Essex Property Trust, Inc. · NYSE:ESS
Essex Property Trust — Investor Presentation (June 2016)
48 slides from Essex Property Trust's investor presentation, Jun 3, 2016
Slide 1: Investor Presentation June 2016
OCTOBER 2015 INVESTOR PRESENTATIONJUNE 2016
Slide 2: Safe Harbor Disclosure and Table of Contents
SAFE HARBOR DISCLOSURE Certain statements in this presentation, which are not historical facts, may be considered forward-looking statements within the meaning of the federal securities laws. The forward looking statements, some of which can be identified by terms and phrases such as “forecast”, “es
Slide 3: Essex is the only public multifamily REIT dedicated exclusively to the West Coast
Represents percent of pro rata NOI as of 3/31/16.East Bay includes Alameda and Contra Costa Counties.Multifamily REITs represent the total return of 7 peers through 12/31/15. ESSEX IS THE ONLY PUBLIC MULTIFAMILY REIT DEDICATED EXCLUSIVELY TO THE WEST COAST Northern CA,39% of NOI(1) Seattle,17% of NO
Slide 4: Key Strategic Objectives
KEY STRATEGIC OBJECTIVES Add value through strategic redevelopmentAcquire and develop West Coast properties near transportation nodes in submarkets with highest expected rent growth Drive rent growth on high occupancyInternal value creation through transformational synergiesMaintain strong balance s
Slide 5: Strong West Coast Fundamentals
STRONG WEST COAST FUNDAMENTALS
Slide 6: Robust West Coast Job Growth
Trailing 3 Month Job GrowthAs of April 2016 U.S. Avg. = 1.9% Essex Portfolio Wtd. Avg. = 3.0%(1) ESS Markets Non ESS Markets ROBUST WEST COAST JOB GROWTH WEST COAST JOB GROWTH OUTPACES THE U.S. AND OTHER MAJOR MSA’S Source: BLS (not seasonally adjusted)For those markets included in this graph which
Slide 7: Favorable Demographic Trends Indicate Continued Rental Demand
FAVORABLE DEMOGRAPHIC TRENDS INDICATE CONTINUED RENTAL DEMAND Source: Census FAVORABLE DEMOGRAPHICS U.S. Population by Age Group(in Millions) 6
Slide 8: Strong Personal Income Growth Supports Rent Growth in ESS Markets
U.S. Avg. = 5.5% Essex Portfolio Wtd. Avg. = 6.4%(1) STRONG PERSONAL INCOME GROWTH SUPPORTS RENT GROWTH IN ESS MARKETS STRONG PERSONAL INCOME GROWTH Source: BEA, Rosen Consulting Group, Economy.comFor those markets included in this graph which represents 99% of Essex’s NOI at the Company’s pro rata
Slide 9: Limited Supply in ESS Markets
Source: Census, ESS, Rosen Consulting Group LIMITED SUPPLY IN ESS MARKETS ESS CA SUPPLY AS A PERCENT OF STOCK HAS HISTORICALLY BEEN BELOW 1% AND REMAINS MUTEDRELATIVE TO THE NATION, ESS’ CA MARKETS HAVE LESS HOUSING SUPPLY WITH BETTER JOB GROWTH 8
Slide 10: West Coast Expected to Continue to Outperform
15% RENT GROWTH IN ESS MARKETS IS EXPECTED TO EXCEED THE U.S. AND TOP 20 MSA’S(1) THROUGH 2020 WEST COAST EXPECTED TO CONTINUE TO OUTPERFORM Source: Axiometrics Derived Rents (Actual 3Q 2008-4Q 2015; Forecast 1Q 2016-4Q 2020)(1) Top 20 MSA’s excludes Essex markets, but includes the other major metro
Slide 11: Investment Overview
INVESTMENT OVERVIEW ESSEX
Slide 12: Core Competencies to Create Value
ACQUISITIONSImprove the NAV/sh, cash flow/sh and growth prospects of the CompanyDEVELOPMENTDevelop high-quality tenant desired apartment homes near transportation nodesREDEVELOPMENTFocused on rent justified improvements to maximize NOI and valueCO-INVESTMENT PLATFORMFacilitates growth via private ca
Slide 13: Strategic Capital Allocation
STRATEGIC CAPITAL ALLOCATION INVESTMENT ACTIVITY SINCE THE BEGINNING OF 2015 12 82% of acquisition investments have been in Southern California 67% of disposition activity has been in Northern CaliforniaImproved portfolio by selling older properties situated in non-core locations Acquisitions Proper
Slide 14: Year-to-Date Development Starts
YEAR-TO-DATE DEVELOPMENT STARTS GATEWAY VILLAGE Location Santa Clara, CA Apartment Homes 476 Total Cost $226M Construction Start Q2 2016 Initial Occupancy Q2 2018 13
Slide 15: Development Pipeline Update
Total cost in billions and not ESS share. Includes only those projects under construction as of 3/31/16.Based on initial occupancy.As of 3/31/16. EXPECT TO COMPLETE CONSTRUCTION AND BEGIN LEASING 3 PROJECTS IN 2016 FOR A TOTAL COST OF $270.0M3 ANTICIPATED DEVELOPMENT STARTS FOR 2016 (1 SHOWN IN THE
Slide 16: Financial Performance, Capital Management & 2016 Guidance
FINANCIAL PERFORMANCE, CAPITAL MANAGEMENT & 2016 GUIDANCE
Slide 17: Continued Outperformance vs. Peers
Source: Company Disclosures 2016 is the midpoint of company guidance as of First Quarter 2016 Earnings Releases. Peer average represents 7 multifamily REITs. CONTINUED OUTPERFORMANCE VS. PEERS ESS SAME-PROPERTY NOI GROWTH HAS EXCEEDED THE PEER AVERAGE BY 3.5% ANNUALLY FOR THE LAST 4 YEARSNOI GROWTH
Slide 18: 2016 Same-Property Revenue Growth
2016 SAME-PROPERTY REVENUE GROWTH Same-Property Revenue Growth Q1 2016Actuals April/May 2016Actuals YTD throughMay Full-Year 2016 Guidance Range Southern California 6.1% 6.0% 6.0% 5.25% – 6.25% Northern California 9.1% 7.7% 8.5% 8.50% – 9.50% Seattle 7.0% 7.5% 7.2% 6.00% – 7.00% Total 7.3% 6.9% 7.1%
Slide 19: Hypothetical Capital Allocation Strategy: Stock Buyback
Assumes the stock buyback program is balance sheet neutral.Assumes consensus NAV estimate and not the Company’s internal NAV. Discount to NAV(2) 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Disposition Cap Rate 5.25% ($1.9) ($1.2) ($0.4) $0.5 $1.5 $2.6 5.00% ($1.0) ($0.3) $0.5 $1.4 $2.4 $3.5 4.75% ($0.1) $0.6
Slide 20: Capital Structure & Liquidity Profile
$21.3 BILLION TOTAL CAPITALIZATION DEBT SUMMARY ($ MILLION) 3/31/16 Unsecured Debt Bonds $2,712 Term Loan 225 Line of Credit 164 Total Unsecured Debt 3,101 Mortgage Debt Fixed Rate 1,960 Variable Rate 292 Total Secured Mortgage Debt 2,252 Total Consolidated Debt $5,353 Source: Company DisclosuresAs
Slide 21: Strong Credit Profile
Source: Company DisclosuresUnsecured debt ratio is unsecured assets (excluding investments in joint ventures) divided by unsecured indebtedness.Net Indebtedness is total debt less unamortized premiums, unrestricted cash, and marketable securities.Adjusted EBITDA annualizes the pro forma NOI for curr
Slide 22: Well Laddered Debt Maturity Schedule
Debt Maturities in Millions ($) 4.7% 11.2% 6.6% 12.9% 13.4% 10.6% 6.5% 11.5% 7.7% 9.9% 0.0% 5.0% % of Total Debt Maturing/Year WELL LADDERED DEBT MATURITY SCHEDULE Debt Maturity Schedule(1) (1) As of 3/31/2016. Excludes lines of credit. 2.6% 3.2% 5.3% 3.4% 4.9% 4.3% 3.7% 3.6% 4.0% 3.5% 1.0% 0.9% Wei
Slide 23: 2016 Guidance
2016 Revised Midpoint Change to Midpoint of Initial Guidance National GDP Forecast 2.3% (0.5%) National Job Growth 2.0% No Change ESS Job Growth 2.6% 0.1% ESS Market Rent Growth 6.0% No Change ESS Same-Property Revenue Growth 7.0% No Change ESS Same-Property Expense Growth(1) 3.8% No Change ESS Same
Slide 24: 2016 MSA Level Forecast
All data are based on Essex Property Trust, Inc. forecasts.U.S. Economic Assumptions: 2016 G.D.P. Growth: 2.3% , 2016 Job Growth: 2.0%New Residential Supply: MF reflects Company's internal estimate of actual multifamily deliveries; SF is based on 12 month single family trailing permits reported by t
Slide 25: Appendix
ESSEX PROPERTY TRUST. INC.
Slide 26: Established Track Record of Success
ESTABLISHED TRACK RECORD OF SUCCESS
Slide 27: Investment Strategy Leads to Superior Total Returns
INVESTMENT STRATEGY LEADS TO SUPERIOR TOTAL RETURNS Total Shareholder Return Since IPOYears Ending December 31 An innovative management team responsive to changing market dynamics with the ability to source and structure unique opportunities within the multifamily spaceDisciplined underwriting, rigo
Slide 28: History of Growth in Dividend Per Share
HISTORY OF GROWTH IN DIVIDEND PER SHARE Essex has maintained its commitment to dividend safety and has increased its dividend every year for the past 22 years, representing 283% in dividend growth since the IPO 27
Slide 29: Significant Total FFO Per Share Growth
SIGNIFICANT TOTAL FFO PER SHARE GROWTH (1) Through 2015 actuals. Excludes 2016 estimated growth.(2) 1994 Total FFO represents Proforma FFO due to the Company's IPO in June 1994. Since the IPO, Total FFO has increased 434%, or 8% annually(1)Over the past 5 years Core FFO per Share has increased 96%(1
Slide 30: Substantial Growth Since the Great Recession
2009 2016(1) Cumulative Change CAGR # of Units(2) 27,248 59,441 118.1% 13.3% # of Properties 133 244 83.5% 10.2% Share Price $83.65 $233.86 179.6% 17.9% Equity Market Cap $2.7B $16.0B 492.6% 32.9% Total Market Cap $4.6B $21.3B 363.0% 27.8% Annualized Dividend/Share $4.12 $ 6.40 55.3% 7.3% Core FFO/S
Slide 31: Why West Coast?
WHY WEST COAST? ESSEX
Slide 32: West Coast Significance
WEST COAST SIGNIFICANCE Rank State Q3 2015 GDP(1) ($M) % of Total 1 California 2,448,467 14% 2 Texas 1,639,375 9% 3 New York 1,455,568 8% 4 Florida 893,189 5% 5 Illinois 771,896 4% Source: BEA, IMF(1) Q3 2015 GDP is seasonally adjusted at annual rates. The combined GDP of California and Washington w
Slide 33: Why West Coast Markets?
WHY WEST COAST MARKETS? FAVORABLE DEMOGRAPHICSHigher incomes coupled with a higher cost of home ownershipHigher percentage of educated 25-34 year olds DIVERSE DEMAND DRIVERSHighest GDP in the U.S.Job growth consistently outpaces the U.S.Centers of innovation and drivers of job creation LOW SUPPLYLon
Slide 34: Why West Coast Markets?
WHY WEST COAST MARKETS? Source: DQ News, NWMLS, NAR, Moody’s. Data as of March 2016.Represents the average annual new supply as a % of stock since 1990. ESS Markets U.S. 33
Slide 35: Tech Industry: Then & Now
TECH INDUSTRY: THEN & NOW ESSEX
Slide 36: Tech Today vs. Dot-Com
Source: PWC MoneyTree, Renaissance Capital, US Department of Commerce, Internet World Stats, UF Warrington TECH TODAY VS. DOT-COM THEN (2000) NOW (2015) % OF THE WORLD WITH ACCESS TO INTERNET 7% 46% GLOBAL INTERNET POPULATION 0.4B 3.4B NUMBER OF DEVICES PER PERSON 1 4.3 (by 2020) PRICE-TO-SALES RATI
Slide 37: Wealth Creation Is Accelerating on the West Coast
WEALTH CREATION IS ACCELERATING ON THE WEST COAST SEATTLE SAN FRANCISCO LOS ANGELES BOSTON NEW YORK WASHINGTON D.C. SAN JOSE TECH HUBS ON THE WEST COAST HAVE HELPED FUEL A SHIFT IN ECONOMIC POWER FROM THE EAST COAST TO THE WEST COAST SAN JOSE HAS THE HIGHEST GDP PER CAPITA OF ALL MAJOR U.S. CITIES B
Slide 38: Unicorns vs. Public Tech Companies
UNICORNS Rank Company Total Employees Est. Bay Area/Seattle Employees Est. Market Value ($B)(1) 1 Uber 4,400 2,310 $62.5 2 Airbnb 1,600 850 $27.0 3 Palantir 1,800 1,100 $20.1 4 Pinterest 700 600 $11.2 5 Dropbox 1,200 765 $10.4 6 Theranos 700 530 $9.0 7 Lyft 1,000 630 $5.5 8 Zenefits 1,300 620 $4.5 9
Slide 39: Comparison of Largest Public Tech vs. Non-Tech Firms
COMPARISON OF 10 LARGEST PUBLIC TECH VS. NON-TECH FIRMS TECH FIRMS HAVE CREATED ~$2.0 TRILLION IN EQUITY MARKET VALUE OVER THE PAST 10 YEARS, GROWING 3.0X FASTER THAN NON-TECH FIRMS TECH FIRMS HAVE 2.2X MORE CASH ON HAND THAN NON-TECH FIRMSALL TOP 10 TECH FIRMS AND 3 OF THE TOP NON-TECH FIRMS ARE HE
Slide 40: Large Tech Firms Continue to Hire
LARGE TECH FIRMS CONTINUE TO HIRE Source: Company Disclosures(1) Includes Top 10 Largest Public Tech Firms today that have been public since 2005. TOP 10 LARGE TECH FIRMS GLOBAL EMPLOYMENT GROWTH OVER THE PAST DECADE HAS CONTINUED TO RISEOVER THE TEN YEAR PERIOD, THE COMPOUND ANNUAL GROWTH RATE OF E
Slide 41: Northern California Highlights
Both San Francisco and San Jose have seen strong trailing three month job growth as of April of 4.1% and 3.9%, respectively. Approximately 39% of the month-over-month job gains in San Francisco came from the Professional and Business Services sector. Office absorption in the first quarter in Silicon
Slide 42: Los Angeles Portfolio and Highlights
Source: Axiometrics, Core Logic, JLL US Office Report Q2 2015, Moody's, RCG, SNL, BLS, Census and ESS Disclosures as of March 31, 2016. Trailing 3 months beginning April 2016.Home prices as of March 2016. Home prices in Los Angeles represent the entire county and not ESS submarkets, which had a weig
Slide 43: Orange County Portfolio and Highlights
Source: Axiometrics, Moody's, RCG, SNL, BLS, Census and ESS Disclosures as of March 31, 2016. Trailing 3 months beginning April 2016.Home Prices as of March 2016. U.S. uses NAR 4Q15. ORANGE COUNTY PORTFOLIO ORANGE COUNTY HIGHLIGHTS Orange County had job growth of 3.0% for the trailing three month pe
Slide 44: Seattle Portfolio and Highlights
Source: Axiometrics, Moody's, RCG, SNL, BLS, NWMLS, Census and ESS Disclosures as of March 31, 2016. Trailing 3 months beginning April 2016.Home Prices as of March 2016. U.S. uses NAR 4Q15. SEATTLE HIGHLIGHTS SEATTLE PORTFOLIO Market Data U.S. Seattle Trailing 3 Month Job Growth 1.9% 3.2% Personal I
Slide 45: Commitment to Sustainability
COMMITMENT TO SUSTAINABILITY
Slide 46: Sustainability Initiatives
2016 2015 2014 2009 2008 2006 45 SUSTAINABLE COMMITTMENTFor the past 10 years, Essex has been incorporating green initiatives within its apartment communities SUSTAINABILITY INITIATIVES
Slide 47: Dedication to Sustainable Living
46 DEDICATION TO SUSTAINABLE LIVING SUSTAINABLE INITIATIVES THROUGHOUT THE ORGANIZATION *LEED is a nationally recognized program established by the U.S. Green Building Council to encourage the design of environmentally responsible buildings. GreenPoint Rated is California-specific program through Bu
Slide 48: Notes
NOTES 47
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