EX-99.2 3 s001186x1_ex99-2.htm EXHIBIT 99.2

Exhibit 99.2

 

See Company's 10-K and 10-Q for additional disclosures
 

Q4 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 – December 31, 2015  S-5
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – December 31, 2015  S-6
Portfolio Summary by County – December 31, 2015  S-7
Operating Income by Quarter – December 31, 2015  S-8
Same-Property Revenue Results by County – Quarters ended December 31, 2015 and 2014, and September 30, 2015  S-9
Same-Property Revenue Results by County – Years ended December 31, 2015 and 2014  S-9.1
Same-Property Operating Expenses  S-10
Development Pipeline – December 31, 2015  S-11
Redevelopment Pipeline – December 31, 2015  S-12
Co-Investments – December 31, 2015  S-13
Assumptions for 2016 FFO Guidance Range  S-14
Summary of Apartment Community Acquisitions and Dispositions Activity  S-15
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   Twelve Months Ended
(Dollars in thousands, except share and per share amounts)   December 31,   December 31,
   2015  2014 (1)    2015  2014 (1)
                 
Revenues:                    
Rental and other property  $308,646   $276,778   $1,185,498   $961,591 
Management and other fees   2,100    2,490    8,909    9,347 
    310,746    279,268    1,194,407    970,938 
                     
Expenses:                    
Property operating   92,141    88,621    363,508    312,546 
Depreciation and amortization   116,477    106,703    453,423    360,592 
General and administrative   8,867    12,256    40,090    40,878 
Merger and integration expenses   —      7,116    3,798    53,530 
Acquisition and investment related costs   1,057    1,109    2,414    1,878 
    218,542    215,805    863,233    769,424 
Earnings from operations   92,204    63,463    331,174    201,514 
                     
Interest expense, net (2)   (50,771)   (47,529)   (199,172)   (164,551)
Interest and other income   4,323    3,126    19,143    11,811 
Equity income from co-investments   5,899    18,828    21,861    39,893 
Loss on early retirement of debt   (6,114)   (268)   (6,114)   (268)
Gain on sale of real estate and land   40,221    7,185    47,333    46,039 
Gain on remeasurement of co-investment   —      —      34,014    —   
Net income   85,762    44,805    248,239    134,438 
Net income attributable to noncontrolling interest   (4,824)   (3,316)   (16,119)   (12,288)
Net income attributable to controlling interest   80,938    41,489    232,120    122,150 
Dividends to preferred stockholders   (1,314)   (1,314)   (5,255)   (5,291)
Net income available to common stockholders  $79,624   $40,175   $226,865   $116,859 
                     
Net income per share - basic  $1.22   $0.63   $3.50   $2.07 
                     
Shares used in income per share - basic   65,336,773    63,362,624    64,871,717    56,546,959 
                     
Net income per share - diluted  $1.22   $0.63   $3.49   $2.06 
                     
Shares used in income per share - diluted   65,519,438    63,544,534    65,061,685    56,696,525 

 

(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 results.
(2)  Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges.

 

See Company's 10-K and 10-Q 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  Twelve Months Ended
Selected Line Item Detail  December 31,  December 31,
(Dollars in thousands)  2015  2014  2015  2014
             
Rental and other property                    
Rental  $288,119   $258,995   $1,108,758   $896,278 
Other property   20,527    17,783    76,740    65,313 
Rental and other property  $308,646   $276,778   $1,185,498   $961,591 
                     
Property operating expenses                    
Real estate taxes  $30,734   $30,421   $128,555   $107,873 
Administrative and insurance   18,765    19,551    74,868    69,931 
Maintenance and repairs   20,352    17,792    73,002    60,234 
Utilities   15,988    15,659    62,196    55,718 
Property management   6,302    5,198    24,887    18,790 
Property operating expenses  $92,141   $88,621   $363,508   $312,546 
                     
                     
Interest and other income                    
Marketable securities and other interest income  $4,323   $3,126   $14,475   $10,925 
Gain from sale of marketable securities, note prepayment, and other investments   —      —      598    886 
Insurance reimbursements   —      —      4,070    —   
Interest and other income  $4,323   $3,126   $19,143   $11,811 
                     
Equity income from co-investments                    
Equity income from co-investments  $3,541   $778   $9,716   $2,356 
Income from preferred equity investments   2,358    3,717    9,999    15,089 
Gain on sale of co-investment communities   —      3,347    —      6,558 
Co-investment promote income   —      5,736    192    10,640 
Income from early redemption of preferred equity investments   —      5,250    1,954    5,250 
Equity income from co-investments  $5,899   $18,828   $21,861   $39,893 
                     
Noncontrolling interest                    
Limited partners of Essex Portfolio, L.P.  $2,710   $1,469   $7,824   $4,911 
DownREIT limited partners' distributions   1,297    1,142    5,191    4,705 
Third-party ownership interest   817    705    3,104    2,672 
Noncontrolling interest  $4,824   $3,316   $16,119   $12,288 

 

See Company's 10-K and 10-Q 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     Twelve Months Ended   
(Dollars in thousands, except share and per share amounts and in footnotes)  December 31,     December 31,   
   2015  2014  % Change  2015  2014  % Change
                   
Funds from operations attributable to common stockholders and unitholders (FFO)                              
Net income available to common stockholders  $79,624   $40,175        $226,865   $116,859      
Adjustments:                              
Depreciation and amortization   116,477    106,703         453,423    360,592      
Gains not included in FFO   (40,221)   (8,399)        (81,347)   (50,064)     
Depreciation add back from unconsolidated co-investments   13,004    10,915         49,826    33,975      
Noncontrolling interest related to Operating Partnership units   2,710    1,469         7,824    4,911      
Insurance reimbursements (1)    —      —           (1,751)   —        
Depreciation attributable to third party ownership and other (2)   (28)   (335)        (781)   (1,331)     
Funds from operations attributable to common stockholders and unitholders  $171,566   $150,528        $654,059   $464,942      
FFO per share-diluted  $2.53   $2.29    10.5%  $9.72   $7.89    23.2%
                               
Components of the change in FFO                              
Non-core items:                              
Merger and integration expenses  $—      7,116        $3,798    53,530      
Acquisition and investment related costs   1,057    1,109         2,414    1,878      
Gain on sale of marketable securities, note prepayment, and other investments   —      —           (598)   (886)     
Gain on sale of land   —      (2,133)        —      (2,533)     
Loss on early retirement of debt   6,114    268         6,114    268      
Co-investment promote income   —      (5,736)        (192)   (10,640)     
Income from early redemption of preferred equity investments   —      (5,250)        (1,954)   (5,250)     
Insurance reimbursments   —      —           (2,319)   —        
Other non-core adjustments   (444)   1,142         (651)   1,852      
Core funds from operations attributable to common stockholders and unitholders   178,293    147,044         660,671    503,161      
Core FFO per share-diluted  $2.63   $2.24    17.4%  $9.82   $8.54    15.0%
                               
Changes in core items:                              
Same-property NOI  $15,164             $114,324           
Non-same property NOI   12,854              58,527           
Management and other fees, net   (390)             (313)          
FFO from co-investments   3,441              18,040           
Interest and other income   1,197              3,550           
Interest expense   (3,242)             (34,621)          
General and administrative   2,185              (1,665)          
Other items, net   40              (332)          
   $31,249             $157,510           
                               
Weighted average number of shares outstanding diluted (3)   67,785,975    65,740,227         67,310,148    58,921,232      

 

(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 twelve months ended December 31, 2015 was $1.0 million and $3.9 million, respectively.
(3) Assumes conversion of all outstanding operating partnership interests in the Operating Partnership and excludes 744,346 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 and 10-Q 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)
   December 31, 2015  December 31, 2014
       
Real Estate:          
Land and land improvements  $2,522,842   $2,424,930 
Buildings and improvements   9,808,627    8,819,751 
    12,331,469    11,244,681 
Less:  accumulated depreciation   (1,949,892)   (1,564,806)
    10,381,577    9,679,875 
Real estate under development   242,326    429,096 
Co-investments   1,036,047    1,042,423 
Real estate held for sale, net   26,879    56,300 
    11,686,829    11,207,694 
Cash and cash equivalents   123,055    95,749 
Marketable securities and other investments   137,485    117,240 
Notes and other receivables   19,285    24,923 
Acquired in-place lease value, net   2,857    47,748 
Prepaid expenses and other assets   35,580    33,378 
Total assets  $12,005,091   $11,526,732 
           
Unsecured debt, net  $3,088,680   $2,603,548 
Mortgage notes payable, net   2,215,077    2,234,317 
Lines of credit, net   11,707    242,824 
Other liabilities   307,152    286,719 
Total liabilities   5,622,616    5,367,408 
Redeemable noncontrolling interest   45,452    23,256 
Equity:          
Common stock   6    6 
Cumulative redeemable preferred stock, liquidation value   73,750    73,750 
Additional paid-in capital   7,003,317    6,651,165 
Distributions in excess of accumulated earnings   (797,329)   (650,797)
Accumulated other comprehensive loss, net   (42,011)   (51,452)
Total stockholders' equity   6,237,733    6,022,672 
Noncontrolling interest   99,290    113,396 
Total equity   6,337,023    6,136,068 
Total liabilities and equity  $12,005,091   $11,526,732 

 

See Company's 10-K and 10-Q 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 - December 31, 2015
(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                       
    Balance Outstanding  Interest Rate  Maturity In Years     Unsecured  Secured  Unamortized
premiums
(discounts) and
(debt issuance
costs)		  Total  Weighted Average Interest Rate  Percentage of Total Debt
Unsecured Debt, net                                                   
Bonds private - fixed rate    465,000    4.5%   3.2    2016   $350,000   $29,714   $24,803   $404,517    3.3%   7.6%
Bonds public - fixed rate    2,400,000    3.5%   6.7    2017    365,000    199,180    16,324    580,504    3.2%   11.0%
Term loan (1)    225,000    2.4%   0.9    2018    —      320,622    13,246    333,868    5.4%   6.3%
Unamortized net premiums and debt issuance costs    (1,320)   —      —      2019    75,000    586,212    8,654    669,866    4.3%   12.6%
     3,088,680    3.6%   5.8    2020    —      693,088    3,323    696,411    5.0%   13.1%
Mortgage Notes Payable, net                   2021    500,000    50,764    (3,430)   547,334    4.3%   10.3%
Fixed rate - secured   $1,866,558    4.9%   3.6    2022    300,000    774    (3,873)   296,901    3.7%   5.6%
Variable rate - secured (2)    291,709    1.2%   22.6    2023    600,000    846    (1,603)   599,243    3.6%   11.3%
Unamortized premiums and debt issuance costs    56,810    —      —      2024    400,000    925    (899)   400,026    4.0%   7.6%
Total mortgage notes payable    2,215,077    4.4%   6.1    2025    500,000    14,611    (212)   514,399    3.5%   9.7%
                    2026    —      1,106    (102)   1,004    1.1%   0.0%
Unsecured Lines of Credit, net                   Thereafter    —      260,425    (741)   259,684    1.2%   4.9%
Line of credit (3)    15,000    1.9%                                        
Line of credit (4)    —      —           Total   $3,090,000   $2,158,267   $55,490   $5,303,757    3.9%   100.0%
Unamortized debt issuance costs    (3,293)   —                                           
Total lines of credit (5)    11,707    1.9%                                        
                                                    
Total debt, net   $5,315,464    3.9%                                        

 

Capitalized interest for the three and twelve months ended December 31, 2015 was approximately $3.4 million and $15.6 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) $281.7 million of $291.7 million of variable rate debt is tax exempt to the note holders and $267.3 million is subject to interest rate protection agreements or total return swap contracts.
(3) The unsecured line of credit facility aggregates to $1 billion. In January 2016, the line maturity was extended to December 2019 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 0.90%.
(4) The unsecured line of credit facility is $25 million. In January 2016, the maturity was extended to January 2018. 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 0.90%.

 

See Company's 10-K and 10-Q 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 - December 31, 2015

(Dollars and shares in thousands, except per share amounts)

 

Capitalization Data         Public Bond Covenants Actual   Requirement    
Total debt, net     $ 5,315,464                  
                Debt to Total Assets:   38%   < 65%    
Common stock and potentially dilutive securities                      
  Common stock outstanding   65,379                  
  Limited partnership units (1)   2,295                  
  Options-treasury method   238     Secured Debt to Total Assets:   16%   < 40%    
Total shares of common stock and potentially dilutive securities   67,912                  
                             
Common stock price per share as of December 31, 2015 $ 239.41                  
                Interest Coverage:   357%   > 150%    
Market value of common stock and potentially dilutive securities $ 16,258,812                  
                             
Preferred stock     $ 73,750     Unsecured Debt Ratio (1) :   292%   > 150%    
                             
Total equity capitalization   $ 16,332,562                  
              Selected Credit Ratios   Actual        
Total market capitalization $ 21,648,026                 
Ratio of debt to total market capitalization   24.6%     Net Indebtedness Divided by Adjusted EBITDA (2) (3):   5.8        
                             
                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, discounts, 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 and 10-Q 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 December 31, 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   9,438    1,618    —      11,056   $2,212   $1,878   $2,185    20.1%   14.1%   19.5%
Orange County   5,786    1,144    —      6,930    1,951    1,654    1,924    11.3%   8.5%   11.0%
San Diego County   4,962    616    —      5,578    1,709    1,561    1,700    8.2%   4.2%   7.8%
Ventura County   2,898    373    —      3,271    1,610    2,017    1,635    4.8%   3.3%   4.7%
Other Southern CA   623    581    —      1,204    1,516    1,628    1,552    0.9%   4.4%   1.3%
Total Southern California   23,707    4,332    —      28,039    1,949    1,752    1,932    45.3%   34.5%   44.3%
Northern California                                                  
Santa Clara County   6,057    2,477    376    8,910    2,558    2,615    2,568    16.2%   26.1%   17.2%
Alameda County   3,138    1,293    —      4,431    2,340    2,220    2,319    7.2%   13.9%   7.9%
San Mateo County   1,830    197    599    2,626    2,677    2,708    2,679    5.2%   2.7%   4.9%
Contra Costa County   2,270    —      555    2,825    2,139    —      2,139    5.1%   —      4.6%
San Francisco MSA   1,341    463    545    2,349    3,011    3,503    3,089    3.5%   8.0%   3.9%
Other Northern CA   230    —      —      230    2,054    —      2,054    0.5%   —      0.4%
Total Northern California   14,866    4,430    2,075    21,371    2,495    2,603    2,510    37.7%   50.7%   38.9%
Seattle Metro   10,239    1,958    —      12,197    1,599    1,478    1,589    17.0%   14.8%   16.8%
Total   48,812    10,720    2,075    61,607   $2,040   $2,065   $2,043    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 December 31, 2015.
(3) Includes all apartment communities with rents including one development community in lease-up which consists of 172 apartment homes, excluding commercial space.
(4) Includes one rental income producing development community in lease-up which consists of 200 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 and 10-Q 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, except in footnotes)

 

   Apartment Homes  Q4 '15  Q3 '15  Q2 '15  Q1 '15  Q4 '14
                   
Rental and other property revenues:                              
Same-property (2)   42,734   $257,824   $254,157   $248,287   $242,759   $239,873 
Acquisitions (3)   3,791    24,445    23,099    20,255    14,269    12,579 
Development (4)   1,503    12,482    12,038    11,273    9,753    8,146 
Redevelopment   680    4,293    4,214    4,078    3,979    4,134 
Non-Residential/Other, net (5)   104    9,602    9,014    10,208    9,469    12,046 
Total rental and other property revenues   48,812    308,646    302,522    294,101    280,229    276,778 
                               
Property operating expenses:                              
Same-property (2)        78,627    78,682    76,068    74,883    75,840 
Acquisitions (3)        8,526    8,003    7,256    4,867    4,166 
Development (4)        3,651    4,024    3,868    3,355    3,167 
Redevelopment        1,653    1,611    1,534    1,539    1,515 
Non-Residential/Other, net (5) (6)        (316)   1,799    1,351    2,527    3,933 
Total property operating expenses        92,141    94,119    90,077    87,171    88,621 
                               
Net operating income (NOI):                              
Same-property (2)        179,197    175,475    172,219    167,876    164,033 
Acquisitions (3)        15,919    15,096    12,999    9,402    8,413 
Development (4)        8,831    8,014    7,405    6,398    4,979 
Redevelopment        2,640    2,603    2,544    2,440    2,619 
Non-Residential/Other, net (5)        9,918    7,215    8,857    6,942    8,113 
Total NOI       $216,505   $208,403   $204,024   $193,058   $188,157 
                               
Same-property metrics                              
Operating margin        70%   69%   69%   69%   68%
Annualized turnover (7)        44%   60%   55%   44%   45%
Financial occupancy (8)        96.1%   96.0%   96.1%   96.1%   96.3%

 

(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, held for sale properties, and disposition properties.
(6) Includes other expenses and intercompany eliminations pertaining to self-insurance. In Q4'15 there were $1.9 million in reductions to operating expenses related to changes in prior period property tax estimates.
(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 and 10-Q 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 - Fourth Quarter 2015 vs. Fourth Quarter 2014 and Third 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		  Q4 '15 %
of Actual
NOI		  Q4 '15  Q4 '14  % Change  Q4 '15  Q4 '14  % Change  Q4 '15  Q4 '14  % Change  Q3 '15  % Change
Southern California                                                                 
Los Angeles County   6,844    16.7%  $2,138   $2,020    5.8%   96.0%   95.9%   0.1%  $44,007   $41,331    6.5%  $43,303    1.6%
Orange County   5,786    13.0%   1,951    1,849    5.5%   96.2%   96.7%   -0.5%   34,103    32,532    4.8%   33,835    0.8%
San Diego County   4,583    8.7%   1,694    1,597    6.1%   96.0%   96.5%   -0.5%   23,696    22,400    5.8%   23,202    2.1%
Ventura County   2,898    5.6%   1,610    1,514    6.3%   96.0%   96.4%   -0.4%   14,288    13,500    5.8%   14,170    0.8%
Other Southern CA   623    1.1%   1,516    1,407    7.7%   99.0%   98.8%   0.2%   2,959    2,773    6.7%   2,676    10.6%
Total Southern California   20,734    45.1%   1,895    1,789    5.9%   96.1%   96.4%   -0.3%   119,053    112,536    5.8%   117,186    1.6%
Northern California                                                                 
Santa Clara County   5,228    16.5%   2,504    2,285    9.6%   96.1%   96.2%   -0.1%   39,530    36,112    9.5%   39,078    1.2%
Alameda County   2,613    7.1%   2,309    2,048    12.7%   95.2%   96.8%   -1.7%   18,184    16,438    10.6%   17,935    1.4%
San Mateo County   1,566    4.9%   2,560    2,344    9.2%   96.4%   96.1%   0.3%   12,242    11,186    9.4%   12,098    1.2%
Contra Costa County   2,270    5.9%   2,139    1,954    9.5%   96.6%   96.1%   0.5%   14,799    13,574    9.0%   14,625    1.2%
San Francisco MSA   816    2.2%   2,394    2,219    7.9%   96.1%   95.5%   0.6%   5,884    5,405    8.9%   5,745    2.4%
Other Northern CA   126    0.4%   2,232    1,899    17.5%   99.3%   98.8%   0.5%   857    739    16.0%   790    8.5%
Total Northern California   12,619    37.0%   2,395    2,176    10.1%   96.1%   96.3%   -0.2%   91,496    83,454    9.6%   90,271    1.4%
Seattle Metro   9,381    17.9%   1,594    1,483    7.5%   96.2%   95.9%   0.3%   47,275    43,883    7.7%   46,700    1.2%
Total Same-Property   42,734    100.0%  $1,977   $1,836    7.7%   96.1%   96.3%   -0.2%  $257,824   $239,873    7.5%  $254,157    1.4%

 

(1) Same-property includes BRE properties acquired April 1, 2014, excluding properties held for sale.

 

 

See Company's 10-K and 10-Q 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 - Twelve months ended December 31, 2015 vs. Twelve months ended December 31, 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%    $   2,036    $   1,920   6.0%   96.1%   96.2%   -0.1%    $  108,467    $  102,540   5.8%
  Orange County   2,887   10.7%         2,061         1,941   6.2%   96.3%   96.1%   0.2%          72,093          67,604   6.6%
  San Diego County   2,067   5.1%         1,397         1,308   6.8%   96.1%   96.4%   -0.3%          35,716          33,747   5.8%
  Ventura County   2,898   8.5%         1,569         1,481   5.9%   96.3%   96.5%   -0.2%          56,011          53,077   5.5%
  Other Southern CA   623   1.5%         1,464         1,365   7.3%   96.8%   96.8%   0.0%          11,148          10,445   6.7%
Total Southern California   12,875   42.2%         1,806         1,701   6.2%   96.2%   96.3%   -0.1%        283,435        267,413   6.0%
                                                 
Northern California                                            
  Santa Clara County   4,279   20.3%         2,402         2,173   10.5%   96.2%   96.1%   0.1%        124,408        112,406   10.7%
  Alameda County   1,542   6.1%         2,086         1,848   12.9%   96.3%   96.9%   -0.6%          39,506          35,478   11.4%
  San Mateo County   768   3.6%         2,470         2,235   10.5%   96.8%   96.6%   0.2%          23,442          21,232   10.4%
  Contra Costa County   1,720   6.6%         2,029         1,842   10.2%   96.6%   96.3%   0.3%          42,681          38,686   10.3%
  San Francisco MSA   645   2.5%         2,277         2,116   7.6%   95.0%   94.7%   0.3%          17,314          16,025   8.0%
  Other Northern CA   126   0.5%         2,058         1,848   11.4%   97.6%   97.8%   -0.2%           3,127            2,852   9.6%
Total Northern California   9,080   39.6%         2,270         2,052   10.6%   96.3%   96.2%   0.1%        250,478        226,679   10.5%
                                                 
Seattle Metro   6,558   18.2%         1,493         1,388   7.6%   96.2%   96.0%   0.2%        124,143        115,219   7.7%
                                                 
Total Same-Property   28,513   100.0%    $   1,882    $   1,741   8.1%   96.2%   96.2%   0.0%    $  658,056    $  609,311   8.0%

 

(1) Same-property excludes BRE properties acquired April 1, 2014, and properties held for sale.

 

 

 

See Company's 10-K and 10-Q 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 December 31, 2015 and 2014
(Dollars in thousands)
                                     
                                     
    Based on 42,734 apartment homes (1)       Based on 28,513 apartment homes (2)
    Q4 '15   Q4 '14   % Change   % of
Op. Ex.		       YTD 2015   YTD 2014   % Change   % of Op. Ex.
                                     
Same-property operating expenses:                                    
Real estate taxes    $       25,729    $       25,170   2.2%   32.7%        $           56,891    $           55,147   3.2%   29.4%
Maintenance and repairs             17,379             15,722   10.5%   22.1%                    42,104                 40,431   4.1%   21.8%
Administrative             14,212             14,487   -1.9%   18.1%                    38,584                 38,285   0.8%   19.9%
Utilities             13,395             13,463   -0.5%   17.0%                    36,068                 35,946   0.3%   18.6%
Management fees (3)              5,342              4,518   18.2%   6.8%                    13,084                 12,751   2.6%   6.8%
Insurance              2,570              2,480   3.6%   3.3%                      6,792                   6,950   -2.3%   3.5%
Total same-property operating expenses    $       78,627    $       75,840   3.7%   100.0%        $         193,523    $         189,510   2.1%   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 and 10-Q 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 - December 31, 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    $       119    $         16    $       135    $           135    $       744   21.3%   66.0%   Q3 2014   Q4 2015   Q2 2016
  Station Park Green   San Mateo, CA   100%             599           35,000              83             271             354                 354             567   0.0%   0.0%   Q3 2015   Q3 2017   Q4 2018
Total Development Projects - Consolidated             771           46,500             202             287             489                 489             634                    
                                                           
Land Held for Future Development - Consolidated                
  Other Projects   Various   100%                      40                 -              40                   40                        
Total Development Pipeline - Consolidated             771           46,500             242             287             529                 529                        
                                                           
Development Projects/Land Held for Future Development - Joint Venture (3)          
  Epic - Phase III   San Jose, CA   55%             200                   -              84                8              92                   51             460   75.3%   82.0%   Q3 2013   Q3 2015   Q1 2016
  Agora (5) Walnut Creek, CA 51%            49           32,188              84              11              95                   48          1,140   0.0%   0.0%   Q3 2013   Q1 2016   Q2 2016
  Owens   Pleasanton, CA   55%             255            5,729              55              34              89                   49             341   0.0%   0.0%   Q3 2014   Q2 2016   Q2 2017
  Hacienda   Pleasanton, CA   55%             251                   -              37              49              86                   47             343   0.0%   0.0%   Q1 2015   Q3 2016   Q3 2017
  Century Towers   San Jose, CA   50%             376            2,006              93              79             172                   86             456   0.0%   0.0%   Q3 2014   Q1 2017   Q1 2018
  500 Folsom (6)   San Francisco, CA   50%             545            6,000              62             319             381                 191             691   0.0%   0.0%   Q4 2015   Q4 2018   Q2 2020
Total Development Projects - Joint Venture   1,676   45,923             415             500             915                 472    $       517                    
                                                           
Grand Total - Development Pipeline          2,447           92,423    $       657    $       787    $    1,444              1,001                        
Essex Cost Incurred to Date                                    (459)                        
Essex Remaining Commitment              $           542                        

 

(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 fourth quarter of 2015, the Company's cost includes $3.2 million of capitalized interest, $0.2 million of capitalized overhead and $0.8 million of development fees (such development fees reduced G&A expenses).
(4) To date the Company has received $43.9 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 and 10-Q 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 - December 31, 2015
(Dollars in thousands, except per apartment home amounts and in footnotes)
                               
                               
          Total    Estimated   Estimated       NOI
      Apartment   Incurred   Remaining   Total   Project   For the year ended
Region/Project Name (1)    Homes   To Date   Cost   Cost   Start Date   2015 (4)   2014 (4)
                               
Same-property - Redevelopment Projects (2) (3)                            
Northern California                            
Summerhill Park                  100    $       7,300    $       2,600            9,900   Q4 2014        
Southern California                            
Hamptons                  215            7,200           16,400           23,600   Q1 2014        
Monterras                  292           20,300   6,100           26,400   Q1 2014        
Seattle Metro                            
Park Highland                  250            7,600   4,900           12,500   Q4 2014        
Total Same-property - Redevelopment Projects                  857    $     42,400    $     30,000    $     72,400        $        13,557    $       11,544
                               
Non-same property - Redevelopment Projects                            
Southern California                            
Bunker Hill Towers                  456    $     34,900    $     52,500    $     87,400   Q3 2013        
Total Non-same property - Redevelopment Projects                  456    $     34,900    $     52,500    $     87,400        $         5,893    $        5,656
                               

                               
(1) The Company incurred $0.2 million of capitalized interest, $2.4 million of capitalized overhead and $0.2 million of co-investment redevelopment fees related to redevelopment in Q4 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 twelve months ended December 31, 2015, the Company completed the redevelopment of interiors totaling 618 and 2,370 apartment homes for the same-property portfolio and 704 and 2,996 apartment homes for the total portfolio, respectively.
(4) Park Highland was acquired on April 1, 2014. As a result, the NOI for the twelve months ended December 31, 2014 reflects three quarters of NOI, amounting to $2.0 million, as opposed to the NOI for the twelve months ended December 31, 2015, which reflects four quarters of NOI, amounting to $2.9 million.

 

See Company's 10-K and 10-Q for additional disclosures
S-12
 

 

E S S E XP R O P E R T YT R U S T, I N C.

Co-investments - December 31, 2015

 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
December 31,
2015		 For the Twelve
Months Ended
December 31,
2015
(Dollars in thousands)
Operating Non-Consolidated Joint Ventures NOI
Wesco I, LLC 50.0% 2,275 $ 558,009 $ 297,181 $ 102,476 3.9% 9.3 $ 9,206 $ 36,183
Wesco III, LLC 50.0% 993 237,690 129,599 53,009 3.3% 4.7 3,672 13,647
Wesco IV, LLC 50.0% 1,116 300,474 155,000 63,417 3.9% 5.2 4,495 17,267
BEXAEW, LLC 50.0% 2,723 525,540 321,778 88,850 3.0% 5.2 8,183 31,550
CPPIB 55.0% 1,728 614,651 - 329,723 - - 9,254 32,266
Palm Valley 50.0% 1,098 370,832 227,011 68,525 2.5% 1.1 4,943 19,979
Other 28.2% - 55.0% 587 200,147 134,741 32,927 2.0% 2.6 2,349 7,020
Total Operating Non-Consolidated Joint Ventures 10,520 $ 2,807,343 $ 1,265,310 $ 738,927 3.2% 5.1 $ 42,102 $ 157,912
Development Non-Consolidated Joint Ventures (1) 50.0% - 55.0% 1,676 414,950 24,808 190,808 3.3% 1.7 531 611
Total Non-Consolidated Joint Ventures 12,196 $ 3,222,293 $ 1,290,118 $ 929,735 $ 42,633 $ 158,523
Essex Portion of NOI and Expenses
NOI $ 21,880 $ 81,265
Depreciation (13,004) (49,826)
Interest expense and other (5,335) (21,723)
Promote income - 192
Net income from operating co-investments $ 3,541 $ 9,908
Income from Preferred Equity Investments
For the Three Months Ended
December 31, 2015		 For the TwelveMonths Ended
December 31, 2015
Weighted Average Preferred Return Weighted Average Expected Term
Income from preferred equity investments $ 2,358 $ 9,999
Income from early redemption of preferred equity investments - 1,954
Preferred Equity Investments (2) $ 106,312 9.8% 2.9 $ 2,358 $ 11,953
Total Co-investments $ 1,036,047 $ 5,899 $ 21,861

 

   
(1) The Company has interests in six development co-investments, which are detailed on S-11.
(2) As of December 31, 2015 the Company has invested in eight preferred equity investments.

 

See Company's 10-K and 10-Q 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 2016 FFO Guidance Range
Q4 2015 Earnings Results Supplement
          
($'s in thousands, except share and per share data) (1)  YTD  2016 Guidance Range
    Actuals    Low End    High End 
Net Operating Income ("NOI")               
Total NOI from consolidated communities  $821,990   $889,900   $908,100 
                
Management Fees   8,534    7,900    8,900 
                
Interest Expense               
Interest expense, before capitalized interest   (214,574)   (219,600)   (215,600)
Forecasted interest capitalized   15,570    12,800    14,800 
Net interest expense   (199,004)   (206,800)   (200,800)
                
Recurring Income and Expenses               
Interest and other income   14,476    16,600    17,600 
FFO from co-investments   69,540    78,800    81,700 
General and administrative expense   (40,534)   (41,500)   (43,500)
Preferred dividends and non-controlling interest   (14,331)   (14,000)   (13,600)
Total recurring income and expenses   29,151    39,900    42,200 
                
Non-Core Income and Expenses               
Promote income from co-investment   192           
Gains on sales of marketable securities and land   598           
Income from early redemption of preferred equity investment   1,954           
Loss on early retirement of debt and redemption costs   (6,114)   (3,000)   (2,000)
Merger and integration expenses   (3,798)          
Acquisition and investment related costs   (2,414)   (2,000)   (3,000)
Other non-core adjustments   2,970           
Total non-core income and expenses   (6,612)   (5,000)   (5,000)
                
Funds from Operations attributable to common stockholders and unitholders  $654,059   $725,900   $753,400 
                
Funds from Operations per diluted share  $9.72   $10.64   $11.05 
                
% Change - Funds from Operations   23.2%   9.5%   13.7%
                
Core Funds from Operations attributable to common stockholders and unitholders  $660,671   $730,900   $758,400 
                
Core Funds from Operations per diluted share  $9.82   $10.72   $11.12 
                
% Change - Core Funds from Operations   15.0%   9.2%   13.3%
                
Weighted average shares outstanding   67,310    68,200    68,200 
                

 

(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 and 10-Q 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 December 31, 2015
(Dollars in thousands, except average rent amounts and in footnotes)

 

Acquisitions                        
Property Name  Location  Apartment
Homes		  Essex
Ownership
Percentage		  Entity  Date  Purchase
Price		  Price per
Apartment Home		  Average
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    
                                     
Avant II  Los Angeles, CA  193   100.0%   EPLP    Dec-15   $73,000   $378   $2,302 
Enso  San Jose, CA  183   100.0%   EPLP    Dec-15    93,000    508    2,817 
   Q4 2015  376                $166,000   $441    
                                     
  2015 Total  1,722               $638,063   $472      
                                     
Dispositions (3)                                   
                                 
Property Name  Location   Apartment
Homes		   Essex
Ownership
Percentage		    Entity    Date    Sales
Price		    Price per
Apartment Home		      
Pinnacle South Mountain  Phoenix, AZ  552   100.0%   EPLP    Jan-15   $63,750   $115      
   Q1 2015  552                       $63,750   $115         
                                               
Sharon Green  Menlo Park, CA  296   100.0%   EPLP    Dec-15   $245,000   $828      
   Q4 2015  296                       $245,000   $828         
                                               
  2015 Total   848                        $ 308,750  $364      

 

(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 and 10-Q 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.    
 
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 % 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 4Q over 4Q, 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 and 10-Q for additional disclosures
S-16