Exhibit 99.2

 

 

 

 

Q1 2016 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 – March 31, 2016	S-5
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – March 31, 2016	S-6
Portfolio Summary by County – March 31, 2016	S-7
Operating Income by Quarter – March 31, 2016	S-8
Same-Property Revenue Results by County – Quarters ended March 31, 2016 and 2015, and December 31, 2015	S-9
Same-Property Operating Expenses	S-10
Development Pipeline – March 31, 2016	S-11
Redevelopment Pipeline – March 31, 2016	S-12
Capital Expenditures – March 31, 2016	S-12.1
Co-Investments – March 31, 2016	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
(Dollars in thousands, except share and per share amounts)		March 31,
		2016				2015
Revenues:
Rental and other property		$	312,178			$	280,229
Management and other fees			2,024				2,644
			314,202				282,873
Expenses:
Property operating			94,490				87,171
Depreciation and amortization			109,707				106,907
General and administrative			9,182				10,545
Merger and integration expenses			—				2,388
Acquisition and investment related costs			828				547
			214,207				207,558
Earnings from operations			99,995				75,315
Interest expense, net (1)			(49,343	)			(47,546	)
Interest and other income			5,208				4,199
Equity income from co-investments			15,068				4,311
Gain on sale of real estate and land			20,258				7,112
Deferred tax expense on gain on sale of real estate and land			(4,279	)			—
Gain on remeasurement of co-investment			—				21,362
Net income			86,907				64,753
Net income attributable to noncontrolling interest			(5,071	)			(4,076	)
Net income attributable to controlling interest			81,836				60,677
Dividends to preferred stockholders			(1,314	)			(1,314	)
Excess of redemption value of preferred stock
over the carrying value			(2,541	)			—
Net income available to common stockholders		$	77,981			$	59,363
Net income per share - basic		$	1.19			$	0.92
Shares used in income per share - basic			65,405,654				64,185,455
Net income per share - diluted		$	1.19			$	0.92
Shares used in income per share - diluted			65,557,639				64,394,680

 

(1)	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
Selected Line Item Detail			March 31,
(Dollars in thousands)			2016			2015
Rental and other property
Rental			$	292,519		$	262,365
Other property				19,659			17,864
Rental and other property			$	312,178		$	280,229
Property operating expenses
Real estate taxes			$	34,419		$	31,553
Administrative and insurance				19,034			18,240
Maintenance and repairs				18,018			16,467
Utilities				15,466			14,829
Property management				7,553			6,082
Property operating expenses			$	94,490		$	87,171
Interest and other income
Marketable securities and other interest income			$	4,468		$	3,199
Gain from sale of marketable securities				740			—
Insurance reimbursements				—			1,000
Interest and other income			$	5,208		$	4,199
Equity income from co-investments
Equity income from co-investments			$	4,952		$	1,227
Income from preferred equity investments				2,681			2,615
Gain on sale of co-investment communities				7,435			—
Income from early redemption of preferred equity investments				—			469
Equity income from co-investments			$	15,068		$	4,311
Noncontrolling interest
Limited partners of Essex Portfolio, L.P.			$	2,784		$	2,063
DownREIT limited partners' distributions				1,434			1,300
Third-party ownership interest				853			713
Noncontrolling interest			$	5,071		$	4,076

 

 

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
(Dollars in thousands, except share and per share amounts and in footnotes)			March 31,						% Change
			2016			2015
Funds from operations attributable to common stockholders and unitholders (FFO)
Net income available to common stockholders			$	77,981		$	59,363
Adjustments:
	Depreciation and amortization			109,707			106,907
	Gains not included in FFO			(27,693)			(28,474)
	Deferred tax expense on gain on sale of real estate and land - Taxable REIT Subsidiary activity			4,279			—
	Depreciation add back from unconsolidated co-investments			12,023			11,917
	Noncontrolling interest related to Operating Partnership units			2,784			2,063
	Depreciation attributable to third party ownership and other (1)			6			(249)
		Funds from operations attributable to common stockholders and unitholders	$	179,087		$	151,527
		FFO per share-diluted	$	2.64		$	2.27		16.3%
Components of the change in FFO
Non-core items:
Merger and integration expenses			$	—			2,388
Acquisition and investment related costs				828			547
Gain on sale of marketable securities				(740)			—
Income from early redemption of preferred equity investments				—			(469)
Excess of redemption value of preferred stock over the carrying value				2,541			—
Other non-core adjustments				—			(1,375)
		Core funds from operations attributable to common stockholders and unitholders		181,716			152,618
		Core FFO per share-diluted	$	2.68		$	2.29		17.0%
Changes in core items:
Same-property NOI			$	15,780
Non-same property NOI				8,850
Management and other fees, net				(245)
FFO from co-investments				3,897
Interest and other income				1,269
Interest expense				(1,797)
General and administrative				1,363
Other items, net				(19)
			$	29,098
Weighted average number of shares outstanding diluted (2)				67,866,703			66,641,225

 

(1)	The Company consolidates Hidden Valley and Hillsdale Garden Apartments.  Noncontrolling interest's share of net operating income in these investments for the three ended March 31, 2016 was $1.0 million.

 

(2)

Assumes conversion of all outstanding operating partnership interests in the Operating Partnership and excludes 740,146 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)
					March 31, 2016			December 31, 2015
	Real Estate:
		Land and land improvements		$	2,573,923		$	2,522,842
		Buildings and improvements			10,052,754			9,808,627
					12,626,677			12,331,469
		Less:  accumulated depreciation			(2,051,802)			(1,949,892)
					10,574,875			10,381,577
	Real estate under development				145,711			242,326
	Co-investments				1,069,684			1,036,047
	Real estate held for sale, net							26,879
					11,790,270			11,686,829
	Cash and cash equivalents				80,483			123,055
	Marketable securities and other investments				138,597			137,485
	Notes and other receivables				18,198			19,285
	Prepaid expenses and other assets				39,936			38,437
			Total assets	$	12,067,484		$	12,005,091
	Unsecured debt, net			$	2,936,463		$	3,088,680
	Mortgage notes payable, net				2,252,057			2,215,077
	Lines of credit, net				164,282			11,707
	Other liabilities				353,489			307,152
	Cumulative redeemable preferred stock at liquidation value				73,750			—
			Total liabilities		5,780,041			5,622,616
	Redeemable noncontrolling interest				46,203			45,452
	Equity:
		Common stock			6			6
		Cumulative redeemable preferred stock, liquidation value						73,750
		Additional paid-in capital			7,010,181			7,003,317
		Distributions in excess of accumulated earnings			(824,046)			(797,329)
		Accumulated other comprehensive loss, net			(44,149)			(42,011)
			Total stockholders' equity		6,141,992			6,237,733
		Noncontrolling interest			99,248			99,290
			Total equity		6,241,240			6,337,023
			Total liabilities and equity	$	12,067,484		$	12,005,091

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.
Debt Summary - March 31, 2016
(Dollars in thousands, except in footnotes)
												Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
																					Unamortized premiums (discounts) and (debt issuance costs)
																										Weighted Average Interest Rate		Percentage of Total Debt
							Weighted Average
				Balance Outstanding			Interest Rate		Maturity In Years					Unsecured			Secured							Total
Unsecured Debt, net
	Bonds private - fixed rate			$	315,000		4.5%		4.4			2016		$	200,000		$	22,803		$	18,993		$	241,796		2.6%		4.7%
	Bonds public - fixed rate				2,400,000		3.5%		6.5			2017			365,000			199,851			16,825			581,676		3.2%		11.2%
	Term loan (1)				225,000		2.4%		0.7			2018			—			321,328			13,732			335,060		5.3%		6.6%
	Unamortized net premiums and debt issuance costs				(3,537)		—		—			2019			75,000			586,954			9,120			671,074		3.4%		12.9%
					2,936,463		3.5%		5.8			2020			—			693,868			3,791			697,659		4.9%		13.4%
Mortgage Notes Payable, net												2021			500,000			51,584			(2,943)			548,641		4.3%		10.6%
	Fixed rate - secured				1,903,947		4.9%		3.5			2022			300,000			41,355			(3,400)			337,955		3.7%		6.5%
	Variable rate - secured (2)				291,709		1.0%		19.6			2023			600,000			846			(1,615)			599,231		3.6%		11.5%
	Unamortized premiums and debt issuance costs				56,401		—		—			2024			400,000			925			(912)			400,013		4.0%		7.7%
		Total mortgage notes payable			2,252,057		4.4%		5.6			2025			500,000			14,611			(236)			514,375		3.5%		9.9%
												2026			—			1,106			(137)			969		1.0%		0.0%
Unsecured Lines of Credit, net												Thereafter			—			260,425			(354)			260,071		0.9%		5.0%
	Line of credit (3)				165,000		1.8%
	Line of credit (4)				3,386		1.8%					Total		$	2,940,000		$	2,195,656		$	52,864		$	5,188,520		3.9%		100.0%
	Unamortized debt issuance costs				(4,104)		—
		Total lines of credit (5)			164,282		1.8%
		Total debt, net		$	5,352,802		3.8%

 

Capitalized interest for the three months ended March 31, 2016 was approximately $3.1 million.

 

(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. $20.7 million is subject to interest rate cap protection agreements.

 

(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 - March 31, 2016

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

Capitalization Data

Public Bond Covenants

Actual

Requirement

Total debt, net

$

5,352,802

Debt to Total Assets:

38%

< 65%

Common stock and potentially dilutive securities

Common stock outstanding

65,427

Limited partnership units (1)

2,306

Options-treasury method

206

Secured Debt to Total Assets:

16%

< 40%

Total shares of common stock and potentially dilutive securities

67,939

Common stock price per share as of March 31, 2016

$

233.86

Interest Coverage:

372%

> 150%

Market value of common stock and potentially dilutive securities

$

15,888,215

Preferred stock (2)

$

73,750

Unsecured Debt Ratio (1):

293%

> 150%

Total equity capitalization

$

15,961,965

Selected Credit Ratios

Actual

Total market capitalization

$

21,314,767

Ratio of debt to total market capitalization

25.1%

Net Indebtedness Divided by Adjusted EBITDA (2) (3):

5.7

Unencumbered NOI to Total NOI:

67%

(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)

For financial statement purposes, the preferred stock was reclassified to cumulative redeemable preferred stock at liquidation value in total liabilities on the Consolidated Balance Sheet and is no longer part of total equity.

(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 March 31, 2016
		Apartment Homes																Average Monthly Rental Rate (1)												Percent of NOI (2)
Region - County		Consolidated (3)				Unconsolidated Co-investments				Apartment Homes in Development (4)				Total				Consolidated				Unconsolidated Co-investments (5)				Total (6)				Consolidated				Unconsolidated Co-investments (5)				Total (6)
Southern California
Los Angeles County			9,438				1,618				—				11,056			$	2,237			$	1,901			$	2,211				20.2	%			13.9	%			19.6	%
Orange County			5,788				1,144				—				6,932				1,968				1,674				1,942				11.2	%			8.6	%			10.9	%
San Diego County			5,203				616				—				5,819				1,727				1,574				1,718				8.2	%			5.5	%			8.0	%
Ventura County			2,897				373				—				3,270				1,625				2,033				1,650				4.8	%			3.3	%			4.7	%
Other Southern CA			623				249				—				872				1,525				1,461				1,514				0.9	%			1.7	%			1.0	%
Total Southern California			23,949				4,000				—				27,949				1,971				1,771				1,956				45.3	%			33.0	%			44.2	%
Northern California
Santa Clara County			6,160				2,477				852				9,489				2,601				2,626				2,605				16.6	%			27.5	%			17.6	%
Alameda County			3,138				1,293				506				4,937				2,363				2,252				2,343				7.4	%			14.9	%			8.1	%
San Mateo County			1,830				197				599				2,626				2,714				2,729				2,714				5.1	%			2.6	%			4.9	%
Contra Costa County			2,270				—				49				2,319				2,163				—				2,163				5.0	%			—				4.5	%
San Francisco MSA			1,341				463				545				2,349				3,024				3,467				3,095				3.5	%			7.9	%			3.9	%
Other Northern CA			126				—				—				126				2,200				—				2,200				0.3	%			—				0.3	%
Total Northern California			14,865				4,430				2,551				21,846				2,532				2,615				2,544				37.9	%			52.9	%			39.3	%
Seattle Metro			10,239				1,958				—				12,197				1,619				1,499				1,609				16.8	%			14.1	%			16.5	%
Total			49,053				10,388				2,551				61,992			$	2,068			$	2,091			$	2,071				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 March 31, 2016.

 

(3)	Includes all apartment communities with rents.

 

(4)	Includes development communities with no rental income.

 

(5)	Co-investment amounts weighted for Company's pro rata share.

 

(6)	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				Q1 '16				Q4 '15				Q3 '15				Q2 '15				Q1 '15
Rental and other property revenues:
Same-property			45,517			$	279,745			$	276,664			$	272,899			$	266,450			$	260,697
Acquisitions (2)			2,232				15,856				12,941				11,594				9,035				3,150
Development (3)			624				6,292				5,146				4,801				4,330				2,934
Redevelopment			680				4,406				4,293				4,214				4,078				3,979
Non-Residential/Other, net (4)			—				5,879				9,602				9,014				10,208				9,469
Total rental and other property revenues			49,053				312,178				308,646				302,522				294,101				280,229
Property operating expenses:
Same-property							84,256				85,109				85,225				82,206				80,988
Acquisitions (2)							5,575				4,312				4,032				3,519				1,084
Development (3)							2,108				1,383				1,452				1,468				1,033
Redevelopment							1,507				1,653				1,611				1,534				1,539
Non-Residential/Other, net (4) (5)							1,044				(316	)			1,799				1,350				2,527
Total property operating expenses							94,490				92,141				94,119				90,077				87,171
Net operating income (NOI):
Same-property							195,489				191,555				187,674				184,244				179,709
Acquisitions (2)							10,281				8,629				7,562				5,516				2,066
Development (3)							4,184				3,763				3,349				2,862				1,901
Redevelopment							2,899				2,640				2,603				2,544				2,440
Non-Residential/Other, net (4)							4,835				9,918				7,215				8,858				6,942
Total NOI						$	217,688			$	216,505			$	208,403			$	204,024			$	193,058
Same-property metrics
Operating margin							70	%			69	%			69	%			69	%			69	%
Annualized turnover (6)							45	%			45	%			61	%			56	%			45	%
Financial occupancy (7)							96.0	%			96.0	%			96.0	%			96.0	%			96.1	%

 

(1)	Includes consolidated communities only.

 

(2)	Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2015.

 

(3)	Development includes properties developed which did not have comparable stabilized results as of January 1, 2015.

 

(4)	Other real estate assets consists mainly of retail space, commercial properties, boat slips, held for sale properties, and disposition properties.

 

(5)	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.

 

(6)	Annualized turnover is defined as the number of apartment homes turned over during the quarter, annualized, divided by the total number of apartment homes.

 

(7)	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 Results by County - First Quarter 2016 vs. First Quarter 2015 and Fourth Quarter 2015
(Dollars in thousands, except average monthly rental rates)
										Average Monthly Rental Rate												Financial Occupancy												Gross Revenues												Sequential Gross Revenues
Region - County		Apartment Homes				Q1 '16 % of Actual NOI				Q1 '16				Q1 '15				% Change				Q1 '16				Q1 '15				% Change				Q1 '16				Q1 '15				% Change				Q4 '15				% Change
Southern California
Los Angeles County			7,443				17.3	%		$	2,199			$	2,076				5.9	%			96.0	%			95.7	%			0.3	%		$	49,257			$	46,024				7.0	%		$	48,514				1.5	%
Orange County			5,788				12.1	%			1,968				1,868				5.4	%			96.1	%			96.3	%			-0.2	%			34,437				32,951				4.5	%			34,103				1.0	%
San Diego County			4,961				8.9	%			1,727				1,621				6.5	%			95.7	%			95.6	%			0.1	%			25,982				24,398				6.5	%			25,786				0.8	%
Ventura County			2,897				5.3	%			1,625				1,529				6.3	%			96.2	%			96.3	%			-0.1	%			14,472				13,694				5.7	%			14,288				1.3	%
Other Southern CA			623				1.0	%			1,525				1,417				7.6	%			98.4	%			98.7	%			-0.3	%			2,953				2,756				7.1	%			2,959				-0.2	%
Total Southern California			21,712				44.6	%			1,934				1,825				6.0	%			96.0	%			96.0	%			0.0	%			127,101				119,823				6.1	%			125,650				1.2	%
Northern California
Santa Clara County			5,874				17.4	%			2,590				2,387				8.5	%			96.4	%			96.4	%			0.0	%			45,957				42,249				8.8	%			45,234				1.6	%
Alameda County			2,914				7.4	%			2,337				2,111				10.7	%			95.7	%			96.2	%			-0.5	%			20,614				18,754				9.9	%			20,242				1.8	%
San Mateo County			1,566				4.6	%			2,596				2,387				8.8	%			96.2	%			96.1	%			0.1	%			12,438				11,393				9.2	%			12,242				1.6	%
Contra Costa County			2,270				5.4	%			2,163				1,981				9.2	%			96.6	%			96.2	%			0.4	%			14,970				13,695				9.3	%			14,799				1.2	%
San Francisco MSA			816				2.0	%			2,405				2,248				7.0	%			93.4	%			94.1	%			-0.7	%			5,753				5,403				6.5	%			5,884				-2.2	%
Other Northern CA			126				0.3	%			2,200				1,916				14.8	%			98.6	%			96.7	%			2.0	%			839				725				15.7	%			857				-2.1	%
Total Northern California			13,566				37.1	%			2,450				2,247				9.0	%			96.1	%			96.2	%			-0.1	%			100,571				92,219				9.1	%			99,258				1.3	%
Seattle Metro			10,239				18.3	%			1,619				1,503				7.7	%			95.8	%			96.2	%			-0.4	%			52,073				48,655				7.0	%			51,756				0.6	%
Total Same-Property			45,517				100.0	%		$	2,017			$	1,878				7.4	%			96.0	%			96.1	%			-0.1	%		$	279,745			$	260,697				7.3	%		$	276,664				1.1	%

 

 

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 to Date as of March 31, 2016 and 2015
(Dollars in thousands)
		Based on 45,517 apartment homes
		Q1 '16		Q1 '15		% Change		% of Op. Ex.
Same-property operating expenses:
Real estate taxes		$            29,335		$            28,743		2.1%		34.8%
Maintenance and repairs		16,309		15,380		6.0%		19.4%
Administrative		15,072		14,695		2.6%		17.9%
Utilities		13,852		13,663		1.4%		16.4%
Management fees (1)		6,854		5,654		21.2%		8.1%
Insurance		2,834		2,853		-0.7%		3.4%
Total same-property operating expenses		$            84,256		$            80,988		4.0%		100.0%

 

(1)

Reflects the Company's change to property management fee allocation.

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.
Development Pipeline - March 31, 2016
(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)
	Station Park Green		San Mateo, CA		100%		599		35,000		$         91		$       263		$       354		$           354		$       567		0.0%		0.0%		Q3 2015		Q3 2017		Q4 2018
	Gateway Village (4)		Santa Clara, CA		100%		476		—		29		197		226		226		475		0.0%		0.0%		Q2 2016		Q2 2018		Q3 2019
Total Development Projects - Consolidated							1,075		35,000		120		460		580		580		540
Land Held for Future Development - Consolidated
	Other Projects		Various		100%						30		—		30		30
Total Development Pipeline - Consolidated							1,075		35,000		150		460		610		610
Development Projects/Land Held for Future Development - Joint Venture (3)
	Agora (5)		Walnut Creek, CA		51%		49		32,188		90		5		95		48		1,140		0.0%		0.0%		Q3 2013		Q2 2016		Q3 2016
	Owens		Pleasanton, CA		55%		255		5,729		69		20		89		49		341		0.0%		0.0%		Q3 2014		Q2 2016		Q2 2017
	Hacienda		Pleasanton, CA		55%		251		—		44		42		86		47		343		0.0%		0.0%		Q1 2015		Q3 2016		Q3 2017
	Century Towers		San Jose, CA		50%		376		2,006		105		67		172		86		456		0.0%		0.0%		Q3 2014		Q1 2017		Q1 2018
	500 Folsom (6)		San Francisco, CA		50%		545		6,000		76		305		381		191		691		0.0%		0.0%		Q4 2015		Q4 2018		Q2 2020
Total Development Projects - Joint Venture							1,476		45,923		384		439		823		421		$       526
Grand Total - Development Pipeline							2,551		80,923		$       534		$       899		$    1,433		1,031
Essex Cost Incurred to Date																	(349)
Essex Remaining Commitment																	$           682

 

(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 first quarter of 2016, the Company's cost includes $2.8 million of capitalized interest, $0.8 million of capitalized overhead and $1.2 million of development fees (such development fees reduced G&A expenses).

 

(4)	Cost incurred to date does not include a deduction of $4.7 million for accumulated depreciation recorded during the period when the property was held as a retail operating asset.

 

(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 - March 31, 2016
(Dollars in thousands, except in footnotes)
					Total		Estimated		Estimated				NOI
			Apartment		Incurred		Remaining		Total		Project		For the year ended
Region/Project Name			Homes		To Date		Cost		Cost		Start Date		2016		2015
Same-property - Redevelopment Projects (1)
Southern California
Hamptons			215		$       8,800		$     14,800		$     23,600		Q1 2014
The Hallie (formerly Monterras)			292		21,300		5,100		26,400		Q1 2014
Northern California
Summerhill Park			100		7,800		2,100		9,900		Q4 2014
Seattle Metro
Park Highland			250		8,300		4,200		12,500		Q4 2014
Total Same-Property - Redevelopment Projects			857		$     46,200		$     26,200		$     72,400				$         3,714		$        3,197
Non-same property - Redevelopment Projects
Southern California
Bunker Hill Towers			456		$     41,600		$     45,800		$     87,400		Q3 2013
Total Non-Same Property - Redevelopment Projects			456		$     41,600		$     45,800		$     87,400				$         1,656		$        1,296

 

(1)	Redevelopment activities are ongoing at these communities, but the communities have stabilized operations, therefore results are classified in same-property results.

 

E S S E X  P R O P E R T Y  T R U S T, I N C.
Capital Expenditures - March 31, 2016
(Dollars in thousands, except in footnotes)
Revenue Generating Capital Expenditures (1) (2)			Q1 2016		Q4 2015		Q3 2015		Q2 2015				Trailing 4 Quarter
Same-property portfolio			$       15,460		$     23,132		$     19,027		$     18,281				$        75,900
Non-same property portfolio			8,221		8,999		5,453		4,579				27,252
Total revenue generating capital expenditures			$       23,681		$     32,131		$     24,480		$     22,860				$      103,152
Number of same-property interior renovations completed			813		618		859		700				2,990
Number of total consolidated interior renovations completed			917		704		1,051		848				3,520
Non-Revenue Generating Capital Expenditures (3)			Q1 2016		Q4 2015		Q3 2015		Q2 2015				Trailing 4 Quarter
Non-revenue generating capital expenditures			$         5,312		$     14,533		$     17,994		$     14,696				$        52,535
Average apartment units in quarter			48,933		48,686		48,560		48,197				48,594
Capital expenditures per apartment unit in the quarter			$            109		$         299		$         371		$         305				$         1,081

  

(1)	The Company incurred $0.3 million of capitalized interest, $2.4 million of capitalized overhead and $0.1 million of co-investment redevelopment fees related to redevelopment in Q1 2016.

 

(2)	Represents revenue generating or expense saving expenditures such as full-scale redevelopments shown on page S-12, interior unit turn renovations, enhanced amenities and certain resource management initiatives.

 

(3)	Represents roof replacements, paving, building and mechanical systems, exterior painting, siding, etc.

 

 

E S S E X  P R O P E R T Y  T R U S T, I N C.
Co-investments - March 31, 2016 (Dollars in thousands)			Essex Ownership Percentage				Apartment Homes				Total Undepreciated Book Value				Debt Amount				Essex Book Value				Weighted Average Borrowing Rate				Remaining Term of Debt (in Years)				For the Three Months Ended  March 31, 2016
Operating Non-Consolidated Joint Ventures																															NOI
Wesco I, LLC			50.0	%			2,275			$	559,905			$	295,443			$	102,726				3.9	%			9.1			$	8,984
Wesco III, LLC			50.0	%			993				239,288				129,323				52,268				3.4	%			4.5				3,580
Wesco IV, LLC			50.0	%			1,116				300,379				155,000				61,491				3.7	%			4.9				4,803
BEXAEW, LLC			50.0	%			2,391				445,024				269,664				74,069				3.2	%			4.9				7,556
CPPIB			55.0	%			1,928				690,417				—				380,399				—				—				10,275
Palm Valley			50.0	%			1,098				370,832				225,254				68,340				2.5	%			0.8				5,120
Other			50.0% - 55.0%				587				200,250				137,717				32,000				2.7	%			2.3				2,621
Total Operating Non-Consolidated Joint Ventures							10,388			$	2,806,095			$	1,212,401			$	771,293				3.3	%			4.8			$	42,939
Development Non-Consolidated Joint Ventures (1)			50.0% - 55.0%				1,476				384,270				39,151				158,408				3.3	%			1.4				—
Total Non-Consolidated Joint Ventures							11,864			$	3,190,365			$	1,251,552			$	929,701											$	42,939
																															Essex Portion of NOI and Expenses
NOI																														$	22,084
Depreciation																															(12,023	)
Interest expense and other																															(5,109	)
Gain on sale of co-investments																															7,435
Net income from operating co-investments																														$	12,387
																															Income from Preferred Equity Investments
																							Weighted Average Preferred Return				Weighted Average Expected Term				For the Three Months Ended  March 31, 2016
Income from preferred equity investments																														$	2,681
Preferred Equity Investments (2)																		$	139,983				10.3	%			3.2			$	2,681
Total Co-investments																		$	1,069,684											$	15,068

 

(1)	The Company has interests in five development co-investments, which are detailed on S-11.

 

(2)	As of March 31, 2016 the Company has invested in nine 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
Q1 2016 Earnings Results Supplement
($'s in thousands, except share and per share data) (1)		YTD		2016 Guidance Range
		Actuals		Low End		High End		Changes from Guidance Provided on Q4 '15 Earnings Release
Net Operating Income ("NOI")
Total NOI from consolidated communities		$          217,688		$         889,900		$         908,100		Range of same-property NOI growth of 7.5% to 9.5%.
Management Fees		2,024		7,900		8,900
Interest Expense
Interest expense, before capitalized interest		(52,398)		(222,900)		(219,500)		Updated to reflect April unsecured bond offering.
Forecasted interest capitalized		3,055		12,800		14,800
Net interest expense		(49,343)		(210,100)		(204,700)
Recurring Income and Expenses
Interest and other income		4,468		16,600		17,600
FFO from co-investments		19,656		81,400		84,600		Updated to reflect investment activity through April.
General and administrative expense		(9,182)		(41,500)		(43,500)
Preferred dividends and non-controlling interest		(3,595)		(13,300)		(12,900)
Total recurring income and expenses		11,347		43,200		45,800
Non-Core Income and Expenses
Gain on sale of marketable securities		740		740		740
Loss on early retirement of debt and redemption costs		(2,541)		(2,541)		(2,541)
Acquisition and investment related costs		(828)		(2,000)		(3,000)
Other non-core adjustments		-		-		-
Total non-core income and expenses		(2,629)		(3,801)		(4,801)
Funds from Operations attributable to common stockholders and unitholders		$          179,087		$         727,099		$         753,299
Funds from Operations per diluted share		$               2.64		$             10.66		$             11.05
% Change - Funds from Operations		16.3%		9.7%		13.6%
Core Funds from Operations attributable to common stockholders and unitholders		$          181,716		$         730,900		$         758,100
Core Funds from Operations per diluted share		$               2.68		$             10.72		$             11.12
% Change - Core Funds from Operations		17.0%		9.2%		13.3%
Weighted average shares outstanding		67,867		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 March 31, 2016

(Dollars in thousands, except average rent amounts)

Acquisitions

Essex

Apartment

Ownership

Contract

Price per

Average

Property Name

Location

Homes

Percentage

Entity

Date

Price

Apartment Home

Rent

Mio

San Jose, CA

103

100.0%

EPLP

Jan-16

$         51,300

$                  498

$           2,888

Form 15

San Diego, CA

242

100.0%

EPLP

Mar-16

97,400

402

2,221

Q1 2016

345

$       148,700

$                  431

Dispositions (1)

Essex

Apartment

Ownership

Sales

Price per

Property Name

Location

Homes

Percentage

Entity

Date

Price

Apartment Home

The Heights

Chino Hills, CA

332

50.0%

JV

Jan-16

$         93,800

(2)

$                  283

Harvest Park

Santa Rosa, CA

104

100.0%

EPLP

Feb-16

30,500

293

Q1 2016

436

$       124,300

$                  285

 

(1)	In January 2016, the Company sold its former headquarters office building, located in Palo Alto, CA for gross proceeds of $18.0 million.

 

(2)	The Heights sales price represents the total sales price at 100%.

 

 

 

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		11,000	5,700	16,700	0.7%	0.5%		94,600	2.2%		5.5%
Orange		3,800	3,800	7,600	0.9%	0.7%		39,500	2.5%		5.6%
San Diego		3,300	3,500	6,800	0.7%	0.6%		36,700	2.6%		5.3%
Ventura		150	700	850	0.2%	0.3%		5,350	1.8%		5.4%
So. Cal.		18,250	13,700	31,950	0.7%	0.5%		176,150	2.3%		5.5%
San Francisco		5,400	650	6,050	1.3%	0.8%		34,700	3.0%		6.3%
Oakland		1,600	4,300	5,900	0.5%	0.6%		27,900	2.5%		6.7%
San Jose		5,850	2,100	7,950	2.3%	1.2%		31,300	3.0%		6.3%
No. Cal.		12,850	7,050	19,900	1.5%	0.9%		93,900	2.8%		6.5%
Seattle		8,450	7,100	15,550	1.7%	1.3%		48,600	3.0%		6.1%
Weighted Average (4)		39,550	27,850	67,400	1.2%	0.8%		318,650	2.6%		6.0%

 

All data are based on Essex Property Trust, Inc. forecasts.

 

U.S. Economic Assumptions: 2016 G.D.P. Growth: 2.3%, 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.