Essex Property Trust, Inc. · NYSE:ESS
Essex Property Trust — 2011 NAREIT REIT World
30 slides from Essex Property Trust's conference presentation, Nov 17, 2011
Slide 1: 2011 NAREIT REIT World
Reveal (formerly Millenium at Warner Center) - Los Angeles, CA 2011 NAREIT REIT World November 15-17, 2011
Slide 2: About Essex Property Trust
About Essex Property Trust At IPO, Essex owned 16 multifamily properties (4,410 units); currently, Essex has ownership in 155 apartment communities (32,076 units) § Multifamily REIT dedicated to supply-constrained markets - Formed in 1971 - Initial Public Offering in June 1994 • IPO stock price was
Slide 3: Multifamily Fundamental Drivers
Multifamily Fundamental Drivers 20-34 Year Olds - Lost Fewer Jobs in 2008 -2009, recovering faster Echo Boomers will Drive Demand with Higher Propensity to Rent * Through September 2011 Sources: Marcus & Millichap Research Services, BLS * Source: Green Street Advisors
Slide 4: Residential Supply Distortion
Residential Supply Distortion Major Decline in For-Sale Housing Supply New Home Sales and Recessions Easy Financing Converted Renters to Homeowners
Slide 5: Why Essex is Maintaining the West Coast Focus?
Why Essex is Maintaining the West Coast Focus? § West Coast recovered later, implying rent growth has greater upside potential § Better than average job growth prospects, especially in technology related industries § Most desirable locations due to quality of life § New supply remains muted, <1% ann
Slide 6: The West Coast is Well-Positioned
The West Coast is Well-Positioned Drivers of strong continued demand in Essex markets § California and Washington combined are the 6th largest economy in the world § 52% of Venture Capital spending is in our markets - key driver of growth industries & jobs § Incoming Echo Boomers (64 million) & qual
Slide 7: Drivers of Renter Demand - Population & Jobs
Drivers of Renter Demand - Population & Jobs Source: US Census Source: BLS California Population Trends on the Rebound California Job Growth now outpacing US Trend
Slide 8: The West Coast Recovery is Underway
The West Coast Recovery is Underway September 2009** Most state economies are doing poorly (red = declining) West Coast economies are recovering Snapshots of FRB of Philadelphia Coincident Index* * The FRB of Philadelphia publishes its monthly coincident index as an indicator of the economic health
Slide 9: September Y-Y Job Growth: Selected Metros by % Growth
Source: BLS Strong MSA Job Growth in Essex Portfolio September Y-Y Job Growth: Selected Metros by % Growth (000’s) § Tech/ Energy based markets are leading the way § Positive growth spreading across the country Job Growth: 1.6 million jobs created in U.S. and 130,000 in Essex markets
Slide 10: Education Data for Essex Counties & State/U.S. Data
Source: U.S. Census Essex Attracts Higher Wage Renters Education Data for Essex Counties & State/U.S. Data § Essex’s tech markets have a significantly higher percentage of college educated workers. § These markets should continue to lead job growth § Concentrated in the highest skilled California co
Slide 11: High Single-Family Prices Restrict Homeownership
Source: National Association of Realtors, Dataquick, Essex Homeownership is not Affordable § High Single-Family Prices Restrict Homeownership § Despite the fall in home prices since 2008, prices remain high in supply-constrained markets
Slide 12: Conclusions: Essex Supply Risk Low
Source: U.S. Census Essex Supply Risk Low Conclusions: § Single family supply is low everywhere currently § When single family supply recovers, we expect a sharp rebound in the non-constrained markets § The supply constrained coastal rental markets will have less competition from for-sale as compare
Slide 13: Superior Class 'B' Occupancy in Essex Markets
Superior Class ‘B’ Occupancy in Essex Markets Class ‘B’ Vacancy Rates are Low in Supply- Constrained Markets Vacancy Rate Spread by Class (selected metros) * All vacancies as of 2Q 2011 Sources: Marcus & Millichap Research Services, Reis
Slide 14: Essex Intermediate Goals
Essex Intermediate Goals § To Grow FFO/share consistent with NAV Growth § Focus on delivering growth from operations platform § Target acquisitions generating (at least an) unlevered return of 9% § Target development generating at least 10% unlevered returns and for unfunded commitments to represent
Slide 15: Performance Record: Top REITs by Total Return
Performance Record Top 10 REITs by Total Return* 1 Essex Property Trust, Inc. 1,834 2 Public Storage 1,616 3 Taubman Centers, Inc. 1,549 4 AvalonBay Communities, Inc. 1,489 5 Realty Income Corporation 1,439 6 Simon Property Group, Inc. 1,206 7 Tanger Factory Outlet Centers 1,175 8 First REIT of New
Slide 16: Seattle Market Review
Seattle Market Review Average Rent as a % of Median Household Income (in 000’s) Job Growth vs. Total Residential Supply (% change) Actual Job Growth by Sector: Sept. ‘11 vs. Sept. ‘10 Source: Essex, U.S. Census, BLS
Slide 17: Northern California Market Review (San Jose MSA Example)
Northern California Market Review (San Jose MSA Example) Average Rent as a % of Median Household Income (in 000’s) Job Growth vs. Total Residential Supply (% change) Actual Job Growth by Sector: Sept. ‘11 vs. Sept. ‘10 Gap = 3% of current rents Source: Essex, U.S. Census, BLS
Slide 18: Southern California Market Review (Los Angeles MSA Example)
Southern California Market Review (Los Angeles MSA Example) Average Rent as a % of Median Household Income (in 000’s) Job Growth vs. Total Residential Supply (% change) Actual Job Growth by Sector: Sept. ‘11 vs. Sept. ‘10 Gap = 9.6% of current rents Source: Essex, U.S. Census, BLS
Slide 19: Southern California Market Review
Southern California Market Review Source: BLS Source: Axiometrics *LA/Orange Numerical Average Occupancy breaks through 95% for both markets for the first time since q4 2007. Essex believes with occupancy rates above 95% pricing power shifts to the landlord
Slide 20: Multiple Investment Platforms
Multiple Investment Platforms § Development - Upgrading the portfolio - Over the past 25-years, we have delivered over 8,500 units through our development program § Acquisitions - Accelerating portfolio growth - Improving cash flows and total per share returns - Targeting markets with high rent grow
Slide 21: Development portfolio by region
1 Corbella (169 units) $23.8 $1,045 2 Elevation (157 units) $22.4 $1,141 3 Courtyard off Main (109 units) $30.1 $1,601 4 Joule (295 units) $85.4 $1,548 5 The Bernard (63 units) $15.0 $1,335 6 Redmond Hill (882 units) $151.3 $1,136 7 Queen Anne (275 units) $79.1 - 8 Fourth & U (171 units) $62.3 $1,67
Slide 22: Property photos
Anavia - Anaheim, CA 101 San Fernando - San Jose, CA Essex Skyline - Santa Ana, CA 416 on Broadway - Glendale, CA Santee Court - Los Angeles, CA Elevation - Redmond, WA Bella Villagio - San Jose, CA Corbella at Juanita Bay - Kirkland, WA
Slide 23: Active Development Pipeline and Track Record
Estimated Units Estimated retail sq. feet Incurred to Date Estimated Total Cost Construction Complete Project Name Location Via Sunnyvale, CA 284 40,000 $101.2 $112.0 Oct-11 Queen Anne (JV) Seattle, WA 275 17,000 $28.5 $79.1 Apr-13 West Dublin (JV) Dublin, CA 309 - $17.9 $94.5 Jun-13 Cadence - Phase
Slide 24: Redevelopment
Highridge - Rancho Palos Verde, CA 255 units $16.6 million renovation cost $65,000 cost per unit 9.25% return Redevelopment Before After Before After The Pointe at Cupertino - Cupertino, CA 116 units $8.0 million renovation cost $69,000 cost per unit 9.5% return § Capitalize on the strategy of ownin
Slide 25: Fund & Joint Ventures
Fund & Joint Ventures The co-investment program facilitates external growth via private capital, provides a diversified source of equity and enhances risk adjusted returns. This platform represents 18.2% of the units in Essex’s total portfolio. Current Co-Investment Programs Consists of: § Fund II -
Slide 26: Conservatively Proportioned and Flexible Balance Sheet
Conservatively Proportioned and Flexible Balance Sheet Cost of Debt 5.5% 4.9% 5.0% 5.3% 5.2% 4.9% Essex is 30% leveraged on total market capitalization with a strong interest coverage ratio of over 2.5x, staggered maturities and a BBB S&P corporate rating. Debt Maturities Consolidated Debt ($MM): $2
Slide 27: 2011 Guidance (updated November 2, 2011)
2011 Guidance (updated November 2, 2011) FFO Per Share Guidance $5.66- $5.74 Same Property Revenue Growth (Midpoint) 3.9% Same Property NOI Growth (Midpoint) 5.4% Market Expectations Market Market Market Job Growth Rent Growth Occupancy Southern California 0.9% 4.8% 95.2% Northern California 1.6% 9.
Slide 28: Monthly Revenues -- Same-Property
Monthly Revenues -- Same-Property September October November--forecast December-forecast Quarter ended December 31 Quarterly Operating Expenses--same property : Real Estate Taxes Administration Maintenance & Repairs (includes Turnover) Utilities Management Fees, Insurance and Other Quarter ended Dec
Slide 29: Notes
NOTES ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ______________
Slide 30: Via - Sunnyvale, CA on Broadway - Glendale, CA Joule - Seattle, WA For
Via - Sunnyvale, CA 416 on Broadway - Glendale, CA Joule - Seattle, WA For additional information, please contact the Company’s Investor Relations department at (650) 849-1600. Fourth & U - Berkeley, CA Axis 2300 - Irvine, CA Arbors at Park Rose - Oxnard, CA