Essex Property Trust, Inc. (NYSE: ESS) (the “Company”) announced
today its first quarter 2023 earnings results and related business
activities.
Net Income, Funds from Operations (“FFO”), and Core FFO per
diluted share for the quarter ended March 31, 2023 are detailed
below.
Three Months Ended
March 31,
%
2023
2022
Change
Per Diluted
Share
Net Income
$2.38
$1.12
112.5%
Total FFO
$3.80
$3.36
13.1%
Core FFO
$3.65
$3.37
8.3%
First Quarter 2023
Highlights:
- Reported Net Income per diluted share for the first quarter of
2023 of $2.38, compared to $1.12 in the first quarter of 2022. The
increase is largely attributable to the gain on sale of real estate
and land recognized in the first quarter of 2023.
- Grew Core FFO per diluted share by 8.3% compared to the first
quarter of 2022, exceeding the midpoint of the guidance range by
$0.08 primarily due to favorable same-property revenues.
- Achieved same-property revenue and net operating income (“NOI”)
growth of 7.6% and 9.2%, respectively, compared to the first
quarter of 2022.
- Sold one apartment community in a non-core market for a total
contract price of $91.7 million.
- Repurchased 437,026 shares of common stock in the first
quarter, totaling $95.7 million, including commissions, at an
average price per share of $218.88.
- Increased the dividend by 5.0% to an annual distribution of
$9.24 per common share, the Company’s 29th consecutive annual
increase.
- Increased full-year Net Income per diluted share guidance by
$0.98 at the midpoint to a range of $6.36 to $6.74.
- Increased full-year Core FFO per diluted share guidance by
$0.03 at the midpoint to a range of $14.59 to $14.97.
- Reaffirmed full-year guidance ranges for same-property revenue,
expense, and NOI growth.
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 March 31, 2023 compared to the quarter ended
March 31, 2022, and the sequential percentage change for the
quarter ended March 31, 2023 compared to the quarter ended December
31, 2022, by submarket for the Company:
Q1 2023 vs.
Q1 2022
Q1 2023 vs.
Q4 2022
% of
Total
Revenue
Change
Revenue
Change
Q1 2023
Revenues
Southern California
Los Angeles County
5.2%
-1.7%
18.7%
Orange County
10.2%
-0.5%
10.5%
San Diego County
10.5%
2.2%
8.8%
Ventura County
11.4%
1.7%
4.0%
Total Southern California
8.1%
-0.3%
42.0%
Northern California
Santa Clara County
8.2%
0.8%
19.6%
Alameda County
3.8%
0.7%
7.9%
San Mateo County
6.4%
-0.3%
4.5%
Contra Costa County
6.8%
-0.1%
5.4%
San Francisco
1.4%
-1.4%
2.6%
Total Northern California
6.4%
0.4%
40.0%
Seattle Metro
9.1%
-0.4%
18.0%
Same-Property Portfolio
7.6%
0.0%
100.0%
The table below illustrates the components that drove the change
in same-property revenue on a year-over-year and sequential basis
for the quarter ended March 31, 2023.
Same-Property Revenue
Components
Q1 2023
vs. Q1 2022
Q1 2023
vs. Q4 2022
Scheduled Rents
6.8%
0.3%
Delinquencies
-0.1%
-0.9%
Cash Concessions
0.3%
0.3%
Vacancy
0.2%
0.7%
Other Income
0.4%
-0.4%
Q1 2023 Same-Property Revenue
Growth
7.6%
0.0%
Year-Over-Year Change
Q1 2023 compared to Q1
2022
Revenues
Operating
Expenses
NOI
Southern California
8.1%
9.2%
7.6%
Northern California
6.4%
2.4%
8.2%
Seattle Metro
9.1%
-3.6%
15.2%
Same-Property Portfolio
7.6%
4.0%
9.2%
Sequential Change
Q1 2023 compared to Q4
2022
Revenues
Operating
Expenses
NOI
Southern California
-0.3%
6.0%
-2.7%
Northern California
0.4%
1.1%
0.1%
Seattle Metro
-0.4%
-0.2%
-0.4%
Same-Property Portfolio
0.0%
2.9%
-1.2%
Financial Occupancies
Quarter Ended
3/31/2023
12/31/2022
3/31/2022
Southern California
96.8%
96.4%
96.3%
Northern California
96.6%
95.8%
96.4%
Seattle Metro
96.6%
95.8%
95.9%
Same-Property Portfolio
96.7%
96.0%
96.3%
Investment Activity
Dispositions
In March 2023, the Company sold a 61-year-old student housing
community containing 239 apartment homes in the non-core market of
Santa Barbara County, for a total contract price of $91.7 million.
The Company recognized a $54.5 million gain on sale during the
quarter, which has been excluded from Total and Core FFO.
Liquidity and Balance Sheet
Common Stock
In the first quarter of 2023, the Company repurchased 437,026
shares of its common stock through the Company’s stock repurchase
plan, totaling $95.7 million, including commissions, at an average
price per share of $218.88. As of April 26, 2023, the Company had
$302.7 million of purchase authority remaining under the Company’s
stock repurchase plan.
Balance Sheet
As of April 26, 2023, the Company had approximately $1.5 billion
in liquidity via undrawn capacity on its unsecured credit
facilities, cash, and marketable securities.
Guidance
For the first quarter of 2023, the Company exceeded the midpoint
of the guidance range provided in its fourth quarter 2022 earnings
release for Core FFO by $0.08 per diluted share. The
better-than-expected results primarily relate to lower delinquency
and higher occupancy within the same-property portfolio.
The following table provides a reconciliation of first quarter
2023 Core FFO per diluted share to the midpoint of the guidance
provided in the Company’s fourth quarter 2022 earnings release.
Per Diluted
Share
Guidance midpoint of Core FFO per diluted
share for Q1 2023
$
3.57
NOI from consolidated communities
0.07
FFO from Co-Investments
0.01
Interest Expense (Consolidated) and Other
Income
0.01
G&A
(0.02)
Impact from Weighted Average Shares
Outstanding
0.01
Core FFO per diluted share for Q1 2023
reported
$
3.65
2023 Full-Year and Second
Quarter Guidance
Previous
Range
Previous
Midpoint
Revised
Range
Revised
Midpoint
Change at the
Midpoint
Per Diluted Share
Net Income
$5.35 - $5.79
$5.57
$6.36 - $6.74
$6.55
$0.98
Total FFO
$14.53 - $14.97
$14.75
$14.74 - $15.12
$14.93
$0.18
Core FFO
$14.53 - $14.97
$14.75
$14.59 - $14.97
$14.78
$0.03
Q2 2023 Core FFO
-
-
$3.63 - $3.75
$3.69
-
Same-Property Growth on a
Cash-Basis(1)
Revenues
3.25% to 4.75%
4.00%
No Change
-
-
Operating Expenses
4.50% to 5.50%
5.00%
No Change
-
-
NOI
2.30% to 4.90%
3.60%
No Change
-
-
(1)
The midpoint of the Company’s same-property revenues and NOI on
a GAAP basis remain unchanged since the Company’s fourth quarter
2022 earnings release at 4.40% and 4.10%, respectively.
For additional details regarding the Company’s 2023 Core FFO
guidance range, please see page S-14 of the accompanying
supplemental financial information.
Conference Call with Management
The Company will host an earnings conference call with
management to discuss its quarterly results on Friday, April 28,
2023 at 10 a.m. PT (1 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 7 days. To access the replay online, go to
www.essex.com and select the first quarter 2023 earnings link. To
access the replay, dial (844) 512-2921 using the replay pin number
13737546. 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.
Upcoming Events
The Company is scheduled to participate in the National
Association of Real Estate Investment Trusts (“NAREIT”)
Institutional Investor Forum in New York from June 6-7, 2023. The
Company’s President and Chief Executive Officer, Angela L. Kleiman,
will present at the conference on June 7, 2023 at 8:45 a.m. ET. The
presentation will be webcast and can be accessed on the Investors
section of the Company’s website at www.essex.com. A copy of any
materials provided by the Company at the conference will also be
made available on the Investors section of the Company’s
website.
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. Essex currently has
ownership interests in 251 apartment communities comprising
approximately 62,000 apartment homes with an additional property in
active development. 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 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 Web, please contact the Investor Relations
Department at (650) 655-7800.
FFO RECONCILIATION
FFO, as defined by the National Association of Real Estate
Investment Trusts (“NAREIT”), is generally considered by industry
analysts as an appropriate measure of performance of an equity
REIT. Generally, FFO adjusts the net income of equity REITs for
non-cash charges such as depreciation and amortization of rental
properties, impairment charges, gains on sales of real estate and
extraordinary items. Management considers FFO and FFO which
excludes non-core items, which is referred to as “Core FFO,” to be
useful supplemental operating 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 to
pay dividends. By excluding gains or losses related to sales of
depreciated operating properties and land and excluding real estate
depreciation (which can vary among owners of identical assets in
similar condition based on historical cost accounting and useful
life estimates), FFO can help investors compare the operating
performance of a real estate company between periods or as compared
to different companies. By further adjusting for items that are not
considered part of the Company’s core business operations, Core FFO
allows investors to compare the core operating performance of the
Company to its performance in prior reporting periods and to the
operating performance of other real estate companies without the
effect of items that by their nature are not comparable from period
to period and tend to obscure the Company’s actual operating
results. 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 alternatives 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.
The following table sets forth the Company’s calculation of
diluted FFO and Core FFO for the three months ended March 31, 2023
and 2022 (dollars in thousands, except for share and per share
amounts):
Three Months Ended
March 31,
Funds from Operations attributable to
common stockholders and unitholders
2023
2022
Net income available to common
stockholders
$
153,532
$
73,254
Adjustments:
Depreciation and amortization
136,347
133,533
Gains on sale of real estate and land not
included in FFO
(59,238)
-
Casualty loss
433
-
Depreciation and amortization from
unconsolidated co-investments
17,609
18,115
Noncontrolling interest related to
Operating Partnership units
5,404
2,563
Depreciation attributable to third party
ownership and other
(359)
(353)
Funds from Operations attributable to
common stockholders and unitholders
$
253,728
$
227,112
FFO per share – diluted
$
3.80
$
3.36
Expensed acquisition and investment
related costs
$
339
$
8
Deferred tax benefit on unconsolidated
co-investments(1)
(900)
(2,754)
Gain on sale of marketable securities
(912)
(12,171)
Change in unrealized (gains) losses on
marketable securities, net
(368)
24,585
Provision for credit losses
18
(62)
Equity loss from non-core
co-investments(2)
94
8,844
Loss on early retirement of debt from
unconsolidated co-investment
-
86
Co-investment promote income
-
(17,076)
Income from early redemption of preferred
equity investments and notes receivable
-
(858)
General and administrative and other,
net
266
448
Insurance reimbursements, legal
settlements, and other, net
(8,504)
-
Core Funds from Operations attributable
to common stockholders and unitholders
$
243,761
$
228,162
Core FFO per share – diluted
$
3.65
$
3.37
Weighted average number of shares
outstanding diluted (3)
66,725,582
67,621,842
(1)
Represents deferred tax benefit related to net unrealized gains
or losses on technology co-investments.
(2)
Represents the Company’s share of co-investment loss from
technology co-investments.
(3)
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 DownREIT limited
partnership units.
Net Operating Income (“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 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 revenues 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
March 31,
2023
2022
Earnings from operations
$
187,385
$
109,850
Adjustments:
Corporate-level property management
expenses
11,432
10,172
Depreciation and amortization
136,347
133,533
Management and other fees from
affiliates
(2,765)
(2,689)
General and administrative
15,311
12,242
Expensed acquisition and investment
related costs
339
8
Casualty loss
433
-
Gain on sale of real estate and land
(59,238)
-
NOI
289,244
263,116
Less: Non-same property NOI
(15,145)
(12,088)
Same-Property NOI
$
274,099
$
251,028
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,”
“projects,” “believes,” “seeks,” “future,” “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 expectations related to the continued evolution of the
work-from-home trend, 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 of 1986, as amended, 2023 Same-Property
revenue and operating expenses generally and in specific regions,
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 such economic
conditions, inflation, the labor market, supply chain impacts and
ongoing hostilities between Russia and Ukraine, 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.
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:
potential future outbreaks of infectious diseases or other health
concerns, which could adversely affect the Company’s business and
its tenants, and cause a significant downturn in general economic
conditions, the real estate industry, and the markets in which the
Company's communities are located; 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 or redevelopment 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,
inflation, escalated operating costs and possible recessionary
impacts; as well as uncertainties regarding ongoing hostilities
between Russia and Ukraine and the related impacts on macroeconomic
conditions, including, among other things, interest rates and
inflation; 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; changes in laws or regulations; the terms of any
refinancing may not be as favorable as the terms of existing
indebtedness; unexpected difficulties in leasing of development
projects; volatility in financial and securities markets; the
Company’s failure to successfully operate acquired properties;
unforeseen consequences from cyber-intrusion; the Company’s
inability to maintain our investment grade credit rating with the
rating agencies; government approvals, actions and initiatives,
including the need for compliance with environmental requirements;
and those further risks, special considerations, and other factors
referred to in the Company’s annual report on Form 10-K for the
year ended December 31, 2022, quarterly reports on Form 10-Q, and
those risk factors and special considerations set forth in the
Company's other filings with the SEC which may 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. 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-18.1 through S-18.4, "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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005857/en/
Rylan Burns Group VP of Private Equity & Finance (650)
655-7800 rburns@essex.com
Grafico Azioni Essex Property (NYSE:ESS)
Storico
Da Apr 2024 a Mag 2024
Grafico Azioni Essex Property (NYSE:ESS)
Storico
Da Mag 2023 a Mag 2024