Maryland
|
77-0369576
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification
Number)
|
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company o
|
(Do
not check if a smaller reporting company)
|
Page No.
|
||
PART
I. FINANCIAL INFORMATION
|
||
3
|
||
4
|
||
|
||
5
|
||
6
|
||
7
|
||
8
|
||
17
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||
25
|
||
26
|
||
PART
II. OTHER INFORMATION
|
||
26
|
||
27
|
||
|
||
28
|
||
28
|
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Assets
|
||||||||
Real
estate:
|
||||||||
Rental
properties:
|
||||||||
Land
and land improvements
|
$ | 669,322 | $ | 670,494 | ||||
Buildings
and improvements
|
2,485,788 | 2,447,265 | ||||||
3,155,110 | 3,117,759 | |||||||
Less
accumulated depreciation
|
(612,249 | ) | (541,987 | ) | ||||
2,542,861 | 2,575,772 | |||||||
Real
estate - held for sale, net
|
15,983 | - | ||||||
Real
estate under development
|
347,979 | 233,445 | ||||||
Co-investments
|
66,363 | 64,191 | ||||||
2,973,186 | 2,873,408 | |||||||
Cash
and cash equivalents-unrestricted
|
33,404 | 9,956 | ||||||
Cash
and cash equivalents-restricted
|
12,552 | 12,527 | ||||||
Marketable
securities
|
58,614 | 2,017 | ||||||
Receivables
from related parties
|
967 | 904 | ||||||
Notes
and other receivables
|
45,782 | 49,632 | ||||||
Prepaid
expenses and other assets
|
23,474 | 20,286 | ||||||
Deferred
charges, net
|
11,347 | 11,593 | ||||||
Total
assets
|
$ | 3,159,326 | $ | 2,980,323 | ||||
Liabilities and Stockholders'
Equity
|
||||||||
Mortgage
notes payable
|
$ | 1,341,327 | $ | 1,262,873 | ||||
Mortgage
notes payable - held for sale
|
10,799 | - | ||||||
Exchangeable
bonds
|
225,000 | 225,000 | ||||||
Lines
of credit
|
153,000 | 169,818 | ||||||
Accounts
payable and accrued liabilities
|
64,759 | 52,783 | ||||||
Construction
payable
|
20,089 | 5,365 | ||||||
Dividends
payable
|
32,037 | 28,521 | ||||||
Other
liabilities
|
16,672 | 17,773 | ||||||
Total
liabilities
|
1,863,683 | 1,762,133 | ||||||
Commitments
and contingencies
|
||||||||
Minority
interests
|
279,930 | 281,960 | ||||||
Cumulative
convertible preferred stock; $.0001 par value:4.875% Series G - 5,980,000
issued and outstanding
|
145,912 | 145,912 | ||||||
Stockholders'
equity:
|
||||||||
Common
stock, $.0001 par value, 649,702,178 shares authorized 24,943,675 and
24,876,737 shares issued and outstanding
|
2 | 2 | ||||||
Cumulative
redeemable preferred stock; $.0001 par value:7.8125% Series F - 1,000,000
shares authorized, issued and outstanding, liquidation
value
|
25,000 | 25,000 | ||||||
Excess
stock, $.0001 par value, 330,000,000 shares authorized and no shares
issued and outstanding
|
- | - | ||||||
Additional
paid-in capital
|
982,754 | 857,109 | ||||||
Distributions
in excess of accumulated earnings
|
(122,044 | ) | (82,805 | ) | ||||
Accumulated
other comprehensive income (loss)
|
(15,911 | ) | (8,988 | ) | ||||
Total
stockholders' equity
|
869,801 | 790,318 | ||||||
Total
liabilities and stockholders' equity
|
$ | 3,159,326 | $ | 2,980,323 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenues:
|
||||||||||||||||
Rental
and other property
|
$ | 102,907 | $ | 95,012 | $ | 302,898 | $ | 275,747 | ||||||||
Management
and other fees from affiliates
|
1,311 | 1,268 | 3,965 | 3,662 | ||||||||||||
104,218 | 96,280 | 306,863 | 279,409 | |||||||||||||
Expenses:
|
||||||||||||||||
Property
operating, excluding real estate taxes
|
25,719 | 22,949 | 74,625 | 66,707 | ||||||||||||
Real
estate taxes
|
8,630 | 8,185 | 24,904 | 23,298 | ||||||||||||
Depreciation
and amortization
|
27,952 | 24,169 | 82,564 | 69,036 | ||||||||||||
Interest
|
19,399 | 19,459 | 57,835 | 57,688 | ||||||||||||
Amortization
of deferred financing costs
|
686 | 701 | 2,109 | 2,054 | ||||||||||||
General
and administrative
|
6,524 | 6,415 | 19,600 | 18,519 | ||||||||||||
88,910 | 81,878 | 261,637 | 237,302 | |||||||||||||
Earnings
from operations
|
15,308 | 14,402 | 45,226 | 42,107 | ||||||||||||
Gain
on sale of real estate
|
2,446 | - | 2,446 | - | ||||||||||||
Interest
and other income
|
2,847 | 2,407 | 8,048 | 7,454 | ||||||||||||
Equity
income in co-investments
|
335 | 322 | 7,325 | 2,767 | ||||||||||||
Minority
interests
|
(5,666 | ) | (5,088 | ) | (16,929 | ) | (15,459 | ) | ||||||||
Income
before discontinued operations
|
15,270 | 12,043 | 46,116 | 36,869 | ||||||||||||
Income
(loss) from discontinued operations (net of minority
interests)
|
(584 | ) | 265 | (1,417 | ) | 25,172 | ||||||||||
Net
income
|
14,686 | 12,308 | 44,699 | 62,041 | ||||||||||||
Dividends
to preferred stockholders
|
(2,310 | ) | (2,311 | ) | (6,931 | ) | (6,864 | ) | ||||||||
Net
income available to common stockholders
|
$ | 12,376 | $ | 9,997 | $ | 37,768 | $ | 55,177 | ||||||||
Per
common share data:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Income
before discontinued operations available to common
stockholders
|
$ | 0.52 | $ | 0.39 | $ | 1.58 | $ | 1.23 | ||||||||
Income
(loss) from discontinued operations
|
(0.02 | ) | 0.01 | (0.06 | ) | 1.03 | ||||||||||
Net
income available to common stockholders
|
$ | 0.50 | $ | 0.40 | $ | 1.52 | $ | 2.26 | ||||||||
Weighted
average number of common shares outstanding during the
period
|
25,110,710 | 25,165,276 | 24,876,611 | 24,370,184 | ||||||||||||
Diluted:
|
||||||||||||||||
Income
before discontinued operations available to common
stockholders
|
$ | 0.51 | $ | 0.38 | $ | 1.56 | $ | 1.20 | ||||||||
Income
(loss) from discontinued operations
|
(0.02 | ) | 0.01 | (0.06 | ) | 1.01 | ||||||||||
Net
income available to common stockholders
|
$ | 0.49 | $ | 0.39 | $ | 1.50 | $ | 2.21 | ||||||||
Weighted
average number of common shares outstanding during the
period
|
25,474,924 | 25,555,928 | 25,182,107 | 24,983,765 | ||||||||||||
Dividend
per common share
|
$ | 1.02 | $ | 0.93 | $ | 3.06 | $ | 2.79 |
Distributions
|
||||||||||||||||||||||||||||||||
Series
F
|
Additional
|
in
excess of
|
Accumulated
other
|
|||||||||||||||||||||||||||||
Preferred
stock
|
Common
stock
|
paid-in
|
accumulated
|
comprehensive
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
earnings
|
income
(loss)
|
Total
|
|||||||||||||||||||||||||
Balances
at December 31, 2007
|
1,000 | $ | 25,000 | 24,877 | $ | 2 | $ | 857,109 | $ | (82,805 | ) | $ | (8,988 | ) | $ | 790,318 | ||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 44,699 | - | 44,699 | ||||||||||||||||||||||||
Change
in fair value of cash flow hedges and amortization of swap
settlements
|
- | - | - | - | - | - | (6,923 | ) | (6,923 | ) | ||||||||||||||||||||||
Comprehensive
income
|
37,776 | |||||||||||||||||||||||||||||||
Issuance
of common stock under:
|
||||||||||||||||||||||||||||||||
Stock-based
compensation plans
|
- | - | 79 | - | 5,714 | - | - | 5,714 | ||||||||||||||||||||||||
Issuance
of common stock
|
- | - | 1,131 | - | 133,654 | - | - | 133,654 | ||||||||||||||||||||||||
Retirement
of common stock
|
- | - | (143 | ) | - | (13,723 | ) | - | - | (13,723 | ) | |||||||||||||||||||||
Dividends
declared
|
- | - | - | - | - | (83,938 | ) | - | (83,938 | ) | ||||||||||||||||||||||
Balances
at September 30, 2008
|
1,000 | $ | 25,000 | 25,944 | $ | 2 | $ | 982,754 | $ | (122,044 | ) | $ | (15,911 | ) | $ | 869,801 |
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Net
cash provided by operating activities
|
$ | 143,048 | $ | 158,148 | ||||
Cash
flows used in investing activities:
|
||||||||
Additions
to real estate:
|
||||||||
Acquisitions
and improvements to recent acquisitions
|
(93,906 | ) | (333,110 | ) | ||||
Capital
expenditures and redevelopment
|
(52,420 | ) | (52,124 | ) | ||||
Additions
to real estate under development
|
(92,497 | ) | (96,236 | ) | ||||
Dispositions
of real estate and investments
|
44,980 | 124,103 | ||||||
Changes
in restricted cash and refundable deposits
|
(2,791 | ) | 1,979 | |||||
Purchases
of marketable securities
|
(62,522 | ) | (5,843 | ) | ||||
Sales
and maturities of marketable securities
|
5,925 | - | ||||||
Advances
under notes and other receivables
|
(1,958 | ) | (19,192 | ) | ||||
Collections
of notes and other receivables
|
5,980 | 1,472 | ||||||
Contributions
to co-investments
|
(4,183 | ) | (22,164 | ) | ||||
Distributions
from co-investments
|
9,423 | 15,330 | ||||||
Net
cash used in investing activities
|
(243,969 | ) | (385,785 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Borrowings
under mortgage and other notes payable and lines of credit
|
565,096 | 665,709 | ||||||
Repayment
of mortgage and other notes payable and lines of credit
|
(450,485 | ) | (494,331 | ) | ||||
Additions
to deferred charges
|
(2,105 | ) | (1,516 | ) | ||||
Settlement
of forward-starting swaps
|
(1,840 | ) | 1,311 | |||||
Net
proceeds from stock options exercised
|
4,841 | 3,786 | ||||||
Net
proceeds from sale of common stock
|
133,654 | 213,672 | ||||||
Repurchase
of common stock
|
(13,723 | ) | (1,409 | ) | ||||
Distributions
to minority interest partners
|
(18,128 | ) | (77,145 | ) | ||||
Redemption
of minority interest limited partnership units
|
(12,304 | ) | (9,983 | ) | ||||
Common
and preferred stock dividends paid
|
(80,637 | ) | (71,880 | ) | ||||
Net
cash provided by financing activities
|
124,369 | 228,214 | ||||||
Net
increase in cash and cash equivalents
|
23,448 | 577 | ||||||
Cash
and cash equivalents at beginning of period
|
9,956 | 9,662 | ||||||
Cash
and cash equivalents at end of period
|
$ | 33,404 | $ | 10,239 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid for interest, net of $8.2 million and $3.6 million capitalized in
2008 and 2007, respectively
|
$ | 46,929 | $ | 52,443 | ||||
Supplemental
disclosure of noncash investing and financing activities:
|
||||||||
Mortgage
note assumed by buyer in connection with sale of property
|
$ | 42,200 | $ | - | ||||
Mortgage
note assumed in connection with land contribution
|
$ | - | $ | 43,839 | ||||
Mortgage
note issued to buyer in connection with sale of property
|
$ | 4,070 | $ | - | ||||
Land
contributed by a partner in a consolidated joint venture
|
$ | 10,500 | $ | 22,200 | ||||
Change
in value of cash flow hedges and amortization of swap
settlements
|
$ | 6,923 | $ | 6,602 | ||||
Change
in construction payable
|
$ | 14,724 | $ | 5,576 | ||||
Issuance
of DownREIT units in connection with purchase of real
estate
|
$ | - | $ | 7,067 | ||||
Property
received in satisfaction of note receivable
|
$ | 1,500 | $ | - |
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Investments
in joint ventures accounted for under the equity method of
accounting:
|
||||||||
Limited
partnership interest of 27.2% and general partner interest of 1% in Essex
Apartment Value Fund II, L.P ("Fund II")
|
$ | 60,866 | $ | 58,419 | ||||
Preferred
limited partnership interest in Mountain Vista Apartments, LLC
(A)
|
- | 1,182 | ||||||
Development
joint venture
|
4,997 | 4,090 | ||||||
65,863 | 63,691 | |||||||
Investments
accounted for under the cost method of accounting:
|
||||||||
Series
A Preferred Stock interest in Multifamily Technology Solutions,
Inc
|
500 | 500 | ||||||
Total
co-investments
|
$ | 66,363 | $ | 64,191 |
(A)
|
The
investment was held in an entity that included an affiliate of The Marcus
& Millichap Company (“TMMC”), and is the general
partner. TMMC’s Chairman is also the Chairman of the
Company.
|
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Balance
sheets:
|
||||||||
Real
estate and real estate under development
|
$ | 519,921 | $ | 614,266 | ||||
Other
assets
|
7,672 | 16,184 | ||||||
Total
assets
|
$ | 527,593 | $ | 630,450 | ||||
Mortgage
notes payable
|
$ | 298,442 | $ | 322,615 | ||||
Other
liabilities
|
12,733 | 24,014 | ||||||
Partners'
equity
|
216,418 | 283,821 | ||||||
Total
liabilities and partners' equity
|
$ | 527,593 | $ | 630,450 | ||||
Company's
share of equity
|
$ | 65,863 | $ | 63,691 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Statements
of operations:
|
||||||||||||||||
Property
revenues
|
$ | 11,906 | $ | 11,761 | $ | 34,232 | $ | 34,596 | ||||||||
Operating
expenses
|
(4,565 | ) | (4,335 | ) | (13,180 | ) | (13,805 | ) | ||||||||
Interest
expense
|
(2,876 | ) | (3,369 | ) | (8,205 | ) | (10,623 | ) | ||||||||
Depreciation
and amortization
|
(3,308 | ) | (3,485 | ) | (9,979 | ) | (10,431 | ) | ||||||||
Total
net income (loss)
|
$ | 1,157 | $ | 572 | $ | 2,868 | $ | (263 | ) | |||||||
Company's
share of operating net income
|
335 | 322 | 1,007 | 421 | ||||||||||||
Company's
preferred interest/gain - Mt. Vista
|
- | - | 6,318 | 2,346 | ||||||||||||
Company's
share of net income
|
$ | 335 | $ | 322 | $ | 7,325 | $ | 2,767 |
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Note
receivable, secured, bearing interest at LIBOR + 4.65%, due July
2008
|
$ | - | $ | 5,448 | ||||
Note
receivable, secured, bearing interest at LIBOR + 3.38%, due February
2009
|
12,863 | 10,999 | ||||||
Note
receivable, secured, bearing interest at LIBOR + 2.95%, due April
2009
|
14,000 | 14,010 | ||||||
Note
receivable, secured, bearing interest at LIBOR + 3.69%, due June
2009
|
7,328 | 7,346 | ||||||
Note
receivable, secured, bearing interest at LIBOR + 4.75%, due March
2011
|
7,260 | 7,128 | ||||||
Other
receivables
|
4,331 | 4,701 | ||||||
$ | 45,782 | $ | 49,632 |
Three
Months Ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Revenues:
|
||||||||
Southern
California
|
$ | 53,442 | $ | 52,429 | ||||
Northern
California
|
30,516 | 25,608 | ||||||
Seattle
Metro
|
18,269 | 16,355 | ||||||
Other
real estate assets
|
680 | 620 | ||||||
Total
property revenues
|
$ | 102,907 | $ | 95,012 | ||||
Net
operating income:
|
||||||||
Southern
California
|
$ | 36,282 | $ | 35,979 | ||||
Northern
California
|
19,877 | 16,919 | ||||||
Seattle
Metro
|
12,037 | 10,680 | ||||||
Other
real estate assets
|
362 | 300 | ||||||
Total
net operating income
|
68,558 | 63,878 | ||||||
Depreciation
and amortization
|
(27,952 | ) | (24,169 | ) | ||||
Interest
expense
|
(19,399 | ) | (19,459 | ) | ||||
Amortization
of deferred financing costs
|
(686 | ) | (701 | ) | ||||
General
and administrative
|
(6,524 | ) | (6,415 | ) | ||||
Management
and other fees from affiliates
|
1,311 | 1,268 | ||||||
Gain
on sale or real estate
|
2,446 | - | ||||||
Interest
and other income
|
2,847 | 2,407 | ||||||
Equity
income in co-investments
|
335 | 322 | ||||||
Minority
interests
|
(5,666 | ) | (5,088 | ) | ||||
Income
before discontinued operations
|
$ | 15,270 | $ | 12,043 |
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Revenues:
|
||||||||
Southern
California
|
$ | 159,725 | $ | 155,632 | ||||
Northern
California
|
88,782 | 71,122 | ||||||
Seattle
Metro
|
52,355 | 47,144 | ||||||
Other
real estate assets
|
2,036 | 1,849 | ||||||
Total
property revenues
|
$ | 302,898 | $ | 275,747 | ||||
Net
operating income:
|
||||||||
Southern
California
|
$ | 109,582 | $ | 107,608 | ||||
Northern
California
|
58,002 | 47,081 | ||||||
Seattle
Metro
|
34,925 | 31,035 | ||||||
Other
real estate assets
|
860 | 18 | ||||||
Total
net operating income
|
203,369 | 185,742 | ||||||
Depreciation
and amortization
|
(82,564 | ) | (69,036 | ) | ||||
Interest
expense
|
(57,835 | ) | (57,688 | ) | ||||
Amortization
of deferred financing costs
|
(2,109 | ) | (2,054 | ) | ||||
General
and administrative
|
(19,600 | ) | (18,519 | ) | ||||
Management
and other fees from affiliates
|
3,965 | 3,662 | ||||||
Gain
on sale of real estate
|
2,446 | - | ||||||
Interest
and other income
|
8,048 | 7,454 | ||||||
Equity
income in co-investments
|
7,325 | 2,767 | ||||||
Minority
interests
|
(16,929 | ) | (15,459 | ) | ||||
Income
before discontinued operations
|
$ | 46,116 | $ | 36,869 |
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Assets:
|
||||||||
Southern
California
|
$ | 1,218,392 | $ | 1,354,818 | ||||
Northern
California
|
852,061 | 829,879 | ||||||
Seattle
Metro
|
420,411 | 353,737 | ||||||
Other
real estate assets
|
51,997 | 37,338 | ||||||
Net
rental properties
|
2,542,861 | 2,575,772 | ||||||
Real
estate - held for sale, net
|
15,983 | - | ||||||
Real
estate under development
|
347,979 | 233,445 | ||||||
Co-investments
|
66,363 | 64,191 | ||||||
Cash
and cash equivalents
|
45,956 | 22,483 | ||||||
Marketable
securities
|
58,614 | 2,017 | ||||||
Notes
and other receivables
|
46,749 | 50,536 | ||||||
Other
non-segment assets
|
34,821 | 31,879 | ||||||
Total
assets
|
$ | 3,159,326 | $ | 2,980,323 |
(7)
|
Net Income Per Common
Share
|
|
(Amounts
in thousands, except per share and unit
data)
|
Three
Months Ended
|
Three
Months Ended
|
|||||||||||||||||||||||
September
30, 2008
|
September
30, 2007
|
|||||||||||||||||||||||
Weighted-
|
Per
|
Weighted-
|
Per
|
|||||||||||||||||||||
average
|
Common
|
average
|
Common
|
|||||||||||||||||||||
Common
|
Share
|
Common
|
Share
|
|||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income
from continuing operations available to common
stockholders
|
$ | 12,960 | 25,111 | $ | 0.52 | $ | 9,732 | 25,165 | $ | 0.39 | ||||||||||||||
Income
(loss) from discontinued operations
|
(584 | ) | 25,111 | (0.02 | ) | 265 | 25,165 | 0.01 | ||||||||||||||||
12,376 | $ | 0.50 | 9,997 | $ | 0.40 | |||||||||||||||||||
Effect
of Dilutive Securities (1)
|
- | 364 | - | 391 | ||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income
from continuing operations available to common
stockholders
|
12,960 | 25,475 | $ | 0.51 | 9,732 | 25,556 | $ | 0.38 | ||||||||||||||||
Income
(loss) from discontinued operations
|
(584 | ) | 25,475 | (0.02 | ) | 265 | 25,556 | 0.01 | ||||||||||||||||
$ | 12,376 | $ | 0.49 | $ | 9,997 | $ | 0.39 | |||||||||||||||||
Nine
Months Ended
|
Nine
Months Ended
|
|||||||||||||||||||||||
September
30, 2008
|
September
30, 2007
|
|||||||||||||||||||||||
Weighted
|
Per
|
Weighted
|
Per
|
|||||||||||||||||||||
Average
|
Common
|
Average
|
Common
|
|||||||||||||||||||||
Common
|
Share
|
Common
|
Share
|
|||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income
before discontinued operations available to common
stockholders
|
$ | 39,185 | 24,877 | $ | 1.58 | $ | 30,005 | 24,370 | $ | 1.23 | ||||||||||||||
Income
(loss) from discontinued operations
|
(1,417 | ) | 24,877 | (0.06 | ) | 25,172 | 24,370 | 1.03 | ||||||||||||||||
37,768 | $ | 1.52 | 55,177 | $ | 2.26 | |||||||||||||||||||
Effect
of Dilutive Securities (1)
|
- | 305 | - | 614 | ||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income
before discontinued operations available to common
stockholders
|
39,185 | 25,182 | $ | 1.56 | 30,005 | 24,984 | $ | 1.20 | ||||||||||||||||
Income
(loss) from discontinued operations
|
(1,417 | ) | 25,182 | (0.06 | ) | 25,172 | 24,984 | 1.01 | ||||||||||||||||
$ | 37,768 | $ | 1.50 | $ | 55,177 | $ | 2.21 |
(1)
|
Weighted
convertible limited partnership units of 2,184,446 and 2,273,992 for the
three months ended September 30, 2008 and 2007, respectively, and
2,224,828 and 2,285,541 for the nine months ended September 30, 2008 and
2007, respectively, and Series Z incentive units of 250,927 and 213,205
for the three months ended September 30, 2008 and 2007, respectively,
and 250,514 and 213,045 for the nine months ended September 30,
2008 and 2007, respectively, were not included in the determination of
diluted EPS because they were anti-dilutive. The Company has
the ability and intent to redeem DownREIT Limited Partnership units for
cash and does not consider them to be common stock
equivalents.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Rental
revenues
|
$ | 1,677 | $ | 4,594 | $ | 6,528 | $ | 13,416 | ||||||||
Interest
and other income
|
- | - | - | 290 | ||||||||||||
Revenues
|
1,677 | 4,594 | 6,528 | 13,706 | ||||||||||||
Property
operating expenses
|
(1,183 | ) | (2,142 | ) | (3,594 | ) | (5,899 | ) | ||||||||
Interest
expense
|
(545 | ) | (783 | ) | (2,087 | ) | (1,729 | ) | ||||||||
Depreciation
and amortization
|
(629 | ) | (1,443 | ) | (2,434 | ) | (3,460 | ) | ||||||||
Minority
interests
|
54 | (20 | ) | 128 | (226 | ) | ||||||||||
Expenses
|
(2,303 | ) | (4,388 | ) | (7,987 | ) | (11,314 | ) | ||||||||
Gain
on sale of real estate
|
46 | 64 | 46 | 79,275 | ||||||||||||
Subordination
fees
|
- | - | - | 10,290 | ||||||||||||
Minority
interests - OP units
|
(4 | ) | (5 | ) | (4 | ) | (2,156 | ) | ||||||||
Minority
interests - City Heights
|
- | - | - | (64,629 | ) | |||||||||||
Net
gain on sale of real estate
|
42 | 59 | 42 | 22,780 | ||||||||||||
- | ||||||||||||||||
Income
from discontinued operations
|
$ | (584 | ) | $ | 265 | $ | (1,417 | ) | $ | 25,172 |
As
of September 30, 2008
|
As
of September 30, 2007
|
|||||||||||||||
Apartment
Homes
|
%
|
Apartment
Homes
|
%
|
|||||||||||||
Southern
California
|
12,225 | 51 | % | 12,225 | 52 | % | ||||||||||
Northern
California
|
6,457 | 27 | % | 6,361 | 27 | % | ||||||||||
Seattle
Metro
|
5,338 | 22 | % | 5,005 | 21 | % | ||||||||||
Total
|
24,020 | 100 | % | 23,591 | 100 | % |
Three
months ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Southern
California
|
95.4 | % | 95.5 | % | ||||
Northern
California
|
97.8 | % | 96.8 | % | ||||
Seattle
Metro
|
96.8 | % | 95.9 | % |
Three
Months Ended
|
||||||||||||||||||||
Number
of
|
September
30,
|
Dollar
|
Percentage
|
|||||||||||||||||
Properties
|
2008
|
2007
|
Change
|
Change
|
||||||||||||||||
Property
Revenues (dollars in
thousands)
|
||||||||||||||||||||
Same-Properties:
|
||||||||||||||||||||
Southern
California
|
57 | $ | 48,237 | $ | 47,701 | $ | 536 | 1.1 | % | |||||||||||
Northern
California
|
18 | 20,080 | 18,527 | 1,553 | 8.4 | |||||||||||||||
Seattle
Metro
|
24 | 16,493 | 15,349 | 1,144 | 7.5 | |||||||||||||||
Total
Same-Property revenues
|
99 | 84,810 | 81,577 | 3,233 | 4.0 | |||||||||||||||
Non-Same
Property Revenues (1)
|
18,097 | 13,435 | 4,662 | 34.7 | ||||||||||||||||
Total
property revenues
|
$ | 102,907 | $ | 95,012 | $ | 7,895 | 8.3 | % |
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Southern
California
|
95.5 | % | 95.5 | % | ||||
Northern
California
|
97.5 | % | 96.2 | % | ||||
Seattle
Metro
|
96.8 | % | 96.0 | % |
Nine
Months Ended
|
||||||||||||||||||||
Number
of
|
September
30,
|
Dollar
|
Percentage
|
|||||||||||||||||
Properties
|
2008
|
2007
|
Change
|
Change
|
||||||||||||||||
Property
Revenues (dollars in
thousands)
|
||||||||||||||||||||
Same-Properties:
|
||||||||||||||||||||
Southern
California
|
56 | $ | 140,566 | $ | 137,921 | $ | 2,645 | 1.9 | % | |||||||||||
Northern
California
|
18 | 59,021 | 53,655 | 5,366 | 10.0 | |||||||||||||||
Seattle
Metro
|
23 | 46,344 | 42,830 | 3,514 | 8.2 | |||||||||||||||
Total
Same-Property revenues
|
97 | 245,931 | 234,406 | 11,525 | 4.9 | |||||||||||||||
Non-Same
Property Revenues (1)
|
56,967 | 41,341 | 15,626 | 37.8 | ||||||||||||||||
Total
property revenues
|
$ | 302,898 | $ | 275,747 | $ | 27,151 | 9.8 | % |
2009
and
|
2011
and
|
|||||||||||||||||||
(In
thousands)
|
2008
|
2010
|
2012
|
Thereafter
|
Total
|
|||||||||||||||
Mortgage
notes payable
|
$ | - | $ | 193,563 | $ | 183,786 | $ | 974,777 | $ | 1,352,126 | ||||||||||
Exchangeable
bonds
|
- | - | - | 225,000 | 225,000 | |||||||||||||||
Lines
of credit
|
- | 153,000 | - | - | 153,000 | |||||||||||||||
Interest
on indebtedness
|
21,630 | 115,826 | 70,479 | 208,924 | 416,859 | |||||||||||||||
Development
commitments
|
34,400 | 270,900 | 88,800 | 89,500 | 483,600 | |||||||||||||||
Redevelopment
commitments
|
11,000 | 43,900 | - | - | 54,900 | |||||||||||||||
Fund
II capital commitment
|
9,858 | - | - | - | 9,858 | |||||||||||||||
$ | 76,888 | $ | 777,189 | $ | 343,065 | $ | 1,498,201 | $ | 2,695,343 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
income available to common stockholders
|
$ | 12,376 | $ | 9,997 | $ | 37,768 | $ | 55,177 | ||||||||
Adjustments:
|
||||||||||||||||
Depreciation
and amortization
|
28,581 | 25,612 | 84,998 | 72,496 | ||||||||||||
Gains
not included in FFO
|
(2,492 | ) | (64 | ) | (2,492 | ) | (14,565 | ) | ||||||||
Minority
interests and co-investments (1)
|
2,217 | 1,777 | 6,534 | 6,114 | ||||||||||||
Funds
from operations
|
$ | 40,682 | $ | 37,322 | $ | 126,808 | $ | 119,222 | ||||||||
Funds
from operations per share - diluted
|
$ | 1.46 | $ | 1.33 | $ | 4.58 | $ | 4.34 | ||||||||
Weighted
average number shares outstanding diluted (2)
|
27,910,297 | 28,043,125 | 27,657,449 | 27,482,406 |
(1)
|
Amount
includes the following: (i) minority interest related to Operating
Partnership units, and (ii) net depreciation add back from unconsolidated
co-investments net of depreciation attributable to third-party ownership
of consolidated co-investments.
|
(2)
|
Assumes conversion of all
dilutive outstanding operating partnership interests in the Operating
Partnership.
|
Carrying
and
|
||||||||||||||||||||
Notional
|
Maturity
|
Estimate
Fair
|
+
50
|
-
50
|
||||||||||||||||
(Dollars
in thousands)
|
Amount
|
Date
Range
|
Value
|
Basis
Points
|
Basis
Points
|
|||||||||||||||
Cash
flow hedges:
|
||||||||||||||||||||
Interest
rate forward-starting swaps
|
$ | 400,000 | 2008-2011 | $ | (15,809 | ) | $ | (1,859 | ) | $ | (32,778 | ) | ||||||||
Interest
rate caps
|
129,149 | 2008-2011 | 370 | 586 | 217 | |||||||||||||||
Total
cash flow hedges
|
$ | 529,149 | 2007-2011 | $ | (15,439 | ) | $ | (1,273 | ) | $ | (32,561 | ) |
For
the Years Ended
|
2008
|
2009(1)
|
2010(2)
|
2011(3)
|
2012
|
Thereafter
|
Total
|
Fair
value
|
||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||
Fixed
rate debt
|
$ | - | 23,256 | 153,007 | 151,400 | 31,870 | 971,162 | $ | 1,330,695 | $ | 1,381,140 | |||||||||||||||||||||
Average
interest rate
|
6.3 | % | 8.1 | % | 6.4 | % | 5.4 | % | 5.0 | % | ||||||||||||||||||||||
Variable
rate debt
|
$ | - | 170,300 | - | 516 | - | 228,615 | (4) | $ | 399,431 | $ | 399,431 | ||||||||||||||||||||
Average
interest
|
3.4 | % | 4.0 | % | 3.6 | % |
|
·
|
funds
may be expended and management's time devoted to projects that may not be
completed;
|
|
·
|
construction
costs of a project may exceed original estimates possibly making the
project economically unfeasible;
|
|
·
|
projects
may be delayed due to, among other things, adverse weather
conditions;
|
|
·
|
occupancy
rates and rents at a completed project may be less than anticipated;
and
|
|
·
|
expenses
at a completed development project may be higher than
anticipated.
|
|
A.
|
Exhibits
|
|
3.1
|
Second
Amended and Restated Bylaws of Essex Property Trust, Inc., attached as
Exhibit 3.1 to the Company’s Form 8-K, filed September 22, 2008, and
incorporated herein by reference.
|
|
Ratio
of Earnings to Fixed Charges
|
|
Certification
of Keith R. Guericke, Chief Executive Officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
Certification
of Michael T. Dance, Chief Financial Officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
Certification
of Keith R. Guericke, Chief Executive Officer, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
Certification
of Michael T. Dance, Chief Financial Officer, pursuant to Section 906 of
the Sarbanes-Oxley Act of
2002.
|
ESSEX
PROPERTY TRUST, INC.
|
|
(Registrant)
|
|
Date:
October 31, 2008
|
|
By: /S/ MICHAEL T.
DANCE
|
|
Michael
T. Dance
|
|
Executive
Vice President, Chief Financial Officer
|
|
(Authorized
Officer, Principal Financial Officer)
|
|
By: /S/ BRYAN
HUNT
|
|
Bryan
Hunt
|
|
Vice
President, Chief Accounting
Officer
|