Essex Property Trust, Inc. · NYSE:ESS
Essex Property Trust — Citigroup CEO Conference 2012
32 slides from Essex Property Trust's conference presentation, Mar 12, 2012
Slide 1: Citigroup CEO Conference March 12-14, 2012
Citigroup CEO Conference March 12-14, 2012 Via - Sunnyvale, CA
Slide 2: Safe Harbor Disclosure
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: Table of Contents
Table of Contents Page Section I. About Essex & Performance Record 3-6 Section II. National Fundamental Drivers 7-9 Section III. West Coast Apartment Outlook 10-20 Section IV. Company Information 21-30
Slide 4: About Essex Property Trust
Section I. About Essex & Performance Record About Essex Property Trust At IPO, Essex owned 16 multifamily properties (4,410 units); currently, Essex has ownership in 160 apartment communities (32,913 units) § Multifamily REIT dedicated to supply-constrained markets - Formed in 1971 - Initial Public
Slide 5: Performance Record
Performance Record Source: NAREIT. Represents the value of a $100 investment and reinvestment of all dividends.
Slide 6: In 4Q 2011 Industry Leading NOI Growth
In 4Q 2011 Industry Leading NOI Growth Accelerating and Industry Leading Same-Property NOI Growth Source: Peer group includes 11 multifamily REITs
Slide 7: National Fundamental Drivers
Section II. National Fundamental Drivers Job growth accelerating and jobless claims abating 20-34 year olds is a key renter cohort § Lost fewer jobs in the recession § Gaining a greater percentage of jobs during the recovery 2008-2009 Share of Job Losses 2010-2011* Share of Job Gains *Through Decemb
Slide 8: National Multifamily Fundamental Drivers
National Multifamily Fundamental Drivers Echo Boomers will Drive Demand with Higher Propensity to Rent Source: U.S. Census Bureau, Robert Charles Lesser & Co., and Green Street Advisors.
Slide 9: Residential Supply Distortion
Residential Supply Distortion The “Distressing Gap” for homebuilders has benefited multifamily owners as it indicates home values are too low to support for-sale construction. Thus, we believe that new home construction will not return in a meaningful way until distressed home sales abate. The best
Slide 10: Why Essex is Maintaining the West Coast Focus?
Section III. West Coast Apartment Outlook Why Essex is Maintaining the West Coast Focus? Critical Factors: § West Coast rents declined further and recovered later relative to other major U.S. metros § Better than average job growth prospects, especially in high paying industries § New supply remains
Slide 11: The West Coast is a Dominant Economic Player
The West Coast is a Dominant Economic Player Drivers of strong continued demand in Essex markets § California and Washington combined are the 6th largest economy in the world § 58% of Venture Capital spending is in our markets - key driver of growth industries & jobs § Incoming Echo Boomers (64 mill
Slide 12: California Outperforms U.S. Average - Population & Jobs
California Outperforms U.S. Average - Population & Jobs Source: US Census Source: BLS 6 Months of Outperformance CA Outperforms
Slide 13: Essex Portfolio Contains Leading Job Growth Markets
Essex Portfolio Contains Leading Job Growth Markets Top 20 Markets Absolute Change % Growth San Jose 25.7 3.0% Houston 75.8 3.0% San Diego 26.9 2.2% San Francisco 19.7 2.1% Inland Empire 22.9 2.0% Miami 18.2 1.8% Jacksonville 10.6 1.8% Orange County 24.6 1.8% Ventura 4.6 1.7% Dallas Ft Worth 45.7 1.
Slide 14: Essex Attracts Higher Wage Renters
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 and personal income growth § Concentrated in the highest skilled California co
Slide 15: High Single-Family Prices Restrict Homeownership
Source: National Association of Realtors, Dataquick, Essex Expensive Single Family Housing § High Single-Family Prices Restrict Homeownership § Despite the fall in home prices since 2008, prices remain high in supply-constrained markets
Slide 16: Conclusions: For-Sale Supply Risk Low
Source: U.S. Census For-Sale Supply Risk Low Conclusions: § When single family supply recovers, we expect a sharp rebound in the non-constrained markets § The coastal rental markets will have less competition from for-sale as compared to 2003 - 2007, due to more restrictive lending standards and hig
Slide 17: 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: Dec. ‘11 vs. Dec. ‘10 Gap = 7.5% of current rents Source: Essex, U.S. Census, BLS Office Absorption: 2.0% in 2011 Total Jobs Created (000’s)
Slide 18: Northern California Market Review
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: Dec. ‘11 vs. Dec. ‘10 Gap = 1% of current rents Source: Essex, U.S. Census, BLS Office Absorption: 3.9% i
Slide 19: Southern California Market Review
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: Dec. ‘11 vs. Dec. ‘10 Gap = 9.7% of current rents Source: Essex, U.S. Census, BLS Office Absorption: 0
Slide 20: Southern California Market Review
Southern California Market Review Source: Axiometrics, Realfacts *LA/Orange Numerical Average Occupancy breaks through 95% for both markets for the first time since Q4 2007.
Slide 21: Essex Intermediate Goals
Section IV. Company Information Essex Intermediate Goals § To Grow FFO/share, consistent with NAV Growth, in the top tier of multifamily REITs • Focus on improving operating platform • Target acquisitions generating an unlevered return of 8.5-9% • Target development generating at least 10% unlevered
Slide 22: Multiple Investment Platforms
Multiple Investment Platforms Committed approximately $2 billion of investments in acquisitions, developments, redevelopments and co-investments since the beginning of 2010 § Acquisitions - Targeting markets with high rent growth potential to enhance the quality of the portfolio and to accelerate po
Slide 23: Active Acquirer Early in the Cycle
Active Acquirer Early in the Cycle § The 2010 and 2011 acquisitions are expected to generate approximately a 5.5% yield in 2012 § Upgraded the quality of our portfolio: § Average age of new investments is below the portfolio average § Average rents are higher as compared to the existing portfolio Re
Slide 24: Recent Acquisitions and Developments
Essex Skyline - Santa Ana, CA 416 on Broadway - Glendale, CA Santee Court - Los Angeles, CA Delano - Redmond, WA Bon Terra - Redmond, WA Reveal - Woodland Hills, CA Anavia - Orange, CA Allegro - Valley Village, CA
Slide 25: Development Pipeline
Estimated Units Estimated retail sq. feet Incurred to Date Estimated Total Cost Construction Complete Project Name Location Queen Anne (JV) Seattle, WA 275 17,000 $33.5 $79.1 Mar-13 Epic (JV) San Jose, CA 280 $36.7 $98.6 May-13 West Dublin (JV) Dublin, CA 309 $23.1 $94.5 Jun-13 Santa Monica (JV) Wes
Slide 26: 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 27: 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 19% of the units in Essex’s total portfolio. Current Co-Investment Programs Consists of: § Fund II - 1
Slide 28: Conservatively Proportioned and Flexible Balance Sheet
Conservatively Proportioned and Flexible Balance Sheet § Leverage of 34% on a debt to total market capitalization basis, one of the lowest within the multifamily peer group. § Debt to adjusted EBITDA is expected to be approximately 7.0X by year-end 2012. § Nearly $400 million in available liquidity
Slide 29: 2012 Guidance
2012 Guidance FFO Per Share Guidance $6.50-$6.80 Same Property Revenue Growth (Midpoint) 6.0% Same Property NOI Growth of the Consolidated portfolio (Midpoint) * 7.7% Market Expectations Market Market Market Job Growth Rent Growth Occupancy Southern California 1.2% 6.2% 95.6% Northern California 1.7
Slide 30: Key Strengths
Key Strengths § Attractive market fundamental in our West Coast markets § Strong growth prospects § Internal growth is forecast at 7.7% in ’12 § External growth through development and acquisitions § Strong balance sheet with ample financial flexibility to take advantage of attractive opportunities
Slide 31: Notes
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Slide 32: 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