|
|
|
|
|
|
(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 twelve months ended December 31, 2022.
|
||
104
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
|
Date: February 7, 2023
|
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
|
Table of Contents
|
|
Earnings Press Release
|
Pages 1 - 10
|
Consolidated Operating Results
|
S-1 & S-2
|
Consolidated Funds from Operations
|
S-3
|
Consolidated Balance Sheets
|
S-4
|
Debt Summary
|
S-5
|
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios
|
S-6
|
Portfolio Summary by County
|
S-7
|
Operating Income by Quarter
|
S-8
|
Same-Property Operating Results by County, Quarter-to-Date
|
S-9
|
Same-Property Operating Results by County, Year-to-Date
|
S-9.1
|
Same-Property Operating Expenses, Quarter and Year-to-Date
|
S-10
|
Development Pipeline
|
S-11
|
Capital Expenditures
|
S-12
|
Co-Investments and Preferred Equity Investments
|
S-13
|
Assumptions for 2023 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 on a GAAP basis
|
S-16
|
2023 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions
|
S-17
|
Divergent Supply Trends in 2023 are Set to Benefit Essex's Relative Market Fundamentals
|
S-17.1
|
Reconciliations of Non-GAAP Financial Measure and Other Terms
|
S-18.1 – S-18.4
|
Three Months Ended
December 31,
|
%
|
Twelve Months Ended
December 31,
|
%
|
|||||||||||||||||
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|||||||||||||||
Per Diluted Share
|
||||||||||||||||||||
Net Income
|
$2.86
|
$2.10
|
36.2%
|
|
$6.27
|
$7.51
|
-16.5%
|
|||||||||||||
Total FFO
|
$3.77
|
$4.30
|
-12.3%
|
|
$13.70
|
$13.98
|
-2.0%
|
|||||||||||||
Core FFO
|
$3.77
|
$3.25
|
16.0%
|
|
$14.51
|
$12.49
|
16.2%
|
• |
Reported Net Income per diluted share for the fourth quarter of 2022 of $2.86, compared to $2.10 in the fourth quarter of 2021. For the full year, the Company reported Net Income per diluted
share of $6.27 compared to $7.51 in 2021.
|
• |
Grew Core FFO per diluted share by 16.0% compared to the fourth quarter of 2021 and 16.2% for full-year 2022, exceeding the high-end of the Company’s original guidance range.
|
• |
Achieved same-property revenue and net operating income (“NOI”) growth of 10.5% and 13.3%, respectively, compared to the fourth quarter of 2021. For the full year, same-property revenue and NOI
grew by 10.3% and 13.2%, respectively both exceeding the high-end of the Company’s original guidance range.
|
• |
For the full year, the Company acquired or increased its ownership interest in three apartment communities for a total contract price of $215.9 million and disposed of one apartment community
for a total contract price of $160.0 million.
|
• |
For the full year, the Company committed $127.0 million to nine structured finance investments at a weighted average return of 10.2% and received $243.1 million in redemption proceeds from
seven investments at a weighted average return of 10.4%.
|
• |
Repurchased 149,209 shares of common stock in the fourth quarter, totaling $31.8 million at an average price per share of $212.95. For the full year, the Company repurchased 740,053 shares of
its common stock, totaling $189.7 million at an average price per share of $256.37.
|
• |
As of February 6, 2023, the Company had approximately $1.3 billion in liquidity via undrawn capacity on its unsecured credit facilities, cash, and marketable securities.
|
Q4 2022 vs.
Q4 2021
|
Q4 2022 vs.
Q3 2022
|
% of Total
|
|||||
Revenue
Change
|
Revenue
Change
|
Q4 2022
Revenue
|
|||||
Southern California
|
|||||||
Los Angeles County
|
9.9%
|
1.1%
|
18.7%
|
||||
Orange County
|
10.5%
|
2.0%
|
10.9%
|
||||
San Diego County
|
14.2%
|
1.7%
|
8.8%
|
||||
Ventura County
|
8.7%
|
-0.9%
|
4.0%
|
||||
Total Southern California
|
10.8%
|
1.3%
|
42.4%
|
||||
Northern California
|
|||||||
Santa Clara County
|
10.8%
|
0.7%
|
18.6%
|
||||
Alameda County
|
5.3%
|
-0.7%
|
8.0%
|
||||
San Mateo County
|
11.5%
|
-2.2%
|
4.6%
|
||||
Contra Costa County
|
7.3%
|
-0.5%
|
5.5%
|
||||
San Francisco
|
8.5%
|
0.4%
|
2.7%
|
||||
Total Northern California
|
9.0%
|
-0.1%
|
39.4%
|
||||
Seattle Metro
|
12.9%
|
1.8%
|
18.2%
|
||||
Same-Property Portfolio
|
10.5%
|
0.8%
|
100.0%
|
Same-Property Revenue Components
|
Q4 2022
vs. Q4 2021
|
YTD 2022
vs. YTD 2021
|
Q4 2022
vs. Q3 2022
|
||||
Scheduled Rents
|
8.2%
|
7.2%
|
1.0%
|
||||
Delinquencies
|
0.7%
|
0.7%
|
0.3%
|
||||
Cash Concessions
|
1.0%
|
2.3%
|
-0.8%
|
||||
Vacancy (1)
|
-0.3%
|
-0.6%
|
0.0%
|
||||
Other Income
|
0.9%
|
0.7%
|
0.3%
|
||||
2022 Same-Property Revenue Growth
|
10.5%
|
|
10.3%
|
0.8%
|
(1) |
Higher vacancy in Q4 2022 and full-year 2022 is primarily attributable to above-average turnover related to delinquency.
|
Year-Over-Year Change
|
Year-Over-Year Change
|
|||||||||||||
Q4 2022 compared to Q4 2021
|
YTD 2022 compared to YTD 2021
|
|||||||||||||
Revenue
|
Operating
Expenses
|
NOI
|
Revenue
|
Operating
Expenses
|
NOI
|
|||||||||
Southern California
|
10.8%
|
4.9%
|
13.3%
|
11.3%
|
4.6%
|
14.3%
|
||||||||
Northern California
|
9.0%
|
4.4%
|
11.1%
|
8.4%
|
4.8%
|
10.1%
|
||||||||
Seattle Metro
|
12.9%
|
1.0%
|
18.5%
|
12.0%
|
-0.1%
|
17.9%
|
||||||||
Same-Property Portfolio
|
10.5%
|
4.0%
|
13.3%
|
10.3%
|
3.8%
|
13.2%
|
Sequential Change
|
|||||||
Q4 2022 compared to Q3 2022
|
|||||||
Revenue
|
Operating
Expenses
|
NOI
|
|||||
Southern California
|
1.3%
|
-0.8%
|
2.1%
|
||||
Northern California
|
-0.1%
|
-2.6%
|
0.9%
|
||||
Seattle Metro
|
1.8%
|
-0.3%
|
2.7%
|
||||
Same-Property Portfolio
|
0.8%
|
-1.5%
|
1.8%
|
Financial Occupancies
|
|||||||
Quarter Ended
|
|||||||
12/31/2022
|
9/30/2022
|
12/31/2021
|
|||||
Southern California
|
96.4%
|
96.2%
|
96.2%
|
||||
Northern California
|
95.8%
|
96.0%
|
96.1%
|
||||
Seattle Metro
|
95.8%
|
95.4%
|
95.7%
|
||||
Same-Property Portfolio
|
96.0%
|
96.0%
|
96.1%
|
Per Diluted Share
|
Range
|
Midpoint
|
||||
Net Income
|
$5.35 - $5.79
|
$5.57
|
||||
Total FFO
|
$14.53 - $14.97
|
$14.75
|
||||
Core FFO
|
$14.53 - $14.97
|
$14.75
|
||||
Q1 2023 Core FFO
|
$3.51 - $3.63
|
$3.57
|
||||
U.S. Economic Assumptions
|
||||||
GDP Growth
|
0.4%
|
|||||
Job Growth
|
-0.2%
|
|||||
ESS Markets Economic Assumptions
|
||||||
Job Growth
|
0.4%
|
|||||
Market Rent Growth
|
2.0%
|
|||||
Estimated Same-Property Portfolio Growth based on 50,064 Apartment Homes
|
Midpoint
Cash-Basis
|
Midpoint
GAAP-Basis
|
||||
Revenues |
3.25% to 4.75%
|
4.00%
|
4.40%
|
|||
Operating Expenses
|
4.50% to 5.50%
|
5.00%
|
5.00%
|
|||
Net Operating Income
|
2.30% to 4.90%
|
3.60%
|
4.10%
|
• |
Acquisition and disposition investment activities will be subject to market conditions and cost of capital, consistent with the Company’s historical practice of creating NAV and FFO per share.
|
• |
Structured finance redemptions are expected to be approximately $100 million, the proceeds of which will be reinvested back into structured finance investments or other new investments, subject
to market conditions and cost of capital.
|
• |
Total development spending in 2023 for one existing project under construction is expected to be approximately $15 million at the Company’s pro rata share. The Company does not currently plan
to start any new developments during 2023.
|
• |
Revenue generating capital expenditures are expected to be approximately $50 - $100 million at the Company’s pro rata share.
|
2023 Core FFO Per Diluted Share Guidance Midpoint versus 2022
|
Midpoint
|
|||
2022 Core FFO Per Diluted Share
|
$
|
14.51
|
||
NOI from Consolidated Communities
|
0.58
|
|||
Net Interest Expense (Consolidated)
|
(0.12
|
)
|
||
Interest and Other Income
|
(0.06
|
)
|
||
FFO from Co-Investments
|
(0.15
|
)
|
||
G&A and Other
|
(0.10
|
)
|
||
Impact from Weighted Average Shares Outstanding
|
0.09
|
|||
2023 Core FFO Per Diluted Share Guidance Midpoint
|
$
|
14.75
|
Full-Year
2023 vs. 2022
|
Q1 2023 vs.
Q4 2022
|
Commentary
|
|
Net Delinquency(1)
|
($0.18)
|
($0.12)
|
Anticipated to be worse in 2023 due to majority of government reimbursements processed in 2022 and uncertainty regarding timing of evictions in Los Angeles. Net delinquency is
forecasted to reduce same-property revenue growth by 70 basis points in 2023. The Company has cumulative uncollected cash delinquencies of $89.9M since the start of COVID which it continues to work to collect.
|
Total Interest Expense
(at Pro Rata)
|
($0.32)
|
($0.02)
|
Attributed to increases in short-term interest rates by the Federal Reserve and higher borrowing costs on refinancing. Essex has low variable rate exposure
with approximately 4% on a consolidated basis and approximately 8% including its pro rata share in co-investments.
|
Structured Finance
Income
|
($0.07)
|
($0.03)
|
Due to the timing of redemptions in the fourth quarter of 2022 as well as a preferred equity investment in Oakland for which the Company is no longer accruing income. The
remainder of the Company's structured finance portfolio continues to perform as expected.
|
Total Impact ($)
|
($0.57)
|
($0.17)(2)
|
|
Total Impact (%)
|
3.9%
|
4.5%
|
(1) |
For additional details regarding the Company’s net delinquency, please see page S-16 of the supplemental financial information.
|
(2) |
The remaining $0.03 of sequential decline compared to Q4 2022 is primarily attributable to increases in operating expenses.
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
|||||||||||||||
Funds from Operations attributable to common stockholders and unitholders
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Net income available to common stockholders
|
$
|
185,165
|
$
|
136,874
|
$
|
408,315
|
$
|
488,554
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation and amortization
|
135,758
|
132,179
|
539,319
|
520,066
|
||||||||||||
Gains not included in FFO
|
(94,416
|
)
|
-
|
(111,839
|
)
|
(145,253
|
)
|
|||||||||
Impairment loss from unconsolidated co-investments
|
2,105
|
-
|
2,105
|
-
|
||||||||||||
Depreciation and amortization from unconsolidated co-investments
|
18,053
|
16,467
|
72,585
|
61,059
|
||||||||||||
Noncontrolling interest related to Operating Partnership units
|
6,497
|
4,788
|
14,297
|
17,191
|
||||||||||||
Depreciation attributable to third party ownership and other
|
(357
|
)
|
(159
|
)
|
(1,421
|
)
|
(571
|
)
|
||||||||
Funds from Operations attributable to common stockholders and unitholders
|
$
|
252,805
|
$
|
290,149
|
$
|
923,361
|
$
|
941,046
|
||||||||
FFO per share – diluted
|
$
|
3.77
|
$
|
4.30
|
$
|
13.70
|
$
|
13.98
|
||||||||
Expensed acquisition and investment related costs
|
$
|
1,884
|
$
|
39
|
$
|
2,132
|
$
|
203
|
||||||||
Deferred tax (benefit) expense on unconsolidated co-investments (1)
|
(2,373
|
)
|
10,277
|
(10,236
|
)
|
15,668
|
||||||||||
Gain on sale of marketable securities
|
(6
|
)
|
(901
|
)
|
(12,436
|
)
|
(3,400
|
)
|
||||||||
Change in unrealized (gains) losses on marketable securities, net
|
(5,573
|
)
|
(9,332
|
)
|
57,983
|
(33,104
|
)
|
|||||||||
Provision for credit losses
|
(317
|
)
|
251
|
(381
|
)
|
141
|
||||||||||
Equity loss (income) from non-core co-investments (2)
|
6,928
|
(36,336
|
)
|
38,045
|
(55,602
|
)
|
||||||||||
Loss on early retirement of debt, net
|
-
|
28
|
2
|
19,010
|
||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
-
|
7
|
988
|
25
|
||||||||||||
Co-investment promote income
|
-
|
-
|
(17,076
|
)
|
-
|
|||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
(811
|
)
|
(209
|
)
|
(1,669
|
)
|
(8,469
|
)
|
||||||||
General and administrative and other, net
|
209
|
261
|
2,536
|
1,026
|
||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(315
|
)
|
(35,044
|
)
|
(5,392
|
)
|
(35,234
|
)
|
||||||||
Core Funds from Operations attributable to common stockholders and unitholders
|
$
|
252,431
|
$
|
219,190
|
$
|
977,857
|
$
|
841,310
|
||||||||
Core FFO per share – diluted
|
$
|
3.77
|
$
|
3.25
|
$
|
14.51
|
$
|
12.49
|
||||||||
Weighted average number of shares outstanding diluted (3)
|
67,003,718
|
67,480,346
|
67,374,526
|
67,335,261
|
(1) |
Represents deferred tax (benefit) expense 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
December 31,
|
Twelve Months Ended
December 31,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Earnings from operations
|
$
|
228,143
|
$
|
101,262
|
$
|
595,229
|
$
|
529,995
|
||||||||
Adjustments:
|
||||||||||||||||
Corporate-level property management
expenses
|
10,172
|
9,076
|
40,704
|
36,211
|
||||||||||||
Depreciation and amortization
|
135,758
|
132,179
|
539,319
|
520,066
|
||||||||||||
Management and other fees from affiliates
|
(2,826
|
)
|
(2,431
|
)
|
(11,139
|
)
|
(9,138
|
)
|
||||||||
General and administrative
|
16,036
|
17,092
|
56,577
|
51,838
|
||||||||||||
Expensed acquisition and investment related costs
|
1,884
|
39
|
2,132
|
203
|
||||||||||||
Gain on sale of real estate and land
|
(94,416
|
)
|
-
|
(94,416
|
)
|
(142,993
|
)
|
|||||||||
NOI
|
294,751
|
257,217
|
1,128,406
|
986,182
|
||||||||||||
Less: Non-same property NOI
|
(22,437
|
)
|
(16,854
|
)
|
(76,027
|
)
|
(56,267
|
)
|
||||||||
Same-Property NOI
|
$
|
272,314
|
$
|
240,363
|
$
|
1,052,379
|
$
|
929,915
|
Consolidated Operating Results
(Dollars in thousands, except share and per share amounts)
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Revenues:
|
||||||||||||||||
Rental and other property
|
$
|
412,357
|
$
|
369,165
|
$
|
1,595,675
|
$
|
1,431,418
|
||||||||
Management and other fees from affiliates
|
2,826
|
2,431
|
11,139
|
9,138
|
||||||||||||
415,183
|
371,596
|
1,606,814
|
1,440,556
|
|||||||||||||
Expenses:
|
||||||||||||||||
Property operating
|
117,606
|
111,948
|
467,269
|
445,236
|
||||||||||||
Corporate-level property management expenses
|
10,172
|
9,076
|
40,704
|
36,211
|
||||||||||||
Depreciation and amortization
|
135,758
|
132,179
|
539,319
|
520,066
|
||||||||||||
General and administrative
|
16,036
|
17,092
|
56,577
|
51,838
|
||||||||||||
Expensed acquisition and investment related costs
|
1,884
|
39
|
2,132
|
203
|
||||||||||||
281,456
|
270,334
|
1,106,001
|
1,053,554
|
|||||||||||||
Gain on sale of real estate and land
|
94,416
|
-
|
94,416
|
142,993
|
||||||||||||
Earnings from operations
|
228,143
|
101,262
|
595,229
|
529,995
|
||||||||||||
Interest expense, net (1)
|
(51,101
|
)
|
(47,849
|
)
|
(196,891
|
)
|
(192,351
|
)
|
||||||||
Interest and other income (loss)
|
12,531
|
49,988
|
(19,040
|
)
|
98,744
|
|||||||||||
Equity income from co-investments
|
2,274
|
51,029
|
26,030
|
111,721
|
||||||||||||
Deferred tax benefit (expense) on unconsolidated co-investments
|
2,373
|
(10,277
|
)
|
10,236
|
(15,668
|
)
|
||||||||||
Loss on early retirement of debt, net
|
-
|
(28
|
)
|
(2
|
)
|
(19,010
|
)
|
|||||||||
Gain on remeasurement of co-investment
|
-
|
-
|
17,423
|
2,260
|
||||||||||||
Net income
|
194,220
|
144,125
|
432,985
|
515,691
|
||||||||||||
Net income attributable to noncontrolling interest
|
(9,055
|
)
|
(7,251
|
)
|
(24,670
|
)
|
(27,137
|
)
|
||||||||
Net income available to common stockholders
|
$
|
185,165
|
$
|
136,874
|
$
|
408,315
|
$
|
488,554
|
||||||||
Net income per share - basic
|
$
|
2.86
|
$
|
2.10
|
$
|
6.27
|
$
|
7.51
|
||||||||
Shares used in income per share - basic
|
64,727,333
|
65,164,191
|
65,079,764
|
65,051,465
|
||||||||||||
Net income per share - diluted
|
$
|
2.86
|
$
|
2.10
|
$
|
6.27
|
$
|
7.51
|
||||||||
Shares used in income per share - diluted
|
64,731,222
|
65,331,744
|
65,098,186
|
65,088,874
|
(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
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Rental and other property
|
||||||||||||||||
Rental income
|
$
|
406,698
|
$
|
363,979
|
$
|
1,573,368
|
$
|
1,410,197
|
||||||||
Other property
|
5,659
|
5,186
|
22,307
|
21,221
|
||||||||||||
Rental and other property
|
$
|
412,357
|
$
|
369,165
|
$
|
1,595,675
|
$
|
1,431,418
|
||||||||
Property operating expenses
|
||||||||||||||||
Real estate taxes
|
$
|
46,324
|
$
|
44,959
|
$
|
183,918
|
$
|
180,367
|
||||||||
Administrative
|
21,931
|
21,541
|
89,234
|
87,253
|
||||||||||||
Maintenance and repairs
|
24,912
|
23,836
|
98,650
|
91,298
|
||||||||||||
Utilities
|
24,439
|
21,612
|
95,467
|
86,318
|
||||||||||||
Property operating expenses
|
$
|
117,606
|
$
|
111,948
|
$
|
467,269
|
$
|
445,236
|
||||||||
Interest and other income (loss)
|
||||||||||||||||
Marketable securities and other income
|
$
|
5,488
|
$
|
5,627
|
$
|
20,119
|
$
|
23,065
|
||||||||
Gain on sale of marketable securities
|
6
|
901
|
12,436
|
3,400
|
||||||||||||
Income from early redemption of notes receivable
|
811
|
192
|
811
|
4,939
|
||||||||||||
Provision for credit losses
|
317
|
(251
|
)
|
381
|
(141
|
)
|
||||||||||
Change in unrealized gains (losses) on marketable securities, net
|
5,573
|
9,332
|
(57,983
|
)
|
33,104
|
|||||||||||
Insurance reimbursements, legal settlements, and other, net
|
336
|
34,187
|
5,196
|
34,377
|
||||||||||||
Interest and other income (loss)
|
$
|
12,531
|
$
|
49,988
|
$
|
(19,040
|
)
|
$
|
98,744
|
|||||||
Equity income from co-investments
|
||||||||||||||||
Equity loss from co-investments
|
$
|
(1,930
|
)
|
$
|
(1,343
|
)
|
$
|
(4,908
|
)
|
$
|
(4,832
|
)
|
||||
Income from preferred equity investments
|
13,258
|
15,169
|
53,946
|
56,589
|
||||||||||||
Equity (loss) income from non-core co-investments
|
(6,928
|
)
|
36,336
|
(38,045
|
)
|
55,602
|
||||||||||
Non-core (loss) gain from unconsolidated co-investments
|
(21
|
)
|
-
|
196
|
-
|
|||||||||||
Impairment loss from unconsolidated co-investment
|
(2,105
|
)
|
-
|
(2,105
|
)
|
-
|
||||||||||
Legal settlement from unconsolidated co-investment
|
-
|
857
|
-
|
857
|
||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
-
|
(7
|
)
|
(988
|
)
|
(25
|
)
|
|||||||||
Co-investment promote income
|
-
|
-
|
17,076
|
-
|
||||||||||||
Income from early redemption of preferred equity investments
|
-
|
17
|
858
|
3,530
|
||||||||||||
Equity income from co-investments
|
$
|
2,274
|
$
|
51,029
|
$
|
26,030
|
$
|
111,721
|
||||||||
Noncontrolling interest
|
||||||||||||||||
Limited partners of Essex Portfolio, L.P.
|
$
|
6,497
|
$
|
4,788
|
$
|
14,297
|
$
|
17,191
|
||||||||
DownREIT limited partners' distributions
|
2,065
|
2,046
|
8,427
|
8,301
|
||||||||||||
Third-party ownership interest
|
493
|
417
|
1,946
|
1,645
|
||||||||||||
Noncontrolling interest
|
$
|
9,055
|
$
|
7,251
|
$
|
24,670
|
$
|
27,137
|
Consolidated Funds From Operations (1)
(Dollars in thousands, except share and per share amounts and in footnotes)
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||||||||
2022
|
2021
|
% Change
|
2022
|
2021
|
% Change
|
|||||||||||||||||||
Funds from operations attributable to common stockholders and unitholders (FFO)
|
||||||||||||||||||||||||
Net income available to common stockholders
|
$
|
185,165
|
$
|
136,874
|
$
|
408,315
|
$
|
488,554
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||
Depreciation and amortization
|
135,758
|
132,179
|
539,319
|
520,066
|
||||||||||||||||||||
Gains not included in FFO
|
(94,416
|
)
|
-
|
(111,839
|
)
|
(145,253
|
)
|
|||||||||||||||||
Impairment loss from unconsolidated co-investments
|
2,105
|
-
|
2,105
|
-
|
||||||||||||||||||||
Depreciation and amortization from unconsolidated co-investments
|
18,053
|
16,467
|
72,585
|
61,059
|
||||||||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
6,497
|
4,788
|
14,297
|
17,191
|
||||||||||||||||||||
Depreciation attributable to third party ownership and other (2)
|
(357
|
)
|
(159
|
)
|
(1,421
|
)
|
(571
|
)
|
||||||||||||||||
Funds from operations attributable to common stockholders and unitholders
|
$
|
252,805
|
$
|
290,149
|
$
|
923,361
|
$
|
941,046
|
||||||||||||||||
FFO per share-diluted
|
$
|
3.77
|
$
|
4.30
|
-12.3%
|
|
$
|
13.70
|
$
|
13.98
|
-2.0%
|
|
||||||||||||
Components of the change in FFO
|
||||||||||||||||||||||||
Non-core items:
|
||||||||||||||||||||||||
Expensed acquisition and investment related costs
|
$
|
1,884
|
$
|
39
|
$
|
2,132
|
$
|
203
|
||||||||||||||||
Deferred tax (benefit) expense on unconsolidated co-investments (3)
|
(2,373
|
)
|
10,277
|
(10,236
|
)
|
15,668
|
||||||||||||||||||
Gain on sale of marketable securities
|
(6
|
)
|
(901
|
)
|
(12,436
|
)
|
(3,400
|
)
|
||||||||||||||||
Change in unrealized (gains) losses on marketable securities, net
|
(5,573
|
)
|
(9,332
|
)
|
57,983
|
(33,104
|
)
|
|||||||||||||||||
Provision for credit losses
|
(317
|
)
|
251
|
(381
|
)
|
141
|
||||||||||||||||||
Equity loss (income) from non-core co-investments (4)
|
6,928
|
(36,336
|
)
|
38,045
|
(55,602
|
)
|
||||||||||||||||||
Loss on early retirement of debt, net
|
-
|
28
|
2
|
19,010
|
||||||||||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
-
|
7
|
988
|
25
|
||||||||||||||||||||
Co-investment promote income
|
-
|
-
|
(17,076
|
)
|
-
|
|||||||||||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
(811
|
)
|
(209
|
)
|
(1,669
|
)
|
(8,469
|
)
|
||||||||||||||||
General and administrative and other, net
|
209
|
261
|
2,536
|
1,026
|
||||||||||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(315
|
)
|
(35,044
|
)
|
(5,392
|
)
|
(35,234
|
)
|
||||||||||||||||
Core funds from operations attributable to common stockholders and unitholders
|
$
|
252,431
|
$
|
219,190
|
$
|
977,857
|
$
|
841,310
|
||||||||||||||||
Core FFO per share-diluted
|
$
|
3.77
|
$
|
3.25
|
16.0%
|
|
$
|
14.51
|
$
|
12.49
|
16.2%
|
|
||||||||||||
Weighted average number of shares outstanding diluted (5)
|
67,003,718
|
67,480,346
|
67,374,526
|
67,335,261
|
(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 twelve months ended December 31, 2022 was $0.8 million and $3.3 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.
|
Consolidated Balance Sheets
(Dollars in thousands)
|
||||||||
December 31, 2022
|
December 31, 2021
|
|||||||
Real Estate:
|
||||||||
Land and land improvements
|
$
|
3,043,321
|
$
|
3,032,678
|
||||
Buildings and improvements
|
12,922,906
|
12,597,249
|
||||||
15,966,227
|
15,629,927
|
|||||||
Less: accumulated depreciation
|
(5,152,133
|
)
|
(4,646,854
|
)
|
||||
10,814,094
|
10,983,073
|
|||||||
Real estate under development
|
24,857
|
111,562
|
||||||
Co-investments
|
1,127,491
|
1,177,802
|
||||||
11,966,442
|
12,272,437
|
|||||||
Cash and cash equivalents, including restricted cash
|
42,681
|
58,638
|
||||||
Marketable securities
|
112,743
|
191,829
|
||||||
Notes and other receivables
|
103,045
|
341,033
|
||||||
Operating lease right-of-use assets
|
67,239
|
68,972
|
||||||
Prepaid expenses and other assets
|
80,755
|
64,964
|
||||||
Total assets
|
$
|
12,372,905
|
$
|
12,997,873
|
||||
Unsecured debt, net
|
$
|
5,312,168
|
$
|
5,307,196
|
||||
Mortgage notes payable, net
|
593,943
|
638,957
|
||||||
Lines of credit
|
52,073
|
341,257
|
||||||
Distributions in excess of investments in co-investments
|
42,532
|
35,545
|
||||||
Operating lease liabilities
|
68,696
|
70,675
|
||||||
Other liabilities
|
381,227
|
393,069
|
||||||
Total liabilities
|
6,450,639
|
6,786,699
|
||||||
Redeemable noncontrolling interest
|
27,150
|
34,666
|
||||||
Equity:
|
||||||||
Common stock
|
6
|
7
|
||||||
Additional paid-in capital
|
6,750,076
|
6,915,981
|
||||||
Distributions in excess of accumulated earnings
|
(1,080,176
|
)
|
(916,833
|
)
|
||||
Accumulated other comprehensive income (loss), net
|
46,466
|
(5,552
|
)
|
|||||
Total stockholders' equity
|
5,716,372
|
5,993,603
|
||||||
Noncontrolling interest
|
178,744
|
182,905
|
||||||
Total equity
|
5,895,116
|
6,176,508
|
||||||
Total liabilities and equity
|
$
|
12,372,905
|
$
|
12,997,873
|
Debt Summary - December 31, 2022
(Dollars in thousands, except in footnotes)
|
||||||||||||||||||||||||||||||||||||
Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
|
||||||||||||||||||||||||||||||||||||
Weighted Average
|
Weighted
Average
Interest Rate
|
Percentage
of Total Debt
|
||||||||||||||||||||||||||||||||||
Balance
Outstanding
|
Interest
Rate
|
Maturity
in Years
|
Unsecured
|
Secured
|
Total
|
|||||||||||||||||||||||||||||||
Unsecured Debt, net
|
||||||||||||||||||||||||||||||||||||
Bonds public - fixed rate
|
$
|
5,350,000
|
3.3
|
%
|
7.7
|
2023 (4)
|
|
$
|
300,000
|
$
|
2,945
|
$
|
302,945
|
3.4
|
%
|
5.1
|
%
|
|||||||||||||||||||
Unamortized net discounts and debt issuance costs
|
(37,832
|
)
|
-
|
-
|
2024
|
400,000
|
3,109
|
403,109
|
4.0
|
%
|
6.8
|
%
|
||||||||||||||||||||||||
Total unsecured debt, net
|
5,312,168
|
3.3
|
%
|
7.7
|
2025
|
500,000
|
133,054
|
633,054
|
3.5
|
%
|
10.7
|
%
|
||||||||||||||||||||||||
2026
|
450,000
|
99,405
|
549,405
|
3.5
|
%
|
9.2
|
%
|
|||||||||||||||||||||||||||||
Mortgage Notes Payable, net
|
2027
|
350,000
|
153,955
|
503,955
|
3.7
|
%
|
8.5
|
%
|
||||||||||||||||||||||||||||
Fixed rate - secured
|
371,154
|
3.6
|
%
|
3.7
|
2028
|
450,000
|
68,332
|
518,332
|
2.2
|
%
|
8.7
|
%
|
||||||||||||||||||||||||
Variable rate - secured (1)
|
223,583
|
3.5
|
%
|
15.2
|
2029
|
500,000
|
1,456
|
501,456
|
4.1
|
%
|
8.4
|
%
|
||||||||||||||||||||||||
Unamortized premiums and debt issuance costs, net
|
(794
|
)
|
-
|
-
|
2030
|
550,000
|
1,592
|
551,592
|
3.1
|
%
|
9.3
|
%
|
||||||||||||||||||||||||
Total mortgage notes payable, net
|
593,943
|
3.5
|
%
|
8.0
|
2031
|
600,000
|
1,740
|
601,740
|
2.3
|
%
|
10.1
|
%
|
||||||||||||||||||||||||
2032
|
650,000
|
1,903
|
651,903
|
2.6
|
%
|
11.0
|
%
|
|||||||||||||||||||||||||||||
Unsecured Lines of Credit
|
2033
|
-
|
32,126
|
32,126
|
3.5
|
%
|
0.5
|
%
|
||||||||||||||||||||||||||||
Line of credit (2)
|
40,000
|
4.4
|
%
|
N/A
|
Thereafter
|
600,000
|
95,120
|
695,120
|
3.6
|
%
|
11.7
|
%
|
||||||||||||||||||||||||
Line of credit (3)
|
12,073
|
4.4
|
%
|
N/A
|
Subtotal
|
5,350,000
|
594,737
|
5,944,737
|
3.3
|
%
|
100.0
|
%
|
||||||||||||||||||||||||
Total lines of credit
|
52,073
|
4.4
|
%
|
N/A
|
Debt Issuance Costs
|
(29,914
|
)
|
(2,020
|
)
|
(31,934
|
)
|
NA
|
NA
|
|||||||||||||||||||||||
(Discounts)/Premiums
|
(7,918
|
)
|
1,226
|
(6,692
|
)
|
NA
|
NA
|
|||||||||||||||||||||||||||||
Total debt, net
|
$
|
5,958,184
|
3.3
|
%
|
7.7
|
Total
|
$
|
5,312,168
|
$
|
593,943
|
$
|
5,906,111
|
3.3
|
%
|
100.0
|
%
|
||||||||||||||||||||
(1)
|
$223.6 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.
|
(4) |
In October 2022, the Company obtained a new $300.0 million unsecured term loan priced at Adjusted SOFR plus 0.85%. The loan has been swapped to an all-in fixed rate of 4.2% and matures in October 2024 with three 12-month extension
options, exercisable at the Company’s option. The loan includes a 6-month delayed draw feature with the proceeds expected to be drawn in April 2023 to repay the Company’s $300.0 million unsecured notes due in May 2023. As a result,
the Company currently anticipates no refinancing needs until 2024.
|
Capitalization Data
|
Public Bond Covenants (1)
|
Actual
|
Requirement
|
|||||||||
Total debt, net
|
$
|
5,958,184
|
||||||||||
Debt to Total Assets:
|
34%
|
|
< 65%
|
|||||||||
Common stock and potentially dilutive securities
|
||||||||||||
Common stock outstanding
|
64,605
|
|||||||||||
Limited partnership units (1)
|
2,272
|
|||||||||||
Options-treasury method
|
4 |
Secured Debt to Total Assets:
|
3%
|
|
< 40%
|
|||||||
Total shares of common stock and potentially dilutive securities
|
66,881
|
|||||||||||
Common stock price per share as of December 31, 2022
|
$
|
211.92
|
||||||||||
Interest Coverage:
|
579%
|
|
> 150%
|
|||||||||
Total equity capitalization
|
$
|
14,173,422
|
||||||||||
Total market capitalization
|
$
|
20,131,606
|
Unsecured Debt Ratio (2):
|
287%
|
|
> 150%
|
||||||
Ratio of debt to total market capitalization
|
29.6
|
%
|
||||||||||
Selected Credit Ratios (3)
|
Actual
|
|
||||||||||
Credit Ratings
|
||||||||||||
Rating Agency
|
Rating
|
Outlook
|
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized:
|
5.6
|
|
|||||||
Moody’s
|
Baa1
|
Stable
|
||||||||||
Standard & Poor’s
|
BBB+
|
Stable
|
Unencumbered NOI to Adjusted Total NOI:
|
95%
|
|
|
||||||
(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
|
$
|
2,634
|
$
|
2,531
|
$
|
2,626
|
18.0
|
%
|
13.9
|
%
|
17.6
|
%
|
||||||||||||||||||||||||
Orange County
|
5,189
|
1,149
|
-
|
6,338
|
2,619
|
2,330
|
2,590
|
10.6
|
%
|
10.7
|
%
|
10.6
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,824
|
795
|
264
|
5,883
|
2,439
|
2,405
|
2,436
|
9.1
|
%
|
7.5
|
%
|
9.0
|
%
|
|||||||||||||||||||||||||||
Ventura County and Other
|
2,600
|
693
|
-
|
3,293
|
2,247
|
2,604
|
2,292
|
4.7
|
%
|
7.5
|
%
|
5.0
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
22,151
|
4,223
|
264
|
26,638
|
2,543
|
2,467
|
2,536
|
42.4
|
%
|
39.6
|
%
|
42.2
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||
Santa Clara County (6)
|
8,749
|
1,774
|
-
|
10,523
|
2,909
|
2,877
|
2,906
|
19.6
|
%
|
17.8
|
%
|
19.5
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
3,959
|
1,512
|
-
|
5,471
|
2,597
|
2,574
|
2,593
|
7.4
|
%
|
14.8
|
%
|
8.0
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
2,561
|
195
|
-
|
2,756
|
3,024
|
3,673
|
3,048
|
5.2
|
%
|
2.1
|
%
|
5.0
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
-
|
-
|
2,619
|
2,639
|
-
|
2,639
|
5.3
|
%
|
0.0
|
%
|
4.8
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,342
|
537
|
-
|
1,879
|
2,885
|
3,327
|
2,959
|
2.5
|
%
|
5.9
|
%
|
2.8
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
19,230
|
4,018
|
-
|
23,248
|
2,822
|
2,859
|
2,825
|
40.0
|
%
|
40.6
|
%
|
40.1
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,341
|
2,184
|
-
|
12,525
|
2,164
|
2,085
|
2,156
|
17.6
|
%
|
19.8
|
%
|
17.7
|
%
|
|||||||||||||||||||||||||||
Total
|
51,722
|
10,425
|
264
|
62,411
|
$
|
2,571
|
$
|
2,535
|
$
|
2,567
|
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 December 31, 2022, divided by the number of apartment homes as of December 31, 2022.
|
(2) |
Represents the percentage of actual NOI for the quarter ended December 31, 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
|
Q4 '22
|
Q3 '22
|
Q2 '22
|
Q1 '22
|
Q4 '21
|
|||||||||||||||||||
Rental and other property revenues:
|
||||||||||||||||||||||||
Same-property
|
49,119
|
$
|
381,383
|
$
|
378,299
|
$
|
371,140
|
$
|
354,154
|
$
|
345,271
|
|||||||||||||
Acquisitions (2)
|
479
|
2,723
|
2,570
|
1,753
|
1,747
|
916
|
||||||||||||||||||
Development (3)
|
1,275
|
11,201
|
11,327
|
11,184
|
9,427
|
8,785
|
||||||||||||||||||
Redevelopment
|
164
|
1,418
|
1,422
|
1,491
|
1,435
|
1,498
|
||||||||||||||||||
Non-residential/other, net (4)
|
685
|
13,468
|
14,676
|
14,939
|
15,037
|
14,156
|
||||||||||||||||||
Straight-line rent concessions (5)
|
-
|
2,164
|
(1,432
|
)
|
(3,267
|
)
|
(2,584
|
)
|
(1,461
|
)
|
||||||||||||||
Total rental and other property revenues
|
51,722
|
412,357
|
406,862
|
397,240
|
379,216
|
369,165
|
||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||
Same-property
|
109,069
|
110,688
|
104,998
|
107,842
|
104,908
|
|||||||||||||||||||
Acquisitions (2)
|
1,111
|
877
|
540
|
556
|
324
|
|||||||||||||||||||
Development (3)
|
4,285
|
4,550
|
4,313
|
3,922
|
3,571
|
|||||||||||||||||||
Redevelopment
|
654
|
662
|
600
|
687
|
590
|
|||||||||||||||||||
Non-residential/other, net (4) (6)
|
2,487
|
3,266
|
3,069
|
3,093
|
2,555
|
|||||||||||||||||||
Total property operating expenses
|
117,606
|
120,043
|
113,520
|
116,100
|
111,948
|
|||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||
Same-property
|
272,314
|
267,611
|
266,142
|
246,312
|
240,363
|
|||||||||||||||||||
Acquisitions (2)
|
1,612
|
1,693
|
1,213
|
1,191
|
592
|
|||||||||||||||||||
Development (3)
|
6,916
|
6,777
|
6,871
|
5,505
|
5,214
|
|||||||||||||||||||
Redevelopment
|
764
|
760
|
891
|
748
|
908
|
|||||||||||||||||||
Non-residential/other, net (4)
|
10,981
|
11,410
|
11,870
|
11,944
|
11,601
|
|||||||||||||||||||
Straight-line rent concessions (5)
|
2,164
|
(1,432
|
)
|
(3,267
|
)
|
(2,584
|
)
|
(1,461
|
)
|
|||||||||||||||
Total NOI
|
$
|
294,751
|
$
|
286,819
|
$
|
283,720
|
$
|
263,116
|
$
|
257,217
|
||||||||||||||
Same-property metrics
|
||||||||||||||||||||||||
Operating margin
|
71
|
%
|
71
|
%
|
72
|
%
|
70
|
%
|
70
|
%
|
||||||||||||||
Annualized turnover (7)
|
42
|
%
|
49
|
%
|
41
|
%
|
34
|
%
|
37
|
%
|
||||||||||||||
Financial occupancy (8)
|
96.0
|
%
|
96.0
|
%
|
96.1
|
%
|
96.3
|
%
|
96.1
|
%
|
(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
|
Q4 '22 % of
Actual NOI
|
Q4 '22
|
Q4 '21
|
% Change
|
Q4 '22
|
Q4 '21
|
% Change
|
Q4 '22
|
Q4 '21
|
% Change
|
Q3 '22
|
% Change
|
|||||||||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,982
|
18.1
|
%
|
$
|
2,647
|
$
|
2,472
|
7.1
|
%
|
96.4
|
%
|
95.8
|
%
|
0.6
|
%
|
$
|
71,362
|
$
|
64,923
|
9.9
|
%
|
$
|
70,583
|
1.1
|
%
|
|||||||||||||||||||||||||||
Orange County
|
5,189
|
11.2
|
%
|
2,619
|
2,377
|
10.2
|
%
|
96.5
|
%
|
96.4
|
%
|
0.1
|
%
|
41,056
|
37,163
|
10.5
|
%
|
40,253
|
2.0
|
%
|
||||||||||||||||||||||||||||||||
San Diego County
|
4,582
|
9.1
|
%
|
2,434
|
2,153
|
13.1
|
%
|
96.4
|
%
|
96.7
|
%
|
-0.3
|
%
|
33,513
|
29,358
|
14.2
|
%
|
32,941
|
1.7
|
%
|
||||||||||||||||||||||||||||||||
Ventura County
|
2,253
|
4.3
|
%
|
2,223
|
2,016
|
10.3
|
%
|
96.1
|
%
|
97.1
|
%
|
-1.0
|
%
|
15,304
|
14,084
|
8.7
|
%
|
15,439
|
-0.9
|
%
|
||||||||||||||||||||||||||||||||
Total Southern California
|
21,006
|
42.7
|
%
|
2,548
|
2,330
|
9.4
|
%
|
96.4
|
%
|
96.2
|
%
|
0.2
|
%
|
161,235
|
145,528
|
10.8
|
%
|
159,216
|
1.3
|
%
|
||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
8,177
|
19.2
|
%
|
2,880
|
2,693
|
6.9
|
%
|
95.8
|
%
|
96.3
|
%
|
-0.5
|
%
|
71,126
|
64,214
|
10.8
|
%
|
70,616
|
0.7
|
%
|
||||||||||||||||||||||||||||||||
Alameda County
|
3,959
|
7.8
|
%
|
2,597
|
2,481
|
4.7
|
%
|
95.9
|
%
|
96.0
|
%
|
-0.1
|
%
|
30,496
|
28,971
|
5.3
|
%
|
30,713
|
-0.7
|
%
|
||||||||||||||||||||||||||||||||
San Mateo County
|
1,962
|
4.3
|
%
|
2,966
|
2,819
|
5.2
|
%
|
95.0
|
%
|
95.6
|
%
|
-0.6
|
%
|
17,684
|
15,860
|
11.5
|
%
|
18,088
|
-2.2
|
%
|
||||||||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
5.5
|
%
|
2,639
|
2,499
|
5.6
|
%
|
96.2
|
%
|
96.3
|
%
|
-0.1
|
%
|
21,096
|
19,668
|
7.3
|
%
|
21,210
|
-0.5
|
%
|
||||||||||||||||||||||||||||||||
San Francisco
|
1,178
|
2.3
|
%
|
2,809
|
2,697
|
4.2
|
%
|
95.2
|
%
|
95.4
|
%
|
-0.2
|
%
|
10,186
|
9,391
|
8.5
|
%
|
10,141
|
0.4
|
%
|
||||||||||||||||||||||||||||||||
Total Northern California
|
17,895
|
39.1
|
%
|
2,787
|
2,632
|
5.9
|
%
|
95.8
|
%
|
96.1
|
%
|
-0.3
|
%
|
150,588
|
138,104
|
9.0
|
%
|
150,768
|
-0.1
|
%
|
||||||||||||||||||||||||||||||||
Seattle Metro
|
10,218
|
18.2
|
%
|
2,168
|
1,968
|
10.2
|
%
|
95.8
|
%
|
95.7
|
%
|
0.1
|
%
|
69,560
|
61,639
|
12.9
|
%
|
68,315
|
1.8
|
%
|
||||||||||||||||||||||||||||||||
Total Same-Property
|
49,119
|
100.0
|
%
|
$
|
2,556
|
$
|
2,365
|
8.1
|
%
|
96.0
|
%
|
96.1
|
%
|
-0.1
|
%
|
$
|
381,383
|
$
|
345,271
|
10.5
|
%
|
$
|
378,299
|
0.8
|
%
|
|||||||||||||||||||||||||||
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
|
%
|
$
|
2,581
|
$
|
2,434
|
6.0
|
%
|
96.2
|
%
|
96.1
|
%
|
0.1
|
%
|
$
|
279,271
|
$
|
248,392
|
12.4
|
%
|
|||||||||||||||||||||||
Orange County
|
5,189
|
10.8
|
%
|
2,532
|
2,290
|
10.6
|
%
|
96.1
|
%
|
97.1
|
%
|
-1.0
|
%
|
156,870
|
142,399
|
10.2
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,582
|
9.0
|
%
|
2,332
|
2,071
|
12.6
|
%
|
96.4
|
%
|
97.3
|
%
|
-0.9
|
%
|
129,234
|
115,746
|
11.7
|
%
|
|||||||||||||||||||||||||||
Ventura County
|
2,253
|
4.4
|
%
|
2,144
|
1,957
|
9.6
|
%
|
96.1
|
%
|
97.8
|
%
|
-1.7
|
%
|
59,532
|
54,789
|
8.7
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
21,006
|
42.5
|
%
|
2,468
|
2,268
|
8.8
|
%
|
96.2
|
%
|
96.7
|
%
|
-0.5
|
%
|
624,907
|
561,326
|
11.3
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
8,177
|
19.2
|
%
|
2,807
|
2,677
|
4.9
|
%
|
96.4
|
%
|
96.5
|
%
|
-0.1
|
%
|
277,484
|
252,555
|
9.9
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
3,959
|
7.9
|
%
|
2,555
|
2,458
|
3.9
|
%
|
96.0
|
%
|
96.2
|
%
|
-0.2
|
%
|
120,812
|
113,578
|
6.4
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
1,962
|
4.5
|
%
|
2,922
|
2,818
|
3.7
|
%
|
95.8
|
%
|
95.2
|
%
|
0.6
|
%
|
69,950
|
63,620
|
9.9
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
5.5
|
%
|
2,589
|
2,471
|
4.8
|
%
|
96.1
|
%
|
96.6
|
%
|
-0.5
|
%
|
82,943
|
78,172
|
6.1
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,178
|
2.4
|
%
|
2,760
|
2,680
|
3.0
|
%
|
95.9
|
%
|
95.8
|
%
|
0.1
|
%
|
40,367
|
37,610
|
7.3
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
17,895
|
39.5
|
%
|
2,729
|
2,614
|
4.4
|
%
|
96.1
|
%
|
96.2
|
%
|
-0.1
|
%
|
591,556
|
545,535
|
8.4
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,218
|
18.0
|
%
|
2,100
|
1,914
|
9.7
|
%
|
95.8
|
%
|
96.2
|
%
|
-0.4
|
%
|
268,512
|
239,819
|
12.0
|
%
|
|||||||||||||||||||||||||||
Total Same-Property
|
49,119
|
100.0
|
%
|
$
|
2,486
|
$
|
2,320
|
7.2
|
%
|
96.1
|
%
|
96.4
|
%
|
-0.3
|
%
|
$
|
1,484,975
|
$
|
1,346,680
|
10.3
|
%
|
|||||||||||||||||||||||
Based on 49,119 apartment homes
|
||||||||||||||||||||||||||||||||
Q4 '22
|
Q4 '21
|
% Change
|
% of Op. Ex.
|
YTD 2022
|
YTD 2021
|
% Change
|
% of Op. Ex.
|
|||||||||||||||||||||||||
Same-property operating expenses:
|
||||||||||||||||||||||||||||||||
Real estate taxes
|
$
|
41,373
|
$
|
40,978
|
1.0
|
%
|
37.9
|
%
|
$
|
163,967
|
$
|
163,671
|
0.2
|
%
|
37.9
|
%
|
||||||||||||||||
Maintenance and repairs (1)
|
23,228
|
22,480
|
3.3
|
%
|
21.3
|
%
|
92,154
|
85,995
|
7.2
|
%
|
21.3
|
%
|
||||||||||||||||||||
Administrative
|
15,936
|
16,137
|
-1.2
|
%
|
14.6
|
%
|
66,131
|
65,641
|
0.7
|
%
|
15.3
|
%
|
||||||||||||||||||||
Utilities
|
22,826
|
20,104
|
13.5
|
%
|
21.0
|
%
|
88,681
|
80,651
|
10.0
|
%
|
20.5
|
%
|
||||||||||||||||||||
Insurance and other
|
5,706
|
5,209
|
9.5
|
%
|
5.2
|
%
|
21,664
|
20,807
|
4.1
|
%
|
5.0
|
%
|
||||||||||||||||||||
Total same-property operating expenses
|
$
|
109,069
|
$
|
104,908
|
4.0
|
%
|
100.0
|
%
|
$
|
432,597
|
$
|
416,765
|
3.8
|
%
|
100.0
|
%
|
||||||||||||||||
(1) Maintenance and repairs also includes compensation related costs.
|
||||||||||||||||||||||||||||||||
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
12/31/22 (3)
|
%
Leased as of
2/6/23 (3)
|
Construction
Start
|
Initial
Occupancy
|
Stabilized
Operations
|
|||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Projects
|
Various
|
100%
|
|
-
|
-
|
$
|
25
|
$
|
-
|
$
|
25
|
$
|
25
|
|||||||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Consolidated
|
-
|
-
|
25
|
-
|
25
|
25
|
||||||||||||||||||||||||||||||||||||||||||||||||
Development Projects - Joint Venture (4)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
LIVIA (fka Scripps Mesa Apartments) (5)
|
San Diego, CA
|
51%
|
|
264
|
2,000
|
77
|
25
|
102
|
52
|
383
|
0%
|
|
0%
|
|
0%
|
|
Q3 2020
|
Q2 2023
|
Q1 2024
|
|||||||||||||||||||||||||||||||||||
Total Development Projects - Joint Venture
|
264
|
2,000
|
77
|
25
|
102
|
52
|
$
|
383
|
||||||||||||||||||||||||||||||||||||||||||||||
Grand Total - Development Pipeline
|
264
|
2,000
|
$
|
102
|
$
|
25
|
$
|
127
|
77
|
|||||||||||||||||||||||||||||||||||||||||||||
Essex Cost Incurred to Date - Pro Rata
|
(64
|
)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Essex Remaining Commitment
|
$
|
13
|
(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 fourth quarter of 2022, the Company's cost includes $0.2 million of capitalized interest, $0.3 million of capitalized overhead and $0.7 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)
|
Q4 '22
|
Trailing 4
Quarters
|
||||||
Same-property portfolio
|
$
|
24,140
|
$
|
67,811
|
||||
Non-same property portfolio
|
472
|
1,169
|
||||||
Total revenue generating capital expenditures
|
$
|
24,612
|
$
|
68,980
|
||||
Number of same-property interior renovations
|
816
|
3,697
|
||||||
Number of total consolidated interior renovations
|
836
|
3,818
|
Non-Revenue Generating Capital Expenditures (3)
|
Q4 '22
|
Trailing 4
Quarters
|
||||||
Non-revenue generating capital expenditures
|
$
|
46,582
|
$
|
138,280
|
||||
Average apartment homes in quarter
|
51,847
|
51,796
|
||||||
Capital expenditures per apartment homes in the quarter
|
$
|
898
|
$
|
2,670
|
(1) |
The Company incurred $0.1 million of capitalized interest, $3.8 million of capitalized overhead and $0.3 million of co-investment fees related to redevelopment in Q4
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. 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 costs
related to retail, furniture and fixtures, expenditures in which the Company expects to be reimbursed, and expenditures incurred due to changes in governmental regulation that the Company would not have incurred otherwise.
|
|
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
|
$
|
2,132,041
|
$
|
1,439,603
|
$
|
178,552
|
2.9
|
%
|
3.8 |
$
|
29,825
|
$
|
114,880
|
|||||||||||||||||||||
BEXAEW, BEX II, BEX IV, and 500 Folsom
|
50%
|
3,083
|
1,246,432
|
549,340
|
238,537
|
3.2
|
%
|
8.4 |
(4)
|
|
15,468
|
60,612
|
||||||||||||||||||||||||
Other (2)
|
52%
|
1,367
|
559,471
|
408,294
|
74,742
|
3.6
|
%
|
2.4
|
7,108
|
27,500
|
||||||||||||||||||||||||||
Total Operating and Other Non-Consolidated Joint Ventures
|
10,425
|
$
|
3,937,944
|
$
|
2,397,237
|
$
|
491,831
|
3.1
|
%
|
4.6
|
$
|
52,401
|
$
|
202,992
|
||||||||||||||||||||||
Development Non-Consolidated Joint Ventures (3)
|
51%
|
264
|
76,624
|
89,250
|
12,994
|
1.9
|
%
|
37.4
|
(5)
|
|
-
|
-
|
||||||||||||||||||||||||
Total Non-Consolidated Joint Ventures
|
10,689
|
$
|
4,014,568
|
$
|
2,486,487
|
$
|
504,825
|
3.1
|
%
|
5.8
|
$
|
52,401
|
$
|
202,992
|
||||||||||||||||||||||
Essex Portion of NOI and Expenses
|
||||||||||||||||||||||||||||||||||||
NOI
|
$
|
28,036
|
$
|
107,850
|
||||||||||||||||||||||||||||||||
Depreciation
|
(18,053
|
)
|
(72,585
|
)
|
||||||||||||||||||||||||||||||||
Interest expense and other
|
(11,934
|
)
|
(39,977
|
)
|
||||||||||||||||||||||||||||||||
Equity loss from non-core co-investments
|
(6,928
|
)
|
(38,045
|
)
|
||||||||||||||||||||||||||||||||
Loss on early retirement of debt from unconsolidated co-investment
|
-
|
(988
|
)
|
|||||||||||||||||||||||||||||||||
Impairment loss from unconsolidated co-investment
|
(2,105
|
)
|
(2,105
|
)
|
||||||||||||||||||||||||||||||||
Co-investment promote income
|
-
|
17,076
|
||||||||||||||||||||||||||||||||||
Net income from operating and other co-investments
|
$
|
(10,984
|
)
|
$
|
(28,774
|
)
|
||||||||||||||||||||||||||||||
Weighted Average Preferred Return
|
Weighted Average Expected
Term
|
|||||||||||||||||||||||||||||||||||
Income from Preferred Equity Investments
|
||||||||||||||||||||||||||||||||||||
Income from preferred equity investments
|
$
|
13,258
|
$
|
53,946
|
||||||||||||||||||||||||||||||||
Income from early redemption of preferred equity investments
|
-
|
858
|
||||||||||||||||||||||||||||||||||
Preferred Equity Investments (6)
|
$
|
580,134
|
9.7
|
%
|
2.6
|
$
|
13,258
|
$
|
54,804
|
|||||||||||||||||||||||||||
Total Co-investments
|
$
|
1,084,959
|
$
|
2,274
|
$
|
26,030
|
(1)
|
As of December 31, 2022, the Company’s investments in Wesco I, Wesco III, and Wesco IV were classified as a liability of $41.7 million due to
distributions received in excess of the Company's investment.
|
(2)
|
As of December 31, 2022, the Company’s investments in Expo and Century Towers were classified as a liability of $0.8 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)
|
LIVIA (fka Scripps Mesa Apartments) has $89.3 million of long-term tax-exempt bond debt that is subject to a total return swap that matures in
2025.
|
(6)
|
As of December 31, 2022, the Company has invested in 25 preferred equity investments.
|
2022
|
2023 Full-Year Guidance Range
|
||||||||||||
($'s in thousands, except per share data)
|
Actuals (1)
|
Low End
|
High End
|
Comments About 2023 Full-Year Guidance
|
|||||||||
Total NOI from Consolidated Communities - Excluding Straight-Line Rent Concessions
|
$
|
1,133,525
|
$
|
1,154,500
|
|
$
|
1,181,500
|
Includes a range of same-property NOI growth of 2.3% to 4.9%
|
|||||
Straight-Line Rent Concessions from Consolidated Communities
|
(5,119
|
)
|
2,300
|
(3,700
|
)
|
Reflects the non-cash impact of recording lease concessions on a straight-line basis
|
|||||||
Management Fees
|
11,139
|
10,700
|
11,700
|
||||||||||
Interest Expense
|
|||||||||||||
Interest expense, before capitalized interest
|
(199,180
|
)
|
(207,400
|
)
|
(203,800
|
)
|
|||||||
Interest capitalized
|
2,289
|
100
|
700
|
||||||||||
Net interest expense
|
(196,891
|
)
|
(207,300
|
)
|
(203,100
|
)
|
|||||||
Recurring Income and Expenses
|
|||||||||||||
Interest and other income
|
20,119
|
15,500
|
17,500
|
||||||||||
FFO from co-investments
|
121,623
|
109,600
|
113,100
|
||||||||||
General and administrative
|
(54,041
|
)
|
(55,500
|
)
|
(57,500
|
)
|
|||||||
Corporate-level property management expenses
|
(40,704
|
)
|
(45,200
|
)
|
(46,200
|
)
|
|||||||
Non-controlling interest
|
(11,794
|
)
|
(12,100
|
)
|
(11,100
|
)
|
|||||||
Total recurring income and expenses
|
35,203
|
12,300
|
15,800
|
||||||||||
Non-Core Income and Expenses
|
|||||||||||||
Expensed acquisition and investment related costs
|
(2,132
|
)
|
|||||||||||
Deferred tax benefit on unconsolidated co-investments
|
10,236
|
||||||||||||
Gain on sale of marketable securities
|
12,436
|
||||||||||||
Change in unrealized losses on marketable securities, net
|
(57,983
|
)
|
|||||||||||
Provision for credit losses
|
381
|
||||||||||||
Equity loss from non-core co-investments
|
(38,045
|
)
|
|||||||||||
Loss on early retirement of debt, net
|
(2
|
)
|
|||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
(988
|
)
|
|||||||||||
Co-investment promote income
|
17,076
|
||||||||||||
Income from early redemption of preferred equity investments
|
1,669
|
||||||||||||
General and administrative and other, net
|
(2,536
|
)
|
|||||||||||
Insurance reimbursements, legal settlements, and other, net
|
5,392
|
||||||||||||
Total non-core income and expenses
|
(54,496
|
)
|
-
|
-
|
|||||||||
Funds from Operations (2)
|
$
|
923,361
|
$
|
972,500
|
|
$
|
1,002,200
|
||||||
Funds from Operations per diluted Share
|
$
|
13.70
|
$
|
14.53
|
|
$
|
14.97
|
||||||
% Change - Funds from Operations
|
-2.0
|
%
|
6.1
|
%
|
9.3
|
%
|
|||||||
Core Funds from Operations (excludes non-core items)
|
$
|
977,857
|
$
|
972,500
|
|
$
|
1,002,200
|
||||||
Core Funds from Operations per diluted Share
|
$
|
14.51
|
$
|
14.53
|
|
$
|
14.97
|
||||||
% Change - Core Funds from Operations
|
16.2
|
%
|
0.1
|
%
|
3.2
|
%
|
|||||||
EPS - Diluted
|
$
|
6.27
|
$
|
5.35
|
|
$
|
5.79
|
||||||
Weighted average shares outstanding - FFO calculation
|
67,375
|
66,950
|
66,950
|
(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) |
2023 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.
|
2023 Guidance Range (1)
|
||||||||||||||||||||
1st Quarter 2023
|
Full-Year 2023
|
|||||||||||||||||||
2022
|
||||||||||||||||||||
Actuals
|
Low
|
High
|
Low
|
High
|
||||||||||||||||
EPS - diluted
|
$
|
6.27
|
$
|
1.21
|
$
|
1.33
|
$
|
5.35
|
$
|
5.79
|
||||||||||
Conversion from GAAP share count
|
(0.21
|
)
|
(0.04
|
)
|
(0.04
|
)
|
(0.19
|
)
|
(0.19
|
)
|
||||||||||
Impairment Loss from unconsolidated co-investments
|
0.03
|
-
|
-
|
-
|
-
|
|||||||||||||||
Depreciation and amortization
|
9.08
|
2.30
|
2.30
|
9.19
|
9.19
|
|||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
0.19
|
0.04
|
0.04
|
0.18
|
0.18
|
|||||||||||||||
Gain on sale of real estate
|
(1.40
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Gain on remeasurement of co-investment
|
(0.26
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
FFO per share - diluted
|
$
|
13.70
|
$
|
3.51
|
$
|
3.63
|
$
|
14.53
|
$
|
14.97
|
||||||||||
Expensed acquisition and investment related costs
|
0.03
|
-
|
-
|
-
|
-
|
|||||||||||||||
Deferred tax benefit on unconsolidated co-investments
|
(0.15
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Gain on sale of marketable securities
|
(0.18
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Change in unrealized losses on marketable securities, net
|
0.86
|
-
|
-
|
-
|
-
|
|||||||||||||||
Provision for credit losses
|
(0.01
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Equity loss from non-core co-investments
|
0.56
|
-
|
-
|
-
|
-
|
|||||||||||||||
Loss on early retirement of debt, net
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
0.01
|
-
|
-
|
-
|
-
|
|||||||||||||||
Co-investment promote income
|
(0.25
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Income from early redemption of preferred equity investments
|
(0.02
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
General and administrative and other, net
|
0.04
|
-
|
-
|
-
|
-
|
|||||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(0.08
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Core FFO per share - diluted
|
$
|
14.51
|
$
|
3.51
|
$
|
3.63
|
$
|
14.53
|
$
|
14.97
|
(1) |
2023 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
|
|
Location
|
Apartment
Homes
|
Essex
Ownership
Percentage
|
Entity
|
Date
|
Total Sale
Price
|
Price per
Apartment Home
|
|||||||||||||||||||
Anavia
|
Anaheim, CA
|
250 |
100%
|
|
EPLP
|
Nov-22
|
$
|
160,000 |
|
|
$
|
640 |
|
|||||||||||||
Q4 2022
|
250 |
$
|
160,000
|
$
|
640 | |||||||||||||||||||||
2022 Total
|
250 |
$
|
160,000
|
$
|
640 |
(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 Fourth Quarter 2022
|
Same-Property
|
Non-Same
Property and
Co-investments |
Total Operating
Communities
|
Commercial
|
Total
|
|||||||||||||||
Operating apartment community units
|
49,119
|
12,229
|
61,348
|
N/A
|
N/A
|
|||||||||||||||
|
||||||||||||||||||||
Cash delinquencies as % of scheduled rent
|
1.1
|
%
|
1.5
|
%
|
1.1
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies as % of scheduled rent (1)
|
1.1
|
%
|
1.5
|
%
|
1.1
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies in 4Q 2022 (2) (3)
|
$
|
(4.0
|
)
|
$
|
(0.9
|
)
|
$
|
(4.9
|
)
|
$
|
0.3
|
$
|
(4.6
|
)
|
||||||
Reported delinquencies in 4Q 2021 (2)
|
$
|
(6.7
|
)
|
$
|
(1.4
|
)
|
$
|
(8.1
|
)
|
$
|
0.8
|
$
|
(7.3
|
)
|
||||||
|
||||||||||||||||||||
YoY impact to 4Q 2022 Core FFO per share
|
$
|
0.04
|
$
|
0.01
|
|
$
|
0.05
|
|
$
|
(0.01
|
)
|
$
|
0.04
|
|
||||||
YoY impact to Core FFO per share growth
|
1.2
|
%
|
0.2
|
%
|
1.5
|
%
|
-0.2
|
%
|
1.2
|
%
|
||||||||||
|
||||||||||||||||||||
Total cumulative cash delinquencies (4) (5)
|
$
|
(77.9
|
)
|
$
|
(12.0
|
)
|
$
|
(89.9
|
)
|
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 December 31, 2022
|
(2) |
Co-investment delinquencies reported at the Company's pro rata share.
|
(3) |
Commercial delinquencies in 4Q 2022 co-investment amounts at the Company's pro rata share.
|
(4) |
Represents cash delinquencies from the period of April 1, 2020 to December 31, 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 $3.7 million and $64.3 million for the three
months ended December 31, 2022 and the period from April 1, 2020 to December 31, 2022, respectively
|
Operating Statistics
|
Same-Property Revenue Growth with Concessions on a GAAP basis
|
|||||||||||||||||||||||||
|
Preliminary Estimate
|
|
||||||||||||||||||||||||
Same-Property Portfolio
|
January 2023
|
4Q 2022
|
|
4Q 2022
|
4Q 2021
|
YTD 2022
|
YTD 2021
|
|||||||||||||||||||
Cash delinquencies as % of scheduled rent (1)
|
3.1%
|
|
1.1%
|
|
Reported rental revenue (cash basis concessions)
|
$
|
381.4 |
$
|
345.3 |
$
|
1,485.0 |
$
|
1,346.7
|
|||||||||||||
|
Straight-line rent impact to rental revenue
|
1.8
|
|
(1.6
|
)
|
(5.0
|
)
|
(10.6
|
)
|
|||||||||||||||||
New lease rates (2)
|
-0.6%
|
|
0.8%
|
|
GAAP rental revenue
|
$
|
383.2 |
$
|
343.7
|
$
|
1,480.0 |
$
|
1,336.1 |
|||||||||||||
Renewal rates (2)
|
5.5%
|
|
7.6%
|
|
|
|||||||||||||||||||||
Blended rates
|
2.2% |
|
3.8%
|
|
% change - reported rental revenue
|
10.5 |
%
|
10.3
|
%
|
|||||||||||||||||
|
% change - GAAP rental revenue
|
11.5 |
%
|
10.8
|
%
|
|||||||||||||||||||||
Financial occupancy
|
96.4%
|
|
96.0%
|
|
|
(1)
|
The Company's same-property portfolio has received Emergency Rental Assistance payments of $0.3 million and $2.6 million in January
2023 and for the three months ended December 31, 2022, respectively.
|
(2)
|
Represents % change in similar term lease tradeouts, including the impact of leasing incentives.
|
Three Months Ended
December 31,
2022
|
||||
Net income available to common stockholders
|
$
|
185,165
|
||
Adjustments:
|
||||
Net income attributable to noncontrolling interest
|
9,055
|
|||
Interest expense, net (1)
|
51,101
|
|||
Depreciation and amortization
|
135,758
|
|||
Income tax provision
|
78
|
|||
Gain on sale of real estate and land
|
(94,416
|
)
|
||
Impairment loss from unconsolidated co-investments
|
2,105
|
|||
Co-investment EBITDAre adjustments
|
29,859 | |||
EBITDAre
|
318,705
|
|||
Gain on sale of marketable securities
|
(6 |
) |
||
Change in unrealized gains (losses) on marketable securities, net
|
(5,573
|
) |
||
Provision for credit losses
|
(317
|
)
|
||
Equity (loss) income from non-core co-investments
|
6,928
|
|||
Deferred tax benefit (expense) on unconsolidated co-investments
|
(2,373
|
) |
||
General and administrative and other, net
|
209
|
|||
Insurance reimbursements and legal settlements, net
|
(315
|
)
|
||
Income from early redemption of preferred equity investments
|
(811
|
) |
||
Expensed acquisition and investment related costs
|
1,884
|
|||
Adjusted EBITDAre
|
$
|
318,331
|
(1)
|
Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges.
|
Three Months Ended
December 31,
2022
|
Twelve Months Ended
December 31,
2022
|
|||||||
Interest expense
|
$
|
52,298
|
$
|
204,798
|
||||
Adjustments:
|
||||||||
Total return swap income
|
(1,197
|
)
|
(7,907
|
)
|
||||
Interest expense, net
|
$
|
51,101
|
$
|
196,891
|
February 6, 2023
|
||||
Unsecured credit facility - committed
|
$
|
1,235
|
||
Balance outstanding
|
113
|
|||
Undrawn portion of line of credit
|
$
|
1,122
|
||
Cash, cash equivalents & marketable securities
|
140
|
|||
Total liquidity
|
$
|
1,262
|
Total consolidated debt, net
|
$
|
5,958,184
|
||
Total debt from co-investments at pro rata share
|
1,328,569
|
|||
Adjustments:
|
||||
Consolidated unamortized premiums, discounts, and debt issuance costs
|
38,626
|
|||
Pro rata co-investments unamortized premiums, discounts, and debt issuance costs
|
6,545
|
|||
Consolidated cash and cash equivalents-unrestricted
|
(33,295
|
)
|
||
Pro rata co-investment cash and cash equivalents-unrestricted
|
(32,767
|
)
|
||
Marketable securities
|
(128,026
|
)
|
||
Net Indebtedness
|
$
|
7,137,836
|
||
Adjusted EBITDAre, annualized (1)
|
$
|
1,273,324
|
||
Other EBITDAre normalization adjustments, net, annualized (2)
|
(8,466
|
) |
||
Adjusted EBITDAre, normalized and annualized
|
$
|
1,264,858
|
||
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized
|
5.6
|
(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
December 31,
2022
|
Three Months Ended
December 31,
2021
|
Twelve Months Ended
December 31,
2022
|
Twelve Months Ended
December 31,
2021
|
|||||||||||||
Earnings from operations
|
$
|
228,143
|
$
|
101,262
|
$
|
595,229
|
$
|
529,995
|
||||||||
Adjustments:
|
||||||||||||||||
Corporate-level property management expenses
|
10,172
|
9,076
|
40,704
|
36,211
|
||||||||||||
Depreciation and amortization
|
135,758
|
132,179
|
539,319
|
520,066
|
||||||||||||
Management and other fees from affiliates
|
(2,826
|
)
|
(2,431
|
)
|
(11,139
|
)
|
(9,138
|
)
|
||||||||
General and administrative
|
16,036
|
17,092
|
56,577
|
51,838
|
||||||||||||
Expensed acquisition and investment related costs
|
1,884
|
39
|
2,132
|
203
|
||||||||||||
Gain on sale of real estate and land
|
(94,416
|
) |
-
|
|
(94,416
|
) |
(142,993
|
)
|
||||||||
NOI
|
294,751
|
257,217
|
1,128,406
|
986,182
|
||||||||||||
Less: Non-same property NOI
|
(22,437
|
)
|
(16,854
|
)
|
(76,027
|
)
|
(56,267
|
)
|
||||||||
Same-Property NOI
|
$
|
272,314
|
$
|
240,363
|
$
|
1,052,379
|
$
|
929,915
|
Annualized
Q4'22 (1)
|
||||
NOI
|
$
|
1,179,004
|
||
Adjustments:
|
||||
NOI from real estate assets sold or held for sale
|
(3,109
|
) |
||
Other, net (2)
|
(11,574
|
) |
||
Adjusted Total NOI
|
1,164,321
|
|||
Less: Encumbered NOI
|
(62,766
|
)
|
||
Unencumbered NOI
|
$
|
1,101,555
|
||
Encumbered NOI
|
$
|
62,766
|
||
Unencumbered NOI
|
1,101,555
|
|||
Adjusted Total NOI
|
$
|
1,164,321
|
||
Unencumbered NOI to Adjusted Total NOI
|
95
|
%
|
(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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