Company Quick10K Filing
Essex Property Trust
Price326.35 EPS7
Shares68 P/E49
MCap22,280 P/FCF32
Net Debt5,771 EBIT616
TEV28,052 TEV/EBIT46
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-20
10-Q 2019-09-30 Filed 2019-10-25
10-Q 2019-06-30 Filed 2019-07-25
10-Q 2019-03-31 Filed 2019-04-26
10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-10-31
10-Q 2018-06-30 Filed 2018-08-03
10-Q 2018-03-31 Filed 2018-05-04
10-K 2017-12-31 Filed 2018-02-22
10-Q 2017-09-30 Filed 2017-11-03
10-Q 2017-06-30 Filed 2017-07-31
10-Q 2017-03-31 Filed 2017-05-01
10-K 2016-12-31 Filed 2017-02-24
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-08-01
10-Q 2016-03-31 Filed 2016-05-03
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-06
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-03-02
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-11
10-Q 2014-03-31 Filed 2014-05-12
10-K 2013-12-31 Filed 2014-02-26
10-Q 2013-09-30 Filed 2013-11-04
10-Q 2013-06-30 Filed 2013-08-05
10-Q 2013-03-31 Filed 2013-05-06
10-K 2012-12-31 Filed 2013-02-25
10-Q 2012-09-30 Filed 2012-11-05
10-Q 2012-06-30 Filed 2012-08-06
10-Q 2012-03-31 Filed 2012-05-07
10-K 2011-12-31 Filed 2012-02-27
10-Q 2011-09-30 Filed 2011-11-07
10-Q 2011-06-30 Filed 2011-08-08
10-Q 2011-03-31 Filed 2011-05-09
10-K 2010-12-31 Filed 2011-02-25
10-Q 2010-09-30 Filed 2010-11-09
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-06
10-K 2009-12-31 Filed 2010-02-26
8-K 2020-05-06 Earnings, Exhibits
8-K 2020-03-19 Officers
8-K 2020-02-28 Regulation FD, Exhibits
8-K 2020-02-11 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2020-02-04 Other Events, Exhibits
8-K 2020-01-29 Earnings, Exhibits
8-K 2019-10-23
8-K 2019-10-07 Off-BS Arrangement, Other Events, Exhibits
8-K 2019-09-09 Regulation FD, Exhibits
8-K 2019-09-05 Officers, Other Events, Exhibits
8-K 2019-08-07 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-07-29 Other Events, Exhibits
8-K 2019-07-24 Earnings, Exhibits
8-K 2019-05-31 Regulation FD, Exhibits
8-K 2019-05-14 Shareholder Vote
8-K 2019-04-24 Earnings, Exhibits
8-K 2019-03-26 Off-BS Arrangement, Exhibits
8-K 2019-03-19 Other Events, Exhibits
8-K 2019-03-04 Regulation FD, Exhibits
8-K 2019-02-11 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-02-04 Other Events, Exhibits
8-K 2019-02-04 Other Events, Exhibits
8-K 2019-01-30 Earnings, Exhibits
8-K 2018-12-19 Officers, Other Events, Exhibits
8-K 2018-10-29 Earnings, Exhibits
8-K 2018-09-28 Other Events, Exhibits
8-K 2018-09-24 Regulation FD, Exhibits
8-K 2018-09-18 Officers
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-05-31 Regulation FD, Exhibits
8-K 2018-05-15 Officers, Shareholder Vote
8-K 2018-05-02 Earnings, Exhibits
8-K 2018-03-08 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-05 Regulation FD, Exhibits
8-K 2018-02-27 Other Events, Exhibits
8-K 2018-02-26 Other Events, Exhibits
8-K 2018-02-20 Officers, Amend Bylaw, Exhibits
8-K 2018-02-07 Earnings, Exhibits
8-K 2018-01-17 Enter Agreement, Off-BS Arrangement, Exhibits

ESS 10Q Quarterly Report

Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risks
Item 4: Controls and Procedures
Part II - - Other Information
Item 1: Legal Proceedings
Item 1A: Risk Factors
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Item 3: Defaults Upon Senior Securities
Item 4: Mine Safety Disclosures
Item 5: Other Information
Item 6: Exhibits
EX-10.1 ess-33120xex101.htm
EX-31.1 ess-33120xex311.htm
EX-31.2 ess-33120xex312.htm
EX-31.3 ess-33120xex313.htm
EX-31.4 ess-33120xex314.htm
EX-32.1 ess-33120xex321.htm
EX-32.2 ess-33120xex322.htm
EX-32.3 ess-33120xex323.htm
EX-32.4 ess-33120xex324.htm

Essex Property Trust Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
151296302012201420172020
Assets, Equity
0.40.30.20.20.10.02012201420172020
Rev, G Profit, Net Income
0.50.30.0-0.2-0.5-0.72012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

001-13106 (Essex Property Trust, Inc.)
333-44467-01 (Essex Portfolio, L.P.)
(Commission File Number)

ESSEX PROPERTY TRUST, INC.
ESSEX PORTFOLIO, L.P.
(Exact name of Registrant as Specified in its Charter)
Maryland
 
77-0369576
(Essex Property Trust, Inc.)
 
(Essex Property Trust, Inc.)
California
 
77-0369575
 (Essex Portfolio, L.P.)
 
(Essex Portfolio, L.P.)
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification Number)
1100 Park Place, Suite 200
San Mateo, California 94403
(Address of Principal Executive Offices, Including Zip Code)

(650) 655-7800
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange on which registered
Common Stock, $.0001 par value (Essex Property Trust, Inc.)
 
ESS
 
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Essex Property Trust, Inc.
Yes
No
Essex Portfolio, L.P.
Yes
No


i


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Essex Property Trust, Inc.
Yes
No
Essex Portfolio, L.P.
Yes
No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Essex Property Trust, Inc.:
Large accelerated filer

Accelerated filer
Non-accelerated filer
Smaller reporting company
 
 
 
 
 
 
Emerging growth company


Essex Portfolio, L.P.:
Large accelerated filer
Accelerated filer
Non-accelerated filer

Smaller reporting company
 
 
 
 
 
 
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.

Essex Property Trust, Inc.
Essex Portfolio, L.P.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Essex Property Trust, Inc.
Yes
No
Essex Portfolio, L.P.
Yes
No
 
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 65,417,355 shares of Common Stock ($.0001 par value) of Essex Property Trust, Inc. were outstanding as of May 5, 2020.
 

ii


EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the three month period ended March 31, 2020 of Essex Property Trust, Inc., a Maryland corporation, and Essex Portfolio, L.P., a Delaware limited partnership of which Essex Property Trust, Inc. is the sole general partner.

Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us" or "our" mean collectively Essex Property Trust, Inc. and those entities/subsidiaries owned or controlled by Essex Property Trust, Inc., including Essex Portfolio, L.P., and references to the "Operating Partnership" mean Essex Portfolio, L.P. and those entities/subsidiaries owned or controlled by Essex Portfolio, L.P. Unless stated otherwise or the context otherwise requires, references to "Essex" mean Essex Property Trust, Inc., not including any of its subsidiaries.

Essex operates as a self-administered and self-managed real estate investment trust ("REIT"), and is the sole general partner of the Operating Partnership. As the sole general partner of the Operating Partnership, Essex has exclusive control of the Operating Partnership's day-to-day management.

The Company is structured as an umbrella partnership REIT ("UPREIT") and Essex contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, Essex receives a number of Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") equal to the number of shares of common stock it has issued in the equity offerings. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units, which is one of the reasons why the Company is structured in the manner outlined above. Based on the terms of the Operating Partnership's partnership agreement, OP Units can be exchanged into Essex common stock on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units issued to Essex and shares of common stock.

The Company believes that combining the reports on Form 10-Q of Essex and the Operating Partnership into this single report provides the following benefits:

enhances investors' understanding of Essex and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both Essex and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

Management operates Essex and the Operating Partnership as one business. The management of Essex consists of the same members as the management of the Operating Partnership.

All of the Company's property ownership, development, and related business operations are conducted through the Operating Partnership and Essex has no material assets, other than its investment in the Operating Partnership. Essex's primary function is acting as the general partner of the Operating Partnership. As general partner with control of the Operating Partnership, Essex consolidates the Operating Partnership for financial reporting purposes. Therefore, the assets and liabilities of Essex and the Operating Partnership are the same on their respective financial statements. Essex also issues equity from time to time and guarantees certain debt of the Operating Partnership, as disclosed in this report. The Operating Partnership holds substantially all of the assets of the Company, including the Company's ownership interests in its co-investments. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by the Company, which are contributed to the capital of the Operating Partnership in exchange for OP Units (on a one-for-one share of common stock per OP Unit basis), the Operating Partnership generates all remaining capital required by the Company's business. These sources of capital include the Operating Partnership's working capital, net cash provided by operating activities, borrowings under its revolving credit facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from disposition of certain properties and co-investments.

The Company believes it is important to understand the few differences between Essex and the Operating Partnership in the context of how Essex and the Operating Partnership operate as a consolidated company. Stockholders' equity, partners' capital and noncontrolling interest are the main areas of difference between the condensed consolidated financial statements of Essex and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners' capital in the Operating Partnership's condensed consolidated financial statements and as noncontrolling interest in Essex’s condensed consolidated financial statements. The noncontrolling interest in the Operating Partnership's condensed consolidated financial statements include the interest of unaffiliated partners in various consolidated partnerships and co-investment partners. The noncontrolling interest in Essex's condensed consolidated financial statements include (i) the same noncontrolling interest as

iii


presented in the Operating Partnership’s condensed consolidated financial statements and (ii) OP Unitholders. The differences between stockholders' equity and partners' capital result from differences in the equity issued at Essex and Operating Partnership levels.
 
To help investors understand the significant differences between Essex and the Operating Partnership, this report on Form 10-Q provides separate consolidated financial statements for Essex and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of stockholders' equity or partners' capital, and earnings per share/unit, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations.

This report on Form 10-Q also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Essex and the Operating Partnership in order to establish that the requisite certifications have been made and that Essex and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. §1350.

In order to highlight the differences between Essex and the Operating Partnership, the separate sections in this report on Form 10-Q for Essex and the Operating Partnership specifically refer to Essex and the Operating Partnership. In the sections that combine disclosure of Essex and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and co-investments and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. The separate discussions of Essex and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

The information furnished in the accompanying unaudited condensed consolidated balance sheets, statements of income and comprehensive income, equity, capital, and cash flows of the Company and the Operating Partnership reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the aforementioned condensed consolidated financial statements for the interim periods and are normal and recurring in nature, except as otherwise noted.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to such unaudited condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations herein. Additionally, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2019.

iv


ESSEX PROPERTY TRUST, INC.
ESSEX PORTFOLIO, L.P.
FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Page No.
 
 
 
Item 1.
Condensed Consolidated Financial Statements of Essex Property Trust, Inc. (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Financial Statements of Essex Portfolio, L.P. (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 

1


Part I – Financial Information

Item 1. Condensed Consolidated Financial Statements

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except parenthetical and share amounts)
ASSETS
March 31, 2020
 
December 31, 2019
Real estate:
 
 
 
Rental properties:
 
 
 
Land and land improvements
$
2,983,314

 
$
2,773,805

Buildings and improvements
12,263,293

 
11,264,337

 
15,246,607

 
14,038,142

Less: accumulated depreciation
(3,818,489
)
 
(3,689,482
)
 
11,428,118

 
10,348,660

Real estate under development
435,865

 
546,075

Co-investments
997,137

 
1,335,339

 
12,861,120

 
12,230,074

Cash and cash equivalents-unrestricted
271,877

 
70,087

Cash and cash equivalents-restricted
10,470

 
11,007

Marketable securities, net of allowance for credit losses of $13.6 million and zero as of March 31, 2020 and December 31, 2019, respectively
148,139

 
144,193

Notes and other receivables, net of allowance for credit losses of $0.1 million and zero as of March 31, 2020 and December 31, 2019, respectively (includes related party receivables of $7.7 million and $90.2 million as of March 31, 2020 and December 31, 2019, respectively)
34,867

 
134,365

Operating lease right-of-use assets
74,428

 
74,744

Prepaid expenses and other assets
49,940

 
40,935

Total assets
$
13,450,841

 
$
12,705,405

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Unsecured debt, net
$
5,258,263

 
$
4,763,206

Mortgage notes payable, net
887,389

 
990,667

Lines of credit
350,000

 
55,000

Accounts payable and accrued liabilities
193,564

 
158,017

Construction payable
50,538

 
48,912

Dividends payable
142,800

 
135,384

Operating lease liabilities
76,405

 
76,740

Other liabilities
41,290

 
36,565

Total liabilities
7,000,249

 
6,264,491

Commitments and contingencies


 


Redeemable noncontrolling interest
32,643

 
37,410

Equity:
 

 
 

Common stock; $.0001 par value, 670,000,000 shares authorized; 65,412,355 and 66,091,954 shares issued and outstanding, respectively
7

 
7

Additional paid-in capital
6,959,523

 
7,121,927

Distributions in excess of accumulated earnings
(708,697
)
 
(887,619
)
Accumulated other comprehensive loss, net
(22,668
)
 
(13,888
)
Total stockholders' equity
6,228,165

 
6,220,427

Noncontrolling interest
189,784

 
183,077

Total equity
6,417,949

 
6,403,504

Total liabilities and equity
$
13,450,841

 
$
12,705,405



See accompanying notes to the unaudited condensed consolidated financial statements.

2


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(In thousands, except share and per share amounts)
 
Three Months Ended March 31,
 
2020
 
2019
Revenues:
 
 
 
Rental and other property
$
389,750

 
$
353,888

Management and other fees from affiliates
2,617

 
2,335

 
392,367

 
356,223

Expenses:
 

 
 

Property operating, excluding real estate taxes
64,131

 
58,622

Real estate taxes
43,012

 
39,418

Corporate-level property management expenses
8,759

 
8,429

Depreciation and amortization
131,559

 
120,568

General and administrative
13,982

 
13,459

Expensed acquisition and investment related costs
87

 
32

 
261,530

 
240,528

Earnings from operations
130,837

 
115,695

Interest expense
(55,147
)
 
(53,643
)
Total return swap income
1,984

 
2,045

Interest and other income (loss)
(5,221
)
 
12,261

Equity income from co-investments
21,297

 
16,276

Gain on early retirement of debt, net
321

 
1,336

Gain on remeasurement of co-investment
234,694

 
31,535

Net income
328,765

 
125,505

Net income attributable to noncontrolling interest
(13,759
)
 
(6,647
)
Net income available to common stockholders
$
315,006

 
$
118,858

Comprehensive income
$
319,678

 
$
123,668

Comprehensive income attributable to noncontrolling interest
(13,452
)
 
(6,585
)
Comprehensive income attributable to controlling interest
$
306,226

 
$
117,083

Per share data:
 

 
 

Basic:
 

 
 

Net income available to common stockholders
$
4.77

 
$
1.81

Weighted average number of shares outstanding during the period
66,043,831

 
65,702,788

Diluted:
 

 
 

Net income available to common stockholders
$
4.76

 
$
1.81

Weighted average number of shares outstanding during the period
66,195,415

 
65,783,869


See accompanying notes to the unaudited condensed consolidated financial statements.

3


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Equity for the three months ended March 31, 2020 and 2019
(Unaudited)
(In thousands)
 
 
Common stock
 
Additional paid-in capital
 
Distributions
in excess of accumulated earnings
 
Accumulated
other
comprehensive loss
 
Noncontrolling interest
 
Total
Three Months Ended March 31, 2020
 
Shares
 
Amount
 
 
 
 
 
Balances at December 31, 2019
 
66,092

 
$
7

 
$
7,121,927

 
$
(887,619
)
 
$
(13,888
)
 
$
183,077

 
$
6,403,504

Net income
 

 

 

 
315,006

 

 
13,759

 
328,765

Change in fair value of derivatives and amortization of swap settlements
 

 

 

 

 
(8,486
)
 
(296
)
 
(8,782
)
Change in fair value of marketable debt securities, net
 

 

 

 

 
(294
)
 
(11
)
 
(305
)
Issuance of common stock under:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Stock option and restricted stock plans, net
 
89

 

 
8,665

 

 

 

 
8,665

Sale of common stock, net
 

 

 
(70
)
 

 

 

 
(70
)
Equity based compensation costs
 

 

 
1,619

 

 

 
79

 
1,698

Retirement of common stock, net
 
(776
)
 

 
(176,311
)
 

 

 

 
(176,311
)
Cumulative effect upon adoption of ASU No. 2016-13
 

 

 

 
(190
)
 

 

 
(190
)
Changes in the redemption value of redeemable noncontrolling interest
 

 

 
4,741

 

 

 
26

 
4,767

Changes in noncontrolling interest from acquisition
 

 

 

 

 

 
1,349

 
1,349

Distributions to noncontrolling interest
 

 

 

 

 

 
(7,879
)
 
(7,879
)
Redemptions of noncontrolling interest
 
7

 

 
(1,048
)
 

 

 
(320
)
 
(1,368
)
Common stock dividends ($2.0775 per share)
 

 

 

 
(135,894
)
 

 

 
(135,894
)
Balances at March 31, 2020
 
65,412

 
$
7

 
$
6,959,523

 
$
(708,697
)
 
$
(22,668
)
 
$
189,784

 
$
6,417,949



4


 
 
Common stock
 
Additional paid-in capital
 
Distributions
in excess of accumulated earnings
 
Accumulated
other
comprehensive loss, net
 
Noncontrolling Interest
 
Total
Three Months Ended March 31, 2019
 
Shares
 
Amount
 
 
 
 
 
Balances at December 31, 2018
 
65,890

 
$
7

 
$
7,093,079

 
$
(812,796
)
 
$
(13,217
)
 
$
126,771

 
$
6,393,844

Net income
 

 

 

 
118,858

 

 
6,647

 
125,505

Reversal of unrealized losses upon the sale of marketable debt securities
 

 

 

 

 
32

 
1

 
33

Change in fair value of derivatives and amortization of swap settlements
 

 

 

 

 
(1,926
)
 
(67
)
 
(1,993
)
Change in fair value of marketable debt securities, net
 

 

 

 

 
119

 
4

 
123

Issuance of common stock under:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Stock option and restricted stock plans, net
 
51

 

 
3,204

 

 

 

 
3,204

Sale of common stock, net
 

 

 
(20
)
 

 

 

 
(20
)
Equity based compensation costs
 

 

 
2,301

 

 

 
299

 
2,600

Retirement of common stock, net
 
(234
)
 

 
(56,989
)
 

 

 

 
(56,989
)
Cumulative effect upon adoption of ASU No. 2017-12
 

 

 

 

 
175

 
6

 
181

Changes in the redemption value of redeemable noncontrolling interest
 

 

 
(3,027
)
 

 

 
1,260

 
(1,767
)
Distributions to noncontrolling interest
 

 

 

 

 

 
(7,164
)
 
(7,164
)
Redemptions of noncontrolling interest
 
9

 

 
(10,394
)
 

 

 
(1,819
)
 
(12,213
)
Common stock dividends ($1.95 per share)
 

 

 

 
(128,149
)
 

 

 
(128,149
)
Balances at March 31, 2019
 
65,716

 
$
7

 
$
7,028,154

 
$
(822,087
)
 
$
(14,817
)
 
$
125,938

 
$
6,317,195



See accompanying notes to the unaudited condensed consolidated financial statements.

5


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands, except parenthetical amounts) 
 
Three Months Ended March 31,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income
$
328,765

 
$
125,505

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
131,559

 
120,568

Amortization of discount on marketable securities
(2,394
)
 
(5,311
)
Amortization of discount and debt financing costs, net
2,297

 
529

Loss on sale of marketable securities
13

 
58

Provision for credit losses
(50
)
 

Unrealized (gain) loss on equity securities recognized through income
8,696

 
(4,510
)
Earnings from co-investments
(21,297
)
 
(16,276
)
Operating distributions from co-investments
19,388

 
17,804

Accrued interest from notes and other receivables
(355
)
 
(1,424
)
Equity-based compensation
1,405

 
2,068

Gain on early retirement of debt, net
(321
)
 
(1,336
)
Gain on remeasurement of co-investment
(234,694
)
 
(31,535
)
Changes in operating assets and liabilities:
 
 
 
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets
(172
)
 
(4,730
)
Accounts payable, accrued liabilities, and operating lease liabilities
32,808

 
53,895

Other liabilities
1,278

 
454

Net cash provided by operating activities
266,926

 
255,759

Cash flows from investing activities:
 

 
 

Additions to real estate:
 

 
 

Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired
(458,302
)
 
(44,984
)
Redevelopment
(18,296
)
 
(14,157
)
Development acquisitions of and additions to real estate under development
(25,681
)
 
(39,306
)
Capital expenditures on rental properties
(17,151
)
 
(17,075
)
Collections of notes and other receivables
98,711

 
2,500

Proceeds from insurance for property losses
457

 
1,583

Contributions to co-investments
(21,905
)
 
(126,248
)
Changes in refundable deposits
96

 
5

Purchases of marketable securities
(10,731
)
 
(8,413
)
Sales and maturities of marketable securities
165

 
16,847

Non-operating distributions from co-investments
7,000

 
10,000

Net cash used in investing activities
(445,637
)
 
(219,248
)
Cash flows from financing activities:
 

 
 

Proceeds from unsecured debt and mortgage notes
498,140

 
498,234

Payments on unsecured debt and mortgage notes
(102,563
)
 
(360,975
)
Proceeds from lines of credit
1,038,426

 
567,029

Repayments of lines of credit
(743,426
)
 
(567,029
)
Retirement of common stock
(176,311
)
 
(56,989
)
Additions to deferred charges
(5,172
)
 
(5,445
)
Net proceeds from issuance of common stock
(70
)
 
(20
)
Net proceeds from stock options exercised
14,329

 
6,699

Payments related to tax withholding for share-based compensation
(5,664
)
 
(3,495
)
Distributions to noncontrolling interest
(7,478
)
 
(6,978
)
Redemption of noncontrolling interest
(1,368
)
 
(12,213
)

6


 
Three Months Ended March 31,
 
2020
 
2019
Redemption of redeemable noncontrolling interest

 
(73
)
Common stock dividends paid
(128,879
)
 
(122,525
)
Net cash provided by (used in) financing activities
379,964

 
(63,780
)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents
201,253

 
(27,269
)
Unrestricted and restricted cash and cash equivalents at beginning of period
81,094

 
151,395

Unrestricted and restricted cash and cash equivalents at end of period
$
282,347

 
$
124,126

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest (net of $4.8 million and $5.9 million capitalized in 2020 and 2019, respectively)
$
52,487

 
$
41,914

Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows from operating leases
$
1,715

 
$
1,694

Supplemental disclosure of noncash investing and financing activities:
 

 
 

Transfers between real estate under development and rental properties, net
$
131,841

 
$

Transfer from real estate under development to co-investments
$
824

 
$
313

Reclassifications (from) to redeemable noncontrolling interest to/from additional paid in capital and noncontrolling interest
$
(4,767
)
 
$
1,767

Initial recognition of operating lease right-of-use assets
$

 
$
77,645

Initial recognition of operating lease liabilities
$

 
$
79,693


See accompanying notes to the unaudited condensed consolidated financial statements.


7


ESSEX PORTFOLIO, L.P.  AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except parenthetical and unit amounts)
ASSETS
March 31, 2020
 
December 31, 2019
Real estate:
 
 
 
Rental properties:
 
 
 
Land and land improvements
$
2,983,314

 
$
2,773,805

Buildings and improvements
12,263,293

 
11,264,337

 
15,246,607

 
14,038,142

Less: accumulated depreciation
(3,818,489
)
 
(3,689,482
)
 
11,428,118

 
10,348,660

Real estate under development
435,865

 
546,075

Co-investments
997,137

 
1,335,339

 
12,861,120

 
12,230,074

Cash and cash equivalents-unrestricted
271,877

 
70,087

Cash and cash equivalents-restricted
10,470

 
11,007

Marketable securities, net of allowance for credit losses of $13.6 million and zero as of March 31, 2020 and December 31, 2019, respectively
148,139

 
144,193

Notes and other receivables, net of allowance for credit losses of $0.1 million and zero as of March 31, 2020 and December 31, 2019, respectively (includes related party receivables of $7.7 million and $90.2 million as of March 31, 2020 and December 31, 2019, respectively)
34,867

 
134,365

Operating lease right-of-use assets
74,428

 
74,744

Prepaid expenses and other assets
49,940

 
40,935

Total assets
$
13,450,841


$
12,705,405

 
 
 
 
LIABILITIES AND CAPITAL
 

 
 

Unsecured debt, net
$
5,258,263

 
$
4,763,206

Mortgage notes payable, net
887,389

 
990,667

Lines of credit
350,000

 
55,000

Accounts payable and accrued liabilities
193,564

 
158,017

Construction payable
50,538

 
48,912

Distributions payable
142,800

 
135,384

Operating lease liabilities
76,405

 
76,740

Other liabilities
41,290

 
36,565

Total liabilities
7,000,249


6,264,491

Commitments and contingencies


 


Redeemable noncontrolling interest
32,643

 
37,410

Capital:
 

 
 

General Partner:
 
 
 
Common equity (65,412,355 and 66,091,954 units issued and outstanding, respectively)
6,250,833

 
6,234,315

 
6,250,833


6,234,315

Limited Partners:
 
 
 
Common equity (2,296,043 and 2,301,653 units issued and outstanding, respectively)
63,550

 
57,359

    Accumulated other comprehensive loss
(19,519
)
 
(10,432
)
Total partners' capital
6,294,864


6,281,242

                  Noncontrolling interest
123,085

 
122,262

Total capital
6,417,949


6,403,504

Total liabilities and capital
$
13,450,841


$
12,705,405


See accompanying notes to the unaudited condensed consolidated financial statements.

8


ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(In thousands, except unit and per unit amounts)
 
Three Months Ended March 31,
 
2020
 
2019
Revenues:
 
 
 
Rental and other property
$
389,750

 
$
353,888

Management and other fees from affiliates
2,617

 
2,335

 
392,367

 
356,223

Expenses:
 

 
 

Property operating, excluding real estate taxes
64,131

 
58,622