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Essex Property Trust Inc. Reports Operating Results (10-Q)

August 06, 2010 | About:

10qk

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Essex Property Trust Inc. (ESS) filed Quarterly Report for the period ended 2010-06-30.

Essex Property Trust Inc. has a market cap of $3.2 billion; its shares were traded at around $106.37 with a P/E ratio of 20.8 and P/S ratio of 7.8. The dividend yield of Essex Property Trust Inc. stocks is 3.8%. Essex Property Trust Inc. had an annual average earning growth of 6.1% over the past 10 years.ESS is in the portfolios of Chris Davis of Davis Selected Advisers, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Pioneer Investments, Kenneth Fisher of Fisher Asset Management, LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Quarterly Same-Property Revenues decreased by $4.3 million or 4.4% to $92.3 million in the second quarter of 2010 from $96.6 million in the second quarter of 2009. The decrease was primarily attributable to a decrease in scheduled rents of $5.5 million as reflected in a decrease of 5.8% in average rental rates from $1,375 per unit in the second quarter of 2009 to $1,295 per unit in the second quarter of 2010. Scheduled rents decreased in all regions by 4.2%, 6.0%, and 10.6% in Southern California, Northern California, and Seattle Metro, respectively. The Company has experienced a decrease in scheduled rents due to the slowdown in the economy coupled with job losses during 2009. During 2009, through the second quarter of 2010, the Company experienced a decrease in gross revenue in comparison to the prior year in the Company s markets from the reduction in rents from leases entered during those periods. The decrease in scheduled rents was partially offset by an increase of occupancy of 40 basis points or $0.6 million, from 96.8% for the second quarter of 2009 to 97.2% for the second quarter of 2010. Bad debt expense decreased $0.4 million, and rent concessions, ratio utility billing system (“RUBS”) income, and other income, were consistent between quarters. The Company expects that total Quarterly Same-Property revenues will decrease slightly in the third quarter of 2010 from the same period in 2009, due to an expected decrease in scheduled rents and/or occupancy compared to the same period in 2009. The Company expects total Quarterly Same-Property revenues for the third quarter of 2010 will be slightly higher than the second quarter of 2010 due to an increase in scheduled rents.

Depreciation expense increased by $2.4 million or 8.2% for the second quarter of 2010 compared to the second quarter of 2009, due to the acquisition of two communities, the completion of four development properties, and the capitalization of approximately $19.0 million in additions to rental properties for the six months ended June 30, 2010 and the capitalization of approximately $55.6 million in additions to rental properties, including $26.7 million spent on redevelopment and revenue generating capital expenditures during 2009.

2010/2009 Same-Property Revenues decreased by $10.7 million or 5.5% to $184.9 million for the six months ended June 30, 2010 from $195.6 million for the six months ended June 30, 2009. The decrease was primarily attributable to a decrease in scheduled rents of $12.9 million as reflected in a decrease of 6.7% in average rental rates from $1,389 per unit for the six months ended June 30, 2009 to $1,296 per unit for the six months ended June 30, 2010. Scheduled rents decreased in all regions by 5.0%, 7.0%, and 11.6% in Southern California, Northern California, and Seattle Metro, respectively. The Company has experienced a decrease in scheduled rents due to the slowdown in the economy coupled with job losses during 2009. During 2009, through the six months ended June 30, 2010, the Company experienced a decrease in gross revenue in comparison to the prior year in the Company s markets from the reduction in rents from leases entered into during those periods. The decrease in scheduled rents was partially offset by an increase of occupancy of 40 basis points or $1.3 million, from 97.0% for the six months ended June 30, 2009 to 97.4% for the six months ended June 30, 2010. Bad debt expense and rent concessions decreased $0.4 million and $0.5 million, respectively, and RUBS income increased $0.4 million and other income decreased $0.4 million between periods. The Company expects that total Same-Property revenues will decrease slightly in the third quarter of 2010 from the same period in 2009, due to an expected decrease in scheduled rents and/or occupancy compared to the same period in 2009. The Company expects total Quarterly Same-Property revenues for the third quarter of 2010 will be slightly higher than the second quarter of 2010, due to an increase in scheduled rents.

Depreciation expense increased by $3.9 million or 6.7% for the six months ended June 30, 2010 compared to the six months ended June 30, 2009, due to the acquisition of two communities, the completion of four development properties, and the capitalization of approximately $19.0 million in additions to rental properties for the six months ended June 30, 2010, and the capitalization of approximately $55.6 million in additions to rental properties, including $26.7 million spent on redevelopment and revenue generating capital expenditures during 2009.

Income from discontinued operations for the six months ended June 30, 2010 was $0, compared to $3.4 million for the six months ended June 30, 2009, which included a gain of $1.6 million on the sale of Carlton Heights Villa, the $0.9 million gain on sale of Grand, and $0.8 million gain on the sale of Mountain View, and the operating results of the apartment communities Spring Lake and Maple Leaf, which were sold in the third and fourth quarters of 2009, respectively.

The Company has two outstanding lines of credit in the aggregate of $450.0 million committed as of June 30, 2010. The Company has a $200.0 million unsecured line of credit and as of June 30, 2010 there was a $14.0 million balance on this unsecured line at an average interest rate of 3.6%. The underlying interest rate on the $200.0 million line is based on a tiered rate structure tied to an S&P rating on the credit facility at LIBOR plus 3.0%. This facility matures in December 2010 with two one-year extensions, exercisable by the Company. The Company also has a $250.0 million credit facility from Freddie Mac, which matures in December 2013. This line is secured by eleven apartment communities. As of June 30, 2010, the Company had $250.0 million outstanding under this line of credit at an average interest rate of 1.4%. The underlying interest rate on this line is between 99 and 150 basis points over the Freddie Mac Reference Rate and the interest rate is subject to change by the lender in November 2011. The Company s unsecured line of credit agreements contain debt covenants related to limitations on indebtedness and liabilities and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Company was in compliance with the line of credit covenants as of June 30, 2010 and December 31, 2009.

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10qk
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