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Press Release: Essex Announces Fourth Quarter and -2-

· 02/04/2021 16:15
-- The impact of recording lease concessions on a straight-line basis is expected to be a reduction to 2021 Core FFO by ($6.0 million) to ($16.0 million), as compared to $21.9 million recorded in 2020. As such, this non-cash item will negatively impact year-over-year Core FFO per diluted share by ($0.41) to ($0.56). -- Acquisitions and dispositions of $300 - $500 million, subject to market conditions and cost of capital. -- Preferred equity commitments of $100 - $150 million, to be funded by redemptions. -- Total development spending in 2021 for existing projects under construction is expected to be approximately $60 million at the Company's pro rata share. The Company does not currently plan to start any new developments during 2021. -- Revenue generating capital expenditures are expected to be approximately $25 million at the Company's pro rata share.2021 Core FFO Per Diluted Share Guidance versus 2020 Low-End High-End ------------------------------------------------ ------- -------- 2020 Core FFO Per Diluted Share $ 12.82 $ 12.82 NOI from Consolidated Communities, Excluding Straight-Line Concessions (0.99) (0.44) Change in Straight-Line Concessions from Consolidated Communities (0.41) (0.56) Net Interest Expense 0.18 0.26 Interest and Other Income 0.10 0.12 FFO from Co-Investments 0.09 0.17 G&A and Other (0.01) 0.01 Impact from Weighted Average Shares Outstanding 0.08 0.08 ------- -------- 2021 Core FFO Per Diluted Share Guidance $ 11.86 $ 12.46 ======= ========Per Diluted Share Range Midpoint ------------------------------ ------------------------------ -------- Net Income $3.30 - $3.90 $3.60 Total FFO $11.86 - $12.46 $12.16 Core FFO $11.86 - $12.46 $12.16 Estimated Same-Property Portfolio Change based on 47,090 Apartment Homes --------------------------------------------------------------- -------- Gross Revenue -3.50% to -1.50% -2.5% Operating Expense 2.00% to 3.00% 2.5% Net Operating Income -6.25% to -3.00% -4.6%Total % Leased Project Apartment ESS as of Name Location Homes Ownership 02/01/21 Status ---------- -------------- --------- --------- -------- -------- San Francisco, In 500 Folsom CA 537 50% 91.8% Lease-Up In Mylo Santa Clara, CA 476 100% 72.9% Lease-Up Patina at In Midtown San Jose, CA 269 50% 50.9% Lease-Up ----------- --------------- --------- --------- -------- -------- Total/Average % Leased 1,282 76.2%

Other Investments

In the fourth quarter of 2020, the Company originated six structured finance investments totaling $206.0 million. The investments have a weighted average return of 10.1% with most of the proceeds expected to be funded by early 2021.

In the fourth quarter of 2020, the Company received cash proceeds of $84.0 million from the full redemption of two structured finance investments and the maturity of an investment in a mortgage backed security.

DEVELOPMENT ACTIVITY

The table below represents the development communities in lease-up and the current leasing status as of February 1, 2021.

LIQUIDITY AND BALANCE SHEET

Common Stock

In the fourth quarter of 2020, the Company repurchased 211,681 shares of its common stock totaling $46.3 million, including commissions, at an average price of $218.84 per share. For the full-year ending December 31, 2020, the Company repurchased 1,197,190 shares of its common stock totaling $269.3 million, including commissions, at an average price of $224.96 per share.

In December 2020, the Board of Directors approved the replenishment of the stock repurchase plan such that the Company had $250.0 million of purchase authority remaining under the stock repurchase plan. As of February 1, 2021, the Company had $214.4 million of purchase authority remaining under the stock repurchase plan.

The Company did not issue any shares of common stock through its equity distribution program in the fourth quarter or full-year 2020.

Balance Sheet

In the fourth quarter of 2020, the Company repaid $328.2 million of secured and unsecured debt due to mature in 2021 with a weighted average effective rate of 4.2%.

Subsequent to quarter end, the Company repaid $100.0 million of unsecured debt due to mature in 2021 at an effective rate of 4.3%.

As of February 1, 2021, the Company has approximately $1.2 billion in liquidity via undrawn capacity on its unsecured credit facilities and cash and marketable securities.

2021 Full-Year Guidance and Key Assumptions

2021 Core FFO Per Diluted Share Guidance Range versus Full-Year 2020

The table below provides a summary of income statement changes between the Company's 2020 Core FFO per diluted share and its 2021 Core FFO per diluted share guidance range.

OTHER KEY ASSUMPTIONS

For additional details regarding the Company's 2021 FFO guidance range, please see page S-14 of the supplemental financial information. For the first quarter of 2021, the Company has established a guidance range of Core FFO per diluted share of $2.96 to $3.10.

CONFERENCE CALL WITH MANAGEMENT

The Company will host an earnings conference call with management to discuss its quarterly results on Friday, February 5, 2021 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 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 fourth quarter 2020 earnings link. To access the replay digitally, dial (844) 512-2921 using the replay pin number 13714536. 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. Essex currently has ownership interests in 246 apartment communities comprising approximately 60,000 apartment homes with an additional 6 properties in various stages of 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 investors@essex.com or by calling (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 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

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February 04, 2021 16:15 ET (21:15 GMT)