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Section 1: 8-K (FORM 8-K)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 1, 2018

ESSEX PROPERTY TRUST, INC.
ESSEX PORTFOLIO, L.P.
(Exact Name of Registrant as Specified in its Charter)

001-13106 (Essex Property Trust, Inc.)
333-44467-01 (Essex Portfolio, L.P.)
 (Commission File Number)
Maryland (Essex Property Trust, Inc.)
California (Essex Portfolio, L.P.)
77-0369576 (Essex Property Trust, Inc.)
77-0369575 (Essex Portfolio, L.P.)
(State or Other Jurisdiction of Incorporation)
(I.R.S. Employer Identification No.)

1100 Park Place, Suite 200
San Mateo, CA 94403
(Address of principal executive offices) (Zip Code)

(650) 655-7800
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
Essex Property Trust, Inc.
Emerging growth company
Essex Portfolio, L.P.
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 



Item 2.02. Results of Operations and Financial Condition.

On August 1, 2018, Essex Property Trust, Inc. (the “Company”) issued a press release and supplemental information announcing the Company’s financial results for the quarter and six months ended June 30, 2018. The Company has posted a copy of the press release and supplemental information on the Company’s website at www.essex.com. A copy of the press release and supplemental information is attached hereto as Exhibit 99.1 and incorporated by reference herein.

The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The exhibit listed below is being furnished with this Form 8-K.

Press Release and Supplemental Information for the quarter and six months ended June 30, 2018.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

Date:  August 1, 2018
 
ESSEX PROPERTY TRUST, INC.
     
 
/s/ Angela L. Kleiman
 
Name:
Angela L. Kleiman
 
Title:
Executive Vice President and Chief Financial Officer
     
 
ESSEX PORTFOLIO, L.P.
     
 
By:  Essex Property Trust, Inc.,
 
its General Partner
     
 
/s/ Angela L. Kleiman
 
Name:
Angela L. Kleiman
 
Title:
Executive Vice President and Chief Financial Officer
 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1
 

 
Essex Announces Second Quarter 2018 Results

San Mateo, California—August 1, 2018—Essex Property Trust, Inc. (NYSE: ESS) (the “Company”) announced today its second quarter 2018 earnings results and related business activities.

Net Income and Funds from Operations (“FFO”) per diluted share for the quarter ended June 30, 2018 are detailed below. Core FFO excludes acquisition and investment related costs and certain non-routine items.

 
Three Months Ended
June 30,
 
Six Months Ended June 30,
 
 
%
%
 
2018
2017
Change
2018
2017
Change
Per Diluted Share
           
  Net Income
$1.52
$1.08
40.7%
$2.90
$3.80
-23.7%
  Total FFO
$3.17
$2.97
6.7%
$6.52
$5.93
9.9%
  Core FFO
$3.14
$2.97
5.7%
$6.23
$5.91
5.4%
             

Second Quarter 2018 Highlights:
·
Reported Net Income per diluted share for the second quarter of 2018 of $1.52, compared to $1.08 in the second quarter of 2017, primarily due to gains realized on a property sale in the second quarter of 2018.

·
Grew Core FFO per diluted share by 5.7% compared to the second quarter of 2017, exceeding the high-end of the guidance range.

·
Achieved same-property gross revenue and net operating income (“NOI”) growth of 2.8% and 3.0%, respectively, compared to the second quarter of 2017.

·
Realized a sequential quarterly increase in same-property revenue growth of 0.4%.

·
Raised the midpoint of guidance for same-property revenue and NOI growth for the full-year by 15 bps each to 2.8% and 2.9%, respectively.

·
Revised full-year Net Income per diluted share guidance range to $5.15 to $5.31. Provided Net Income guidance range for the third quarter of $1.09 to $1.18 per diluted share.

·
Revised full-year Total FFO per diluted share guidance range to $12.72 to $12.88, raising the midpoint by $0.09 per share. Provided Total FFO guidance range for the third quarter of $3.06 to $3.15 per diluted share.

·
Increased full-year Core FFO per diluted share guidance by $0.07 per share at the midpoint to a range of $12.44 to $12.62. Provided Core FFO guidance range for the third quarter of $3.07 to $3.17 per diluted share.
 
 
1100 Park Place Suite 200 San Mateo California 94403 telephone 650 655 7800 facsimile 650 655 7810
www.essex.com

“We are pleased to report another great quarter, with results exceeding expectations across our West Coast footprint.  Improving economic conditions continued to drive housing demand throughout the 2018 prime leasing season, driven by job growth and personal income growth that were well ahead of national averages. Based on the strength of our second quarter results, we are increasing our 2018 guidance with respect to same-property revenue, NOI and Core FFO growth,” commented Michael Schall, President and CEO of the Company.


 Same-Property Operations

Same-property operating results exclude any properties that are not comparable for the periods presented. The table below illustrates the percentage change in same-property gross revenues for the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017, and the sequential percentage change for the quarter ended June 30, 2018 versus the quarter ended March 31, 2018, by submarket for the Company:

 
Q2 2018 vs. Q2 2017
Q2 2018 vs. Q1 2018
% of Total
 
Gross Revenues
Gross Revenues
Q2 2018 Revenues
Southern California
 
   Los Angeles County
3.2%
0.6%
20.4%
   Orange County
2.3%
-0.1%
11.2%
   San Diego County
4.1%
0.9%
8.8%
   Ventura County
5.3%
0.6%
4.5%
   Other Southern California
0.8%
-0.9%
0.5%
       Total Southern California
3.3%
0.5%
45.4%
Northern California
 
   Santa Clara County
1.8%
0.7%
15.6%
   Alameda County
2.7%
0.2%
7.1%
   San Mateo County
2.4%
0.6%
5.1%
   Contra Costa County
1.7%
-0.3%
5.0%
   San Francisco
0.9%
-0.1%
3.3%
   Other Northern California
3.2%
-2.0%
0.2%
       Total Northern California
2.0%
0.4%
36.3%
Seattle Metro
3.0%
0.1%
18.3%
Same-Property Portfolio
2.8%
0.4%
100.0%
       

 
Year-Over-Year Growth
 
Year-Over-Year Growth
 
Q2 2018 compared to Q2 2017
 
YTD 2018 compared to YTD 2017
 
Gross
Revenues
Operating
Expenses
NOI
 
Gross
Revenues
Operating
Expenses
NOI
Southern California
3.3%
0.2%
4.6%
 
3.3%
2.0%
3.9%
Northern California
2.0%
3.3%
1.5%
 
2.3%
1.2%
2.7%
Seattle Metro
3.0%
4.6%
2.3%
 
3.7%
5.1%
3.2%
Same-Property Portfolio
2.8%
2.1%
3.0%
 
3.0%
2.3%
3.3%
               
 
- 2 -

 
Sequential Growth
 
 
Q2 2018 compared to Q1 2018
 
 
Gross
Revenues
Operating
Expenses
NOI
 
Southern California
0.5%
-2.6%
1.7%
 
Northern California
0.4%
-2.8%
1.5%
 
Seattle Metro
0.1%
9.6%
-3.6%
 
Same-Property Portfolio
0.4%
-0.4%
0.6%
 
 
Financial Occupancies
 
 
Quarter Ended
 
 
6/30/2018
3/31/2018
6/30/2017
 
Southern California
96.8%
96.9%
96.2%
 
Northern California
96.7%
97.4%
96.7%
 
Seattle Metro
96.3%
96.9%
96.2%
 
Same-Property Portfolio
96.7%
97.1%
96.4%
 
 
 
Dispositions

In June 2018, the Company sold Domain for a total contract price of $132.0 million. The community, which is located in San Diego, CA, contains 379 apartment homes. Total gain on the sale was $22.2 million, which has been excluded from the calculation of FFO.

 
Other Investments

In May 2018, the Company originated a $26.5 million preferred equity investment in a multifamily community located in Ventura, CA. As of June 30, 2018, the Company had funded $20.4 million. The total investment has an initial preferred return of 10.25% and matures in 2023.

In June 2018, the Company received cash of $26.5 million from the redemption of a preferred equity investment related to one property in Seattle, WA. The Company recorded $1.6 million of income from prepayment penalties as a result of the early redemption, which has been excluded from Core FFO.
 
Development Activity

Station Park Green – Phase I reached stabilized operations in June 2018. The community is located in San Mateo, CA and comprises 121 apartment homes. As of July 30, 2018, Station Park Green – Phase I was 99.2% leased.

 
Liquidity and Balance Sheet

Common Stock

The Company did not issue any shares of common stock through its equity distribution program in the second quarter of 2018.

- 3 -

The Company did not repurchase any shares of common stock in the second quarter of 2018.

Balance Sheet

In June 2018, Fitch Ratings affirmed the Company’s senior unsecured debt at BBB+ and revised the rating outlook from stable to positive.

As of July 30, 2018, the Company had $1.2 billion in undrawn capacity on its unsecured credit facilities.

Guidance

For the second quarter of 2018, the Company exceeded the midpoint of the guidance range provided in its first quarter 2018 earnings release for Core FFO by $0.09 per share. However, $0.03 per share of the favorable variance relates to timing differences on same-property operating expenses, which are now expected to occur in the second half of the year.


The following table provides a reconciliation of second quarter 2018 Core FFO per share to the midpoint of the guidance provided in the first quarter 2018 earnings release, which was dated May 2, 2018.


   
Per Diluted Share
 
Projected midpoint of Core FFO per share for Q2 2018
 
$
3.05
 
    NOI from consolidated communities
   
0.07
 
    FFO from Co-Investments
   
0.01
 
    Interest expense and other
   
0.01
 
Core FFO per share for Q2 2018 reported
 
$
3.14
 


The following table provides key changes to the 2018 full-year assumptions for Net Income, Total FFO, Core FFO per diluted share, and same-property growth. For additional details regarding the Company’s 2018 assumptions, please see page S-14 of the accompanying supplemental financial information. For the third quarter of 2018, the Company has established a range for Core FFO per diluted share of $3.07 to $3.17.


2018 Full-Year Guidance
   
Previous
Range
   
Previous Midpoint
   
Revised
Range
   
Revised Midpoint
 
Per Diluted Share
                       
  Net Income
 
$
4.66 - $5.00
   
$
4.83
   
$
5.15 - $5.31
   
$
5.23
 
  Total FFO
 
$
12.54 - $12.88
   
$
12.71
   
$
12.72 - $12.88
   
$
12.80
 
  Core FFO
 
$
12.28 - $12.64
   
$
12.46
   
$
12.44 - $12.62
   
$
12.53
 
Same-Property Growth
                               
  Gross Revenues
 
2.3% to 3.0%
     
2.7
%
 
2.6% to 3.0%
     
2.8
%
  Operating Expenses
 
2.1% to 3.1%
     
2.6
%
 
2.4% to 2.8%
     
2.6
%
  NOI
 
2.0% to 3.4%
     
2.7
%
 
2.5% to 3.2%
     
2.9
%
                                 
 
- 4 -

Conference Call with Management
The Company will host an earnings conference call with management to discuss its quarterly results on Thursday, August 2, 2018 at 9 a.m. PT (12 p.m. ET), which will be broadcast live via the Internet at www.essex.com, and accessible via phone by dialing toll-free, (877) 407-0784, or toll/international, (201) 689-8560. No passcode is necessary.

A rebroadcast of the live call will be available online for 30 days and digitally for seven days. To access the replay online, go to www.essex.com and select the second quarter 2018 earnings link. To access the replay digitally, dial (844) 512-2921 using the replay pin number 13681122. If you are unable to access the information via the Company’s website, please contact the Investor Relations Department at investors@essex.com or by calling (650) 655-7800.


Corporate Profile

Essex Property Trust, Inc., an S&P 500 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. The Company currently has ownership interests in 247 apartment communities comprising approximately 60,000 apartment homes, excluding six properties in various stages of active development, one commercial building, preferred equity co-investments, and loan investments. Additional information about the Company can be found on the Company’s website at www.essex.com.

This press release and accompanying supplemental financial information has been furnished to the Securities and Exchange Commission (“SEC”) electronically on Form 8-K and can be accessed from the Company’s website at www.essex.com. If you are unable to obtain the information via the Internet, please contact the Investor Relations Department at (650) 655-7800.


FFO Reconciliation

FFO, as defined by 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 on sales of real estate and extraordinary items. Management considers FFO and FFO which excludes merger, integration and acquisition costs and items that are not routine or not related to the Company’s core business activities, which is referred to as “Core FFO”, to be useful financial performance measures of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate the operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and the ability to pay dividends.

FFO and Core FFO do not represent net income or cash flows from operations as defined by U.S. generally accepted accounting principles (“GAAP”) and are not intended to indicate whether cash flows will be sufficient to fund cash needs. These measures 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 and Core FFO do not measure whether cash flow is sufficient to fund all cash needs including principal amortization, capital improvements and distributions to stockholders. FFO and Core FFO also do 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.
 
- 5 -

The following table sets forth the Company’s calculation of diluted FFO and Core FFO for the three and six months ended June 30, 2018 and 2017 (in thousands, except for share and per share amounts):

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
Funds from Operations attributable to common stockholders and unitholders
 
2018
   
2017
   
2018
   
2017
 
Net income available to common stockholders
 
$
100,440
   
$
70,759
   
$
191,358
   
$
249,723
 
Adjustments:
                               
Depreciation and amortization
   
119,330
     
117,939
     
238,435
     
233,442
 
Gains not included in FFO
   
(22,244
)
   
(2,159
)
   
(22,244
)
   
(114,815
)
Depreciation and amortization add back from unconsolidated co-investments
   
15,720
     
13,627
     
31,579
     
26,481
 
Noncontrolling interest related to Operating Partnership units
   
3,460
     
2,422
     
6,592
     
8,568
 
Depreciation attributable to third party ownership and other
   
(233
)
   
(26
)
   
(465
)
   
(51
)
                                 
Funds from Operations attributable to common stockholders and unitholders
 
$
216,473
   
$
202,562
   
$
445,255
   
$
403,348
 
FFO per share – diluted
 
$
3.17
   
$
2.97
   
$
6.52
   
$
5.93
 
Expensed acquisition and investment related costs
 
$
68
   
$
274
   
$
125
   
$
830
 
Loss (gain) on sale of marketable securities
   
131
     
(13
)
   
(549
)
   
(1,618
)
Unrealized (gains) losses on marketable securities
   
(122
)
   
-
     
754
     
-
 
Interest rate hedge ineffectiveness (1)
   
40
     
(14
)
   
96
     
(20
)
Co-investment promote income
   
-
     
-
     
(20,541
)
   
-
 
Income from early redemption of preferred equity investments
   
(1,578
)
   
(248
)
   
(1,602
)
   
(248
)
Insurance reimbursements, legal settlements, and other, net
   
(450
)
   
-
     
1,983
     
(25
)
Core Funds from Operations attributable to common stockholders and unitholders
 
$
214,562
   
$
202,561
   
$
425,521
   
$
402,267
 
Core FFO per share – diluted
 
$
3.14
   
$
2.97
   
$
6.23
   
$
5.91
 
Weighted average number of shares outstanding diluted (2)
   
68,331,709
     
68,145,911
     
68,324,230
     
68,058,495
 

(1)
Interest rate swaps are generally adjusted to fair value through other comprehensive income (loss). However, because certain of our interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch is recorded as noncash interest rate hedge ineffectiveness through interest expense.
(2)
Assumes conversion of all outstanding limited partnership units in Essex Portfolio, L.P. (the “Operating Partnership”) into shares of the Company’s common stock and excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.

- 6 -


NOI and Same-Property NOI Reconciliations

NOI and Same-Property NOI are considered by management to be important supplemental performance measures to earnings from operations included in the Company’s condensed consolidated statements of income. The presentation of same-property NOI assists with the presentation of the Company’s operations prior to the allocation of depreciation and any corporate-level or financing-related costs. NOI reflects the operating performance of a community and allows for an easy comparison of the operating performance of individual communities or groups of communities. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impacts to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets. The Company defines same-property NOI as same-property revenue less same-property operating expenses, including property taxes. Please see the reconciliation of earnings from operations to NOI and same-property NOI, which in the table below is the NOI for stabilized properties consolidated by the Company for the periods presented (dollars in thousands):

   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2018
 
2017
 
2018
 
2017
Earnings from operations
$
116,272
$
112,247
$
226,819
$
221,478
Adjustments:
               
     Corporate-level property management
     expenses
 
7,782
 
7,522
 
15,552
 
15,031
     Depreciation and amortization
 
119,330
 
117,939
 
238,435
 
233,442
     Management and other fees from
     affiliates
 
(2,197)
 
(2,296)
 
(4,505)
 
(4,532)
     General and administrative
 
11,125
 
10,337
 
25,938
 
20,938
     Expensed acquisition and investment related costs
 
68
 
274
 
125
 
830
        NOI
 
252,380
 
246,023
 
502,364
 
487,187
     Less: Non-same property NOI
 
(19,616)
 
(20,082)
 
(38,337)
 
(38,059)
Same-Property NOI
$
232,764
$
225,941
$
464,027
$
449,128


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. Forward-looking statements are statements which are not historical facts, including statements regarding the Company's expectations, estimates, assumptions, hopes, intentions, beliefs and strategies regarding the future. Words such as “expects,” “assumes,” “anticipates,” “may,” “will,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, among other things, statements regarding the Company’s intent, beliefs or expectations with respect to the timing of completion of current development and redevelopment projects and the stabilization of such projects, the timing of lease-up and occupancy of its apartment communities, the anticipated operating performance of its apartment communities, the total projected costs of development and redevelopment projects, co-investment activities, qualification as a REIT under the Internal Revenue Code, the real estate markets in the geographies in which the Company’s properties are located and in the United States in general, the adequacy of future cash flows to meet anticipated cash needs, its financing activities and the use of proceeds from such activities, the availability of debt and equity financing, general economic conditions including the potential impacts from the economic conditions, trends affecting the Company’s financial condition or results of operations, changes to U.S. tax laws and regulations in general or specifically related to REITs or real estate, changes to laws and regulations in jurisdictions in which communities the Company owns are located, and other information that is not historical information.

- 7 -

While the Company's management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect the Company’s current expectations of the approximate outcomes of the matters discussed. Factors that might cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: the Company may fail to achieve its business objectives; the actual completion of development and redevelopment projects may be subject to delays; the stabilization dates of such projects may be delayed; the Company may abandon or defer development projects for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; the total projected costs of current development and redevelopment projects may exceed expectations; such development and redevelopment projects may not be completed; development and redevelopment projects and acquisitions may fail to meet expectations; estimates of future income from an acquired property may prove to be inaccurate; occupancy rates and rental demand may be adversely affected by competition and local economic and market conditions; there may be increased interest rates and operating costs; the Company may be unsuccessful in the management of its relationships with its co-investment partners; future cash flows may be inadequate to meet operating requirements and/or may be insufficient to provide for dividend payments in accordance with REIT requirements; there may be a downturn in general economic conditions, the real estate industry, and the markets in which the Company's communities are located; changes in laws or regulations; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; and those risks, special considerations, and other factors referred to in the Company’s quarterly reports on Form 10-Q, in the Company's annual report on Form 10-K for the year ended December 31, 2017, and in the Company's other filings with the SEC. All forward-looking statements are made as of the date hereof, the Company assumes no obligation to update or supplement this information for any reason, and therefore, they may not represent the Company’s estimates and assumptions after the date of this press release.


Definitions and Reconciliations

Non-GAAP financial measures and certain other capitalized terms, as used in this earnings release, are defined and further explained on pages S-17.1 through S-17.4, "Reconciliations of Non-GAAP Financial Measures and Other Terms," of the accompanying supplemental financial information.  The supplemental financial information is available on the Company's website at www.essex.com.


Contact Information
Barb Pak
Group Vice President of Finance & Investor Relations
(650) 655-7800
bpak@essex.com
 
- 8 -

Q2 2018 Supplemental
Table of Contents
 
 
Page(s)
Consolidated Operating Results
S-1 – S-2
Consolidated Funds From Operations
S-3
Consolidated Balance Sheets
S-4
Debt Summary – June 30, 2018
S-5
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – June 30, 2018
S-6
Portfolio Summary by County – June 30, 2018
S-7
Operating Income by Quarter – June 30, 2018
S-8
Same-Property Revenue Results by County – Quarters ended June 30, 2018 and 2017, and March 31, 2018
S-9
Same-Property Revenue Results by County – Six months ended June 30, 2018 and 2017
S-9.1
Same-Property Operating Expenses – Quarter and Year to Date as of June 30, 2018 and 2017
S-10
Development Pipeline – June 30, 2018
S-11
Redevelopment Pipeline – June 30, 2018
S-12
Capital Expenditures – June 30, 2018
S-12.1
Co-investments and Preferred Equity Investments – June 30, 2018
S-13
Assumptions for 2018 FFO Guidance Range
S-14
Reconciliation of Projected EPS, FFO and Core FFO per diluted share
S-14.1
Summary of Apartment Community Acquisitions and Dispositions Activity
S-15
2018 MSA Level Forecast: Supply, Jobs and Apartment Market Conditions
S-16
The Rising Premium to Own vs. Rent in Essex Markets
 S-16.1
Reconciliations of Non-GAAP Financial Measures and Other Terms
S-17.1 – S-17.4
 
 

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
 
Six Months Ended
(Dollars in thousands, except share and per share amounts)
June 30,
 
June 30,
     
2018
 
2017
 
2018
 
2017
                           
Revenues:
                     
 
Rental and other property
$
          346,526
 
$
                    336,766
 
$
           691,473
 
$
                    669,934
 
Management and other fees from affiliates
 
               2,197
   
                          2,296
   
               4,505
   
                          4,532
       
          348,723
   
                    339,062
   
          695,978
   
                    674,466
                           
Expenses:
                       
 
Property operating
 
             94,146
   
                       90,743
   
           189,109
   
                     182,747
 
Corporate-level property management expenses
 
               7,782
   
                          7,522
   
             15,552
   
                         15,031
 
Depreciation and amortization
 
           119,330
   
                      117,939
   
          238,435
   
                    233,442
 
General and administrative
 
              11,125
   
                        10,337
   
            25,938
   
                       20,938
 
Expensed acquisition and investment related costs
 
                     68
   
                              274
   
                   125
   
                              830
       
           232,451
   
                     226,815
   
           469,159
   
                    452,988
Earnings from operations
 
           116,272
   
                      112,247
   
           226,819
   
                     221,478
                           
Interest expense, net (1)
 
           (54,050)
   
                      (54,281)
   
          (106,641)
   
                   (106,280)
Interest and other income
 
               6,895
   
                          5,362
   
             12,804
   
                         12,126
Equity income from co-investments
 
             15,049
   
                        10,308
   
            47,823
   
                        21,207
Gain on sale of real estate and land
 
            22,244
   
                                     -
   
            22,244
   
                        26,174
Gain on remeasurement of co-investment
 
                       -
   
                           2,159
   
                       -
   
                        88,641
 
Net income
 
           106,410
   
                       75,795
   
          203,049
   
                    263,346
Net income attributable to noncontrolling interest
 
             (5,970)
   
                        (5,036)
   
             (11,691)
   
                      (13,623)
 
Net income available to common stockholders
$
           100,440
 
$
                       70,759
 
$
           191,358
 
$
                    249,723
                           
Net income per share - basic
$
1.52
 
$
1.08
 
$
2.90
 
$
3.80
                           
Shares used in income per share - basic
 
66,047,751
   
65,729,074
   
66,045,897
   
65,639,775
                           
Net income per share - diluted
$
1.52
 
$
1.08
 
$
2.90
 
$
3.80
                           
Shares used in income per share - diluted
 
66,096,349
   
65,819,694
   
66,088,803
   
65,942,018
 
(1)
Refer to page S-17.2, the section titled "Interest Expense, Net" for additional information.
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-1

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
 
Six Months Ended
Selected Line Item Detail
June 30,
 
June 30,
(Dollars in thousands)
2018
 
2017
 
2018
 
2017
                           
Rental and other property
                     
 
Rental
 
$
         323,020
 
$
         314,546
 
$
         644,681
 
$
         624,668
 
Other property
 
           23,506
   
           22,220
   
           46,792
   
           45,266
   
Rental and other property
$
         346,526
 
$
         336,766
 
$
         691,473
 
$
         669,934
                           
Property operating expenses
                     
 
Real estate taxes
$
           35,990
 
$
           34,884
 
$
           73,703
 
$
           70,752
 
Administrative
 
           21,010
   
           20,428
   
           41,711
   
           40,688
 
Maintenance and repairs
 
           19,986
   
           18,865
   
           39,610
   
           38,086
 
Utilities
   
           17,160
   
           16,566
   
           34,085
   
           33,221
   
Property operating expenses
$
           94,146
 
$
           90,743
 
$
         189,109
 
$
         182,747
                           
Interest and other income
                     
 
Marketable securities and other interest income
$
            6,201
 
$
            5,044
 
$
           12,052
 
$
            9,924
 
(Loss) gain on sale of marketable securities
 
              (131)
   
                 13
   
               549
   
            1,618
 
Unrealized gains (losses) on marketable securities (1)
 
               122
   
                   -
   
              (754)
   
                   -
 
Insurance reimbursements, legal settlements, and other, net
 
               703
   
               305
   
               957
   
               584
   
Interest and other income
$
            6,895
 
$
            5,362
 
$
           12,804
 
$
           12,126
                           
Equity income from co-investments
                     
 
Equity income from co-investments
$
            4,492
 
$
            4,395
 
$
            8,781
 
$
            9,648
 
Income from preferred equity investments
 
            8,979
   
            5,665
   
           16,899
   
           11,311
 
Co-investment promote income
 
                   -
   
                   -
   
           20,541
   
                   -
 
Income from early redemption of preferred equity investments
 
            1,578
   
               248
   
            1,602
   
               248
   
Equity income from co-investments
$
           15,049
 
$
           10,308
 
$
           47,823
 
$
           21,207
                           
Noncontrolling interest
                     
 
Limited partners of Essex Portfolio, L.P.
$
            3,460
 
$
            2,422
 
$
            6,592
 
$
            8,568
 
DownREIT limited partners' distributions
 
            1,590
   
            1,695
   
            3,180
   
            3,245
 
Third-party ownership interest
 
               920
   
               919
   
            1,919
   
            1,810
   
Noncontrolling interest
$
            5,970
 
$
            5,036
 
$
           11,691
 
$
           13,623
 
(1)
The Company adopted ASU No. 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabiliies", as of January 1, 2018 using the modified-retrospective method. As a result of this adoption, the Company recognizes mark to market adjustments on equity securities through its income statement on a prospective basis. Prior period results have not been adjusted.
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-2

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 (1)
Three Months Ended
       
Six Months Ended
   
(Dollars in thousands, except share and per share amounts and in footnotes)
June 30,
       
June 30,
   
     
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
                                     
Funds from operations attributable to common stockholders and unitholders (FFO)
                               
Net income available to common stockholders
$
             100,440
 
$
                70,759
       
$
          191,358
 
$
           249,723
   
Adjustments:
                               
 
Depreciation and amortization
 
             119,330
   
              117,939
         
          238,435
   
           233,442
   
 
Gains not included in FFO
 
              (22,244)
   
                (2,159)
         
          (22,244)
   
          (114,815)
   
 
Depreciation and amortization add back from unconsolidated co-investments
 
               15,720
   
                13,627
         
           31,579
   
            26,481
   
 
Noncontrolling interest related to Operating Partnership units
 
                 3,460
   
                 2,422
         
             6,592
   
              8,568
   
 
Depreciation attributable to third party ownership and other (2)
 
                   (233)
   
                     (26)
         
               (465)
   
                  (51)
   
   
Funds from operations attributable to common stockholders and unitholders
$
             216,473
 
$
              202,562
       
$
          445,255
 
$
           403,348
   
   
FFO per share-diluted
$
3.17
 
$
2.97
 
6.7%
   
$
6.52
 
$
5.93
 
9.9%
                                     
Components of the change in FFO
                               
Non-core items:
                               
Expensed acquisition and investment related costs
$
                     68
 
$
                    274
       
$
                125
 
$
                 830
   
Loss (gain) on sale of marketable securities
 
                    131
   
                     (13)
         
               (549)
   
             (1,618)
   
Unrealized (gains) losses on marketable securities
 
                   (122)
   
                        -
         
                754
   
                     -
   
Interest rate hedge ineffectiveness (3)
 
                     40
   
                     (14)
         
                  96
   
                  (20)
   
Co-investment promote income
 
                        -
   
                        -
         
          (20,541)
   
                     -
   
Income from early redemption of preferred equity investments
 
                (1,578)
   
                   (248)
         
            (1,602)
   
                (248)
   
Insurance reimbursements, legal settlements, and other, net
 
                   (450)
   
                        -
         
             1,983
   
                  (25)
   
   
Core funds from operations attributable to common stockholders and unitholders
$
             214,562
 
$
              202,561
       
$
          425,521
 
$
           402,267
   
   
Core FFO per share-diluted
$
3.14
 
$
2.97
 
5.7%
   
$
6.23
 
$
5.91
 
5.4%
                                     
Changes in core items:
                               
Same-property NOI
$
                 6,823
             
$
           14,984
         
Non-same property NOI
 
                   (466)
               
                193
         
Management and other fees, net
 
                    (99)
               
                 (27)
         
FFO from co-investments
 
                 5,504
               
             9,819
         
Interest and other income
 
                 1,105
               
             2,076
         
Interest expense
 
                    177
               
               (477)
         
General and administrative
 
                   (788)
               
            (2,567)
         
Corporate-level property management expenses
 
                   (260)
               
               (521)
         
Other items, net
 
                       5
               
               (226)
         
     
$
               12,001
             
$
           23,254
         
                                     
Weighted average number of shares outstanding diluted (4)
 
68,331,709
   
68,145,911
         
68,324,230
   
68,058,495
   
 
(1)
Refer to page S-17.2, the section titled "Funds from Operations ("FFO") for additional information on the Company's definition and use of FFO and Core FFO.
(2)
The Company consolidates certain co-investments. The noncontrolling interest's share of net operating income in these investments for the three and six months ended June 30, 2018 was $1.3 million and $2.5 million, respectively.
(3)
Interest rate swaps are generally adjusted to fair value through other comprehensive income (loss). However, because certain of our interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch, if any, is recorded as noncash interest rate hedge ineffectiveness through interest expense. 
(4)
Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of the Company's common stock and excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-3

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)
         
         
June 30, 2018
   
December 31, 2017
                 
 
Real Estate:
         
   
Land and land improvements
$
                 2,710,139
 
$
                    2,719,064
   
Buildings and improvements
 
                10,693,682
   
                  10,639,108
         
                13,403,821
   
                  13,358,172
   
Less:  accumulated depreciation
 
                (2,992,819)
   
                   (2,769,297)
         
                10,411,002
   
                  10,588,875
 
Real estate under development
 
                    343,841
   
                      355,735
 
Co-investments
 
                 1,291,320
   
                    1,155,984
         
                12,046,163
   
                  12,100,594
 
Cash and cash equivalents, including restricted cash
 
                    177,576
   
                        61,126
 
Marketable securities
 
                    207,191
   
                      190,004
 
Notes and other receivables
 
                      68,386
   
                      100,926
 
Prepaid expenses and other assets
 
                      56,338
   
                        43,056
     
Total assets
$
                12,555,654
 
$
                  12,495,706
                 
 
Unsecured debt, net
$
                 3,798,097
 
$
                    3,501,709
 
Mortgage notes payable, net
 
                 1,890,326
   
                    2,008,417
 
Lines of credit
 
                        2,670
   
                      179,000
 
Distributions in excess of investments in co-investments
 
                               -
   
                        36,726
 
Other liabilities
 
                    353,621
   
                      333,823
     
Total liabilities
 
                 6,044,714
   
                    6,059,675
 
Redeemable noncontrolling interest
 
                      36,257
   
                        39,206
 
Equity:
           
   
Common stock
 
                              7
   
                                7
   
Additional paid-in capital
 
                 7,131,809
   
                    7,129,571
   
Distributions in excess of accumulated earnings
 
                   (766,193)
   
                     (833,726)
   
Accumulated other comprehensive loss, net
 
                     (11,438)
   
                       (18,446)
     
Total stockholders' equity
 
                 6,354,185
   
                    6,277,406
   
Noncontrolling interest
 
                    120,498
   
                      119,419
     
Total equity
 
                 6,474,683
   
                    6,396,825
     
Total liabilities and equity
$
                12,555,654
 
$
                  12,495,706
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-4

E S S E X  P R O P E R T Y  T R U S T, I N C.         
                                                   
Debt Summary - June 30, 2018           
(Dollars in thousands, except in footnotes)       
                                                   
                                                   
                       
Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
                                             
 
 
             
Weighted Average
                               
       
Balance
Outstanding
Interest
Rate
Maturity
in Years
       
Unsecured
 
Secured
   
Total
  Weighted Average Interest Rate   Percentage of Total Debt
Unsecured Debt, net
                                             
 
Bonds private - fixed rate
 
$
275,000
 
4.5%
 
2.6
   
2018
 
 $
                -
 
 $
        119,779
 
 $
        119,779
 
5.7%
 
2.1%
 
Bonds public - fixed rate
   
3,200,000
 
3.9%
 
8.2
   
2019
   
          75,000
   
        531,843
   
        606,843
 
4.4%
 
10.6%
 
Term loan (1)
   
350,000
 
2.8%
 
3.6
   
2020
   
                -
   
        694,921
   
        694,921
 
5.0%
 
12.2%
 
Unamortized net discounts and debt issuance costs
   
       (26,903)
 
          -
 
          -
   
2021
   
        500,000
   
          44,846
   
        544,846
 
4.5%
 
9.6%
         
3,798,097
 
3.8%
 
7.4
   
2022
   
        650,000
   
          42,466
   
        692,466
 
3.3%
 
12.1%
Mortgage Notes Payable, net
                 
2023
   
        600,000
   
           2,188
   
        602,188
 
3.7%
 
10.6%
 
Fixed rate - secured
   
1,599,714
 
4.7%
 
3.0
   
2024
   
        400,000
   
           2,317
   
        402,317
 
4.0%
 
7.1%
 
Variable rate - secured (2)
   
269,949
 
2.3%
 
18.2
   
2025
   
        500,000
   
          16,056
   
        516,056
 
3.6%
 
9.0%
 
Unamortized premiums and debt issuance costs, net
   
20,663
 
          -
 
          -
   
2026
   
        450,000
   
          55,091
   
        505,091
 
3.5%
 
8.9%
   
Total mortgage notes payable
   
1,890,326
 
4.4%
 
5.1
   
2027
   
        350,000
   
        155,500
   
        505,500
 
3.6%
 
8.9%
                       
2028
   
                -
   
           2,934
   
           2,934
 
3.1%
 
0.1%
Unsecured Lines of Credit
                 
Thereafter
   
        300,000
   
        201,722
   
        501,722
 
3.8%
 
8.8%
 
Line of credit (3)
   
                -
 
2.7%
       
Subtotal
   
3,825,000
   
1,869,663
   
5,694,663
 
4.0%
 
100.0%
 
Line of credit (4)
   
         2,670
 
2.7%
       
Debt Issuance Costs
   
         (20,122)
   
          (4,500)
   
         (24,622)
 
NA
 
NA
   
Total lines of credit
   
         2,670
 
2.7%
       
(Discounts)/Premiums
   
          (6,781)
   
          25,163
   
          18,382
 
NA
 
NA
                       
Total
 
$
3,798,097
 
$
1,890,326
 
$
5,688,423
 
4.0%
 
100.0%
   
Total debt, net
 
$
5,691,093
 
4.0%
                                   
                                                   
 
Capitalized interest for the three and six months ended June 30, 2018 was approximately $4.2 million and $8.4 million, respectively.
 
(1)
The unsecured term loan has a variable interest rate of LIBOR plus 0.95%. The Company has interest rate swap contracts with an aggregate notional amount of $175 million, which effectively converts the interest rate on $175 million of the term loan to a fixed rate of 2.3%.
(2)
$269.9 million of variable rate debt is tax exempt to the note holders. $9.9 million is subject to interest rate cap protection agreements.
(3)
This unsecured line of credit facility has a capacity of $1.2 billion. The line matures in December 2021 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 0.875%.
(4)
This unsecured line of credit facility has a capacity $35.0 million and is scheduled to mature in January 2020. 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 0.875%.
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-5

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 - June 30, 2018  
(Dollars and shares in thousands, except per share amounts)
                                 
                                 
Capitalization Data
           
Public Bond Covenants (1)
 
Actual
 
Requirement
   
Total debt, net
$
5,691,093
                   
                 
Adjusted Debt to Adjusted Total Assets:
 
37%
 
< 65%
   
Common stock and potentially dilutive securities
                       
 
Common stock outstanding
 
66,050
                   
 
Limited partnership units (1)
 
2,235
                   
 
Options-treasury method
 
37
   
Secured Debt to Adjusted Total Assets:
 
12%
 
< 40%
   
Total shares of common stock and potentially dilutive securities
 
68,322
                   
                                 
Common stock price per share as of June 30, 2018
$
239.07
                   
                 
Interest Coverage:
 
431%
 
> 150%
   
Total equity capitalization
$
16,333,741
                   
                                 
Total market capitalization
$
22,024,834
   
Unsecured Debt Ratio (2):
 
282%
 
> 150%
   
                                 
Ratio of debt to total market capitalization
 
25.8%
                   
                 
Selected Credit Ratios (3)
 
Actual
       
Credit Ratings
                             
Rating Agency
 
Rating
Outlook
       
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized:
 
5.5
       
Fitch
 
BBB+
Positive
                       
Moody's
 
Baa1
Stable
       
Unencumbered NOI to Adjusted Total NOI:
 
72%
       
Standard & Poor's
BBB+
Stable
                       
                 
(1)
Refer to page S-17.4 for additional information on the Company's Public Bond Covenants.
   
(1)
Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of the Company's common stock.
(2)
Unsecured Debt Ratio is unsecured assets (excluding investments in co-investments) divided by unsecured indebtedness.
(3)
Refer to pages S-17.1 to S-17.4, the section titled "Reconciliations of Non-GAAP Financial Measures and Other Terms" for additional information on the Company's Selected Credit Ratios.
                                 
                                 
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-6

E S S E X  P R O P E R T Y  T R U S T, I N C.         
                                             
Portfolio Summary by County as of June 30, 2018          
                                             
                                             
        Apartment Homes  
Average Monthly Rental Rate (1)
     
Percent of NOI (2)
   
Region - County
  Consolidated (3)  
Unconsolidated
Co-investments (3)
 
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
 
9,387
 
1,563
 
                  200
 
11,150
 
 $         2,405
 
 $                  2,070
 
 $  2,378
 
19.9%
 
12.5%
 
19.2%
 
Orange County
 
5,553
 
1,149
 
                       -
 
6,702
 
            2,148
 
                    1,861
 
     2,121
 
10.5%
 
8.5%
 
10.3%
 
San Diego County
 
4,824
 
616
 
                       -
 
5,440
 
            1,895
 
                    1,759
 
     1,887
 
8.3%
 
4.3%
 
7.9%
 
Ventura County
 
2,577
 
693
 
                       -
 
3,270
 
            1,780
 
                    2,108
 
     1,821
 
4.4%
 
6.2%
 
4.6%
 
Other Southern CA
 
623
 
249
 
                       -
 
872
 
            1,608
 
                    1,604
 
     1,607
 
0.9%
 
1.5%
 
0.9%
Total Southern California
 
22,964
 
4,270
 
                  200
 
27,434
 
            2,144
 
                    1,951
 
     2,127
 
44.0%
 
33.0%
 
42.9%
                                             
Northern California
                                       
 
Santa Clara County
 
7,356
 
2,266
 
745
 
10,367
 
            2,702
 
                    2,830
 
     2,720
 
19.1%
 
24.9%
 
19.8%
 
Alameda County
 
2,954
 
1,983
 
                       -
 
4,937
 
            2,513
 
                    2,331
 
     2,465
 
6.9%
 
19.4%
 
8.1%
 
San Mateo County
 
1,951
 
197
 
371
 
2,519
 
            2,907
 
                    2,896
 
     2,907
 
5.0%
 
2.4%
 
4.7%
 
Contra Costa County
 
2,270
 
49
 
                       -
 
2,319
 
            2,303
 
                    4,577
 
     2,328
 
4.7%
 
1.2%
 
4.4%
 
San Francisco
 
1,343
 
463
 
545
 
2,351
 
            3,087
 
                    3,254
 
     3,114
 
3.5%
 
6.9%
 
3.8%
 
Other Northern CA
 
96
 
                           -
 
                       -
 
96
 
            2,905
 
                           -
 
     2,905
 
0.3%
 
                           -
 
0.2%
Total Northern California
 
15,970
 
4,958
 
1,661
 
22,589
 
            2,669
 
                    2,690
 
     2,672
 
39.5%
 
54.8%
 
41.0%
                                             
Seattle Metro
 
10,238
 
1,582
 
                       -
 
11,820
 
            1,819
 
                    1,816
 
     1,818
 
16.5%
 
12.2%
 
16.1%
                                             
Total
   
49,172
 
10,810
 
1,861
 
61,843
 
 $         2,247
 
 $                  2,275
 
 $  2,250
 
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 June 30, 2018. See the section titled "Net Operating Income ("NOI") and Same-Property NOI Reconciliations" on page S-17.3.
(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.
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-7

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
 
Q2 '18
 
Q1 '18
 
Q4 '17
 
Q3 '17
 
Q2 '17
                           
Rental and other property revenues:
                       
Same-property
 
          46,863
 
 $            321,283
 
 $            320,095
 
 $            317,738
 
 $            317,302
 
 $            312,629
Acquisitions (2)
 
           1,328
 
                10,501
 
                10,383
 
                10,435
 
                10,498
 
                10,170
Development (3)
 
              121
 
                     450
 
                       19
 
                         -
 
                       -
 
                       -
Redevelopment
 
              621
 
                  5,036
 
                  5,024
 
                  5,005
 
                  4,913
 
                  4,909
Non-residential/other, net (4)
 
              239
 
                  9,256
 
                  9,426
 
                  9,239
 
                  9,261
 
                  9,058
Total rental and other property revenues
 
          49,172
 
               346,526
 
               344,947
 
               342,417
 
               341,974
 
               336,766
                           
Property operating expenses:
                       
Same-property
     
                88,519
 
                88,832
 
                89,425
 
                90,106
 
                86,688
Acquisitions (2)
     
                  2,116
 
                  3,074
 
                  3,116
 
                  3,220
 
                  2,926
Development (3)
     
                     498
 
                       64
 
                         -
 
                         -
 
                         -
Redevelopment
     
                  1,468
 
                  1,469
 
                  1,528
 
                  1,529
 
                  1,392
Non-residential/other, net (4) (5)
     
                  1,545
 
                  1,524
 
                  2,005
 
                  1,709
 
                    (263)
Total property operating expenses
     
                94,146
 
                94,963
 
                96,074
 
                96,564
 
                90,743
                           
Net operating income (NOI):
                       
Same-property
     
               232,764
 
               231,263
 
               228,313
 
               227,196
 
               225,941
Acquisitions (2)
     
                  8,385
 
                  7,309
 
                  7,319
 
                  7,278
 
                  7,244
Development (3)
     
                      (48)
 
                      (45)
 
                         -
 
                         -
 
                       -
Redevelopment
     
                  3,568
 
                  3,555
 
                  3,477
 
                  3,384
 
                  3,517
Non-residential/other, net (4)
     
                  7,711
 
                  7,902
 
                  7,234
 
                  7,552
 
                  9,321
Total NOI
     
 $            252,380
 
 $            249,984
 
 $            246,343
 
 $            245,410
 
 $            246,023
                           
Same-property metrics
                       
Operating margin
     
72%
 
72%
 
72%
 
72%
 
72%
Annualized turnover (6)
     
53%
 
40%
 
46%
 
61%
 
54%
Financial occupancy (7)
     
96.7%
 
97.1%
 
96.8%
 
96.7%
 
96.4%
 
(1)
Includes consolidated communities only.
(2)
Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2017.
(3)
Development includes properties developed which did not have comparable stabilized results as of January 1, 2017.
(4)
Other real estate assets consists mainly of retail space, commercial properties, boat slips, held for sale properties, disposition properties, and student housing.
(5)
Includes other expenses and intercompany eliminations pertaining to self-insurance. In Q2 '17, there were $2.0 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).
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-8

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 - Second Quarter 2018 vs. Second Quarter 2017 and First Quarter 2018 
(Dollars in thousands, except average monthly rental rates)              
                                                         
                                                         
               
Average Monthly Rental Rate
 
Financial Occupancy 
 
Gross Revenues 
 
Sequential Gross Revenues
Region - County
 
Apartment Homes
 
Q2 '18 % of Actual NOI
 
Q2 '18
 
Q2 '17
 
% Change
 
Q2 '18
 
Q2 '17
 
% Change
 
Q2 '18
 
Q2 '17
 
% Change
 
Q1 '18
 
% Change
                                                         
Southern California
                                                   
 
Los Angeles County
 
8,931
 
20.0%
 
 $   2,416
 
 $   2,379
 
1.6%
 
96.7%
 
95.9%
 
0.8%
 
 $    65,670
 
 $   63,659
 
3.2%
 
 $      65,291
 
0.6%
 
Orange County
 
5,553
 
11.1%
 
      2,148
 
      2,097
 
2.4%
 
96.5%
 
96.3%
 
0.2%
 
       36,043
 
      35,219
 
2.3%
 
        36,074
 
-0.1%
 
San Diego County
 
4,824
 
8.8%
 
      1,895
 
      1,840
 
3.0%
 
97.2%
 
96.1%
 
1.1%
 
       28,168
 
      27,049
 
4.1%
 
        27,921
 
0.9%
 
Ventura County
 
2,577
 
4.7%
 
      1,780
 
      1,714
 
3.9%
 
97.6%
 
96.9%
 
0.7%
 
       14,383
 
      13,660
 
5.3%
 
        14,293
 
0.6%
 
Other Southern CA
 
384
 
0.5%
 
      1,291
 
      1,251
 
3.2%
 
97.4%
 
97.9%
 
-0.5%
 
         1,535
 
        1,523
 
0.8%
 
          1,549
 
-0.9%
Total Southern California
 
22,269
 
45.1%
 
      2,143
 
      2,095
 
2.3%
 
96.8%
 
96.2%
 
0.6%
 
     145,799
 
    141,110
 
3.3%
 
       145,128
 
0.5%
                                                         
Northern California
                                                   
 
Santa Clara County
 
6,028
 
16.5%
 
      2,722
 
      2,673
 
1.8%
 
97.1%
 
97.0%
 
0.1%
 
       50,223
 
      49,343
 
1.8%
 
        49,853
 
0.7%
 
Alameda County
 
2,954
 
7.3%
 
      2,513
 
      2,468
 
1.8%
 
96.6%
 
95.8%
 
0.8%
 
       22,694
 
      22,091
 
2.7%
 
        22,649
 
0.2%
 
San Mateo County
 
1,830
 
5.3%
 
      2,872
 
      2,834
 
1.3%
 
97.0%
 
96.7%
 
0.3%
 
       16,261
 
      15,881
 
2.4%
 
        16,158
 
0.6%
 
Contra Costa County
 
2,270
 
5.0%
 
      2,303
 
      2,267
 
1.6%
 
96.7%
 
97.3%
 
-0.6%
 
       16,020
 
      15,751
 
1.7%
 
        16,072
 
-0.3%
 
San Francisco
 
1,178
 
3.1%
 
      2,977
 
      2,937
 
1.4%
 
95.2%
 
96.3%
 
-1.1%
 
       10,651
 
      10,554
 
0.9%
 
        10,666
 
-0.1%
 
Other Northern CA
 
96
 
0.3%
 
      2,905
 
      2,738
 
6.1%
 
96.5%
 
98.5%
 
-2.0%
 
           839
 
          813
 
3.2%
 
             856
 
-2.0%
Total Northern California
 
14,356
 
37.5%
 
      2,654
 
      2,609
 
1.7%
 
96.7%
 
96.7%
 
0.0%
 
     116,688
 
    114,433
 
2.0%
 
       116,254
 
0.4%
                                                         
Seattle Metro
 
10,238
 
17.4%
 
      1,819
 
      1,768
 
2.9%
 
96.3%
 
96.2%
 
0.1%
 
       58,796
 
      57,086
 
3.0%
 
        58,713
 
0.1%
                                                         
Total Same-Property
 
46,863
 
100.0%
 
 $   2,229
 
 $   2,181
 
2.2%
 
96.7%
 
96.4%
 
0.3%
 
 $  321,283
 
 $ 312,629
 
2.8%
 
 $    320,095
 
0.4%
                                                         
                                                         
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-9

E S S E X  P R O P E R T Y  T R U S T, I N C.              
                                                 
Same-Property Revenue Results by County - Six months ended June 30, 2018 vs. Six months ended June 30, 2017      
(Dollars in thousands, except average monthly rental rates)             
                                                 
                                                 
           
YTD
 
Average Monthly Rental Rate
 
Financial Occupancy 
 
Gross Revenues 
Region - County
 
Apartment Homes
 
2018 % of Actual NOI
 
YTD 2018
 
YTD 2017
 
% Change
 
YTD 2018
 
YTD 2017
 
% Change
 
YTD 2018
 
YTD 2017
 
% Change
                                                 
Southern California
                                           
 
Los Angeles County
 
8,931
 
19.8%
 
 $   2,406
 
 $   2,368
 
1.6%
 
96.7%
 
96.0%
 
0.7%
 
 $    130,961
 
 $    127,189
 
3.0%
 
Orange County
 
5,553
 
11.1%
 
      2,139
 
      2,084
 
2.6%
 
96.7%
 
96.4%
 
0.3%
 
         72,117
 
         70,181
 
2.8%
 
San Diego County
 
4,824
 
8.8%
 
      1,885
 
      1,828
 
3.1%
 
97.1%
 
96.3%
 
0.8%
 
         56,089
 
         53,954
 
4.0%
 
Ventura County
 
2,577
 
4.7%
 
      1,769
 
      1,703
 
3.9%
 
97.7%
 
97.1%
 
0.6%
 
         28,676
 
         27,254
 
5.2%
 
Other Southern CA
 
384
 
0.4%
 
      1,283
 
      1,239
 
3.6%
 
97.2%
 
96.9%
 
0.3%
 
          3,084
 
          2,998
 
2.9%
Total Southern California
 
22,269
 
44.8%
 
      2,134
 
      2,084
 
2.4%
 
96.9%
 
96.3%
 
0.6%
 
       290,927
 
       281,576
 
3.3%
                                                 
Northern California
                                           
 
Santa Clara County
 
6,028
 
16.5%
 
      2,705
 
      2,663
 
1.6%
 
97.3%
 
97.1%
 
0.2%
 
       100,076
 
         98,224
 
1.9%
 
Alameda County
 
2,954
 
7.2%
 
      2,501
 
      2,460
 
1.7%
 
96.8%
 
95.3%
 
1.6%
 
         45,343
 
         43,758
 
3.6%
 
San Mateo County
 
1,830
 
5.2%
 
      2,855
 
      2,816
 
1.4%
 
97.4%
 
97.2%
 
0.2%
 
         32,419
 
         31,742
 
2.1%
 
Contra Costa County
 
2,270
 
5.1%
 
      2,291
 
      2,255
 
1.6%
 
97.2%
 
97.3%
 
-0.1%
 
         32,092
 
         31,386
 
2.2%
 
San Francisco
 
1,178
 
3.1%
 
      2,965
 
      2,929
 
1.2%
 
95.7%
 
96.0%
 
-0.3%
 
         21,317
 
         20,881
 
2.1%
 
Other Northern CA
 
96
 
0.3%
 
      2,895
 
      2,738
 
5.7%
 
98.0%
 
98.0%
 
0.0%
 
          1,695
 
          1,614
 
5.0%
Total Northern California
 
14,356
 
37.4%
 
      2,639
 
      2,598
 
1.6%
 
97.1%
 
96.7%
 
0.4%
 
       232,942
 
       227,605
 
2.3%
                                                 
Seattle Metro
 
10,238
 
17.8%
 
      1,809
 
      1,751
 
3.3%
 
96.6%
 
96.4%
 
0.2%
 
       117,509
 
       113,279
 
3.7%
                                                 
Total Same-Property
 
46,863
 
100.0%
 
 $   2,218
 
 $   2,169
 
2.3%
 
96.9%
 
96.4%
 
0.5%
 
 $    641,378
 
 $    622,460
 
3.0%
                                                 
                                                 
 
 See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information
S-9.1

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 and Year to Date as of June 30, 2018 and 2017       
(Dollars in thousands)