|
|
|
|
(State or Other Jurisdiction of Incorporation)
|
(I.R.S. Employer Identification No.)
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange on which registered
|
||
|
|
Essex Property Trust, Inc.
|
Emerging growth company
|
|
Essex Portfolio, L.P.
|
Emerging growth company
|
Item 2.02. |
Results of Operations and Financial Condition.
|
Item 9.01. |
Financial Statements and Exhibits.
|
Exhibit No.
|
Description
|
|
Press Release and Supplemental Information for the three and nine months ended September 30, 2022.
|
||
104
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
|
Date: October
26, 2022
|
ESSEX PROPERTY TRUST, INC.
|
|
/s/ Barbara Pak
|
||
Name:
|
Barbara Pak
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
ESSEX PORTFOLIO, L.P.
|
||
By:
|
Essex Property Trust, Inc.
|
|
Its:
|
General Partner
|
|
/s/ Barbara Pak
|
||
Name:
|
Barbara Pak
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Three Months Ended
September 30,
|
%
|
Nine Months Ended
September 30,
|
%
|
|||||||||||||||
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|||||||||||||
Per Diluted Share
|
||||||||||||||||||
Net Income
|
$1.43
|
$1.82
|
-21.4%
|
|
$3.42
|
$5.40
|
-36.7%
|
|
||||||||||
Total FFO
|
$3.45
|
$3.34
|
3.3%
|
|
$9.93
|
$9.67
|
2.7%
|
|
||||||||||
Core FFO
|
$3.69
|
$3.12
|
18.3%
|
|
$10.75
|
$9.24
|
16.3%
|
|
• |
Reported Net Income per diluted share for the third quarter of 2022 of $1.43, compared to $1.82 in the third quarter of 2021.
|
• |
Achieved Core FFO per diluted share of $3.69, representing 18.3% growth compared to the third quarter of 2021 and exceeding the midpoint of the guidance range by $0.04.
|
• |
Achieved same-property revenues and net operating income (“NOI”) growth of 11.4% and 15.4%, respectively, compared to the third quarter of 2021. On a sequential basis,
same-property revenues and NOI improved 1.9% and 0.6%, respectively.
|
• |
Committed $65.4 million in five structured finance investments at a weighted average return of 9.9%.
|
• |
Repurchased 371,884 shares of common stock totaling $97.1 million, including commissions, at an average price per share of $261.16 under the stock repurchase program.
|
• |
Subsequent to quarter end, the Company obtained a $300.0 million unsecured term loan swapped to an all-in fixed interest rate of 4.2%. The proceeds will
be used to repay the Company’s $300.0 million unsecured notes due in May 2023.
|
• |
Revised the full-year Net Income per diluted share guidance range to $4.80 to $4.90.
|
• |
Raised full-year Core FFO per diluted share guidance by $0.02 at the midpoint to a range of $14.42 to $14.52. This represents 15.9% growth at the midpoint compared to the
prior year.
|
• |
Reaffirmed the midpoint of the full-year guidance ranges for same-property revenues, expenses, and NOI.
|
Q3 2022 vs.
Q3 2021
|
Q3 2022 vs.
Q2 2022
|
% of Total
|
|||||
Revenue
Change
|
Revenue
Change
|
Q3 2022
Revenues
|
|||||
Southern California
|
|||||||
Los Angeles County
|
12.8%
|
|
-0.3%
|
|
18.4%
|
|
|
Orange County
|
10.6%
|
|
4.5%
|
|
11.2%
|
|
|
San Diego County
|
8.8%
|
|
3.6%
|
|
8.7%
|
|
|
Ventura County
|
10.7%
|
|
4.1%
|
|
4.1%
|
|
|
Total Southern California
|
11.2%
|
|
2.1%
|
|
42.4%
|
|
|
Northern California
|
|||||||
Santa Clara County
|
12.9%
|
|
1.6%
|
|
18.5%
|
|
|
Alameda County
|
8.4%
|
|
2.3%
|
|
8.0%
|
|
|
San Mateo County
|
15.5%
|
|
2.8%
|
|
4.8%
|
|
|
Contra Costa County
|
5.6%
|
|
1.5%
|
|
5.6%
|
|
|
San Francisco
|
6.2%
|
|
0.1%
|
|
2.7%
|
|
|
Total Northern California
|
10.7%
|
|
1.7%
|
|
39.6%
|
|
|
Seattle Metro
|
13.3%
|
|
1.9%
|
|
18.0%
|
|
|
Same-Property Portfolio
|
11.4%
|
|
1.9%
|
|
100.0%
|
|
Same-Property Revenue Components
|
Q3 2022
vs. Q3 2021
|
YTD 2022
vs. YTD 2021
|
Q3 2022
vs. Q2 2022
|
||||
Scheduled Rents
|
8.9%
|
|
7.0%
|
|
2.9%
|
|
|
Delinquencies
|
0.1%
|
|
0.6%
|
|
-0.8%
|
|
|
Cash Concessions
|
2.5%
|
|
2.7%
|
|
0.1%
|
|
|
Vacancy
|
-0.8%
|
|
-0.7%
|
|
-0.2%
|
|
|
Other Income
|
0.6%
|
|
0.6%
|
|
0.0%
|
|
|
2022 Same-Property Revenue Growth
|
11.4%
|
|
10.2%
|
|
1.9%
|
|
Year-Over-Year Change
|
Year-Over-Year Change
|
|||||||||||||
Q3 2022 compared to Q3 2021
|
YTD 2022 compared to YTD 2021
|
|||||||||||||
Revenues
|
Operating
Expenses
|
NOI
|
Revenues
|
Operating
Expenses
|
NOI
|
|||||||||
Southern California
|
11.2%
|
|
2.9%
|
|
14.9%
|
|
11.5%
|
|
4.6%
|
|
14.5%
|
|
||
Northern California
|
10.7%
|
|
4.8%
|
|
13.4%
|
|
8.2%
|
|
4.9%
|
|
9.7%
|
|
||
Seattle Metro
|
13.3%
|
|
-2.0%
|
|
21.2%
|
|
11.7%
|
|
-0.4%
|
|
17.7%
|
|
||
Same-Property Portfolio
|
11.4%
|
|
2.7%
|
|
15.4%
|
|
10.2%
|
|
3.8%
|
|
13.1%
|
|
Sequential Change
|
|||||||
Q3 2022 compared to Q2 2022
|
|||||||
Revenues
|
Operating
Expenses
|
NOI
|
|||||
Southern California
|
2.1%
|
|
4.3%
|
|
1.3%
|
|
|
Northern California
|
1.7%
|
|
4.7%
|
|
0.5%
|
|
|
Seattle Metro
|
1.9%
|
|
9.7%
|
|
-1.0%
|
|
|
Same-Property Portfolio
|
1.9%
|
|
5.4%
|
|
0.6%
|
|
Financial Occupancies
|
|||||||
Quarter Ended
|
|||||||
9/30/2022
|
6/30/2022
|
9/30/2021
|
|||||
Southern California
|
96.2%
|
|
95.7%
|
|
97.1%
|
|
|
Northern California
|
96.0%
|
|
96.4%
|
|
95.9%
|
|
|
Seattle Metro
|
95.4%
|
|
96.3%
|
|
95.8%
|
|
|
Same-Property Portfolio
|
96.0%
|
|
96.1%
|
|
96.4%
|
|
Per Diluted
Share
|
|||
Projected midpoint of Core FFO per diluted share for Q3 2022
|
$ |
3.65
|
|
NOI from consolidated communities
|
0.02
|
||
FFO from Co-Investments
|
0.02
|
||
Core FFO per diluted share for Q3 2022 reported
|
$ |
3.69
|
Previous
Range
|
Previous
Midpoint
|
Revised
Range
|
Revised
Midpoint
|
Change at
the Midpoint
|
||||||||
Per Diluted Share
|
||||||||||||
Net Income
|
$4.76 - $4.96
|
$4.86
|
$4.80 - $4.90
|
$4.85
|
($0.01)
|
|
||||||
Total FFO
|
$13.78 - $13.98
|
$13.88
|
$13.60 - $13.70
|
$13.65
|
($0.23)
|
|
||||||
Core FFO
|
$14.35 - $14.55
|
$14.45
|
$14.42 - $14.52
|
$14.47
|
$0.02
|
|||||||
Same-Property Growth on a Cash-Basis(1)
|
||||||||||||
Revenues
|
10.0% - 10.6%
|
|
10.3%
|
|
10.1% - 10.5%
|
|
10.3%
|
|
-
|
|||
Operating Expenses
|
3.0% - 3.5%
|
|
3.3%
|
|
3.1% - 3.4%
|
|
3.3%
|
|
-
|
|||
NOI
|
13.0% - 14.0%
|
|
13.5%
|
|
13.1% - 13.9%
|
|
13.5%
|
|
-
|
(1) |
The midpoint of the Company’s same-property revenues and NOI on a GAAP basis remain unchanged since second quarter 2022 earnings at 10.7% and 14.1%, respectively.
|
Previous
Range
|
Previous
Midpoint
|
Revised
Range
|
Revised
Midpoint
|
Change at
the Midpoint
|
||||||||
Acquisitions
|
$250M - $400M
|
$325M
|
$216M - $216M
|
$216M
|
($109M)
|
|||||||
Dispositions
|
$100M - $200M
|
$150M
|
$100M - $200M
|
$150M
|
-
|
|||||||
Preferred Equity Commitments
|
$50M - $150M
|
$100M
|
$125M - $150M
|
$138M
|
$38M
|
|
||||||
Preferred Equity Redemptions
|
$200M - $250M
|
$225M
|
$200M - $250M
|
$225M
|
-
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
Funds from Operations attributable to common stockholders and unitholders
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Net income available to common stockholders
|
$
|
92,842
|
$
|
118,390
|
$
|
223,150
|
$
|
351,680
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation and amortization
|
135,511
|
130,564
|
403,561
|
387,887
|
||||||||||||
Gains not included in FFO
|
(17,423
|
)
|
(42,897
|
)
|
(17,423
|
)
|
(145,253
|
)
|
||||||||
Depreciation and amortization from unconsolidated co-investments
|
18,288
|
15,044
|
54,532
|
44,592
|
||||||||||||
Noncontrolling interest related to Operating Partnership units
|
3,247
|
4,168
|
7,800
|
12,403
|
||||||||||||
Depreciation attributable to third party ownership and other
|
(357
|
)
|
(145
|
)
|
(1,064
|
)
|
(412
|
)
|
||||||||
Funds from Operations attributable to common stockholders and unitholders
|
$
|
232,108
|
$
|
225,124
|
$
|
670,556
|
$
|
650,897
|
||||||||
FFO per share – diluted
|
$
|
3.45
|
$
|
3.34
|
$
|
9.93
|
$
|
9.67
|
||||||||
Expensed acquisition and investment related costs
|
$
|
230
|
$
|
108
|
$
|
248
|
$
|
164
|
||||||||
Deferred tax expense (benefit) on unconsolidated co-investments (1)
|
1,755
|
3,041
|
(7,863
|
)
|
5,391
|
|||||||||||
Gain on sale of marketable securities
|
-
|
-
|
(12,430
|
)
|
(2,499
|
)
|
||||||||||
Change in unrealized losses (gains) on marketable securities, net
|
17,115
|
(7,091
|
)
|
63,556
|
(23,772
|
)
|
||||||||||
Provision for credit losses
|
(1
|
)
|
(3
|
)
|
(64
|
)
|
(110
|
)
|
||||||||
Equity loss (income) from non-core co-investments (2)
|
1,563
|
(10,868
|
)
|
31,117
|
(19,266
|
)
|
||||||||||
Loss on early retirement of debt, net
|
2
|
-
|
2
|
18,982
|
||||||||||||
Loss on early retirement of debt from unconsolidated co-investment
|
1
|
15
|
988
|
18
|
||||||||||||
Co-investment promote income
|
-
|
-
|
(17,076
|
)
|
-
|
|||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
-
|
-
|
(858
|
)
|
(8,260
|
)
|
||||||||||
General and administrative and other, net
|
882
|
252
|
2,327
|
765
|
||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(5,069
|
)
|
(4
|
)
|
(5,077
|
)
|
(190
|
)
|
||||||||
Core Funds from Operations attributable to common stockholders and unitholders
|
$
|
248,586
|
$
|
210,574
|
$
|
725,426
|
$
|
622,120
|
||||||||
Core FFO per share – diluted
|
$
|
3.69
|
$
|
3.12
|
$
|
10.75
|
$
|
9.24
|
||||||||
Weighted average number of shares outstanding diluted (3)
|
67,341,189
|
67,391,333
|
67,503,403
|
67,324,087
|
(1) |
Represents deferred tax expense (benefit) related to net unrealized gains or losses on technology co-investments.
|
(2) |
Represents the Company's share of co-investment loss (income) from technology co-investments.
|
(3) |
Assumes conversion of all outstanding limited partnership units in Essex Portfolio, L.P. (the “Operating Partnership”) into shares of the Company’s common stock and excludes
DownREIT limited partnership units.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Earnings from operations
|
$
|
128,608
|
$
|
137,971
|
$
|
367,086
|
$
|
428,733
|
||||||||
Adjustments:
|
||||||||||||||||
Corporate-level property management expenses
|
10,184
|
9,060
|
30,532
|
27,135
|
||||||||||||
Depreciation and amortization
|
135,511
|
130,564
|
403,561
|
387,887
|
||||||||||||
Management and other fees from affiliates
|
(2,886
|
)
|
(2,237
|
)
|
(8,313
|
)
|
(6,707
|
)
|
||||||||
General and administrative
|
15,172
|
12,712
|
40,541
|
34,746
|
||||||||||||
Expensed acquisition and investment related costs
|
230
|
108
|
248
|
164
|
||||||||||||
Gain on sale of real estate and land
|
-
|
(42,897
|
)
|
-
|
(142,993
|
)
|
||||||||||
NOI
|
286,819
|
245,281
|
833,655
|
728,965
|
||||||||||||
Less: Non-same property NOI
|
(17,631
|
)
|
(11,942
|
)
|
(49,031
|
)
|
(35,293
|
)
|
||||||||
Same-Property NOI
|
$
|
269,188
|
$
|
233,339
|
$
|
784,624
|
$
|
693,672
|
Page(s)
|
|
Consolidated Operating Results
|
S-1 – S-2
|
Consolidated Funds From Operations
|
S-3
|
Consolidated Balance Sheets
|
S-4
|
Debt Summary – September 30, 2022
|
S-5
|
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – September 30, 2022
|
S-6
|
Portfolio Summary by County – September 30, 2022
|
S-7
|
Operating Income by Quarter – September 30, 2022
|
S-8
|
Same-Property Revenue Results by County – Quarters ended September 30, 2022 and 2021, and June 30, 2022
|
S-9
|
Same-Property Revenue Results by County – Nine months ended September 30, 2022 and 2021
|
S-9.1
|
Same-Property Operating Expenses – Quarter and Year-to-Date as of September 30, 2022 and 2021
|
S-10
|
Development Pipeline –September 30, 2022
|
S-11
|
Capital Expenditures – September 30, 2022
|
S-12
|
Co-investments and Preferred Equity Investments – September 30, 2022
|
S-13
|
Assumptions for 2022 FFO Guidance Range
|
S-14
|
Reconciliation of Projected EPS, FFO and Core FFO per diluted share
|
S-14.1
|
Summary of Apartment Community Acquisitions and Dispositions Activity
|
S-15
|
Delinquencies, Operating Statistics, and Same-Property Revenue Growth with Concessions on a GAAP basis
|
S-16
|
Preliminary 2023 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions
|
S-17
|
Reconciliations of Non-GAAP Financial Measures and Other Terms
|
S-18.1 – S-18.4
|
Consolidated Operating Results
(Dollars in thousands, except share and per share amounts)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Revenues:
|
||||||||||||||||
Rental and other property
|
$
|
406,862
|
$
|
360,620
|
$
|
1,183,318
|
$
|
1,062,253
|
||||||||
Management and other fees from affiliates
|
2,886
|
2,237
|
8,313
|
6,707
|
||||||||||||
409,748
|
362,857
|
1,191,631
|
1,068,960
|
|||||||||||||
Expenses:
|
||||||||||||||||
Property operating
|
120,043
|
115,339
|
349,663
|
333,288
|
||||||||||||
Corporate-level property management expenses
|
10,184
|
9,060
|
30,532
|
27,135
|
||||||||||||
Depreciation and amortization
|
135,511
|
130,564
|
403,561
|
387,887
|
||||||||||||
General and administrative
|
15,172
|
12,712
|
40,541
|
34,746
|
||||||||||||
Expensed acquisition and investment related costs
|
230
|
108
|
248
|
164
|
||||||||||||
281,140
|
267,783
|
824,545
|
783,220
|
|||||||||||||
Gain on sale of real estate and land
|
-
|
42,897
|
-
|
142,993
|
||||||||||||
Earnings from operations
|
128,608
|
137,971
|
367,086
|
428,733
|
||||||||||||
Interest expense, net (1)
|
(49,763
|
)
|
(47,359
|
)
|
(145,790
|
)
|
(144,502
|
)
|
||||||||
Interest and other (loss) income
|
(6,796
|
)
|
11,998
|
(31,571
|
)
|
48,756
|
||||||||||
Equity income from co-investments
|
10,985
|
25,433
|
23,756
|
60,692
|
||||||||||||
Deferred tax (expense) benefit on unconsolidated co-investments
|
(1,755
|
)
|
(3,041
|
)
|
7,863
|
(5,391
|
)
|
|||||||||
Loss on early retirement of debt, net
|
(2
|
)
|
-
|
(2
|
)
|
(18,982
|
)
|
|||||||||
Gain on remeasurement of co-investment
|
17,423
|
-
|
17,423
|
2,260
|
||||||||||||
Net income
|
98,700
|
125,002
|
238,765
|
371,566
|
||||||||||||
Net income attributable to noncontrolling interest
|
(5,858
|
)
|
(6,612
|
)
|
(15,615
|
)
|
(19,886
|
)
|
||||||||
Net income available to common stockholders
|
$
|
92,842
|
$
|
118,390
|
$
|
223,150
|
$
|
351,680
|
||||||||
Net income per share - basic
|
$
|
1.43
|
$
|
1.82
|
$
|
3.42
|
$
|
5.41
|
||||||||
Shares used in income per share - basic
|
65,059,678
|
65,048,486
|
65,198,532
|
65,013,477
|
||||||||||||
Net income per share - diluted
|
$
|
1.43
|
$
|
1.82
|
$
|
3.42
|
$
|
5.40
|
||||||||
Shares used in income per share - diluted
|
65,067,790
|
65,147,781
|
65,225,767
|
65,075,174
|
(1)
|
Refer to page S-18.2, the section titled “Interest Expense, Net” for additional information.
|
Consolidated Operating Results
Selected Line Item Detail
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Rental and other property
|
||||||||||||||||
Rental income
|
$
|
401,467
|
$
|
355,591
|
$
|
1,166,670
|
$
|
1,046,218
|
||||||||
Other property
|
5,395
|
5,029
|
16,648
|
16,035
|
||||||||||||
Rental and other property
|
$
|
406,862
|
$
|
360,620
|
$
|
1,183,318
|
$
|
1,062,253
|
||||||||
Property operating expenses
|
||||||||||||||||
Real estate taxes
|
$
|
46,593
|
$
|
45,802
|
$
|
137,594
|
$
|
135,408
|
||||||||
Administrative
|
22,124
|
21,839
|
67,303
|
65,712
|
||||||||||||
Maintenance and repairs
|
26,302
|
24,396
|
73,738
|
67,462
|
||||||||||||
Utilities
|
25,024
|
23,302
|
71,028
|
64,706
|
||||||||||||
Property operating expenses
|
$
|
120,043
|
$
|
115,339
|
$
|
349,663
|
$
|
333,288
|
||||||||
Interest and other (loss) income
|
||||||||||||||||
Marketable securities and other income
|
$
|
5,275
|
$
|
4,900
|
$
|
14,631
|
$
|
17,438
|
||||||||
Gain on sale of marketable securities
|
-
|
-
|
12,430
|
2,499
|
||||||||||||
Income from early redemption of notes receivable
|
-
|
-
|
-
|
4,747
|
||||||||||||
Provision for credit losses
|
1
|
3
|
64
|
110
|
||||||||||||
Change in unrealized (losses) gains on marketable securities, net
|
(17,115
|
)
|
7,091
|
(63,556
|
)
|
23,772
|
||||||||||
Insurance reimbursements, legal settlements, and other, net
|
5,043
|
4
|
4,860
|
190
|
||||||||||||
Interest and other (loss) income
|
$
|
(6,796
|
)
|
$
|
11,998
|
$
|
(31,571
|
)
|
$
|
48,756
|
||||||
Equity income from co-investments
|
||||||||||||||||
Equity loss from co-investments
|
$
|
(1,430
|
)
|
$
|
(666
|
)
|
$
|
(2,978
|
)
|
$
|
(3,489
|
)
|
||||
Income from preferred equity investments
|
13,953
|
15,246
|
40,688
|
41,420
|
||||||||||||
Equity (loss) income from non-core co-investments
|
(1,563
|
)
|
10,868
|
(31,117
|
)
|
19,266
|
||||||||||
Non-core gain from unconsolidated co-investments
|
26
|
-
|
217
|
-
|
||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
(1
|
)
|
(15
|
)
|
(988
|
)
|
(18
|
)
|
||||||||
Co-investment promote income
|
-
|
-
|
17,076
|
-
|
||||||||||||
Income from early redemption of preferred equity investments
|
-
|
-
|
858
|
3,513
|
||||||||||||
Equity income from co-investments
|
$
|
10,985
|
$
|
25,433
|
$
|
23,756
|
$
|
60,692
|
||||||||
Noncontrolling interest
|
||||||||||||||||
Limited partners of Essex Portfolio, L.P.
|
$
|
3,247
|
$
|
4,168
|
$
|
7,800
|
$
|
12,403
|
||||||||
DownREIT limited partners’ distributions
|
2,069
|
2,046
|
6,362
|
6,255
|
||||||||||||
Third-party ownership interest
|
542
|
398
|
1,453
|
1,228
|
||||||||||||
Noncontrolling interest
|
$
|
5,858
|
$
|
6,612
|
$
|
15,615
|
$
|
19,886
|
E S S E X P R O P E R T Y T R U S T, I N C.
|
||||||||||||||||||||||||
Consolidated Funds From Operations
(1)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||||||||||
(Dollars in thousands, except share and per share amounts and in footnotes)
|
September 30,
|
September 30,
|
||||||||||||||||||||||
|
2022
|
2021
|
% Change
|
2022
|
2021
|
% Change
|
||||||||||||||||||
Funds from operations attributable to common stockholders and unitholders (FFO)
|
||||||||||||||||||||||||
Net income available to common stockholders
|
$
|
92,842
|
$
|
118,390
|
$
|
223,150
|
$
|
351,680
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||
Depreciation and amortization
|
135,511
|
130,564
|
403,561
|
387,887
|
||||||||||||||||||||
Gains not included in FFO
|
(17,423
|
)
|
(42,897
|
)
|
(17,423
|
)
|
(145,253
|
)
|
||||||||||||||||
Depreciation and amortization from unconsolidated co-investments
|
18,288
|
15,044
|
54,532
|
44,592
|
||||||||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
3,247
|
4,168
|
7,800
|
12,403
|
||||||||||||||||||||
Depreciation attributable to third party ownership and other (2)
|
(357
|
)
|
(145
|
)
|
(1,064
|
)
|
(412
|
)
|
||||||||||||||||
Funds from operations attributable to common stockholders and unitholders
|
$
|
232,108
|
$
|
225,124
|
$
|
670,556
|
$
|
650,897
|
||||||||||||||||
FFO per share-diluted
|
$
|
3.45
|
$
|
3.34
|
3.3%
|
|
$
|
9.93
|
$
|
9.67
|
2.7%
|
|
||||||||||||
Components of the change in FFO
|
||||||||||||||||||||||||
Non-core items:
|
||||||||||||||||||||||||
Expensed acquisition and investment related costs
|
$
|
230
|
$
|
108
|
$
|
248
|
$
|
164
|
||||||||||||||||
Deferred tax expense (benefit) on unconsolidated co-investments (3)
|
1,755
|
3,041
|
(7,863
|
)
|
5,391
|
|||||||||||||||||||
Gain on sale of marketable securities
|
-
|
-
|
(12,430
|
)
|
(2,499
|
)
|
||||||||||||||||||
Change in unrealized losses (gains) on marketable securities, net
|
17,115
|
(7,091
|
)
|
63,556
|
(23,772
|
)
|
||||||||||||||||||
Provision for credit losses
|
(1
|
)
|
(3
|
)
|
(64
|
)
|
(110
|
)
|
||||||||||||||||
Equity loss (income) from non-core co-investments (4)
|
1,563
|
(10,868
|
)
|
31,117
|
(19,266
|
)
|
||||||||||||||||||
Loss on early retirement of debt, net
|
2
|
-
|
2
|
18,982
|
||||||||||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
1
|
15
|
988
|
18
|
||||||||||||||||||||
Co-investment promote income
|
-
|
-
|
(17,076
|
)
|
-
|
|||||||||||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
-
|
-
|
(858
|
)
|
(8,260
|
)
|
||||||||||||||||||
General and administrative and other, net
|
882
|
252
|
2,327
|
765
|
||||||||||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(5,069
|
)
|
(4
|
)
|
(5,077
|
)
|
(190
|
)
|
||||||||||||||||
Core funds from operations attributable to common stockholders and unitholders
|
$
|
248,586
|
$
|
210,574
|
$
|
725,426
|
$
|
622,120
|
||||||||||||||||
Core FFO per share-diluted
|
$
|
3.69
|
$
|
3.12
|
18.3%
|
|
$
|
10.75
|
$
|
9.24
|
16.3%
|
|
||||||||||||
Weighted average number of shares outstanding diluted (5)
|
67,341,189
|
67,391,333
|
67,503,403
|
67,324,087
|
(1) |
Refer to page S-18.2, the section titled “Funds from Operations (“FFO”) and Core FFO” for additional information on the Company’s definition and use of FFO and Core FFO.
|
(2) |
The Company consolidates certain co-investments. The noncontrolling interest’s share of net operating income in these investments for the three and nine months ended
September 30, 2022 was $0.9 million and $2.5 million, respectively.
|
(3) |
Represents deferred tax expense (benefit) related to net unrealized gains or losses on technology co-investments.
|
(4) |
Represents the Company’s share of co-investment loss (income) from technology co-investments.
|
(5) |
Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of the Company’s common stock and excludes DownREIT limited
partnership units.
|
E S S E X P R O P E R T Y T R U S T, I N C.
|
||||||||
Consolidated Balance Sheets
|
||||||||
(Dollars in thousands)
|
||||||||
September 30, 2022
|
December 31, 2021
|
|||||||
Real Estate:
|
||||||||
Land and land improvements
|
$
|
3,059,246
|
$
|
3,032,678
|
||||
Buildings and improvements
|
12,912,359
|
12,597,249
|
||||||
15,971,605
|
15,629,927
|
|||||||
Less: accumulated depreciation
|
(5,047,880
|
)
|
(4,646,854
|
)
|
||||
10,923,725
|
10,983,073
|
|||||||
Real estate under development
|
23,752
|
111,562
|
||||||
Co-investments
|
1,145,345
|
1,177,802
|
||||||
12,092,822
|
12,272,437
|
|||||||
Cash and cash equivalents, including restricted cash
|
53,569
|
58,638
|
||||||
Marketable securities
|
141,699
|
191,829
|
||||||
Notes and other receivables
|
197,543
|
341,033
|
||||||
Operating lease right-of-use assets
|
66,531
|
68,972
|
||||||
Prepaid expenses and other assets
|
72,166
|
64,964
|
||||||
Total assets
|
$
|
12,624,330
|
$
|
12,997,873
|
||||
Unsecured debt, net
|
$
|
5,312,131
|
$
|
5,307,196
|
||||
Mortgage notes payable, net
|
635,389
|
638,957
|
||||||
Lines of credit
|
219,481
|
341,257
|
||||||
Distributions in excess of investments in co-investments
|
38,394
|
35,545
|
||||||
Operating lease liabilities
|
68,043
|
70,675
|
||||||
Other liabilities
|
440,457
|
393,069
|
||||||
Total liabilities
|
6,713,895
|
6,786,699
|
||||||
Redeemable noncontrolling interest
|
29,238
|
34,666
|
||||||
Equity:
|
||||||||
Common stock
|
6
|
7
|
||||||
Additional paid-in capital
|
6,775,872
|
6,915,981
|
||||||
Distributions in excess of accumulated earnings
|
(1,123,215
|
)
|
(916,833
|
)
|
||||
Accumulated other comprehensive income (loss), net
|
50,769
|
(5,552
|
)
|
|||||
Total stockholders’ equity
|
5,703,432
|
5,993,603
|
||||||
Noncontrolling interest
|
177,765
|
182,905
|
||||||
Total equity
|
5,881,197
|
6,176,508
|
||||||
Total liabilities and equity
|
$
|
12,624,330
|
$
|
12,997,873
|
Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
|
|||||||||||||||||||||||||||||||||||
Weighted
Average
Interest Rate |
Percentage of
Total Debt
|
||||||||||||||||||||||||||||||||||
Weighted Average
|
|||||||||||||||||||||||||||||||||||
Balance Outstanding
|
Interest
Rate
|
Maturity
in Years
|
Unsecured
|
Secured
|
Total
|
||||||||||||||||||||||||||||||
Unsecured Debt, net
|
|||||||||||||||||||||||||||||||||||
Bonds public - fixed rate
|
$
|
5,350,000
|
3.3
|
%
|
7.9
|
2022
|
$
|
-
|
$
|
40,439
|
$
|
40,439
|
3.6
|
%
|
0.7
|
%
|
|||||||||||||||||||
Unamortized net discounts and debt issuance costs
|
(37,869
|
)
|
-
|
-
|
2023
|
300,000
|
2,945
|
302,945
|
3.4
|
%
|
5.1
|
%
|
|||||||||||||||||||||||
5,312,131
|
3.3
|
%
|
7.9
|
2024
|
400,000
|
3,109
|
403,109
|
4.0
|
%
|
6.7
|
%
|
||||||||||||||||||||||||
Mortgage Notes Payable, net
|
2025
|
500,000
|
133,054
|
633,054
|
3.5
|
%
|
10.6
|
%
|
|||||||||||||||||||||||||||
Fixed rate - secured
|
411,391
|
3.5
|
%
|
3.6
|
2026
|
450,000
|
99,405
|
549,405
|
3.5
|
%
|
9.2
|
%
|
|||||||||||||||||||||||
Variable rate - secured (1)
|
223,785
|
2.3
|
%
|
15.4
|
2027
|
350,000
|
153,955
|
503,955
|
3.5
|
%
|
8.4
|
%
|
|||||||||||||||||||||||
Unamortized premiums and debt issuance costs, net
|
213
|
-
|
-
|
2028
|
450,000
|
68,332
|
518,332
|
2.2
|
%
|
8.7
|
%
|
||||||||||||||||||||||||
Total mortgage notes payable
|
635,389
|
3.1
|
%
|
7.7
|
2029
|
500,000
|
1,456
|
501,456
|
4.1
|
%
|
8.4
|
%
|
|||||||||||||||||||||||
2030
|
550,000
|
1,592
|
551,592
|
3.1
|
%
|
9.2
|
%
|
||||||||||||||||||||||||||||
Unsecured Lines of Credit
|
2031
|
600,000
|
1,740
|
601,740
|
2.3
|
%
|
10.0
|
%
|
|||||||||||||||||||||||||||
Line of credit (2)
|
190,000
|
3.1
|
%
|
N/A
|
2032
|
650,000
|
1,903
|
651,903
|
2.6
|
%
|
10.9
|
%
|
|||||||||||||||||||||||
Line of credit (3)
|
29,481
|
3.1
|
%
|
N/A
|
Thereafter
|
600,000
|
127,246
|
727,246
|
3.4
|
%
|
12.1
|
%
|
|||||||||||||||||||||||
Total lines of credit
|
219,481
|
3.1
|
%
|
N/A
|
Subtotal
|
5,350,000
|
635,176
|
5,985,176
|
3.2
|
%
|
100.0
|
%
|
|||||||||||||||||||||||
|
Debt Issuance Costs
|
(29,458
|
)
|
(1,249
|
)
|
(30,707
|
)
|
NA
|
NA
|
||||||||||||||||||||||||||
Total debt, net
|
$
|
6,167,001
|
3.2
|
%
|
7.8
|
(Discounts)/Premiums
|
(8,411
|
)
|
1,462
|
(6,949
|
)
|
NA
|
NA
|
||||||||||||||||||||||
Total
|
$
|
5,312,131
|
$
|
635,389
|
$
|
5,947,520
|
3.2
|
%
|
100.0
|
%
|
|||||||||||||||||||||||||
|
(1) |
$223.8 million of variable rate debt is tax exempt to the note holders.
|
(2) |
This unsecured line of credit facility has a capacity of $1.2 billion, a scheduled maturity date in January 2027 and two 6-month extension options, exercisable at the
Company’s option. The underlying interest rate on this line is Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company’s corporate ratings and further adjusted by the facility’s Sustainability
Metric Grid.
|
(3) |
This unsecured line of credit facility has a capacity of $35 million and a scheduled maturity date in July 2024. The underlying interest rate on this line is Adjusted
SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company’s corporate ratings and further adjusted by the facility’s Sustainability Metric Grid.
|
Capitalization Data
|
Public Bond Covenants (1)
|
Actual
|
Requirement
|
||||||||||
Total debt, net
|
$
|
6,167,001
|
|||||||||||
Debt to Total Assets:
|
35%
|
|
< 65%
|
||||||||||
Common stock and potentially dilutive securities
|
|||||||||||||
Common stock outstanding
|
64,753
|
||||||||||||
Limited partnership units (1)
|
2,272
|
||||||||||||
Options-treasury method
|
2
|
Secured Debt to Total Assets:
|
4%
|
|
< 40%
|
||||||||
Total shares of common stock and potentially dilutive securities
|
67,027
|
||||||||||||
Common stock price per share as of September 30, 2022
|
$
|
242.23
|
|||||||||||
Interest Coverage:
|
567%
|
|
> 150%
|
||||||||||
Total equity capitalization
|
$
|
16,235,950
|
|||||||||||
Total market capitalization
|
$
|
22,402,951
|
Unsecured Debt Ratio (2):
|
278%
|
|
> 150%
|
|||||||
Ratio of debt to total market capitalization
|
27.5
|
%
|
|||||||||||
Selected Credit Ratios (3)
|
Actual
|
|
|||||||||||
Credit Ratings
|
|||||||||||||
Rating Agency
|
Rating
|
Outlook
|
Net Indebtedness Divided by Adjusted EBITDAre, normalized and
annualized:
|
5.8
|
|
||||||||
Moody’s
|
Baa1
|
Stable
|
|||||||||||
Standard & Poor’s
|
BBB+
|
Stable
|
Unencumbered NOI to Adjusted Total NOI:
|
94%
|
|
|
|||||||
(1) Assumes conversion of all
outstanding limited partnership units in the Operating Partnership into shares of the Company’s common stock.
|
(1) Refer to page S-18.4 for additional information on the Company’s
Public Bond Covenants.
|
||||||||||||
(2) Unsecured Debt Ratio is
unsecured assets (excluding investments in co-investments) divided by unsecured indebtedness.
|
|||||||||||||
(3) Refer to pages S-18.1 to
S-18.4, the section titled “Reconciliations of Non-GAAP Financial Measures and Other Terms” for additional information on the Company’s Selected Credit Ratios.
|
|||||||||||||
Apartment Homes
|
Average Monthly Rental Rate (1)
|
Percent of NOI (2)
|
||||||||||||||||||||||||||||||||||||||
Region - County
|
Consolidated
|
Unconsolidated
Co-investments |
Apartment
Homes in
Development (3)
|
Total
|
Consolidated
|
Unconsolidated
Co-investments (4) |
Total (5)
|
Consolidated
|
Unconsolidated
Co-investments (4) |
Total (5)
|
||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
9,538
|
1,586
|
-
|
11,124
|
$
|
2,606
|
$
|
2,511
|
$
|
2,599
|
17.9
|
%
|
13.5
|
%
|
17.5
|
%
|
||||||||||||||||||||||||
Orange County
|
5,439
|
1,149
|
-
|
6,588
|
2,610
|
2,291
|
2,579
|
11.0
|
%
|
10.4
|
%
|
10.9
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,824
|
795
|
264
|
5,883
|
2,397
|
2,364
|
2,395
|
8.9
|
%
|
7.0
|
%
|
8.7
|
%
|
|||||||||||||||||||||||||||
Ventura County and Other
|
2,600
|
693
|
-
|
3,293
|
2,209
|
2,562
|
2,253
|
4.7
|
%
|
7.6
|
%
|
5.0
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
22,401
|
4,223
|
264
|
26,888
|
2,516
|
2,435
|
2,509
|
42.5
|
%
|
38.5
|
%
|
42.1
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||
Santa Clara County (6)
|
8,749
|
1,774
|
-
|
10,523
|
2,881
|
2,854
|
2,878
|
19.4
|
%
|
17.8
|
%
|
19.4
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
3,959
|
1,512
|
-
|
5,471
|
2,585
|
2,558
|
2,580
|
7.5
|
%
|
14.3
|
%
|
8.0
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
2,561
|
195
|
-
|
2,756
|
3,036
|
3,702
|
3,061
|
5.5
|
%
|
3.0
|
%
|
5.3
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
-
|
-
|
2,619
|
2,629
|
-
|
2,629
|
5.3
|
%
|
0.0
|
%
|
4.8
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,342
|
537
|
-
|
1,879
|
2,863
|
3,302
|
2,936
|
2.5
|
%
|
6.7
|
%
|
2.9
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
19,230
|
4,018
|
-
|
23,248
|
2,805
|
2,840
|
2,808
|
40.2
|
%
|
41.8
|
%
|
40.4
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,341
|
2,184
|
-
|
12,525
|
2,149
|
2,084
|
2,143
|
17.3
|
%
|
19.7
|
%
|
17.5
|
%
|
|||||||||||||||||||||||||||
Total
|
51,972
|
10,425
|
264
|
62,661
|
$
|
2,550
|
$
|
2,515
|
$
|
2,547
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
(1) |
Average monthly rental rate is defined as the total scheduled monthly rental income (actual rent for occupied apartment homes plus market rent for vacant apartment
homes) for the quarter ended September 30, 2022, divided by the number of apartment homes as of September 30, 2022.
|
(2) |
Represents the percentage of actual NOI for the quarter ended September 30, 2022. See the section titled “Net Operating Income (“NOI”) and Same-Property NOI
Reconciliations” on page S-18.3.
|
(3) |
Includes development communities with no rental income.
|
(4) |
Co-investment amounts weighted for Company’s pro rata share.
|
(5) |
At Company’s pro rata share.
|
(6)
|
Includes all communities in Santa Clara County and one community in Santa Cruz County.
|
Apartment Homes
|
Q3 ‘22
|
Q2 ‘22
|
Q1 ‘22
|
Q4 ‘21
|
Q3 ‘21
|
|||||||||||||||||||
Rental and other property revenues:
|
||||||||||||||||||||||||
Same-property
|
49,369
|
$
|
380,562
|
$
|
373,331
|
$
|
356,273
|
$
|
347,353
|
$
|
341,744
|
|||||||||||||
Acquisitions (2)
|
479
|
2,570
|
1,753
|
1,747
|
916
|
1,004
|
||||||||||||||||||
Development (3)
|
1,275
|
11,327
|
11,184
|
9,427
|
8,785
|
8,055
|
||||||||||||||||||
Redevelopment
|
164
|
1,422
|
1,491
|
1,435
|
1,498
|
1,533
|
||||||||||||||||||
Non-residential/other, net (4)
|
685
|
12,413
|
12,748
|
12,918
|
12,074
|
11,320
|
||||||||||||||||||
Straight-line rent concessions (5)
|
-
|
(1,432
|
)
|
(3,267
|
)
|
(2,584
|
)
|
(1,461
|
)
|
(3,036
|
)
|
|||||||||||||
Total rental and other property revenues
|
51,972
|
406,862
|
397,240
|
379,216
|
369,165
|
360,620
|
||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||
Same-property
|
111,374
|
105,656
|
108,512
|
105,503
|
108,405
|
|||||||||||||||||||
Acquisitions (2)
|
877
|
540
|
556
|
324
|
373
|
|||||||||||||||||||
Development (3)
|
4,550
|
4,313
|
3,922
|
3,571
|
3,411
|
|||||||||||||||||||
Redevelopment
|
662
|
600
|
687
|
590
|
619
|
|||||||||||||||||||
Non-residential/other, net (4)
(6)
|
2,580
|
2,411
|
2,423
|
1,960
|
2,531
|
|||||||||||||||||||
Total property operating expenses
|
120,043
|
113,520
|
116,100
|
111,948
|
115,339
|
|||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||
Same-property
|
269,188
|
267,675
|
247,761
|
241,850
|
233,339
|
|||||||||||||||||||
Acquisitions (2)
|
1,693
|
1,213
|
1,191
|
592
|
631
|
|||||||||||||||||||
Development (3)
|
6,777
|
6,871
|
5,505
|
5,214
|
4,644
|
|||||||||||||||||||
Redevelopment
|
760
|
891
|
748
|
908
|
914
|
|||||||||||||||||||
Non-residential/other, net (4)
|
9,833
|
10,337
|
10,495
|
10,114
|
8,789
|
|||||||||||||||||||
Straight-line rent concessions (5)
|
(1,432
|
)
|
(3,267
|
)
|
(2,584
|
)
|
(1,461
|
)
|
(3,036
|
)
|
||||||||||||||
Total NOI
|
$
|
286,819
|
$
|
283,720
|
$
|
263,116
|
$
|
257,217
|
$
|
245,281
|
||||||||||||||
Same-property metrics
|
||||||||||||||||||||||||
Operating margin
|
71
|
%
|
72
|
%
|
70
|
%
|
70
|
%
|
68
|
%
|
||||||||||||||
Annualized turnover (7)
|
49
|
%
|
42
|
%
|
35
|
%
|
36
|
%
|
47
|
%
|
||||||||||||||
Financial occupancy (8)
|
96.0
|
%
|
96.1
|
%
|
96.3
|
%
|
96.1
|
%
|
96.4
|
%
|
(1) |
Includes consolidated communities only.
|
(2) |
Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2021.
|
(3) |
Development includes properties developed which did not have comparable stabilized results as of January 1, 2021.
|
(4) |
Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition properties, student
housing, properties undergoing significant construction activities that do not meet our redevelopment criteria and two communities located in the California counties of Santa Barbara and Santa Cruz, which the Company does
not consider its core markets.
|
(5) |
Same-property revenues reflect concessions on a cash basis. Total Rental and Other Property Revenues reflect concessions on a straight-line basis in accordance
with U.S. GAAP.
|
(6) |
Includes other expenses and intercompany eliminations pertaining to self-insurance.
|
(7) |
Annualized turnover is defined as the number of apartment homes turned over during the quarter, annualized, divided by the total number of apartment homes.
|
(8) |
Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income (actual rent for occupied apartment
homes plus market rent for vacant apartment homes).
|
Average Monthly Rental Rate
|
Financial Occupancy
|
Gross Revenues
|
Sequential Gross Revenues
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Region - County
|
Apartment
Homes
|
Q3 ‘22 % of
Actual NOI
|
Q3 ‘22
|
Q3 ‘21
|
% Change
|
Q3 ‘22
|
Q3 ‘21
|
% Change
|
Q3 ‘22
|
Q3 ‘21
|
% Change
|
Q2 ‘22
|
% Change
|
|||||||||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,982
|
18.0
|
%
|
$
|
2,619
|
$
|
2,438
|
7.4
|
%
|
96.2
|
%
|
96.5
|
%
|
-0.3
|
%
|
$
|
70,583
|
$
|
62,583
|
12.8
|
%
|
$
|
70,813
|
-0.3
|
%
|
|||||||||||||||||||||||||||
Orange County
|
5,439
|
11.5
|
%
|
2,610
|
2,335
|
11.8
|
%
|
96.2
|
%
|
97.5
|
%
|
-1.3
|
%
|
42,516
|
38,447
|
10.6
|
%
|
40,692
|
4.5
|
%
|
||||||||||||||||||||||||||||||||
San Diego County
|
4,582
|
8.9
|
%
|
2,392
|
2,091
|
14.4
|
%
|
96.3
|
%
|
97.5
|
%
|
-1.2
|
%
|
32,941
|
30,281
|
8.8
|
%
|
31,782
|
3.6
|
%
|
||||||||||||||||||||||||||||||||
Ventura County
|
2,253
|
4.4
|
%
|
2,186
|
1,970
|
11.0
|
%
|
96.1
|
%
|
98.2
|
%
|
-2.1
|
%
|
15,439
|
13,942
|
10.7
|
%
|
14,827
|
4.1
|
%
|
||||||||||||||||||||||||||||||||
Total Southern California
|
21,256
|
42.8
|
%
|
2,522
|
2,287
|
10.3
|
%
|
96.2
|
%
|
97.1
|
%
|
-0.9
|
%
|
161,479
|
145,253
|
11.2
|
%
|
158,114
|
2.1
|
%
|
||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
8,177
|
18.9
|
%
|
2,852
|
2,671
|
6.8
|
%
|
96.2
|
%
|
96.1
|
%
|
0.1
|
%
|
70,616
|
62,572
|
12.9
|
%
|
69,532
|
1.6
|
%
|
||||||||||||||||||||||||||||||||
Alameda County
|
3,959
|
7.8
|
%
|
2,585
|
2,457
|
5.2
|
%
|
96.4
|
%
|
96.1
|
%
|
0.3
|
%
|
30,713
|
28,338
|
8.4
|
%
|
30,033
|
2.3
|
%
|
||||||||||||||||||||||||||||||||
San Mateo County
|
1,962
|
4.6
|
%
|
2,966
|
2,790
|
6.3
|
%
|
95.6
|
%
|
94.4
|
%
|
1.3
|
%
|
18,088
|
15,664
|
15.5
|
%
|
17,603
|
2.8
|
%
|
||||||||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
5.5
|
%
|
2,629
|
2,483
|
5.9
|
%
|
95.3
|
%
|
96.3
|
%
|
-1.0
|
%
|
21,210
|
20,085
|
5.6
|
%
|
20,902
|
1.5
|
%
|
||||||||||||||||||||||||||||||||
San Francisco
|
1,178
|
2.4
|
%
|
2,784
|
2,681
|
3.8
|
%
|
95.7
|
%
|
96.0
|
%
|
-0.3
|
%
|
10,141
|
9,552
|
6.2
|
%
|
10,128
|
0.1
|
%
|
||||||||||||||||||||||||||||||||
Total Northern California
|
17,895
|
39.2
|
%
|
2,768
|
2,610
|
6.1
|
%
|
96.0
|
%
|
95.9
|
%
|
0.1
|
%
|
150,768
|
136,211
|
10.7
|
%
|
148,198
|
1.7
|
%
|
||||||||||||||||||||||||||||||||
Seattle Metro
|
10,218
|
18.0
|
%
|
2,153
|
1,920
|
12.1
|
%
|
95.4
|
%
|
95.8
|
%
|
-0.4
|
%
|
68,315
|
60,280
|
13.3
|
%
|
67,019
|
1.9
|
%
|
||||||||||||||||||||||||||||||||
Total Same-Property
|
49,369
|
100.0
|
%
|
$
|
2,535
|
$
|
2,328
|
8.9
|
%
|
96.0
|
%
|
96.4
|
%
|
-0.4
|
%
|
$
|
380,562
|
$
|
341,744
|
11.4
|
%
|
$
|
373,331
|
1.9
|
%
|
|||||||||||||||||||||||||||
Average Monthly Rental Rate
|
Financial Occupancy
|
Gross Revenues
|
||||||||||||||||||||||||||||||||||||||||||
Region - County
|
Apartment
Homes
|
YTD 2022
% of
Actual NOI
|
YTD 2022
|
YTD 2021
|
% Change
|
YTD 2022
|
YTD 2021
|
% Change
|
YTD 2022
|
YTD 2021
|
% Change
|
|||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,982
|
18.3
|
%
|
$
|
2,559
|
$
|
2,422
|
5.7
|
%
|
96.1
|
%
|
96.2
|
%
|
-0.1
|
%
|
$
|
207,909
|
$
|
183,469
|
13.3
|
%
|
|||||||||||||||||||||||
Orange County
|
5,439
|
11.3
|
%
|
2,526
|
2,280
|
10.8
|
%
|
95.9
|
%
|
97.4
|
%
|
-1.5
|
%
|
122,388
|
111,229
|
10.0
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,582
|
8.9
|
%
|
2,299
|
2,043
|
12.5
|
%
|
96.4
|
%
|
97.5
|
%
|
-1.1
|
%
|
95,721
|
86,388
|
10.8
|
%
|
|||||||||||||||||||||||||||
Ventura County
|
2,253
|
4.3
|
%
|
2,118
|
1,937
|
9.3
|
%
|
96.1
|
%
|
98.0
|
%
|
-1.9
|
%
|
44,228
|
40,705
|
8.7
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
21,256
|
42.8
|
%
|
2,448
|
2,253
|
8.7
|
%
|
96.1
|
%
|
96.9
|
%
|
-0.8
|
%
|
470,246
|
421,791
|
11.5
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
8,177
|
19.0
|
%
|
2,782
|
2,672
|
4.1
|
%
|
96.5
|
%
|
96.5
|
%
|
0.0
|
%
|
206,358
|
188,341
|
9.6
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
3,959
|
7.9
|
%
|
2,541
|
2,450
|
3.7
|
%
|
96.0
|
%
|
96.3
|
%
|
-0.3
|
%
|
90,316
|
84,607
|
6.7
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
1,962
|
4.6
|
%
|
2,908
|
2,818
|
3.2
|
%
|
96.1
|
%
|
95.1
|
%
|
1.1
|
%
|
52,266
|
47,760
|
9.4
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
5.5
|
%
|
2,573
|
2,462
|
4.5
|
%
|
96.1
|
%
|
96.7
|
%
|
-0.6
|
%
|
61,847
|
58,504
|
5.7
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,178
|
2.4
|
%
|
2,744
|
2,674
|
2.6
|
%
|
96.1
|
%
|
96.0
|
%
|
0.1
|
%
|
30,181
|
28,219
|
7.0
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
17,895
|
39.4
|
%
|
2,710
|
2,608
|
3.9
|
%
|
96.3
|
%
|
96.3
|
%
|
0.0
|
%
|
440,968
|
407,431
|
8.2
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,218
|
17.8
|
%
|
2,077
|
1,896
|
9.5
|
%
|
95.9
|
%
|
96.4
|
%
|
-0.5
|
%
|
198,952
|
178,180
|
11.7
|
%
|
|||||||||||||||||||||||||||
Total Same-Property
|
49,369
|
100.0
|
%
|
$
|
2,466
|
$
|
2,308
|
6.8
|
%
|
96.1
|
%
|
96.6
|
%
|
-0.5
|
%
|
$
|
1,110,166
|
$
|
1,007,402
|
10.2
|
%
|
|||||||||||||||||||||||
Based on 49,369 apartment homes
|
||||||||||||||||||||||||||||||||
Q3 ‘22
|
Q3 ‘21
|
% Change
|
% of Op. Ex.
|
YTD 2022
|
YTD 2021
|
% Change
|
% of Op. Ex.
|
|||||||||||||||||||||||||
Same-property operating expenses:
|
||||||||||||||||||||||||||||||||
Real estate taxes
|
$
|
41,620
|
$
|
41,607
|
0.0
|
%
|
37.4
|
%
|
$
|
123,418
|
$
|
123,508
|
-0.1
|
%
|
37.9
|
%
|
||||||||||||||||
Maintenance and repairs
|
24,686
|
23,123
|
6.8
|
%
|
22.2
|
%
|
69,381
|
63,890
|
8.6
|
%
|
21.3
|
%
|
||||||||||||||||||||
Administrative
|
16,734
|
16,818
|
-0.5
|
%
|
15.0
|
%
|
50,434
|
49,719
|
1.4
|
%
|
15.5
|
%
|
||||||||||||||||||||
Utilities
|
23,308
|
21,986
|
6.0
|
%
|
20.9
|
%
|
66,250
|
60,924
|
8.7
|
%
|
20.4
|
%
|
||||||||||||||||||||
Insurance and other
|
5,026
|
4,871
|
3.2
|
%
|
4.5
|
%
|
16,059
|
15,689
|
2.4
|
%
|
4.9
|
%
|
||||||||||||||||||||
Total same-property operating expenses
|
$
|
111,374
|
$
|
108,405
|
2.7
|
%
|
100.0
|
%
|
$
|
325,542
|
$
|
313,730
|
3.8
|
%
|
100.0
|
%
|
||||||||||||||||
Project Name
|
Location
|
Ownership
%
|
Estimated
Apartment
Homes
|
Estimated
Commercial
sq. feet
|
Incurred to
Date
|
Remaining
Costs
|
Estimated
Total Cost
|
Essex Est.
Total Cost (1)
|
Cost per
Apartment
Home (2)
|
Average
%
Occupied
|
%
Leased as of
9/30/22 (3)
|
%
Leased as of
10/24/22 (3)
|
Construction
Start
|
Initial
Occupancy
|
Stabilized
Operations
|
|||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Projects
|
Various
|
100%
|
|
-
|
-
|
$
|
24
|
$
|
-
|
$
|
24
|
$
|
24
|
|||||||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Consolidated
|
-
|
-
|
24
|
-
|
24
|
24
|
||||||||||||||||||||||||||||||||||||||||||||||||
Development Projects - Joint Venture (4)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scripps Mesa Apartments (5)
|
San Diego, CA
|
51%
|
|
264
|
2,000
|
73
|
29
|
102
|
52
|
383
|
0%
|
|
0%
|
|
0%
|
|
Q3 2020
|
Q4 2022
|
Q3 2023
|
|||||||||||||||||||||||||||||||||||
Total Development Projects - Joint Venture
|
264
|
2,000
|
73
|
29
|
102
|
52
|
$
|
383
|
||||||||||||||||||||||||||||||||||||||||||||||
Grand Total - Development Pipeline
|
264
|
2,000
|
$
|
97
|
$
|
29
|
$
|
126
|
76
|
|||||||||||||||||||||||||||||||||||||||||||||
Essex Cost Incurred to Date - Pro Rata
|
(61
|
)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Essex Remaining Commitment
|
$
|
15
|
(1)
|
The Company’s share of the estimated total cost of the project.
|
(2)
|
Net of the estimated allocation to the retail component of the project, as applicable.
|
(3)
|
Calculations are based on multifamily operations only.
|
(4)
|
For the third quarter of 2022, the Company’s cost includes $0.3 million of capitalized interest, $0.4 million of
capitalized overhead and $0.6 million of development fees (such development fees reduced G&A expenses).
|
(5)
|
Cost incurred to date and estimated total cost are net of a projected value for low income housing tax credit proceeds and
the value of the tax exempt bond structure.
|
Revenue Generating Capital Expenditures (2)
|
Q3 ‘22
|
Trailing 4
Quarters
|
||||||
Same-property portfolio
|
$
|
16,525
|
$
|
57,528
|
||||
Non-same property portfolio
|
59
|
686
|
||||||
Total revenue generating capital expenditures
|
$
|
16,584
|
$
|
58,214
|
||||
Number of same-property interior renovations
|
1,163
|
3,407
|
||||||
Number of total consolidated interior renovations
|
1,206
|
3,479
|
Non-Revenue Generating Capital Expenditures (3)
|
Q3 ‘22
|
Trailing 4
Quarters
|
||||||
Non-revenue generating capital expenditures
|
$
|
34,512
|
$
|
117,750
|
||||
Average apartment homes in quarter
|
51,867
|
51,732
|
||||||
Capital expenditures per apartment homes in the quarter
|
$
|
665
|
$
|
2,276
|
(1) |
The Company incurred $0.1 million of capitalized interest, $3.5 million of capitalized overhead and $0.3 million of co-investment fees related to
redevelopment in Q3 2022.
|
(2) |
Represents revenue generating or expense saving expenditures, such as full-scale redevelopments, interior unit turn renovations, enhanced amenities and
certain resource management initiatives. Q3 2022 excludes costs related to smart home automation.
|
(3) |
Represents roof replacements, paving, building and mechanical systems, exterior painting, siding, etc. Non-revenue generating capital expenditures does
not include expenditures incurred due to changes in governmental regulations that the Company would not have incurred otherwise, costs related to retail, furniture and fixtures, and expenditures in which the
Company expects to be reimbursed.
|
|
Weighted
Average Essex
Ownership
Percentage
|
Apartment
Homes
|
Total
Undepreciated
Book Value
|
Debt
Amount
|
Essex
Book
Value
|
Weighted
Average
Borrowing Rate
|
Remaining
Term of
Debt (in Years)
|
Three Months
Ended September 30, 2022 |
Nine Months
Ended September 30, 2022 |
|||||||||||||||||||||||||||
Operating and Other Non-Consolidated Joint Ventures
|
NOI
|
|||||||||||||||||||||||||||||||||||
Wesco I, III, IV, V, VI, Essex JV, LLC (1)
|
54%
|
5,975
|
$
|
2,122,928
|
$
|
1,439,877
|
$
|
184,918
|
2.8
|
%
|
4.1
|
$
|
29,159
|
$
|
85,055
|
|||||||||||||||||||||
BEXAEW, BEX II, BEX IV, and 500 Folsom
|
50%
|
3,083
|
1,242,388
|
550,232
|
241,552
|
2.9
|
%
|
8.6
|
(4)
|
|
15,745
|
45,144
|
||||||||||||||||||||||||
Other (2)
|
52%
|
1,367
|
557,820
|
408,294
|
82,918
|
3.3
|
%
|
2.6
|
6,908
|
20,392
|
||||||||||||||||||||||||||
Total Operating and Other Non-Consolidated Joint Ventures
|
10,425
|
$
|
3,923,136
|
$
|
2,398,403
|
$
|
509,388
|
2.9
|
%
|
4.9
|
$
|
51,812
|
$
|
150,591
|
||||||||||||||||||||||
Development Non-Consolidated Joint Ventures (3)
|
51%
|
264
|
73,230
|
89,250
|
12,939
|
1.5
|
%
|
37.7
|
(5)
|
|
-
|
-
|
||||||||||||||||||||||||
Total Non-Consolidated Joint Ventures
|
10,689
|
$
|
3,996,366
|
$
|
2,487,653
|
$
|
522,327
|
2.9
|
%
|
6.0
|
$
|
51,812
|
$
|
150,591
|
||||||||||||||||||||||
Essex Portion of NOI and Expenses
|
||||||||||||||||||||||||||||||||||||
NOI
|
$
|
27,753
|
$
|
79,814
|
||||||||||||||||||||||||||||||||
Depreciation
|
(18,285
|
)
|
(54,529
|
)
|
||||||||||||||||||||||||||||||||
Interest expense and other
|
(10,872
|
)
|
(28,046
|
)
|
||||||||||||||||||||||||||||||||
Equity loss from non-core co-investments
|
(1,563
|
)
|
(31,117
|
)
|
||||||||||||||||||||||||||||||||
Loss on early retirement of debt from unconsolidated co-investment
|
(1
|
)
|
(988
|
)
|
||||||||||||||||||||||||||||||||
Co-investment promote income
|
-
|
17,076
|
||||||||||||||||||||||||||||||||||
Net income from operating and other co-investments
|
$
|
(2,968
|
)
|
$
|
(17,790
|
)
|
||||||||||||||||||||||||||||||
Weighted Average Preferred Return
|
Weighted Average Expected
Term
|
|||||||||||||||||||||||||||||||||||
Income from Preferred Equity Investments
|
||||||||||||||||||||||||||||||||||||
Income from preferred equity investments
|
$
|
13,953
|
$
|
40,688
|
||||||||||||||||||||||||||||||||
Income from early redemption of preferred equity investments
|
-
|
858
|
||||||||||||||||||||||||||||||||||
Preferred Equity Investments (6)
|
$
|
584,624
|
9.7
|
%
|
2.8
|
$
|
13,953
|
$
|
41,546
|
|||||||||||||||||||||||||||
Total Co-investments
|
$
|
1,106,951
|
$
|
10,985
|
$
|
23,756
|
(1) |
As of September 30, 2022, the Company’s investments in Wesco I, Wesco III, and Wesco IV were classified as a liability of $37.9 million due to distributions received
in excess of the Company’s investment.
|
(2) |
As of September 30, 2022, the Company’s investments in Expo and Century Towers were classified as a liability of $0.5 million due to distributions received in excess
of the Company’s investment. The weighted average Essex ownership percentage excludes our investments in non-core technology co-investments which are carried at fair value.
|
(3) |
The Company has ownership interests in development co-investments, which are detailed on page S-11.
|
(4) |
$132.0 million of the debt related to 500 Folsom, one of the Company’s co-investments, is financed by tax exempt bonds with a maturity date of January 2052.
|
(5) |
Scripps Mesa Apartments has $89.3 million of long-term tax-exempt bond debt that is subject to a total return swap that matures in 2025.
|
(6) |
As of September 30, 2022, the Company has invested in 26 preferred equity investments.
|
Nine Months
|
|
||||||||||||
Ended | |||||||||||||
September 30, |
2022 Full-Year Guidance Range
|
||||||||||||
($’s in thousands, except per share data)
|
2022 (1) |
Low End
|
High End
|
Comments About 2022 Full-Year Guidance
|
|||||||||
Total NOI from Consolidated Communities - Excluding Straight-Line Rent Concessions
|
$
|
840,938
|
$
|
1,133,000
|
$
|
1,140,000
|
Includes a range of same-property NOI growth of 13.1% to 13.9%, revised from the previous range of 13.0% to 14.0%
|
||||||
Straight-Line Rent Concessions from Consolidated Communities
|
(7,283
|
)
|
(7,100
|
)
|
(8,100
|
)
|
Reflects the non-cash impact of recording lease concessions on a straight-line basis
|
||||||
Management Fees
|
8,313
|
11,000
|
11,200
|
||||||||||
Interest Expense
|
|||||||||||||
Interest expense, before capitalized interest
|
(147,726
|
)
|
(200,700
|
)
|
(200,300
|
)
|
|||||||
Interest capitalized
|
1,936
|
2,100
|
2,300
|
||||||||||
Net interest expense
|
(145,790
|
)
|
(198,600
|
)
|
(198,000
|
)
|
|||||||
Recurring Income and Expenses
|
|||||||||||||
Interest and other income
|
14,631
|
18,700
|
19,100
|
||||||||||
FFO from co-investments
|
92,242
|
120,700
|
121,400
|
Includes actual results through September and investment activity completed through mid-October
|
|||||||||
General and administrative
|
(38,214
|
)
|
(53,500
|
)
|
(54,500
|
)
|
|||||||
Corporate-level property management expenses
|
(30,532
|
)
|
(40,400
|
)
|
(40,800
|
)
|
|||||||
Non-controlling interest
|
(8,879
|
)
|
(12,000
|
)
|
(11,800
|
)
|
|||||||
Total recurring income and expenses
|
29,248
|
33,500
|
33,400
|
||||||||||
Non-Core Income and Expenses
|
|||||||||||||
Expensed acquisition and investment related costs
|
(248
|
)
|
(248
|
)
|
(248
|
)
|
|||||||
Deferred tax benefit on unconsolidated co-investments
|
7,863
|
7,863
|
7,863
|
||||||||||
Gain on sale of marketable securities
|
12,430
|
12,430
|
12,430
|
||||||||||
Change in unrealized losses on marketable securities, net
|
(63,556
|
)
|
(63,556
|
)
|
(63,556
|
)
|
|||||||
Provision for credit losses
|
64
|
64
|
64
|
||||||||||
Equity loss from non-core co-investments
|
(31,117
|
)
|
(31,117
|
)
|
(31,117
|
)
|
|||||||
Loss on early retirement of debt, net
|
(2
|
)
|
(2
|
)
|
(2
|
)
|
|||||||
Loss on early retirement of debt from unconsolidated co-investments
|
(988
|
)
|
(988
|
)
|
(988
|
)
|
|||||||
Co-investment promote income
|
17,076
|
17,076
|
17,076
|
||||||||||
Income from early redemption of preferred equity investments
|
858
|
858
|
858
|
||||||||||
General and administrative and other, net
|
(2,327
|
)
|
(2,327
|
)
|
(2,327
|
)
|
|||||||
Insurance reimbursements, legal settlements, and other, net
|
5,077
|
5,077
|
5,077
|
||||||||||
Total non-core income and expenses
|
(54,870
|
)
|
(54,870
|
)
|
(54,870
|
)
|
|||||||
Funds from Operations (2)
|
$
|
670,556
|
$
|
916,930
|
$
|
923,630
|
|||||||
Funds from Operations per diluted Share
|
$
|
9.93
|
$
|
13.60
|
$
|
13.70
|
|||||||
% Change - Funds from Operations
|
2.7
|
%
|
-2.7
|
%
|
-2.0
|
%
|
|||||||
Core Funds from Operations (excludes non-core items)
|
$
|
725,426
|
$
|
971,800
|
$
|
978,500
|
|||||||
Core Funds from Operations per diluted Share
|
$
|
10.75
|
$
|
14.42
|
$
|
14.52
|
|||||||
% Change - Core Funds from Operations
|
16.3
|
%
|
15.4
|
%
|
16.2
|
%
|
|||||||
EPS - Diluted
|
$
|
3.42
|
$
|
4.80
|
$
|
4.90
|
|||||||
Weighted average shares outstanding - FFO calculation
|
67,503
|
67,400
|
67,400
|
(1) |
All non-core items are excluded from the 2022 actuals and included in the non-core income and expense section of the FFO reconciliation.
|
(2) |
2022 guidance excludes inestimable projected gain on sale of marketable securities, loss on early retirement of debt, political/legislative costs,
and promote income until they are realized within the reporting period presented in the report.
|
Nine Months
|
2022 Guidance Range (1)
|
|||||||||||||||||||
Ended
|
4th Quarter 2022
|
Full-Year 2022
|
||||||||||||||||||
September 30,
|
||||||||||||||||||||
2022
|
Low
|
High
|
Low
|
High
|
||||||||||||||||
EPS - diluted
|
$
|
3.42
|
$
|
1.38
|
$
|
1.48
|
$
|
4.80
|
$
|
4.90
|
||||||||||
Conversion from GAAP share count
|
(0.12
|
)
|
(0.05
|
)
|
(0.05
|
)
|
(0.17
|
)
|
(0.17
|
)
|
||||||||||
Depreciation and amortization
|
6.80
|
2.28
|
2.28
|
9.08
|
9.08
|
|||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
0.09
|
0.06
|
0.06
|
0.15
|
0.15
|
|||||||||||||||
Gain on sale of real estate
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Gain on remeasurement of co-investment
|
(0.26
|
)
|
-
|
-
|
(0.26
|
)
|
(0.26
|
)
|
||||||||||||
FFO per share - diluted
|
$
|
9.93
|
$
|
3.67
|
$
|
3.77
|
$
|
13.60
|
$
|
13.70
|
||||||||||
Expensed acquisition and investment related costs
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Deferred tax benefit on unconsolidated co-investments
|
(0.11
|
)
|
-
|
-
|
(0.11
|
)
|
(0.11
|
)
|
||||||||||||
Gain on sale of marketable securities
|
(0.18
|
)
|
-
|
-
|
(0.18
|
)
|
(0.18
|
)
|
||||||||||||
Change in unrealized losses on marketable securities, net
|
0.94
|
-
|
-
|
0.94
|
0.94
|
|||||||||||||||
Provision for credit losses
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Equity loss from non-core co-investments
|
0.46
|
-
|
-
|
0.46
|
0.46
|
|||||||||||||||
Loss on early retirement of debt, net
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
0.01
|
-
|
-
|
0.01
|
0.01
|
|||||||||||||||
Co-investment promote income
|
(0.26
|
)
|
-
|
-
|
(0.26
|
)
|
(0.26
|
)
|
||||||||||||
Income from early redemption of preferred equity investments
|
(0.01
|
)
|
-
|
-
|
(0.01
|
)
|
(0.01
|
)
|
||||||||||||
General and administrative and other, net
|
0.04
|
-
|
-
|
0.04
|
0.04
|
|||||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(0.07
|
)
|
-
|
-
|
(0.07
|
)
|
(0.07
|
)
|
||||||||||||
Core FFO per share - diluted
|
$
|
10.75
|
$
|
3.67
|
$
|
3.77
|
$
|
14.42
|
$
|
14.52
|
(1)
|
2022 guidance excludes inestimable projected gain on sale of real estate and land, gain on sale of marketable
securities, loss on early retirement of debt, political/legislative costs, and promote income until they are realized within the reporting period presented in the report.
|
Property Name
|
Location
|
Apartment
Homes
|
Essex
Ownership
Percentage
|
Entity
|
Date
|
Total
Contract
Price
|
Price per
Apartment Home
|
Average
Rent
|
||||||||||||||||||
Vela
|
Woodland Hills, CA
|
379
|
50%
|
|
JV
|
Jan-22
|
$
|
183,000
|
(1)
|
|
$
|
483
|
$
|
2,729
|
||||||||||||
Q1 2022
|
379
|
$
|
183,000
|
$
|
483
|
|||||||||||||||||||||
Regency Palm Court and Windsor Court (2)
|
Los Angeles, CA
|
211
|
100%
|
|
EPLP
|
Jul-22
|
$
|
32,868
|
$
|
313
|
$
|
1,787
|
||||||||||||||
Q3 2022
|
211
|
$
|
32,868
|
$
|
313
|
|||||||||||||||||||||
2022 Total
|
590
|
$
|
215,868
|
$
|
366
|
(1) |
Represents the contract price for the entire property, not the Company’s share.
|
(2) |
In July 2022, the Company acquired its joint venture partner’s 49.8% minority interest in two apartment communities, consisting of 211 apartment
homes located in Los Angeles, CA, for a contract price of $32.9 million.
|
Delinquencies for Third Quarter 2022
|
Same-Property
|
Non-Same
Property and
Co-investments |
Total Operating
Communities
|
Commercial
|
Total
|
|||||||||||||||
Operating apartment community units
|
49,369
|
12,229
|
61,598
|
N/A
|
N/A
|
|||||||||||||||
|
||||||||||||||||||||
Cash delinquencies as % of scheduled rent
|
1.4
|
%
|
2.0
|
%
|
1.5
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies as % of scheduled rent (1)
|
1.4
|
%
|
2.0
|
%
|
1.5
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies in 3Q 2022 (2) (3)
|
$
|
(5.2
|
)
|
$
|
(1.1
|
)
|
$
|
(6.3
|
)
|
$
|
0.2
|
$
|
(6.1
|
)
|
||||||
Reported delinquencies in 3Q 2021 (2)
|
$
|
(5.7
|
)
|
$
|
(0.6
|
)
|
$
|
(6.3
|
)
|
$
|
0.3
|
$
|
(6.0
|
)
|
||||||
|
||||||||||||||||||||
YoY impact to 3Q 2022 Core FFO per share
|
$
|
0.01
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||||||
YoY impact to Core FFO per share growth
|
0.2
|
%
|
-0.2
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||||||||
|
||||||||||||||||||||
Total cumulative cash delinquencies (4) (5)
|
$
|
(74.6
|
)
|
$
|
(10.9
|
)
|
$
|
(85.5
|
)
|
N/A
|
N/A
|
|||||||||
Net accounts receivable balance
|
$
|
3.4
|
$
|
-
|
$
|
3.4
|
N/A
|
N/A
|
(1) |
Represents total residential portfolio delinquencies as a percentage of scheduled rent reflected in the financial statements for the three
months ended September 30, 2022.
|
(2) |
Co-investment delinquencies reported at the Company’s pro rata share.
|
(3) |
Commercial delinquencies in 3Q 2022 includes a reduction of the straight-line rent reserve of $0.7 million and includes co-investment amounts
at the Company’s pro rata share.
|
(4) |
Represents cash delinquencies from the period of April 1, 2020 to September 30, 2022. This includes $3.4 million of the net accounts
receivable balance.
|
(5) |
The Company, including its co-investments, has received Emergency Rental Assistance payments of $9.0 million and $60.6 million for the three
months ended September 30, 2022 and the period from April 1, 2020 to September 30, 2022, respectively.
|
Operating Statistics
|
Same-Property Revenue Growth with Concessions on a GAAP basis
|
|||||||||||||||||||||||||
|
Preliminary Estimate
|
|
||||||||||||||||||||||||
Same-Property Portfolio
|
October 2022
|
3Q 2022
|
|
3Q 2022
|
3Q 2021
|
YTD 2022
|
YTD 2021
|
|||||||||||||||||||
Cash delinquencies as % of scheduled rent (1)
|
0.9%
|
|
1.4%
|
|
Reported rental revenue (cash basis concessions)
|
$
|
380.6
|
$
|
341.7
|
$
|
1,110.2
|
$
|
1,007.4
|
|||||||||||||
|
Straight-line rent impact to rental revenue
|
(1.4
|
)
|
(3.2
|
)
|
(6.8
|
)
|
(9.1
|
)
|
|||||||||||||||||
New lease rates (2)
|
2.8%
|
|
10.3%
|
|
GAAP rental revenue
|
$
|
379.2
|
$
|
338.5
|
$
|
1,103.4
|
$
|
998.3
|
|||||||||||||
Renewal rates (3)
|
8.1%
|
|
8.7%
|
|
|
|||||||||||||||||||||
Blended rates
|
4.7%
|
|
9.6%
|
|
% change - reported rental revenue
|
11.4
|
%
|
10.2
|
%
|
|||||||||||||||||
|
% change - GAAP rental revenue
|
12.0
|
%
|
10.5
|
%
|
|||||||||||||||||||||
Financial occupancy
|
96.0%
|
|
96.0%
|
|
|
(1)
|
The Company’s same-property portfolio has received Emergency Rental Assistance payments of $0.9 million and $7.3 million in October 2022 and for the three months ended September 30, 2022,
respectively.
|
(2)
|
Represents % change on a net-effective basis, including the impact of leasing incentives.
|
(3)
|
Represents % change in similar term lease tradeouts, including the impact of leasing incentives.
|
Three Months Ended
September 30,
2022
|
||||
Net income available to common stockholders
|
$
|
92,842
|
||
Adjustments:
|
||||
Net income attributable to noncontrolling interest
|
5,858
|
|||
Interest expense, net (1)
|
49,763
|
|||
Depreciation and amortization
|
135,511
|
|||
Income tax provision
|
75
|
|||
Gain on remeasurement of co-investment communities
|
(17,423
|
)
|
||
Co-investment EBITDAre adjustments
|
29,125
|
|||
EBITDAre
|
295,751
|
|||
Change in unrealized (losses) gains on marketable securities, net
|
17,115
|
|||
Provision for credit losses
|
(1
|
)
|
||
Equity (loss) income from non-core co-investments
|
1,563
|
|||
Deferred tax (expense) benefit on unconsolidated co-investments
|
1,755
|
|||
General and administrative and other, net
|
882
|
|||
Insurance reimbursements and legal settlements, net
|
(5,069
|
)
|
||
Expensed acquisition and investment related costs
|
230
|
|||
Loss on early retirement of debt from unconsolidated co-investments
|
1
|
|||
Loss on early retirement of debt, net
|
2
|
|||
Adjusted EBITDAre
|
$
|
312,229
|
(1)
|
Interest expense, net includes items such as gains on derivatives and the amortization of deferred
charges.
|
Three Months Ended
September 30,
2022
|
Nine Months Ended
September 30,
2022
|
|||||||
Interest expense
|
$
|
51,645
|
$
|
152,499
|
||||
Adjustments:
|
||||||||
Total return swap income
|
(1,882
|
)
|
(6,709
|
)
|
||||
Interest expense, net
|
$
|
49,763
|
$
|
145,790
|
October 24, 2022
|
||||
Unsecured credit facility - committed
|
$
|
1,235
|
||
Balance outstanding
|
320 | |||
Undrawn portion of line of credit
|
$
|
915 | ||
Cash, cash equivalents & marketable securities
|
172 | |||
Total liquidity
|
$
|
1,087 |
Total consolidated debt, net
|
$
|
6,167,001
|
||
Total debt from co-investments at pro rata share
|
1,329,153
|
|||
Adjustments:
|
||||
Consolidated unamortized premiums, discounts, and debt issuance costs
|
37,656
|
|||
Pro rata co-investments unamortized premiums, discounts, and debt issuance costs
|
6,957
|
|||
Consolidated cash and cash equivalents-unrestricted
|
(42,711
|
)
|
||
Pro rata co-investment cash and cash equivalents-unrestricted
|
(37,078
|
)
|
||
Marketable securities
|
(161,164
|
)
|
||
Net Indebtedness
|
$
|
7,299,814
|
||
Adjusted EBITDAre, annualized (1)
|
$
|
1,248,916
|
||
Other EBITDAre normalization adjustments, net, annualized (2)
|
4,469
|
|||
Adjusted EBITDAre, normalized and annualized
|
$
|
1,253,385
|
||
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized
|
5.8
|
(1)
|
Based on the amount for the most recent quarter, multiplied by four.
|
(2)
|
Adjustments made for properties in lease-up, acquired, or disposed during the most recent quarter and
other partial quarter activity, multiplied by four.
|
Three Months Ended
September 30,
2022
|
Three Months Ended
September 30,
2021
|
Nine Months Ended
September 30,
2022
|
Nine Months Ended
September 30,
2021
|
|||||||||||||
Earnings from operations
|
$
|
128,608
|
$
|
137,971
|
$
|
367,086
|
$
|
428,733
|
||||||||
Adjustments:
|
||||||||||||||||
Corporate-level property management expenses
|
10,184
|
9,060
|
30,532
|
27,135
|
||||||||||||
Depreciation and amortization
|
135,511
|
130,564
|
403,561
|
387,887
|
||||||||||||
Management and other fees from affiliates
|
(2,886
|
)
|
(2,237
|
)
|
(8,313
|
)
|
(6,707
|
)
|
||||||||
General and administrative
|
15,172
|
12,712
|
40,541
|
34,746
|
||||||||||||
Expensed acquisition and investment related costs
|
230
|
108
|
248
|
164
|
||||||||||||
Gain on sale of real estate and land
|
-
|
(42,897
|
)
|
-
|
(142,993
|
)
|
||||||||||
NOI
|
286,819
|
245,281
|
833,655
|
728,965
|
||||||||||||
Less: Non-same property NOI
|
(17,631
|
)
|
(11,942
|
)
|
(49,031
|
)
|
(35,293
|
)
|
||||||||
Same-Property NOI
|
$
|
269,188
|
$
|
233,339
|
$
|
784,624
|
$
|
693,672
|
Annualized
Q3’22 (1) |
||||
NOI
|
$
|
1,147,276
|
||
Adjustments:
|
||||
NOI from real estate assets sold or held for sale
|
-
|
|||
Other, net (2)
|
2,777
|
|||
Adjusted Total NOI
|
1,150,053
|
|||
Less: Encumbered NOI
|
(67,254
|
)
|
||
Unencumbered NOI
|
$
|
1,082,799
|
||
Encumbered NOI
|
$
|
67,254
|
||
Unencumbered NOI
|
1,082,799
|
|||
Adjusted Total NOI
|
$
|
1,150,053
|
||
Unencumbered NOI to Adjusted Total NOI
|
94
|
%
|
(1)
|
This table is based on the amounts for the most recent quarter, multiplied by four.
|
(2)
|
Includes intercompany eliminations pertaining to self-insurance and other expenses.
|
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