Essex Announces 21% Increase in Q3 FFO

PALO ALTO-Locally-based apartment REIT Essex Property Trust is reporting a 21% increase in its Funds From Operations for the third quarter ended Sept. 30, in part due to strong rent growth in all West Coast markets.

During the quarter, Essex reported FFO of $21.3 million, or $1.02 per diluted share. In 1999, the third quarter produced FFO of $17.3 million, or 84 cents per diluted share. Revenues for the third quarter of 2000 were $47.4 million, compared to $37.7 million in the comparable 1999 quarter, a 25% increase. Net income for the quarter was $10.2 million, or $.54 per diluted share, down from $13.1 million, or $.71 per diluted share in the comparable quarter of 1999, which included a $4.7 million gain on sales of real estate.

The Northwestern region experienced the greatest improvement since last quarter, attributable to improved occupancy and higher rents, says Keith R. Guericke, Essex’s President and Chief Executive Officer, as part of the earnings announcement. During the third quarter, Essex’s same-property multifamily net operating income increased by 18.9% in the San Francisco Bay Area, 11.8% in the Pacific Northwest, and 6.9% in Southern California, for an average increase of 13%.

Essex currently has ownership interests in 77 multifamily properties (16,721 units), and has 1,256 units in various stages of development. During the third quarter, Essex acquired ownership interests in two apartment communities located in Southern California. On an aggregate basis, Essex acquired 290 units for approximately $22.5 million, and will invest an additional $4.9 million in conjunction with a major renovation and repositioning program.

As for new developments:

–Essex acquired a site for up to 504 apartments in Richmond, Calif. The 25.5-acre site was acquired for $10.3 million. Construction of the first phase of the project — consisting of 312 units — is scheduled to begin in the spring of 2001. The project is called Vista del Mar.

–Construction continued as planned on The Essex at Lake Merritt, a 270-unit high-rise apartment community located on the shores of Lake Merritt in downtown Oakland, Calif. Substantial completion of construction is scheduled for June 2002.

–Construction at Essex’s 132-unit Salmon Run at Perry Creek community, located in Bothell, Wash., is now complete. As of September 30, 2000, Essex had leased and occupied 114 and 105 apartment homes, respectively.

–Essex started delivering completed apartment homes at its 404-unit Tierra Vista (formerly known as Vintage at the Rose) community located in Oxnard, Calif. As of September 30, 2000, eighty apartments were leased.

Essex’s total market capitalization at Sept. 30, 2000 was approximately $1.9 billion. Essex’s long-term debt had an average maturity of 9.0 years and an average interest rate of 7.2 percent. The Company’s debt-to-total-market-capitalization ratio at September 30, 2000 was 28.5% and interest coverage for the third quarter of 2000 was 4.0 times EBITDA. During the quarter, Essex completed a $60 million secured financing with a 10-year term and an interest rate of 8.18%, and obtained a $30 million unsecured credit facility priced at LIBOR plus 1.18%. The facility is in addition to the company’s $120 million unsecured line of credit and matures in September 2001.