Revenues
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Southern California -4% to -5%
Northern California -5% to -6%
Seattle Metro -9% to -11%
The midpoint of the Company's 2010 total same-property portfolio revenues
guidance is forecasted to be a decline of -5.5% compared to actual 2009
results. This projection is based on a decrease in occupancy of 1%, as
compared to the industry-leading occupancy rates of 97% that were reported
in 2009. In addition, the Company's same-property revenue projection
considers that scheduled or "in-place" rents exceed market rents by
approximately 3.8% at December 31, 2009, and that other income will decline
in 2010 due to our expectation for lower levels of lease-break fees given a
more stable economic outlook for 2010.
The 2010 guidance for same-property portfolio operating expenses is
forecasted to be between zero and a 1.0% increase, with a decline in the
same-property portfolio net operating income between -8.5% and -9.5%
compared to actual 2009 results.
The projected 2010 non-revenue generating capital expenditures that are
needed to extend the useful life of the Company's apartment communities are
estimated at $1,100 per unit.
Acquisitions & Dispositions
The 2010 acquisition plan targets the purchase of up to $300 million of
real estate, to be financed from the dispositions of up to $100 million in
real estate, joint venture capital, cash and marketable securities, and a
combination of equity and debt.
Development & Redevelopment
In 2010, the Company expects to incur approximately $70 million of
development costs on its balance sheet. Three development projects will be
in lease-up during 2010. Two of these communities (Fourth & U in Berkeley,
California and Joule Broadway in Seattle, Washington), will commence
lease-up activities in April 2010, and DuPont Lofts in Irvine, California
will commence lease-up activities in June 2010. The Company expects that
property operating expenses needed to achieve stabilization for the three
development projects being leased-up and the cessation of capitalizing
interest will result in non-recurring charges to FFO of approximately $4
million to $5 million in 2010. The 2010 guidance also assumes the
acquisition and lease-up of a condominium project that the Company will
operate as an apartment community that will result in non-recurring charges
to FFO of an additional $3 million to $5 million.
Approximately $30 million will be invested in redevelopment activities
during 2010. The average yield from the redevelopment program is estimated
at 8% to 10% (redevelopment related net operating income increases divided
by incremental redevelopment costs).
In 2010, development and redevelopment activities will be funded by the
Company's lines of credit and construction loans. The Company expects to
capitalize $11 million to $12 million of interest cost on the development
pipeline.
Other estimates used in providing 2010 guidance include:
-- Interest cost (including amortization of loan fees) of approximately
$86 million, net of capitalized interest assuming an average borrowing
cost of 5.5%. The net interest cost assumes net incremental proceeds of
$50 million from new long-term financing and the refinance of maturing
obligations.
-- Corporate general and administrative ("G&A") expenses of approximately
$23 million.
-- Interest and other income of approximately $13 million is expected to
be generated from marketable securities, cash balances, and external
growth activities.
-- Gains from the sale of marketable securities are expected to generate
approximately $5 million of FFO during the first quarter of 2010.
-- Management fee revenue from Fund II of $3.5 million.
-- Weighted average shares of common stock outstanding estimated at 31.3
million shares.
Essex Property Trust, Inc., located in Palo Alto, California and traded on
the New York Stock Exchange (ESS), is a fully integrated real estate
investment trust ("REIT") that acquires, develops, redevelops, and manages
apartment communities in selected West Coast communities. The Company
currently has ownership interests in 133 apartment communities 27,248
units, and has 581 units in various stages of active development.
Additional information about the Company can be found on the Company's web
site at www.essexpropertytrust.com. If you would like to receive future
press releases via e-mail-please send a request to
investors@essexpropertytrust.com.
Forward-Looking Statements: The statements, which are not historical facts,
contained in this release are forward-looking statements including
statements regarding the Company's beliefs and expectations relating to
2010 annual per diluted share GAAP earnings and FFO; 2010 same property net
operating income; 2010 interest expense; apartment market conditions; 2010
same-property operations; 2010 operating expenses; 2010 non-revenue
generating capital expenditures; 2010 disposition activities; 2010 equity
capital transactions; 2010 development and redevelopment activities, costs
and yields; 2010 G&A expenses; first quarter other income; 2010 management
fee revenue; the weighted average shares outstanding; growth in GDP and
non-farm employment; and 2009 interest rates and costs and refinancing.
These forward-looking statements involve risks and uncertainties which
could cause actual results to differ materially from such forward-looking
statements including, but not limited to, change in the Company's strategy,
downturns in the real estate markets in which the Company owns properties,
the effect of changes in economic conditions, the effect of changes in
interest rates, the impact of competition and competitive pricing, the
results of financing efforts, and other risks detailed in the Company's SEC
filings. All forward-looking statements and reasons why results may differ
included in this press release are made as of the date hereof, and we
assume no obligation to update any such forward-looking statement or reason
why actual results may differ. For more details relating to risks and
uncertainties that could actual results to differ materially from those
anticipated in our forward-looking statements, please refer to our SEC
filings, including our Report on Form 10-K for the year ended December 31,
2008.
Contact Information: Contact: Nicole Culbertson (650) 849-1649