ESSEX PROPERTY TRUST, INC. 
San Mateo, California-April 28, 2016-Essex Property Trust, Inc. (NYSE:ESS) announced today its first quarter 2016 earnings results and related business activities.
Funds from Operations ("FFO") and Net Income per diluted share for the quarter ended March 31, 2016 are detailed below. Core FFO excludes acquisition and investment related costs and certain non-routine items.
Per Diluted Share | Three Months Ended | ||
March 31, | % | ||
2016 | 2015 | Change | |
Total FFO | $2.64 | $2.27 | 16.3% |
Core FFO | $2.68 | $2.29 | 17.0% |
Net Income | $1.19 | $0.92 | 29.3% |
First Quarter Highlights:
Grew Core FFO per diluted share by 17.0% compared to Q1 2015, which exceeded the high-end of the Company's guidance range.
Achieved same-property gross revenues and net operating income ("NOI") growth of 7.3% and 8.8%, respectively, compared to Q1 2015.
Realized a sequential quarterly increase in same-property revenue growth of 1.1%.
Disposed of two properties for total sale proceeds of $124.3 million.
Acquired two apartment communities for a total contract price of $148.7 million.
Increased the dividend by 11.1% to an annual rate of $6.40 per share.
Provided Core FFO guidance range for the second quarter of 2016 of $2.61 to $2.71 per diluted share, which incorporates recent financing and investment transactions.
Reaffirmed the full-year Core FFO guidance range per diluted share of $10.72 to $11.12.
Reaffirmed 2016 guidance for growth in same-property revenues, operating expenses, and NOI from the February 4, 2016 earnings release.
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"We are pleased to report another strong quarter with property operating results and Core FFO exceeding our expectations. During the quarter, positive momentum in Seattle and Southern California allowed us to outperform our 2016 market forecast. Looking forward, the superior results in Seattle and Southern California are expected to continue, offsetting moderating rent growth in Northern California. Our reported 8.8% same- property NOI growth for the quarter provides a strong start to 2016, supporting our belief that operating fundamentals on the West Coast will outpace the nation, allowing us to produce sector-leading growth." commented Michael Schall, President and CEO of the Company.
SAME-PROPERTY OPERATIONSSame-property operating results exclude any properties that are not comparable for the periods presented. The table below illustrates the percentage change in same-property gross revenues for the quarter ended March 31, 2016 compared to the quarter ended March 31, 2015, and the sequential percentage change for the quarter ended March 31, 2016 versus the quarter ended December 31, 2015 by submarket for the Company:
Q1 2016 vs. Q1 2015 | Q1 2016 vs. Q4 2015 | % of Total | |
Gross Revenues | Gross Revenues | Q1 2016 Revenues | |
Southern California | |||
Los Angeles County | 7.0% | 1.5% | 17.6% |
Orange County | 4.5% | 1.0% | 12.3% |
San Diego County | 6.5% | 0.8% | 9.3% |
Ventura County | 5.7% | 1.3% | 5.2% |
Other Southern California | 7.1% | -0.2% | 1.0% |
Total Southern California | 6.1% | 1.2% | 45.4% |
Northern California | |||
Santa Clara County | 8.8% | 1.6% | 16.4% |
Alameda County | 9.9% | 1.8% | 7.4% |
San Mateo County | 9.2% | 1.6% | 4.4% |
Contra Costa County | 9.3% | 1.2% | 5.4% |
San Francisco MSA | 6.5% | -2.2% | 2.1% |
Other Northern California | 15.7% | -2.1% | 0.3% |
Total Northern California | 9.1% | 1.3% | 36.0% |
Seattle Metro | 7.0% | 0.6% | 18.6% |
Same-Property Portfolio | 7.3% | 1.1% | 100% |
Year Over Year Growth | |||
Q1 2016 compared to Q1 2015 | |||
Gross Revenues | Operating Expenses | NOI | |
Southern California | 6.1% | 3.0% | 7.5% |
Northern California | 9.1% | 4.7% | 10.9% |
Seattle Metro | 7.0% | 5.5% | 7.7% |
Same-Property Portfolio | 7.3% | 4.0% | 8.8% |
Sequential Growth | |||
Q1 2016 compared to Q4 2015 | |||
Gross Revenues | Operating Expenses | NOI | |
Southern California | 1.2% | -1.5% | 2.4% |
Northern California | 1.3% | -0.6% | 2.1% |
Seattle Metro | 0.6% | -0.5% | 1.1% |
Same-Property Portfolio | 1.1% | -1.0% | 2.1% |
Financial Occupancies | |||
Quarter Ended | |||
3/31/2016 | 12/31/2015 | 3/31/2015 | |
Southern California | 96.0% | 96.0% | 96.0% |
Northern California | 96.1% | 95.9% | 96.2% |
Seattle Metro | 95.8% | 96.1% | 96.2% |
Same-Property Portfolio | 96.0% | 96.0% | 96.1% |
In January, the Company acquired Mio located in San Jose, CA for a total contract price of $51.3 million. Please see the fourth quarter 2015 results press release dated February 4, 2016 for more details on this acquisition.
In March, the Company acquired Form 15 apartments in San Diego, CA for a contract price of $97.4 million. Built in 2014, the community has 242 apartment homes located in Downtown San Diego. Form 15 has a Walk Score of 93 and is situated in close proximity to entertainment venues, shopping, restaurants, and numerous employment opportunities.
Both of these properties were acquired via like-kind exchange using disposition proceeds.
DISPOSITIONSIn January, the Company sold The Heights, owned by BEXAEW, LLC. The Company has a 50% ownership interest in the BEXAEW, LLC joint venture. The apartment community had 332 apartment homes located in Chino Hills, CA. Total proceeds from the sale were $93.8 million, of which $50.3 million were used to repay the loan on the property. The Company's share of the gain on the sale was $7.4 million, which was excluded from the calculation of FFO.
In January, the Company sold its former headquarters office building located in Palo Alto, CA for total proceeds of $18.0 million. The total gain on the sale was $9.6 million, which has been excluded from FFO.
In February, the Company disposed of Harvest Park located in Santa Rosa, CA. Built in 2004, the community was comprised of 104 apartment homes. Total proceeds from the sale were $30.5 million. Total gain on the sale was $6.4 million, which has been excluded from the calculation of FFO.
OTHER INVESTMENTSIn March, the Company originated a $47.1 million preferred equity investment in a multifamily development project located in Glendale, CA. The investment has a preferred return of 12% and matures in 2020.
DEVELOPMENT ACTIVITYDuring the first quarter, the Company began construction on a development project located in Santa Clara, CA. The project is estimated to have 476 apartment homes located in the heart of Santa Clara. The Company owned the land and operated a commercial building on the property until February 2016. The development is expected to cost $226 million and open in the second quarter of 2018.
The table below represents the development communities in lease-up during the first quarter and the current leasing status as of April 25, 2016.
Project Name | Location | Total Apartment Homes | ESS Ownership | % Leased as of 4/25/16 | Status |
Epic Phase III | San Jose, CA | 200 | 55% | 95% | Stabilized |
MB360 Phase II | San Francisco, CA | 172 | 100% | 97% | Stabilized |
Total/Average % Leased | 372 | 96% | |||
Common Stock
The Company has not issued any shares of common stock through its equity distribution program in the first quarter 2016 or subsequent to quarter-end.
Balance Sheet
In April, the Company redeemed all of the issued and outstanding 2,950,000 shares of the Company's 7.125% Series H Cumulative Redeemable Preferred Stock. The redemption resulted in a $2.5 million non-cash charge to Total FFO during the first quarter, which is excluded from Core FFO. For additional details on the redemption, please see the press release dated March 10, 2016.
In April, the Company issued $450 million of 10-year senior unsecured notes at an interest rate per annum of 3.375%. Please see the press release dated April 4, 2016 for additional details about the transaction.
As of April 25, 2016, the Company had $1.025 billion in undrawn capacity on its unsecured credit facilities.
Guidance
For the first quarter, the Company exceeded the midpoint of the guidance range provided in its fourth quarter 2015 earnings release by $0.08 per share; $0.04 of the favorable variance relates to timing differences and the expenses are now forecasted to occur in the second half of the year.
Essex Property Trust Inc. published this content on 28 April 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 20 May 2016 20:47:03 UTC.
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