Exhibit 99.2

 

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.

 

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

 

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.

 

 

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

 

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%.

 

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

 

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.

 

 

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).

 

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.

 

 

 

 

 

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.

 

 

 

 

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.

 

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.

 

 

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.

 

 

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.

 

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.

 

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.

 

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.