|By Marketwired .||
|January 31, 2013 04:30 PM EST||
PALO ALTO, CA -- (Marketwire) -- 01/31/13 -- Essex Property Trust, Inc. (NYSE: ESS) announced today its fourth quarter and 2012 annual earnings results, related business activities, and 2013 guidance.
Funds from Operations ("FFO") and net income for the quarter and year ended December 31, 2012 are detailed below. Core FFO excludes non-recurring items.
Quarter Ended Year Ended December 31, % December 31, % Earnings(in millions) 2012 2011 change 2012 2011 change -------------------------- -------------------------- Total FFO $ 65.5 $ 55.5 18.0% $ 250.9 $ 200.2 25.3% Core FFO $ 69.1 $ 54.0 28.0% $ 255.0 $ 196.8 29.6% Net Income $ 43.8 $ 13.9 214.2% $ 119.8 $ 40.4 196.8% Per Diluted Share Total FFO $ 1.72 $ 1.55 10.7% $ 6.71 $ 5.74 16.9% Core FFO $ 1.81 $ 1.51 20.0% $ 6.82 $ 5.64 20.9% Earnings per Share $ 1.22 $ 0.42 189.7% $ 3.41 $ 1.24 175.0%
Fourth Quarter and Full Year Highlights:
- Core FFO per diluted share grew 20.0% and 20.9% for the fourth quarter and year ended December 31, 2012, respectively.
- Same-property gross revenues grew 6.2% compared to Q4 2011 and 6.7% for the full year, leading to 9.2% NOI growth for 2012.
- Achieved a 1.7% sequential increase in quarterly gross revenues and 3.7% sequential increase in net operating income for the same-property portfolio.
- Acquired six communities in the fourth quarter for an aggregate investment of $450 million, comprised of 1,519 units. For 2012, the Company acquired 15 properties, for a total investment of $802 million, containing 3,016 units including the purchase of our co-investment partners' interest in Essex Skyline at MacArthur Place.
- Received a credit rating upgrade from Fitch to BBB+ which resulted in a reduction in the pricing on our Line of Credit and Term Loan.
Michael J. Schall, President and Chief Executive Officer of the Company, commented, "2012 was an exceptional year for Essex. We achieved the highest level of same-property NOI growth and FFO per diluted share growth in over a decade. While we expect same-property NOI growth to moderate in 2013, we believe operating fundamentals will remain favorable in the West Coast apartment markets. Strong internal growth along with the $802 million in accretive acquisitions made last year support our expectation for another outstanding year for the Company in 2013."
Same-property operating results exclude properties that are not comparable for the periods presented. The table below illustrates the percentage change in same-property gross revenues, operating expenses, and NOI for the quarter and year ended December 31, 2012 compared to the quarter and year ended December 31, 2011:
Q4 2012 compared to Q4 YTD 2012 compared to YTD 2011 2011 ---------------------------- ---------------------------- Gross Operating Gross Operating Revenues Expenses NOI Revenues Expenses NOI -------- --------- ------- -------- --------- ------- Southern California 4.0% 5.4% 3.3% 4.2% 1.4% 5.6% Northern California 8.7% 3.3% 11.2% 9.6% 2.5% 13.2% Seattle Metro 7.6% 5.3% 8.8% 8.4% 2.7% 11.6% -------- --------- ------- -------- --------- ------- Same-property portfolio 6.2% 4.7% 6.9% 6.7% 2.0% 9.2% ======== ========= ======= ======== ========= =======
The table below illustrates the sequential percentage change in same-property gross revenues, operating expenses, and NOI for the quarter ended December 31, 2012 versus the quarter ended September 30, 2012:
Q4 2012 compared to Q3 2012 ---------------------------------------- Gross Operating Revenues Expenses NOI ------------ ------------ ------------ Southern California 1.2% -1.5% 2.6% Northern California 2.3% -4.6% 5.5% Seattle Metro 2.0% 0.7% 2.8% ------------ ------------ ------------ Same-property portfolio 1.7% -2.1% 3.7% ============ ============ ============
Same-property financial occupancies for the quarters ended are as follows:
12/31/2012 9/30/2012 12/31/2011 ------------ ------------ ------------ Southern California 95.9% 95.9% 96.4% Northern California 96.4% 96.5% 96.8% Seattle Metro 96.0% 95.6% 96.3% ------------ ------------ ------------ Same-property portfolio 96.1% 96.1% 96.6% ============ ============ ============
During the fourth quarter the Company purchased six communities comprised of 1,519 units for a total investment of $450 million. Properties acquired subsequent to the Company's third quarter 2012 earnings release are detailed below.
In November, the Company acquired Madrid, a 230 unit community located in Mission Viejo, California for an undisclosed price (per an agreement with the seller). The property was placed in the Wesco I, LLC ("Wesco I") joint venture of which Essex has a 50% interest. The property was built in 2000 and contains a mix of one, two and three bedroom floor plans.
In November, the Company acquired Haver Hill located in Fullerton, California for $45.6 million. Built in 1973, the property has 264 units. The property was placed into a new joint venture, Wesco III, LLC ("Wesco III"), of which Essex has a 50% interest. The Wesco III joint venture has a total investment capacity of $240 million.
Bennett Lofts (formerly Q Lofts), a 147 unit apartment community comprised of five buildings located in San Francisco, California, was acquired in two phases for $96.0 million. Approximately 75% of the property was acquired in December and the remainder was purchased in January 2013. The property was built in 2004 and has large open live/work condos that average 1,257 square feet per unit. The property is located within walking distance to numerous high tech jobs in the South of Market district as well as many retail and restaurant venues.
In December, the Company acquired Pacific Electric Lofts for an undisclosed amount (per an agreement with the seller) in the Wesco I joint venture. The property contains 314 units along with 22,100 square feet of retail. Built in 1905, the property was converted from office to multifamily use in 2006. As part of the conversion, all of the electrical systems, plumbing and HVAC equipment were replaced. The majority of the units are open loft-style floor plans with 10+ foot ceilings, granite countertops, and stainless steel appliances. The community is located in downtown Los Angeles, within close proximity to the central business district and multiple entertainment and retail venues.
In January 2013, the Company acquired Annaliese, a 56 unit community located in Seattle, Washington for $19.0 million. The property was built in 2009 and located in the South Lake Union submarket. The community features high quality finishes with floor to ceiling windows allowing for spectacular views of the city.
For additional details regarding the properties acquired during the fourth quarter 2012 and first quarter 2013 please see S-15 of the supplemental.
The Company closed on the sale of seven communities owned by Essex Apartment Value Fund II, L.P. ("Fund II") during the fourth quarter for gross proceeds of $413 million. The Company has a 28.2% ownership stake in Fund II. In conjunction with the sale of the assets, the Company incurred a prepayment penalty on debt obligations of $2.3 million during the fourth quarter for its pro-rata share of Fund II's debt. The total GAAP gain on the transaction was $106 million, of which the Company's pro rata share was $29.1 million. The gain has been excluded from the calculation of FFO.
In January 2013, the Company sold the land parcel held for future development located in Palo Alto, California for $9.1 million, resulting in a gain of $1.5 million. The gain will be reported in FFO and excluded from Core FFO in the first quarter 2013.
The Company opened the second phase of Expo in Seattle, Washington in early December. Currently, 175 of the 275 units are leased, representing 64% of the total units. The Company expects the property to stabilize during the second quarter of 2013. The estimated final cost of construction of Expo is $70 million, reflecting a $9.1 million reduction or 11.5% from the project's original total cost estimate.
In the fourth quarter, a note receivable secured by the Emeryville Marketplace at a rate of LIBOR + 8.0% matured and the principal was repaid totaling $6.3 million.
In January 2013, the Company made an $8.6 million preferred equity investment in a development project located in Redwood City, California. The investment has a preferred return of 9.5% and matures in January 2016.
Liquidity and Balance Sheet
During the fourth quarter, the Company sold 629,107 shares of common stock for $88.9 million, net of commissions, at an average per share price of $142.61. For 2012, the Company sold 2,394,855 shares of common stock for $356.3 million, net of commissions, at an average price of $150.26. In January, the Company sold 488,716 shares of common stock for $73.3 million, net of commissions, at an average price of $151.49.
During the fourth quarter, the Company sold $54.1 million of a common stock investment for a gain of $0.3 million. In January 2013, the Company sold $20.3 million of a common stock investment for a gain of $1.8 million. The gain is excluded from Core FFO.
Balance Sheet Update
In November, Fitch upgraded the Company's credit rating to BBB+ with a stable outlook from BBB with a positive outlook. As a result, the pricing on the Company's Line of Credit and Term Loan was reduced to 107.5 basis points over Libor and 120 basis points over Libor, respectively.
In January 2013, the Company expanded the capacity of its unsecured line of credit facility from $500 million to $600 million.
2013 Guidance Assumptions
Per Diluted Share Range Total FFO $7.50 - $7.90 Core FFO $7.40 - $7.70 Earnings per Share ("EPS") $2.70 - $3.10 U.S. Economic Assumptions GDP Growth 2.3% Job Growth 1.6% Essex Markets Economic Assumptions Job Growth 2.0% Market Rent Growth 6.1% Estimated Same-Property Growth Gross Revenues ------------------------- Southern California 3.8% to 5.3% Northern California 6.5% to 8.0% Seattle Metro 6.0% to 7.5% ------------------------- Same-property portfolio 5.0% to 6.5% ========================= Operating Expense growth 3.0% to 4.0% Net Operating Income (NOI) growth 6.0% to 8.0%
Investment Activity Assumptions
- Acquisitions of $400 million to be financed with proceeds from dispositions, joint venture capital, as well as a combination of debt and equity capital. Net acquisitions are expected to generate net accretion of $0.5 million over the cost of capital.
- Total development spend of $350 million for properties currently under construction, and the Company's pro rata share of the development spend is $200 million.
- Approximately $45 million will be invested in the redevelopment of certain properties.
- Dispose of the remaining properties in the Fund II portfolio by the end of the third quarter, and promote income earned from the sale of the Fund II portfolio is expected to range from $3.0 million to $6.0 million. In 2013, we expect $2.1 million lower cash flow and management fee income from the sale of the Fund II portfolio.
- The development pipeline will have significantly more lease-up activity. Our share of dilution from development joint ventures is expected to be $1.8 million for 2013.
- For the forecast of 2013 EPS, no amount has been forecasted related to the Company's pro-rata gain from the sales of Fund II properties.
For additional details regarding our 2013 assumptions, please see page S-14 of the Supplemental Financial Information. For the first quarter of 2013, the Company has established a range for total FFO per diluted share of $1.85 to $1.95 and Core FFO per diluted share of $1.77 to $1.87.
Conference Call with Management
The Company will host an earnings conference call with management to discuss its quarterly results on Friday, February 1, 2013 at 10 a.m. PST (1 p.m. EST), which will be broadcast live via the Internet at www.essexpropertytrust.com, and accessible via phone by dialing (877) 407-0784, no passcode is necessary.
A rebroadcast of the live call will be available online for 90 days and digitally for 7 days. To access the replay online, go to www.essexpropertytrust.com and select the fourth quarter earnings link. To access the replay digitally, dial (877) 870-5176 using the replay pin number 406016. If you are unable to access the information via the Company's website, please contact the Investor Relations department at [email protected] or by calling (650) 494-3700.
Essex Property Trust, Inc., an S&P 400 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. Essex currently has ownership interests in 164 apartment communities with an additional 9 properties in various stages of active development. Additional information about Essex can be found on the Company's web site at www.essexpropertytrust.com.
This press release and accompanying supplemental financial information will be filed electronically on Form 8-K with the Securities and Exchange Commission and can be accessed from the Company's Web site at www.essexpropertytrust.com. If you are unable to obtain the information via the Web, please contact the Investor Relations Department at (650) 494-3700.
Funds from Operations ("FFO") Reconciliation
FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), is generally considered by industry analysts as an appropriate measure of performance of an equity REIT. Generally, FFO adjusts the net income of equity REITs for non-cash charges such as depreciation and amortization of rental properties, impairment charges, gains/losses on sales of real estate and extraordinary items. Management considers FFO and FFO which excludes items not related to the Company's core business activities referred to as Core FFO to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provides investors with an additional basis to evaluate the operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and ability to pay dividends.
FFO does not represent net income or cash flows from operations as defined by U.S. generally accepted accounting principles ("GAAP") and is not intended to indicate whether cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the REIT's operating performance or to cash flows as a measure of liquidity. FFO does not measure whether cash flow is sufficient to fund all cash needs including principal amortization, capital improvements and distributions to shareholders. FFO also does not represent cash flows generated from operating, investing or financing activities as defined under GAAP. Management has consistently applied the NAREIT definition of FFO to all periods presented. However, there is judgment involved and other REITs' calculation of FFO may vary from the NAREIT definition for this measure, and thus their disclosures of FFO may not be comparable to the Company's calculation.
The following table sets forth the Company's calculation of diluted FFO and Core FFO for the three and twelve months ended December 31, 2012 and 2011:
Three Months Ended Year Ended December 31, December 31, ------------------ ------------------ Funds from Operations (In thousands) 2012 2011 2012 2011 -------- -------- -------- -------- Net income available to common stockholders $ 43,793 $ 13,937 $119,812 $ 40,368 Adjustments: Depreciation 45,017 39,863 170,686 152,544 Gains not included in FFO, net of disposition costs (29,112) (3,159) (60,842) (7,543) Depreciation add back from unconsolidated co-investments, and add back convertible preferred dividend - Series G 3,365 4,145 14,467 12,642 Noncontrolling interest related to Operating Partnership units 2,781 1,027 7,950 3,228 Depreciation attributable to noncontrolling interests (319) (277) (1,223) (1,066) -------- -------- -------- -------- Funds from Operations $ 65,525 $ 55,536 $250,850 $200,173 ======== ======== ======== ======== Loss on early retirement of debt 2,348 343 5,009 1,163 Acquisition costs 1,480 181 2,255 1,231 Gain on sales of marketable securities (298) (414) (819) (4,956) Co-investment promote income - - (2,299) - Tax benefit - TRS activity - (1,682) - (1,682) Gain on sale of co-investment - - - (919) Gain on sale of land - - - (180) Excess of cash paid to redeem preferred stock and units over the carrying value - - - 1,949 -------- -------- -------- -------- Core Funds from Operations $ 69,055 $ 53,964 $254,996 $196,799 ======== ======== ======== ========
SAFE HARBOR STATEMENT UNDER THE PRIVATE LITIGATION REFORM ACT OF 1995:
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements and estimates under the caption "2013 Guidance Assumptions" on page 5 with respect to 2013 GAAP Earnings per share, 2013 Total FFO per diluted share, 2013 Core FFO per diluted share, and 2013 same-property growth with respect to revenues, expenses, and NOI and statements under the caption "Investment Activity Assumptions" on page 5, statements and estimates elsewhere in this release with respect to construction costs and start dates and occupancy dates, statements on page 1 regarding same-property NOI growth and 2013 being a year of outperformance, and statements and estimates set forth under the captions "Development Pipeline" and "Redevelopment Pipeline and Capital Expenditures" on pages S-9 and S-10 of the Company's Supplemental Financial Information Package, which accompanies this press release, regarding estimated costs of property development and redevelopment and regarding the anticipated timing of redevelopments and of the construction start, initial occupancy and stabilization of property development and the various financial estimates and assumptions set forth in the columns "Low-end of Guidance range 2013" and "High-end of guidance range 2013" on S-14 of the Company's Supplemental Financial Information Package. The Company's actual results may differ materially from those projected in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, changes in market demand for rental units and the impact of competition and competitive pricing, changes in economic conditions, unexpected delays in the development and stabilization of development projects, unexpected difficulties in leasing of development projects, total costs of development investments exceeding the Company's projections and other risks detailed in the Company's filings with the Securities and Exchange Commission (SEC). All forward-looking statements are made as of today, and the Company assumes no obligation to update this information. For more details relating to risk and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including the Company's most recent Report on Form 10-K for the year ended December 31, 2011.
Director of Investor Relations
In his session at Cloud Expo, Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, will provide economic scenarios that describe how the rapid adoption of software-defined everything including cloud services, SDDC and open networking will change GDP, industry growth, productivity and jobs. This session will also include a drill down for several industries such as finance, social media, cloud service providers and pharmaceuticals.
Jul. 29, 2016 02:15 PM EDT Reads: 330
IoT generates lots of temporal data. But how do you unlock its value? You need to discover patterns that are repeatable in vast quantities of data, understand their meaning, and implement scalable monitoring across multiple data streams in order to monetize the discoveries and insights. Motif discovery and deep learning platforms are emerging to visualize sensor data, to search for patterns and to build application that can monitor real time streams efficiently. In his session at @ThingsExpo, ...
Jul. 29, 2016 02:00 PM EDT Reads: 1,194
Ixia (Nasdaq: XXIA) has announced that NoviFlow Inc.has deployed IxNetwork® to validate the company’s designs and accelerate the delivery of its proven, reliable products. Based in Montréal, NoviFlow Inc. supports network carriers, hyperscale data center operators, and enterprises seeking greater network control and flexibility, network scalability, and the capacity to handle extremely large numbers of flows, while maintaining maximum network performance. To meet these requirements, NoviFlow in...
Jul. 29, 2016 01:00 PM EDT Reads: 754
Choosing the right cloud for your workloads is a balancing act that can cost your organization time, money and aggravation - unless you get it right the first time. Economics, speed, performance, accessibility, administrative needs and security all play a vital role in dictating your approach to the cloud. Without knowing the right questions to ask, you could wind up paying for capacity you'll never need or underestimating the resources required to run your applications.
Jul. 29, 2016 01:00 PM EDT Reads: 691
Security, data privacy, reliability and regulatory compliance are critical factors when evaluating whether to move business applications from in-house client hosted environments to a cloud platform. In her session at 18th Cloud Expo, Vandana Viswanathan, Associate Director at Cognizant, In this session, will provide an orientation to the five stages required to implement a cloud hosted solution validation strategy.
Jul. 29, 2016 01:00 PM EDT Reads: 1,184
"delaPlex is a software development company. We do team-based outsourcing development," explained Mark Rivers, COO and Co-founder of delaPlex Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jul. 29, 2016 01:00 PM EDT Reads: 2,081
ReadyTalk has expanded the capabilities of the FoxDen collaboration platform announced late last year to include FoxDen Connect, an in-room video collaboration experience that launches with a single touch. With FoxDen Connect, users can now not only engage in HD video conferencing between iOS and Android mobile devices or Chrome browsers, but also set up in-person meeting rooms for video interactions. A host’s mobile device automatically recognizes the presence of a meeting room via beacon tech...
Jul. 29, 2016 12:15 PM EDT Reads: 258
Ovum, a leading technology analyst firm, has published an in-depth report, Ovum Decision Matrix: Selecting a DevOps Release Management Solution, 2016–17. The report focuses on the automation aspects of DevOps, Release Management and compares solutions from the leading vendors.
Jul. 29, 2016 12:00 PM EDT Reads: 1,829
Continuous testing helps bridge the gap between developing quickly and maintaining high quality products. But to implement continuous testing, CTOs must take a strategic approach to building a testing infrastructure and toolset that empowers their team to move fast. Download our guide to laying the groundwork for a scalable continuous testing strategy.
Jul. 29, 2016 12:00 PM EDT Reads: 2,093
On Dice.com, the number of job postings asking for skill in Amazon Web Services increased 76 percent between June 2015 and June 2016. Salesforce.com saw its own skill mentions increase 37 percent, while DevOps and Cloud rose 35 percent and 28 percent, respectively. Even as they expand their presence in the cloud, companies are also looking for tech professionals who can manage projects, crunch data, and figure out how to make systems run more autonomously. Mentions of ‘data science’ as a skill ...
Jul. 29, 2016 11:46 AM EDT Reads: 304
Adding public cloud resources to an existing application can be a daunting process. The tools that you currently use to manage the software and hardware outside the cloud aren’t always the best tools to efficiently grow into the cloud. All of the major configuration management tools have cloud orchestration plugins that can be leveraged, but there are also cloud-native tools that can dramatically improve the efficiency of managing your application lifecycle. In his session at 18th Cloud Expo, ...
Jul. 29, 2016 11:30 AM EDT Reads: 1,245
SYS-CON Events announced today that LeaseWeb USA, a cloud Infrastructure-as-a-Service (IaaS) provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LeaseWeb is one of the world's largest hosting brands. The company helps customers define, develop and deploy IT infrastructure tailored to their exact business needs, by combining various kinds cloud solutions.
Jul. 29, 2016 11:15 AM EDT Reads: 1,340
Amazon has gradually rolled out parts of its IoT offerings in the last year, but these are just the tip of the iceberg. In addition to optimizing their back-end AWS offerings, Amazon is laying the ground work to be a major force in IoT – especially in the connected home and office. Amazon is extending its reach by building on its dominant Cloud IoT platform, its Dash Button strategy, recently announced Replenishment Services, the Echo/Alexa voice recognition control platform, the 6-7 strategic...
Jul. 29, 2016 11:15 AM EDT Reads: 677
Up until last year, enterprises that were looking into cloud services usually undertook a long-term pilot with one of the large cloud providers, running test and dev workloads in the cloud. With cloud’s transition to mainstream adoption in 2015, and with enterprises migrating more and more workloads into the cloud and in between public and private environments, the single-provider approach must be revisited. In his session at 18th Cloud Expo, Yoav Mor, multi-cloud solution evangelist at Cloudy...
Jul. 29, 2016 11:00 AM EDT Reads: 506
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
Jul. 29, 2016 11:00 AM EDT Reads: 524