EX-99.2 3 s001077x1_ex99-2.htm EXHIBIT 99.2

Exhibit 99.2

 

 

 

 
 

  

Q3 2015 Supplemental

Table of Contents

 

  Page
Consolidated Operating Results S-1 – S-2
Consolidated Funds From Operations S-3
Consolidated Balance Sheets S-4
Debt Summary – September 30, 2015 S-5
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – September 30, 2015 S-6
Portfolio Summary by County – September 30, 2015 S-7
Operating Income by Quarter – September 30, 2015 S-8
Same-Property Revenue Results by County – Quarters ended September 30, 2015, September 30, 2014, and June 30, 2015 S-9
Same-Property Revenue Results by County – Nine months ended September 30, 2015 and 2014 S-9.1
Same-Property Operating Expenses S-10
Development Pipeline – September 30, 2015 S-11
Redevelopment Pipeline – September 30, 2015 S-12
Co-Investments – September 30, 2015 S-13
Assumptions for 2015 FFO Guidance Range S-14
Summary of Apartment Community Acquisitions and Dispositions Activity S-15
Preliminary 2016 MSA Level Forecasts: Supply, Jobs and Apartment Market Conditions S-16

 

 

 
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                          
                           
Consolidated Operating Results Three Months Ended   Nine Months Ended
(Dollars in thousands, except share and per share amounts) September 30,   September 30,
      2015   2014 (1)   2015   2014 (1)
                           
Revenues:                      
  Rental and other property  $   302,522   $   268,512   $  876,852   $   684,813
  Management and other fees        2,104         2,361         6,809         6,856
        304,626     270,873     883,661     691,669
                           
Expenses:                      
  Property operating     94,119       88,062     271,367     223,926
  Depreciation and amortization   116,308     102,286     336,946     253,890
  General and administrative     11,129       11,479       31,223       28,621
  Merger and integration expenses       -         3,857         3,798       46,413
  Acquisition and investment related costs   381      51         1,357     768
        221,937     205,735     644,691     553,618
Earnings from operations     82,689       65,138     238,970     138,051
                           
Interest expense    (50,053)      (45,830)           (148,401)           (117,021)
Interest and other income        7,367         2,992       14,820         8,685
Equity income from co-investments       7,179         4,910       15,962       21,065
Gain on sale of real estate and land       -       31,372         7,112       38,853
Gain on remeasurement of co-investment       -         -       34,014         -
  Net income     47,182       58,582     162,477       89,633
Net income attributable to noncontrolling interest      (3,545)        (3,720)      (11,295)        (8,971)
Net income attributable to controlling interest     43,637       54,862     151,182       80,662
Dividends to preferred stockholders      (1,314)        (1,296)        (3,941)        (3,977)
  Net income available to common stockholders $   42,323   $   53,566   $ 147,241   $   76,685
                           
Net income per share - basic $ 0.65   $ 0.85   $ 2.28   $ 1.41
                           
Shares used in income per share - basic   65,138,868     62,892,601     64,714,994     54,250,104
                           
Net income per share - diluted $ 0.65   $ 0.85   $ 2.27   $ 1.41
                           
Shares used in income per share - diluted   65,297,550     63,069,772     64,892,770     54,443,227
                           
(1)   Due to subsequent purchase price allocation adjustments made to the opening balance sheet for the BRE Merger on April 1, 2014, certain amounts do not match prior reported.

 

 

See Company’s 10-K for additional disclosures
S-1
 

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                          
                           
Consolidated Operating Results Three Months Ended   Nine Months Ended
Selected Line Item Detail September 30,   September 30,
(Dollars in thousands) 2015   2014   2015   2014
                           
Rental and other property                      
  Rental   $   284,026   $   250,697   $   820,639   $  637,283
  Other property       18,496        17,815        56,213        47,530
    Rental and other property $   302,522   $   268,512   $   876,852   $  684,813
                           
Property operating expenses                      
  Real estate taxes $     33,591   $    31,768   $    97,820   $    77,452
  Administrative and insurance       19,307        19,072        56,103        50,380
  Maintenance and repairs       18,487        16,054        52,650        42,443
  Utilities       16,460        16,052        46,209        40,059
  Property management         6,274          5,116        18,585        13,592
    Property operating expenses $     94,119   $    88,062   $   271,367   $  223,926
                           
                           
Interest and other income                      
  Marketable securities and other interest income $      3,699   $      2,951   $    10,152   $      7,676
  Notes receivable        -        41          -      123
  Gain from sale of marketable securities, note prepayment, and other investments    598          -      598      886
  Insurance reimbursements        3,070          -          4,070          -
    Interest and other income $      7,367   $      2,992   $    14,820   $      8,685
                           
Equity income from co-investments                        
  Equity income from co-investments $      2,969   $  535   $      6,176   $      1,578
  Income from preferred equity investments        2,533          4,375          7,640        11,372
  Gain on sale of co-investment communities        -          -          -          3,211
  Co-investment promote income    192          -      192          4,904
  Income from early redemption of preferred equity investments        1,485          -          1,954          -
    Equity income from co-investments $      7,179   $      4,910   $    15,962   $    21,065
                           
Noncontrolling interest                      
  Limited partners of Essex Portfolio, L.P. $      1,471   $      1,816   $      5,115   $      3,442
  DownREIT limited partners’ distributions        1,297          1,208          3,894          3,563
  Third-party ownership interest    777      696          2,286          1,966
    Noncontrolling interest $      3,545   $      3,720   $    11,295   $      8,971

 

 

 

See Company’s 10-K for additional disclosures
S-2
 

 

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 Three Months Ended         Nine Months Ended    
(Dollars in thousands, except share and per share amounts and in footnotes) September 30,         September 30,    
      2015   2014   % Change     2015   2014   % Change
                                     
Funds from operations attributable to common stockholders and unitholders (FFO)                                
Net income available to common stockholders $  42,323   $   53,566         $    147,241   $      76,685    
Adjustments:                                
  Depreciation and amortization         116,308     102,286              336,946         253,890    
  Gains not included in FFO      -      (31,372)              (41,126)         (41,664)    
  Depreciation addback from unconsolidated co-investments    12,800        9,986               36,822          23,060    
  Noncontrolling interest related to Operating Partnership units      1,471        1,816                 5,115     3,442    
  Insurance reimbursements (1)      (1,751)        -                (1,751)     -    
  Depreciation attributable to third party ownership and other (2)        (253)          (335)            (753)       (996)    
    Funds from operations attributable to common stockholders and unitholders $       170,898   $ 135,947         $    482,494   $     314,417    
    FFO per share-diluted $ 2.53   $ 2.08   21.6%     $ 7.19   $ 5.55   29.5%
                                     
Components of the change in FFO                                
Non-core items:                                
Merger and integration expenses $    -        3,857         $       3,798          46,413    
Acquisition and investment related costs         381      51                 1,357        768    
Gain on sale of marketable securities, note prepayment, and other investments        (598)        -            (598)       (886)    
Gain on sale of land       -        -                 -       (400)    
Co-investment promote income        (192)        -            (192)           (4,904)    
Income from early redemption of preferred equity investments     (1,485)        -                (1,954)     -    
Insurance reimbursments        (569)        -                (2,319)     -    
Other non-core adjustments      -        1,249            (207)        710    
    Core funds from operations attributable to common stockholders and unitholders         168,435     141,104              482,379         356,118    
    Core FFO per share-diluted $ 2.49   $ 2.16   15.3%     $ 7.19   $ 6.28   14.5%
                                     
Changes in core items:                                
Same-property NOI $  16,399               $     34,984          
Non-same property NOI (3)    12,304                    109,850          
Management and other fees, net        (257)                     78          
FFO from co-investments      3,406                     14,599          
Interest and other income         707                       2,353          
Interest expense      (4,223)                    (31,380)          
General and administrative         (899)                      (3,851)          
Other items, net        (106)                  (372)          
      $  27,331               $    126,261          
                                     
Weighted average number of shares outstanding diluted (4)   67,535,685     65,234,328           67,135,143     56,677,712    
                                     
                                     
  (1) Insurance reimbursements for replacement costs related to a flood at one of our properties.
  (2) The Company consolidates Hidden Valley and Hillsdale Garden Apartments.  Noncontrolling interest’s share of net operating income in these investments for the three and nine months ended September 30, 2015 was $1.0 million and $2.9 million, respectively.
  (3) Nine month results include properties acquired in the merger with BRE as non-same property.
  (4) Assumes conversion of all outstanding operating partnership interests in the Operating Partnership and excludes 902,668 DownREIT units for which the Operating Partnership has the ability and intention to redeem the DownREIT limited partnership units for cash and does not consider them to be common stock equivalents.

 

 

 

See Company’s 10-K for additional disclosures
S-3
 

 

  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, 2015     December 31, 2014
                 
  Real Estate:          
    Land and land improvements $     2,566,586   $    2,424,930
    Buildings and improvements       9,753,982        8,819,751
            12,320,568       11,244,681
    Less:  accumulated depreciation      (1,858,134)       (1,564,806)
            10,462,434        9,679,875
  Real estate under development         226,690           429,096
  Co-investments       1,036,043        1,042,423
  Real estate held for sale, net      8,742      56,300
            11,733,909       11,207,694
  Cash and cash equivalents    72,306      95,749
  Marketable securities and other investments         133,058           117,240
  Notes and other receivables    22,668      24,923
  Acquired in-place lease value    12,675      47,748
  Prepaid expenses and other assets    38,101      33,378
      Total assets $   12,012,717   $   11,526,732
                 
  Unsecured debt, net $     3,090,896   $    2,603,548
  Mortgage notes payable, net       2,224,513        2,234,317
  Lines of credit, net (1)      2,011           242,824
  Other liabilities         338,885           286,719
      Total liabilities       5,656,305        5,367,408
  Redeemable noncontrolling interest    24,589      23,256
  Equity:            
    Common stock     6       6
    Cumulative redeemable preferred stock, liquidation value    73,750      73,750
    Additional paid-in capital       6,980,443        6,651,165
    Distributions in excess of accumulated earnings        (782,801)          (650,797)
    Accumulated other comprehensive loss, net   (50,357)     (51,452)
      Total stockholders’ equity       6,221,041        6,022,672
    Noncontrolling interest         110,782           113,396
      Total equity       6,331,823        6,136,068
                 
      Total liabilities and equity  $   12,012,717   $   11,526,732
                 
(1) Lines of credit, net excludes unamortized debt issuance costs as of September 30, 2015 as the net effect resulted in a negative debt balance as of September 30, 2015 and was reclassified to prepaid expenses and other assets on the Consolidated Balance Sheet. The net balance at December 31, 2014 resulted in a positive debt balance and is presented on a net basis.

 

 

See Company’s 10-K for additional disclosures
S-4
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                              
                                                         
Debt Summary - September 30, 2015                                
(Dollars in thousands, except in footnotes)                                
                                                         
                                                         
                        Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
                                     
                                         

Unamortized

premiums

(discounts)

and (debt

issuance

costs)

              
              Weighted Average                              

Weighted

Average

Interest Rate

  

Percentage

of

Total

Debt

        Balance    Interest   Maturity                                
        Outstanding   Rate   In Years         Unsecured   Secured         Total    
Unsecured Debt, net                                                    
  Bonds private - fixed rate     465,000   4.5%   3.5     2015    $  -       $    7,296        6,218    $  13,514   3.8%   0.3%
  Bonds public - fixed rate     2,400,000   3.5%   7.0     2016           350,000     29,707      24,765          404,472   3.2%   7.6%
  Term loan (1)     225,000   2.4%   1.2     2017           365,000           199,178      16,296          580,474   3.2%   10.9%
  Unamortized premiums and debt issuance costs     896      -         -        2018     -              320,621      13,220          333,841   5.4%   6.2%
          3,090,896   3.5%   6.0     2019     75,000           566,393        8,571          649,964   4.2%   12.2%
Mortgage Notes Payable, net                   2020     -              693,447        3,236          696,683   5.0%   13.1%
  Fixed rate - secured   $ 1,873,854   4.9%   3.8     2021           500,000     51,152       (3,545)          547,607   4.3%   10.3%
  Variable rate - secured (2)     292,083   1.7%   22.7     2022           300,000       1,186       (3,974)          297,212   3.7%   5.6%
  Unamortized premiums and debt issuance costs     58,576      -         -        2023           600,000       1,282       (1,703)          599,579   3.6%   11.3%
    Total mortgage notes payable     2,224,513   4.5%   6.3     2024           400,000     19,158       (1,000)          418,158   4.0%   7.9%
                        2025           500,000     14,611          (319)          514,292   3.5%   9.7%
Unsecured Lines of Credit, net                   Thereafter     -              261,906       (2,293)          259,613   1.3%   4.9%
  Line of credit (3)       -      -                                             
  Line of credit (4)       2,011   1.7%         Total   $ 3,090,000   $ 2,165,937   $ 59,472   $ 5,315,409   3.9%   100.0%
  Unamortized debt issuance costs (5)      (3,576)      -                                             
    Total lines of credit (5)      (1,565)   1.7%                                          
                                                         
    Total debt, net   $ 5,313,844   4.0%                                          
                                                         
                                                         
                                                         

Capitalized interest for the three and nine months ended September 30, 2015 was approximately $3.9 million and $12.2 million, respectively.                  

                                                         

(1) The unsecured term loan has a variable interest rate of LIBOR plus 1.05%.  The Company has entered into interest rate swap contracts with a notional amount totaling $225 million, which effectively converts the interest rate on of the term loan to a fixed rate of 2.4%.

(2) Of $292.1 million of variable rate debt, $282.1 million is tax exempt to the note holders and $262.5 million is subject to interest rate protection agreements or total return swap contracts.  

(3) The unsecured line of credit facility aggregates to $1 billion and the line matures in December 2018 with one 18-month extension, exercisable at the Company’s option.  The underlying interest rate on this line is based on a tiered rate structure tied to the Company’s corporate ratings and is currently at LIBOR plus 0.95%.

(4) The unsecured line of credit facility is $25 million and matures in January 2016.  The underlying interest rate on this line is based on a tiered rate structure tied to the Company’s corporate ratings and is currently at LIBOR plus 0.95%.  

(5) For financial statement purposes, unamortized debt issuance costs related to unsecured lines of credit have been reclassified to prepaid expenses and other assets on the Consolidated Balance Sheet because the net effect resulted in a negative debt balance as of September 30, 2015.

 

 

See Company’s 10-K for additional disclosures
S-5
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.              
                             
Capitalization Data, Public Bond Covenants, Credit Ratings and Selected Credit Ratios - September 30, 2015    
(Dollars and shares in thousands, except per share amounts)            
                             
                             
Capitalization Data       Public Bond Covenants    Actual   Requirement    
Total debt, net $ 5,313,844                  
                Debt to Total Assets:   38%   < 65%    
Common stock and potentially dilutive securities                      
  Common stock outstanding   65,235                  
  Limited partnership units (1)   2,237                  
  Options-treasury method    186     Secured Debt to Total Assets:   16%   < 40%    
Total shares of common stock and potentially dilutive securities   67,658                  
                             
Common stock price per share as of September 30, 2015 $ 223.42                  
                Interest Coverage:   345%   > 150%    
Market value of common stock and potentially dilutive securities $ 15,116,150                  
                             
Preferred stock      $ 73,750     Unsecured Debt Ratio (1) :   290%   > 150%    
                             
Total equity capitalization $ 15,189,900                  
              Selected Credit Ratios   Actual        
Total market capitalization $ 20,503,744                  
Ratio of debt to total market capitalization   25.9%     Net Indebtedness Divided by Adjusted EBITDA (2) (3):   6.1        
                             
                Unencumbered NOI to Total NOI:   66%        
                             
(1) Assumes conversion of all outstanding operating partnership interests in the Operating Partnership into shares of the Company’s common stock.   (1) Unsecured Debt Ratio is unsecured assets (excluding investments in co-investments) divided by unsecured indebtedness.
              (2) Net Indebtedness is total debt less unamortized premiums, debt issuance costs, unrestricted cash and cash equivalents, and marketable securities.
Credit Ratings         (3) Adjusted EBITDA annualizes the proforma NOI for current quarter acquisitions and excludes non-routine items in earnings.
Rating Agency   Rating     Outlook        
Fitch        BBB+      Stable      
Moody’s      Baa2      Positive      
Standard & Poor’s      BBB       Positive                      

 

 

See Company’s 10-K for additional disclosures
S-6
 

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                               
                                             
Portfolio Summary as of September 30, 2015                                
                                             

 

                               
   Apartment Homes  Average Monthly Rental Rate (1)  Percent of NOI (2)
Region - County  Consolidated (3)  Unconsolidated
Co-investments (4)		  Apartment
Homes in
Development (5)		  Total  Consolidated  Unconsolidated
Co-investments (6)		  Total (7)  Consolidated  Unconsolidated
Co-investments (6)		  Total (7)
                               
Southern California                                                  
Los Angeles County   9,245    1,618    —      10,863   $2,189   $1,852   $2,162    19.3%   14.0%   18.8%
Orange County   5,786    1,144    —      6,930    1,932    1,633    1,905    11.1%   9.9%   11.0%
San Diego County   4,962    616    —      5,578    1,689    1,541    1,681    8.1%   4.4%   7.8%
Ventura County   2,898    373    —      3,271    1,587    1,991    1,611    4.9%   3.5%   4.8%
Other Southern CA   623    581    —      1,204    1,483    1,622    1,527    0.8%   4.4%   1.1%
Total Southern California   23,514    4,332    —      27,846    1,928    1,731    1,911    44.2%   36.2%   43.5%
                                                   
Northern California                                                  
Santa Clara County   5,874    2,477    376    8,727    2,523    2,607    2,538    16.2%   24.7%   17.0%
Alameda County   3,138    1,293    —      4,431    2,296    2,176    2,275    7.4%   14.5%   8.1%
San Mateo County   2,126    197    599    2,922    2,809    2,705    2,804    6.4%   2.8%   6.1%
Contra Costa County   2,270    —      555    2,825    2,110    —      2,110    5.1%   —      4.6%
San Francisco MSA   1,169    463    717    2,349    2,817    3,492    2,938    3.3%   8.1%   3.7%
Other Northern CA   230    —      —      230    1,979    —      1,979    0.5%   —      0.4%
Total Northern California   14,807    4,430    2,247    21,484    2,467    2,586    2,483    38.9%   50.1%   39.9%
                                                   
Seattle Metro   10,239    1,958    —      12,197    1,582    1,460    1,571    16.9%   13.7%   16.6%
                                                   
Total   48,560    10,720    2,247    61,527   $2,019   $2,045   $2,022    100.0%   100.0%   100.0%
                                                   

 

(1) Average monthly rental rate is defined as the total potential monthly rental revenue (actual rent for occupied apartment homes plus market rent for vacant apartment homes) divided by the number of apartment homes. 

(2) Actual NOI for the quarter ended September 30, 2015.  

(3) Includes all apartment communities with rents including developments in lease up, excluding commercial space. 

(4) Includes two rental income producing development communities in lease-up which consist of 512 apartment homes.

(5) Includes development communities with no rental income.

(6) Co-investment amounts weighted for Company’s pro rata share. 

(7) At Company’s pro rata share.

 

 

 

See Company’s 10-K for additional disclosures
S-7
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.             
                           
Operating Income by Quarter (1)                  
(Dollars in thousands)                  
                           
      Apartment Homes   Q3 ’15   Q2 ’15   Q1 ’15   Q4 ’14   Q3 ’14
                           
Rental and other property revenues:                        
Same-property (2)      43,134    $     258,212    $     252,169    $     246,536    $     243,633    $     240,031
Acquisitions (3)       3,415     23,099     20,255     14,269     12,579     10,110
Development (4)       1,331     12,392     11,273       9,753       8,146       6,101
Redevelopment   680       4,214       4,078       3,979       4,134       4,105
Non-Residential/Other, net (5)       -       4,605       6,326       5,692       8,286       8,165
Total rental and other property revenues      48,560    302,522    294,101    280,229    276,778    268,512
                           
Property operating expenses:                        
Same-property (2)         79,841     77,181     76,042     76,984     78,059
Acquisitions (3)           8,003       7,256       4,867       4,166       3,352
Development (4)           4,024       3,868       3,355       3,167       2,493
Redevelopment           1,611       1,534       1,539       1,515       1,567
Non-Residential/Other, net (5) (6)       640   238       1,368       2,789       2,591
Total property operating expenses         94,119     90,077     87,171     88,621     88,062
                           
Net operating income (NOI):                        
Same-property (2)        178,371    174,988    170,494    166,649    161,972
Acquisitions (3)         15,096     12,999       9,402       8,413       6,758
Development (4)           8,368       7,405       6,398       4,979       3,608
Redevelopment           2,603       2,544       2,440       2,619       2,538
Non-Residential/Other, net (5)           3,965       6,088       4,324       5,497       5,574
Total NOI        $     208,403    $     204,024    $     193,058    $     188,157    $     180,450
                           
Same-property metrics                        
  Operating margin       69%   69%   69%   68%   67%
  Annualized turnover (7)       60%   55%   44%   44%   63%
  Financial occupancy (8)       96.0%   96.1%   96.1%   96.2%   95.9%
                           
(1) Includes consolidated communities only.                    
(2) Same-property includes BRE properties acquired April 1, 2014.                  
(3) Acquisitions include properties acquired which did not have comparable stabilized results as of April 1, 2014.          
(4) Development includes properties developed which did not have comparable stabilized results as of April 1, 2014.        
(5) Other real estate assets consists mainly of retail space, commercial properties, boat slips, and disposition properties.         
(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 revenue by total potential rental revenue (actual rent for occupied apartment homes plus market rent for vacant apartment homes).

 

 

See Company’s 10-K for additional disclosures
S-8
 

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                 
                                                         
Same-Property Revenue Results by County - Third Quarter 2015 vs. Third Quarter 2014 and Second Quarter 2015 (1)
(Dollars in thousands, except average monthly rental rates)          
                                                         
                                                         
                Average Monthly Rental Rate   Financial Occupancy   Gross Revenues   Sequential Gross Revenues
Region - County   Apartment Homes   Q3 ’15 % of Actual NOI   Q3 ’15 Q3 ’14   % Change   Q3 ’15 Q3 ’14   % Change   Q3 ’15 Q3 ’14   % Change   Q2 ’15   % Change
                                                         
Southern California                                                    
  Los Angeles County   6,844   16.3%    $   2,108    $   1,997   5.6%   95.7%   95.6%   0.1%    $    43,303    $   40,922   5.8%    $    42,521   1.8%
  Orange County   5,786   12.7%         1,932         1,826   5.8%   96.2%   96.1%   0.1%   33,835         31,941   5.9%       33,273   1.7%
  San Diego County   4,583   8.6%         1,673         1,581   5.8%   95.4%   96.2%   -0.8%   23,202         22,164   4.7%       22,707   2.2%
  Ventura County   2,898   5.6%         1,587         1,496   6.1%   96.4%   96.3%   0.1%   14,170         13,356   6.1%      13,859   2.2%
  Other Southern CA   623   0.9%         1,483         1,381   7.4%   92.2%   92.4%   -0.2%     2,676    2,532   5.7%         2,757   -2.9%
Total Southern California   20,734   44.1%         1,871         1,769   5.8%   95.8%   95.9%   -0.1%        117,186       110,915   5.7%     115,117   1.8%
                                                         
Northern California                                                    
  Santa Clara County   5,228   16.5%         2,468         2,244   10.0%   96.3%   96.2%   0.1%   39,078         35,472   10.2%     37,980   2.9%
  Alameda County   2,613   7.1%         2,258         1,995   13.2%   96.0%   96.3%   -0.3%   17,935         15,912   12.7%       17,392   3.1%
  San Mateo County   1,862   6.3%         2,737         2,506   9.2%   96.1%   96.0%   0.1%   15,578         14,243   9.4%        15,107   3.1%
  Contra Costa County   2,270   5.8%         2,110         1,923   9.7%   96.8%   96.4%   0.4%   14,625         13,358   9.5%         14,163   3.3%
  San Francisco MSA   816   2.1%         2,355         2,204   6.9%   96.1%   95.1%   1.1%     5,745    5,360   7.2%    5,607   2.5%
  Other Northern CA   230   0.5%         1,979         1,767   12.0%   95.8%   97.1%   -1.3%     1,365    1,249   9.3%         1,310   4.2%
Total Northern California   13,019   38.3%         2,386         2,165   10.2%   96.3%   96.1%   0.2%   94,326         85,594   10.2%         91,559   3.0%
                                                         
Seattle Metro   9,381   17.6%         1,576         1,471   7.1%   96.1%   95.6%   0.5%   46,700         43,522   7.3%         45,493   2.7%
                                                         
Total Same-Property   43,134   100.0%    $   1,963    $   1,824   7.6%   96.0%   95.9%   0.1%    $  258,212    $ 240,031   7.6%    $  252,169   2.4%
                                                         
(1) Same-property includes BRE properties acquired April 1, 2014.                          

 

 

See Company’s 10-K for additional disclosures
S-9
 

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.             
                                                 
Same-Property Revenue Results by County - Nine months ended September 30, 2015 vs. Nine months ended September 30, 2014 (1)
(Dollars in thousands, except average monthly rental rates)                                    
                                                 
                                                 
            YTD   Average Monthly Rental Rate   Financial Occupancy   Gross Revenues
Region - County   Apartment Homes   2015 % of Actual NOI   YTD 2015   YTD 2014   % Change   YTD 2015   YTD 2014   % Change   YTD 2015   YTD 2014   % Change
                                                 
Southern California                                            
  Los Angeles County   4,400   16.4%    $    2,018    $    1,904   6.0%   96.1%   96.2%   -0.1%    $  80,637    $  76,276   5.7%
  Orange County   2,887   10.8%   2,046   1,925   6.3%   96.4%   95.9%   0.5%        53,805        50,219   7.1%
  San Diego County   2,067   5.1%   1,383   1,297   6.6%   96.1%   96.3%   -0.2%        26,546        25,095   5.8%
  Ventura County   2,898   8.5%   1,556   1,470   5.9%   96.3%   96.6%   -0.3%        41,723        39,577   5.4%
  Other Southern CA   623   1.5%   1,447   1,351   7.1%   96.0%   96.2%   -0.2%   8,190   7,672   6.8%
Total Southern California   12,875   42.3%   1,790   1,687   6.1%   96.2%   96.2%   0.0%      210,901      198,839   6.1%
                                                 
Northern California                                            
  Santa Clara County   4,279   20.3%   2,373   2,145   10.6%   96.3%   96.1%   0.2%        92,313        83,217   10.9%
  Alameda County   1,542   6.0%   2,054   1,817   13.0%   96.4%   97.0%   -0.6%        29,225        26,214   11.5%
  San Mateo County   768   3.6%   2,441   2,205   10.7%   96.9%   96.6%   0.3%        17,397        15,711   10.7%
  Contra Costa County   1,720   6.5%   2,005   1,820   10.2%   96.6%   96.3%   0.3%        31,620        28,663   10.3%
  San Francisco MSA   645   2.4%   2,252   2,098   7.3%   94.8%   94.6%   0.2%        12,815        11,897   7.7%
  Other Northern CA   230   0.8%   1,881   1,725   9.0%   96.8%   96.9%   -0.1%   3,949   3,644   8.4%
Total Northern California   9,184   39.6%   2,236   2,020   10.7%   96.3%   96.2%   0.1%      187,319      169,346   10.6%
                                                 
Seattle Metro   6,558   18.1%   1,478   1,375   7.5%   96.3%   96.0%   0.3%        92,204        85,606   7.7%
                                                 
Total Same-Property   28,617   100.0%    $    1,862    $    1,722   8.1%   96.3%   96.2%   0.1%    $ 490,424    $ 453,791   8.1%
                                                 
(1) Same-property excludes BRE properties acquired April 1, 2014.                      

 

 

 

See Company’s 10-K for additional disclosures
S-9.1
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.       
                                   
Same-Property Operating Expenses - Quarter and Year to Date as of September 30, 2015 and 2014
(Dollars in thousands)                              
                                   
                                   
    Based on 43,134 apartment homes (1)     Based on 28,617 apartment homes (2)
    Q3 ’15   Q3 ’14   % Change   % of Op. Ex.     YTD 2015   YTD 2014   % Change   % of Op. Ex.
                                   
Same-property operating expenses:                                  
Real estate taxes    $27,083    $27,533   -1.6%   33.9%      $    42,726    $    41,902   2.0%   29.7%
Maintenance and repairs      16,060      14,361   11.8%   20.1%           30,273   29,891   1.3%   21.1%
Administrative      14,707      14,993   -1.9%   18.4%           28,958   28,451   1.8%   20.1%
Utilities      13,995      14,117   -0.9%   17.5%           26,860   27,060   -0.7%   18.7%
Management fees (3)       5,401       4,557   18.5%   6.8%      9,862     9,609   2.6%   6.8%
Insurance       2,595       2,498   3.9%   3.3%      5,116     5,232   -2.2%   3.6%
Total same-property operating expenses    $79,841    $78,059   2.3%   100.0%      $  143,795    $  142,145   1.2%   100.0%
                                   
(1) Same-property includes BRE properties acquired starting April 1, 2014.
(2) Same-property excludes BRE properties.
(3) During 2015, the Company changed its allocation to property management fees.

 

 

See Company’s 10-K for additional disclosures
S-10
 

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                                   
                                                           
Development Pipeline - September 30, 2015                              
(Dollars in millions, except per apartment home amounts in thousands and except in footnotes)                  
                                                           

 

  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   Construction Start   Initial Occupancy   Stabilized Operations
                                                           
Development Projects - Consolidated (3)                                                     
  MB 360 Phase II (4)   San Francisco, CA   100%    172    11,500    $112    $23    $135    $135    $744   0.0%   0.0%   Q3 2014   Q4 2015   Q2 2016
  Station Park Green   San Mateo, CA   100%   599    35,000    79   275   354   354   567   0.0%   0.0%   Q3 2015   Q3 2017   Q4 2018
Total Development Projects - Consolidated       771    46,500   191   298   489   489   634                    
                                                           
Land Held for Future Development - Consolidated                                                
  Other Projects   Various   100%            36   -    36     36                        
Total Development Pipeline - Consolidated       771    46,500   227   298   525   525                        
                                                           
Development Projects/Land Held for Future Development - Joint Venture (3)                                        
  Epic - Phase III   San Jose, CA   55%   200     -    82    10    92     51   460   30.0%   55.0%   Q3 2013   Q3 2015   Q1 2016
  One South Market   San Jose, CA   55%   312     6,000   139   2   141     78   445   53.5%   75.6%   Q2 2013   Q2 2015   Q1 2016
  Agora (5)   Walnut Creek, CA   51%    49    35,000    79    16    95     48   1,140   0.0%   0.0%   Q3 2013   Q1 2016   Q2 2016
  Owens   Pleasanton, CA   55%   255     5,729    44    45    89     49   341   0.0%   0.0%   Q3 2014   Q2 2016   Q2 2017
  Hacienda   Pleasanton, CA   55%   251     -    32    54    86     47   343   0.0%   0.0%   Q1 2015   Q3 2016   Q3 2017
  Century Towers   San Jose, CA   50%   376     2,006    80    92   172     86   456   0.0%   0.0%   Q3 2014   Q1 2017   Q1 2018
  500 Folsom (6)   San Francisco, CA   50%   545     6,000    58   323   381   191   691   0.0%   0.0%   Q4 2015   Q4 2018   Q2 2020
Total Development Projects - Joint Venture       1,988   54,735   514   542   1,056   550    $507                    
                                                           
Grand Total - Development Pipeline       2,759   101,235    $741    $840    $ 1,581    1,075                        
Essex Cost Incurred to Date                           (499)                        
Essex Remaining Commitment                            $ 576                        
                                                           

 

(1)The Company’s share of the estimated total costs of the project.
(2)Net of the estimated allocation to the retail component of the project.
(3)For the third quarter of 2015, the Company’s cost includes $3.6 million of capitalized interest, $0.9 million of capitalized overhead and $1.0 million of development fees (such development fees reduced G&A expenses).
(4)To date the Company has received $42.1 million of the expected $45.0 million of insurance proceeds for constructions costs related to the fire that occurred in March 2014.
(5)Apartment homes are built to condominium standards and average approximately 1,600 square feet.
(6)Estimated total cost is net of a projected value for low income housing tax credit proceeds and tax exempt bonds.

 

 

 

See Company’s 10-K for additional disclosures
S-11
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                  
                               
Redevelopment Pipeline - September 30, 2015          
(Dollars in thousands, except per apartment home amounts and in footnotes)      
                               
                               
          Total    Estimated   Estimated       NOI
      Apartment   Incurred   Remaining   Total   Project   For the nine months ended
Region/Project Name (1)    Homes   To Date   Cost   Cost   Start Date   2015 (5)   2014 (5)
                               
Same-property - Redevelopment Projects (2) (3)                            
Northern California                            
Summerhill Park    100    $5,200    $4,700     9,900   Q4 2014        
Southern California                            
Hamptons    215     5,200    18,400    23,600   Q1 2014        
Monterras    292    17,700   8,700    26,400   Q1 2014        
Seattle Metro                            
Park Highland    250     3,800   8,700    12,500   Q4 2014        
Total Same-property - Redevelopment Projects    857    $     31,900    $     40,500    $     72,400        $ 10,009    $ 8,391
                               
Non-same property - Redevelopment Projects                            
Southern California                            
Bunker Hill Towers (4)    456    $     27,900    $     59,500    $     87,400   Q3 2013        
Total Non-same property - Redevelopment Projects    456    $     27,900    $     59,500    $     87,400        $  4,346    $ 4,264
                               
(1) The Company incurred $0.3 million of capitalized interest, $2.0 million of capitalized overhead and $0.2 million of co-investment redevelopment fees related to redevelopment in Q3 2015.
(2) Redevelopment activities are ongoing at these communities, but the communities have stabilized operations, therefore results are classified in same-property results.
(3) During the three and nine months ended September 30, 2015, the Company completed the redevelopment of interiors totaling 859 and 1,752 apartment homes for the same-property portfolio and 1,051 and 2,292 apartment homes for the total portfolio, respectively.
(4) The estimated cost has increased by $11.2 million which reflects the redevelopment of the remaining 228 apartment homes (50% of the property) plus additional revenue generating enhancements to the property.
(5) Park Highland was acquired on April 1, 2014. As a result, the NOI for the nine months ended September 30, 2014 reflects two quarters of NOI, amounting to $1.3 million, as opposed to the NOI for the nine months ended September 30, 2015, which reflects three quarters of NOI, amounting to $2.1 million.

 

 

 

See Company’s 10-K for additional disclosures
S-12
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                        
                                           
Co-investments - September 30, 2015                  
(Dollars in thousands) Essex
Ownership
Percentage		   Apartment
Homes		   Total
Undepreciated
Book Value		   Debt
Amount		   Essex
Book
Value		   Weighted
Average
Borrowing Rate		   Remaining
Term of
Debt (in Years)		   For the Three Months Ended
 September 30, 2015 		   For the Nine Months Ended
September 30, 2015
                                           
Operating Non-Consolidated Joint Ventures                  NOI
                                           
  Wesco I, LLC   50.0%    2,275   $   555,482   $   298,904   $  102,811   3.9%    9.5   $  8,620   $  26,977
  Wesco III, LLC    50.0%   993    234,142    119,773    52,248   3.6%    5.0     3,403    9,975
  Wesco IV, LLC    50.0%    1,116    298,948    155,000    63,257   3.9%    5.4     4,411   12,772
  BEXAEW, LLC     50.0%    2,723    523,336    321,837    89,236   3.0%    5.4     8,170   23,367
  CPPIB     55.0%    1,728    608,373     -   335,474    -   -     9,480   23,012
  Palm Valley    50.0%    1,098    370,832    228,765    69,428   2.5%    1.3     5,391   15,036
  Other     28.2% - 50.0%   275     65,529   51,000   6,162   3.6%    4.9     1,196    4,576
  Total Operating Non-Consolidated Joint Ventures       10,208 $ 2,656,642 $ 1,175,279 $  718,616   3.3%    5.6 $ 40,671   $115,715
Development Non-Consolidated Joint Ventures (1) 50.0% - 55.0%    1,988    513,630   87,303   212,892   1.9%    1.2    304    175
  Total Non-Consolidated Joint Ventures       12,196 $ 3,170,272 $ 1,262,582 $  931,508         $ 40,975   $115,890
                                           
                                       Essex Portion of NOI and Expenses 
  NOI                               $ 20,966 $  59,385
  Depreciation                               (12,800)     (36,822)
  Interest expense and other                                (5,197)     (16,387)
  Promote income                                192    192
  Net income from operating co-investments                             $  3,161 $   6,368
                                           
                                           
                                       Income from Preferred Equity Investments 
                                      For the Three Months Ended
 September 30, 2015		   For the NineMonths Ended
September 30, 2015
                              Weighted Average Preferred Return   Weighted Average Expected Term    
                                   
  Income from preferred equity investments                             $  2,533 $   7,640
  Income from early redemption of preferred equity investments                                 1,485    1,954
Preferred Equity Investments (2)         104,535   9.7%    3.2 $  4,018 $   9,594
                                           
  Total Co-investments       $ 1,036,043         $  7,179 $ 15,962
                                           
  (1)   The Company has interests in seven development co-investments, which are detailed on S-11.
  (2)   As of September 30, 2015 the Company has invested in eight preferred equity investments.    

 

 

 

See Company’s 10-K for additional disclosures
S-13
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.          
Assumptions for 2015 FFO Guidance Range      
Q3 2015 Earnings Results Supplement        
                 
($’s in thousands, except share and per share data) (1)   YTD   2015 Guidance Range    
    Actuals   Low End   High End   Changes from Guidance Provided on Q2 ’15 Earnings Release
Net Operating Income (“NOI”)                
Total NOI from consolidated communities    $   605,485    $  817,400    $  820,400   Reflects actual results through Q3 ’15, revised same-property NOI growth to a midpoint of 10.6% for the full-year and investment activity through October.
                 
Management Fees      6,434    8,300    8,700    
                 
Interest Expense                
   Interest expense, before capitalized interest        (160,433)       (215,000)       (214,000)   Updated to reflect refinancings and timing of capital markets activities.
   Forecasted interest capitalized    12,200   15,400   15,900    
    Net interest expense        (148,233)       (199,600)       (198,100)    
                 
Recurring Income and Expenses                
Interest and other income    10,152   13,700   14,100    
FFO from co-investments    50,638   68,800   69,900    
General and administrative expense   (31,223)         (41,200)         (42,200)    
Preferred dividends and non-controlling interest   (10,874)         (14,900)         (14,300)    
  Total recurring income and expenses    18,693   26,400   27,500    
                 
Non-Core Income and Expenses                 
Promote income from co-investment        192       192       192    
Gains on sales of marketable securities and land        598       598       598    
Income from early redemption of preferred equity investment     1,954    1,954    1,954    
Loss on early retirement of debt   -      (6,200)   (5,800)    
Merger and integration expenses    (3,798)   (4,200)   (3,800)    
Acquisition and investment related costs    (1,357)   (1,400)   (1,800)    
Other non-core adjustments     2,526    2,526    2,526    
  Total non-core income and expenses        115   (6,530)   (6,130)    
                 
Funds from Operations attributable to common stockholders and unitholders    $   482,494    $  645,970    $  652,370    
                 
Funds from Operations per diluted Share    $ 7.19    $9.60    $9.69    
                 
% Change - Funds from Operations    29.5%   21.7%   22.9%    
                 
Funds from Operations excluding non-core items attributable to common stockholders and unitholders    $   482,379    $  652,500    $  658,500    
                 
Core Funds from Operations per diluted Share    $ 7.19    $9.70    $9.78    
                 
% Change - Core Funds from Operations    14.5%   13.5%   14.6%    
                 
Weighted average shares outstanding    67,135   67,300   67,300    
                 
(1) All non-core items are excluded from the YTD actuals and included in the non-core income and expense section of the FFO reconciliation.

 

 

See Company’s 10-K for additional disclosures
S-14
 

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                      
                         
Summary of Apartment Community Acquisitions and Dispositions Activity            
Year to date as of September 30, 2015                     
(Dollars in thousands, except average rent amounts and in footnotes)          
                         
Acquisitions        Essex              
      Apartment   Ownership       Purchase   Price per Average 
Property Name Location  Homes    Percentage Entity Date   Price   Apartment Home Rent
                         
  8th & Hope Los Angeles, CA 290   100.0% EPLP Feb-15    $200,000    $    690  $    3,708
  The Huxley (1) Los Angeles, CA 187   100.0% EPLP Mar-15        48,784         522 2,439
  The Dylan (1) Los Angeles, CA 184   100.0% EPLP Mar-15        51,266         557 2,646
                         
    Q1 2015 661            $300,050    $    605  
                         
  Reveal (2) Woodland Hills, CA 438   99.75% EPLP Apr-15    $  73,013    $    337  $    1,936
  Avant Los Angeles, CA 247   100.0% EPLP Jun-15        99,000         401 2,281
    Q2 2015 685            $172,013    $    360  
                         
Dispositions (3)       Essex              
      Apartment   Ownership       Sales   Price per  
Property Name Location  Homes    Percentage Entity Date   Price   Apartment Home  
                         
  Pinnacle South Mountain Phoenix, AZ    552   100.0% EPLP Jan-15    $  63,750    $    115  
                         
    Q1 2015    552            $  63,750         115  
                         
(1)  In March 2015, the Company purchased the joint venture partner’s remaining membership interest in The Huxley and The Dylan co-investments for a purchase price of $100.1 million. The properties are now consolidated.
(2) In April 2015, the Company purchased the joint venture partner’s 49.5% membership interest in the Reveal co-investment for a purchase price of $73.0 million.
(3) In March 2015, the Company sold two commercial buildings aggregating 120,000 square feet located in Emeryville, CA for $13.0 million.

 

 

 

See Company’s 10-K for additional disclosures
S-15
 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.                
Preliminary 2016 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions    
    Residential Supply (1)   Job Forecast (2)   Market Forecast (3)
Market   New MF Supply New SF Supply Total Supply % of MF Supply to MF Stock % of Total Supply to Total Stock   Est. New Jobs Dec-Dec  % Growth   Economic Rent Growth
                       
Los Angeles   10,000 5,700 15,700 0.6% 0.4%   94,600 2.2%   5.4%
Orange   2,850 3,800 6,650 0.7% 0.6%   33,600 2.2%   5.2%
San Diego   3,300 3,800 7,100 0.7% 0.6%   34,500 2.5%   4.9%
Ventura   150 700 850 0.2% 0.3%   5,350 1.8%   5.4%
So. Cal.   16,300 14,000 30,300 0.6% 0.5%   168,050 2.2%   5.2%
                       
San Francisco   4,400 650 5,050 1.1% 0.7%   34,700 3.0%   7.8%
Oakland   1,600 4,300 5,900 0.5% 0.6%   29,300 2.7%   7.0%
San Jose   5,250 2,100 7,350 2.0% 1.1%   31,300 3.0%   7.7%
No. Cal.   11,250 7,050 18,300 1.3% 0.8%   95,300 2.9%   7.5%
                       
Seattle   8,450 7,600 16,050 1.7% 1.3%   43,100 2.7%   4.9%
                       
Weighted Average (4)   36,000 28,650 64,650 1.1% 0.8%   306,450 2.5%   6.0%
                       
All data are based on Essex Property Trust, Inc. forecasts.                
                       
U.S. Economic Assumptions: 2016 G.D.P. Growth:  2.8% , 2016 Job Growth: 2.0%   
                       
(1) New Residential Supply: MF reflects Company’s internal estimate of actual multifamily deliveries; SF is based on 12 month single family trailing permits reported by the US Census Bureau.
                       
(2) Job Forecast:  refers to the difference between total non-farm industry employment (not seasonally adjusted) projected through full year 2016 vs 2015, expressed as total new jobs and growth rates.
                       
(3) Market Forecast:  the estimated rent growth represents the forecasted change in effective market rents for full year 2016 vs 2015 (excludes submarkets not targeted by Essex).
                       
(4) Weighted Average: markets weighted by scheduled rent in the Company’s Portfolio.

 

 

See Company’s 10-K for additional disclosures
S-16