Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 27, 2016 | |
Entity Information [Line Items] | ||
Entity Registrant Name | ESSEX PROPERTY TRUST INC | |
Entity Central Index Key | 920,522 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 65,517,428 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Essex Portfolio, L.P. [Member] | ||
Entity Information [Line Items] | ||
Entity Registrant Name | ESSEX PORTFOLIO LP | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Rental properties: | ||
Land and land improvements | $ 2,573,923 | $ 2,522,842 |
Buildings and improvements | 10,139,823 | 9,808,627 |
Total rental properties | 12,713,746 | 12,331,469 |
Less accumulated depreciation | (2,269,834) | (1,949,892) |
Net real estate | 10,443,912 | 10,381,577 |
Real estate under development | 170,972 | 242,326 |
Co-investments | 1,122,913 | 1,036,047 |
Real estate held for sale, net | 0 | 26,879 |
Total real estate | 11,737,797 | 11,686,829 |
Cash and cash equivalents-unrestricted | 195,167 | 29,683 |
Cash and cash equivalents-restricted | 15,888 | 93,372 |
Marketable securities | 153,703 | 137,485 |
Notes and other receivables | 22,941 | 19,285 |
Prepaid expenses and other assets | 51,700 | 38,437 |
Total assets | 12,177,196 | 12,005,091 |
Liabilities | ||
Unsecured debt, net | 3,375,610 | 3,088,680 |
Mortgage notes payable, net | 2,209,077 | 2,215,077 |
Lines of credit, net | 0 | 11,707 |
Accounts payable and accrued liabilities | 185,185 | 131,415 |
Construction payable | 34,918 | 40,953 |
Dividends payable | 110,223 | 100,266 |
Other liabilities | 34,172 | 34,518 |
Total liabilities | 5,949,185 | 5,622,616 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 44,109 | 45,452 |
Equity: | ||
Common stock; $0.0001 par value, 670,000,000 shares authorized; 65,522,585 and 65,379,359 shares issued and outstanding, respectively | 6 | 6 |
Cumulative redeemable 7.125% Series H preferred stock at liquidation value | 0 | 73,750 |
Additional paid-in capital | 7,024,827 | 7,003,317 |
Distributions in excess of accumulated earnings | (896,120) | (797,329) |
Accumulated other comprehensive loss, net | (40,095) | (42,011) |
Total stockholders' equity | 6,088,618 | 6,237,733 |
Noncontrolling interest | 95,284 | 99,290 |
Total equity | 6,183,902 | 6,337,023 |
Total liabilities and equity | 12,177,196 | 12,005,091 |
Essex Portfolio, L.P. [Member] | ||
Rental properties: | ||
Land and land improvements | 2,573,923 | 2,522,842 |
Buildings and improvements | 10,139,823 | 9,808,627 |
Total rental properties | 12,713,746 | 12,331,469 |
Less accumulated depreciation | (2,269,834) | (1,949,892) |
Net real estate | 10,443,912 | 10,381,577 |
Real estate under development | 170,972 | 242,326 |
Co-investments | 1,122,913 | 1,036,047 |
Real estate held for sale, net | 0 | 26,879 |
Total real estate | 11,737,797 | 11,686,829 |
Cash and cash equivalents-unrestricted | 195,167 | 29,683 |
Cash and cash equivalents-restricted | 15,888 | 93,372 |
Marketable securities | 153,703 | 137,485 |
Notes and other receivables | 22,941 | 19,285 |
Prepaid expenses and other assets | 51,700 | 38,437 |
Total assets | 12,177,196 | 12,005,091 |
Liabilities | ||
Unsecured debt, net | 3,375,610 | 3,088,680 |
Mortgage notes payable, net | 2,209,077 | 2,215,077 |
Lines of credit, net | 0 | 11,707 |
Accounts payable and accrued liabilities | 185,185 | 131,415 |
Construction payable | 34,918 | 40,953 |
Dividends payable | 110,223 | 100,266 |
Other liabilities | 34,172 | 34,518 |
Total liabilities | 5,949,185 | 5,622,616 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 44,109 | 45,452 |
Equity: | ||
General Partner | 6,128,713 | 6,279,744 |
Common equity (2,219,268 and 2,214,545 units issued and outstanding, respectively) | 45,493 | 47,235 |
Accumulated other comprehensive loss, net | (37,617) | (39,598) |
Total partners' capital | 6,136,589 | 6,287,381 |
Noncontrolling interest | 47,313 | 49,642 |
Total capital | 6,183,902 | 6,337,023 |
Total liabilities and equity | 12,177,196 | 12,005,091 |
Essex Portfolio, L.P. [Member] | General Partner [Member] | Common Capital [Member] | ||
Equity: | ||
General Partner | 6,128,713 | 6,208,535 |
Total capital | 6,128,713 | 6,208,535 |
Essex Portfolio, L.P. [Member] | General Partner [Member] | Preferred Capital [Member] | ||
Equity: | ||
General Partner | 0 | 71,209 |
Total capital | $ 0 | $ 71,209 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 670,000,000 | 670,000,000 |
Common stock, shares issued (in shares) | 65,522,585 | 65,379,359 |
Common stock, shares outstanding (in shares) | 65,522,585 | 65,379,359 |
Series H Preferred Interest [Member] | ||
Preferred stock, stated interest percentage | 7.125% | 7.125% |
Essex Portfolio, L.P. [Member] | Series H Preferred Interest [Member] | ||
Preferred interest, liquidation value | $ 0 | $ 73,750 |
Preferred stock, stated interest percentage | 7.125% | 7.125% |
Essex Portfolio, L.P. [Member] | General Partner [Member] | ||
Common stock, shares issued (in shares) | 65,522,585 | 65,379,359 |
Common stock, shares outstanding (in shares) | 65,522,585 | 65,379,359 |
Essex Portfolio, L.P. [Member] | Limited Partners [Member] | ||
Common stock, shares issued (in shares) | 2,219,268 | 2,214,545 |
Common stock, shares outstanding (in shares) | 2,219,268 | 2,214,545 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||||
Rental and other property | $ 327,078,000 | $ 302,522,000 | $ 958,818,000 | $ 876,852,000 |
Management and other fees from affiliates | 2,093,000 | 2,104,000 | 6,145,000 | 6,809,000 |
Total revenues | 329,171,000 | 304,626,000 | 964,963,000 | 883,661,000 |
Expenses: | ||||
Property operating, excluding real estate taxes | 63,781,000 | 60,528,000 | 185,390,000 | 173,547,000 |
Real estate taxes | 35,580,000 | 33,591,000 | 104,540,000 | 97,820,000 |
Depreciation and amortization | 110,467,000 | 116,308,000 | 329,847,000 | 336,946,000 |
General and administrative | 9,647,000 | 11,129,000 | 28,527,000 | 31,223,000 |
Merger and integration expenses | 0 | 0 | 0 | 3,798,000 |
Acquisition and investment related costs | 284,000 | 381,000 | 1,379,000 | 1,357,000 |
Total expenses | 219,759,000 | 221,937,000 | 649,683,000 | 644,691,000 |
Earnings from operations | 109,412,000 | 82,689,000 | 315,280,000 | 238,970,000 |
Interest expense | (56,693,000) | (50,053,000) | (164,727,000) | (148,401,000) |
Total return swap income | 3,143,000 | 0 | 9,080,000 | 0 |
Interest and other income | 4,943,000 | 7,367,000 | 19,560,000 | 14,820,000 |
Equity income in co-investments | 9,568,000 | 7,179,000 | 38,932,000 | 15,962,000 |
Loss on early retirement of debt | (211,000) | 0 | (211,000) | 0 |
Gain on sale of real estate and land | 0 | 0 | 20,258,000 | 7,112,000 |
Deferred tax expense on gain on sale of real estate and land | 0 | 0 | (4,279,000) | 0 |
Gain on remeasurement of co-investment | 0 | 0 | 0 | 34,014,000 |
Net income | 70,162,000 | 47,182,000 | 233,893,000 | 162,477,000 |
Net income attributable to noncontrolling interest | (4,601,000) | (3,545,000) | (14,483,000) | (11,295,000) |
Net income attributable to controlling interest | 65,561,000 | 43,637,000 | 219,410,000 | 151,182,000 |
Dividends to preferred stockholders | 0 | (1,314,000) | (1,314,000) | (3,941,000) |
Excess of redemption value of preferred stock over the carrying value | 0 | 0 | (2,541,000) | 0 |
Net income available to common stockholders | 65,561,000 | 42,323,000 | 215,555,000 | 147,241,000 |
Comprehensive income | 73,173,000 | 46,970,000 | 235,874,000 | 163,609,000 |
Comprehensive income attributable to noncontrolling interest | (4,700,000) | (3,538,000) | (14,548,000) | (11,332,000) |
Comprehensive income attributable to controlling interest | $ 68,473,000 | $ 43,432,000 | $ 221,326,000 | $ 152,277,000 |
Basic: | ||||
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.29 | $ 2.28 |
Weighted average number of shares outstanding during the period (in shares) | 65,507,669 | 65,138,868 | 65,455,004 | 64,714,994 |
Diluted: | ||||
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.29 | $ 2.27 |
Weighted average number of shares outstanding during the period (in shares) | 65,617,551 | 65,297,550 | 65,578,661 | 64,892,770 |
Dividends per common share (in dollars per share) | $ 1.60 | $ 1.44 | $ 4.8 | $ 4.32 |
Essex Portfolio, L.P. [Member] | ||||
Revenues: | ||||
Rental and other property | $ 327,078,000 | $ 302,522,000 | $ 958,818,000 | $ 876,852,000 |
Management and other fees from affiliates | 2,093,000 | 2,104,000 | 6,145,000 | 6,809,000 |
Total revenues | 329,171,000 | 304,626,000 | 964,963,000 | 883,661,000 |
Expenses: | ||||
Property operating, excluding real estate taxes | 63,781,000 | 60,528,000 | 185,390,000 | 173,547,000 |
Real estate taxes | 35,580,000 | 33,591,000 | 104,540,000 | 97,820,000 |
Depreciation and amortization | 110,467,000 | 116,308,000 | 329,847,000 | 336,946,000 |
General and administrative | 9,647,000 | 11,129,000 | 28,527,000 | 31,223,000 |
Merger and integration expenses | 0 | 0 | 0 | 3,798,000 |
Acquisition and investment related costs | 284,000 | 381,000 | 1,379,000 | 1,357,000 |
Total expenses | 219,759,000 | 221,937,000 | 649,683,000 | 644,691,000 |
Earnings from operations | 109,412,000 | 82,689,000 | 315,280,000 | 238,970,000 |
Interest expense | (56,693,000) | (50,053,000) | (164,727,000) | (148,401,000) |
Total return swap income | 3,143,000 | 0 | 9,080,000 | 0 |
Interest and other income | 4,943,000 | 7,367,000 | 19,560,000 | 14,820,000 |
Equity income in co-investments | 9,568,000 | 7,179,000 | 38,932,000 | 15,962,000 |
Loss on early retirement of debt | (211,000) | 0 | (211,000) | 0 |
Gain on sale of real estate and land | 0 | 0 | 20,258,000 | 7,112,000 |
Deferred tax expense on gain on sale of real estate and land | 0 | 0 | (4,279,000) | 0 |
Gain on remeasurement of co-investment | 0 | 0 | 0 | 34,014,000 |
Net income | 70,162,000 | 47,182,000 | 233,893,000 | 162,477,000 |
Net income attributable to noncontrolling interest | (2,378,000) | (2,074,000) | (7,026,000) | (6,180,000) |
Net income attributable to controlling interest | 67,784,000 | 45,108,000 | 226,867,000 | 156,297,000 |
Dividends to preferred stockholders | 0 | (1,314,000) | (1,314,000) | (3,941,000) |
Excess of redemption value of preferred stock over the carrying value | 0 | 0 | (2,541,000) | 0 |
Net income available to common stockholders | 67,784,000 | 43,794,000 | 223,012,000 | 152,356,000 |
Comprehensive income | 73,173,000 | 46,970,000 | 235,874,000 | 163,609,000 |
Comprehensive income attributable to noncontrolling interest | (2,378,000) | (2,074,000) | (7,026,000) | (6,180,000) |
Comprehensive income attributable to controlling interest | $ 70,795,000 | $ 44,896,000 | $ 228,848,000 | $ 157,429,000 |
Basic: | ||||
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.30 | $ 2.28 |
Weighted average number of shares outstanding during the period (in shares) | 67,728,621 | 67,316,498 | 67,679,240 | 66,896,293 |
Diluted: | ||||
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.29 | $ 2.27 |
Weighted average number of shares outstanding during the period (in shares) | 67,838,503 | 67,475,180 | 67,802,897 | 67,074,069 |
Dividends per common share (in dollars per share) | $ 1.6 | $ 1.44 | $ 4.8 | $ 4.32 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Equity - 9 months ended Sep. 30, 2016 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Distributions in Excess of Accumulated Earnings [Member] | Accumulated Other Comprehensive Loss, Net [Member] | Noncontrolling Interest [Member] | Series H Preferred Stock [Member] |
Balance at period beginning at Dec. 31, 2015 | $ 6,337,023 | $ 6 | $ 7,003,317 | $ (797,329) | $ (42,011) | $ 99,290 | $ 73,750 |
Balances (in shares) at Dec. 31, 2015 | 65,379 | 2,950 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 233,893 | 219,410 | 14,483 | ||||
Change in fair value of derivatives and amortization of swap settlements | 3,481 | 3,367 | 114 | ||||
Change in fair value of marketable securities, net | (1,500) | (1,451) | (49) | ||||
Issuance of common stock under: | |||||||
Stock option and restricted stock plans, net | 17,878 | 17,878 | |||||
Stock option and restricted stock plans, net (in shares) | 130 | ||||||
Sale of common stock, net | (382) | (382) | |||||
Equity based compensation costs | 4,436 | 2,662 | 1,774 | ||||
Redemption of Series H preferred stock | (73,750) | 2,541 | (2,541) | $ (73,750) | |||
Redemption of Series H preferred stock (in shares) | (2,950) | ||||||
Changes in the redemption value of redeemable noncontrolling interest | 1,343 | 785 | 558 | ||||
Distributions to noncontrolling interest | (20,425) | (20,425) | |||||
Redemptions of noncontrolling interest | (2,435) | (1,974) | (461) | ||||
Redemptions of noncontrolling interest (in shares) | 14 | ||||||
Common and preferred stock dividends | (315,660) | (315,660) | |||||
Balance at period end at Sep. 30, 2016 | $ 6,183,902 | $ 6 | $ 7,024,827 | $ (896,120) | $ (40,095) | $ 95,284 | $ 0 |
Balances (in shares) at Sep. 30, 2016 | 65,523 | 0 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Capital - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Net income | $ 70,162 | $ 233,893 |
Change in fair value of derivatives and amortization of swap settlements | 3,481 | |
Change in fair value of marketable securities, net | (1,500) | |
Issuance of common stock under: | ||
Sale of common stock by general partner, net | (382) | |
Changes in the redemption value of redeemable noncontrolling interest | 1,343 | |
Distributions to noncontrolling interest | (20,425) | |
Redemptions | (2,435) | |
Essex Portfolio, L.P. [Member] | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Balance at period beginning | 6,337,023 | |
Net income | 70,162 | 233,893 |
Change in fair value of derivatives and amortization of swap settlements | 3,481 | |
Change in fair value of marketable securities, net | (1,500) | |
Issuance of common stock under: | ||
General partner's stock based compensation, net | 17,878 | |
Sale of common stock by general partner, net | (382) | |
Equity based compensation costs | 4,436 | |
Reclassification of Series H preferred stock | (73,750) | |
Changes in the redemption value of redeemable noncontrolling interest | 1,343 | |
Distributions to noncontrolling interest | (9,502) | |
Redemptions | (2,435) | |
Distributions declared | (326,583) | |
Balance at period end | 6,183,902 | 6,183,902 |
Essex Portfolio, L.P. [Member] | Accumulated Other Comprehensive Loss, Net [Member] | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Balance at period beginning | (39,598) | |
Change in fair value of derivatives and amortization of swap settlements | 3,481 | |
Change in fair value of marketable securities, net | (1,500) | |
Issuance of common stock under: | ||
Balance at period end | (37,617) | (37,617) |
Essex Portfolio, L.P. [Member] | Noncontrolling Interest [Member] | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Balance at period beginning | 49,642 | |
Net income | 7,026 | |
Issuance of common stock under: | ||
Changes in the redemption value of redeemable noncontrolling interest | 558 | |
Distributions to noncontrolling interest | (9,502) | |
Redemptions | (411) | |
Balance at period end | 47,313 | 47,313 |
Essex Portfolio, L.P. [Member] | General Partner [Member] | Common Equity [Member] | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Balance at period beginning | $ 6,208,535 | |
Balance at period beginning (in shares) | 65,379 | |
Net income | $ 215,555 | |
Issuance of common stock under: | ||
General partner's stock based compensation, net | $ 17,878 | |
General partner's stock based compensation, net (in shares) | 130 | |
Sale of common stock by general partner, net | $ (382) | |
Equity based compensation costs | 2,662 | |
Changes in the redemption value of redeemable noncontrolling interest | 785 | |
Redemptions | $ (1,974) | |
Redemptions (in shares) | 14 | |
Distributions declared | $ (314,346) | |
Balance at period end | $ 6,128,713 | $ 6,128,713 |
Balance at period end (in shares) | 65,523 | 65,523 |
Essex Portfolio, L.P. [Member] | General Partner [Member] | Preferred Equity [Member] | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Balance at period beginning | $ 71,209 | |
Net income | 3,855 | |
Issuance of common stock under: | ||
Reclassification of Series H preferred stock | (73,750) | |
Distributions declared | (1,314) | |
Balance at period end | $ 0 | 0 |
Essex Portfolio, L.P. [Member] | Limited Partner [Member] | Common Equity [Member] | ||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||
Balance at period beginning | $ 47,235 | |
Balance at period beginning (in shares) | 2,215 | |
Net income | $ 7,457 | |
Issuance of common stock under: | ||
Equity based compensation costs | $ 1,774 | |
Equity based compensation costs (in shares) | 18 | |
Redemptions | $ (50) | |
Redemptions (in shares) | (14) | |
Distributions declared | $ (10,923) | |
Balance at period end | $ 45,493 | $ 45,493 |
Balance at period end (in shares) | 2,219 | 2,219 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 233,893 | $ 162,477 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 329,847 | 336,946 |
Amortization of discount on marketable securities and other investments | (10,771) | (9,012) |
Amortization of (premium) discount and debt financing costs, net | (11,432) | (15,064) |
Gain on sale of marketable securities | (2,876) | (598) |
Company's share of gain on the sales of co-investments | (13,046) | 0 |
Earnings from co-investments | (25,886) | (15,962) |
Operating distributions from co-investments | 45,342 | 28,632 |
Gain on the sale of real estate and land | (20,258) | (7,112) |
Equity-based compensation | 4,436 | 5,511 |
Loss on early retirement of debt | 211 | 0 |
Gain on remeasurement of co-investments | 0 | (34,014) |
Changes in operating assets and liabilities: | ||
Prepaid expenses, receivables and other assets | 656 | (1,851) |
Accounts payable and accrued liabilities | 49,739 | 36,480 |
Other liabilities | 420 | 1,475 |
Net cash provided by operating activities | 580,275 | 487,908 |
Additions to real estate: | ||
Acquisitions of real estate and acquisition related capital expenditures | (124,054) | (327,799) |
Redevelopment | (62,983) | (66,783) |
Development acquisitions of and additions to real estate under development | (58,575) | (138,101) |
Capital expenditures on rental properties | (40,503) | (42,809) |
Acquisition of membership interest in co-investments | 0 | (115,724) |
Investments in notes receivable | (4,375) | 0 |
Proceeds from insurance for property losses | 3,288 | 12,044 |
Proceeds from dispositions of real estate | 48,008 | 74,485 |
Contributions to co-investments | (121,972) | (119,120) |
Changes in restricted cash and refundable deposits | 65,858 | 38,282 |
Purchases of marketable securities | (18,779) | (14,300) |
Sales and maturities of marketable securities and other investments | 14,708 | 7,566 |
Non-operating distributions from co-investments | 34,564 | 31,938 |
Net cash used in investing activities | (264,815) | (660,321) |
Cash flows from financing activities: | ||
Borrowings under debt agreements | 821,097 | 1,068,032 |
Repayment of debt | (580,956) | (924,844) |
Repayment of cumulative redeemable preferred stock | (73,750) | 0 |
Additions to deferred charges | (5,300) | (4,320) |
Net proceeds from issuance of common stock | (382) | 307,835 |
Net proceeds from stock options exercised | 17,878 | 22,173 |
Distributions to noncontrolling interest | (19,844) | (15,789) |
Redemption of noncontrolling interest | (2,435) | (2,621) |
Common and preferred stock dividends paid | (306,284) | (272,000) |
Net cash (used in) provided by financing activities | (149,976) | 178,466 |
Cash acquired in consolidation of co-investment | 0 | 4,005 |
Net increase in cash and cash equivalents | 165,484 | 10,058 |
Cash and cash equivalents at beginning of period | 29,683 | 25,610 |
Cash and cash equivalents at end of period | 195,167 | 35,668 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest, net of $9.4 million and $12.2 million capitalized in 2016 and 2015, respectively | 140,183 | 135,736 |
Supplemental disclosure of noncash investing and financing activities: | ||
Transfers between real estate under development to rental properties, net | 106,255 | 308,069 |
Transfer from real estate under development to co-investments | 8,332 | 5,913 |
Reclassifications (from) to redeemable noncontrolling interest to or from additional paid in capital and noncontrolling interest | (1,343) | 1,333 |
Debt assumed in connection with acquisition | 48,832 | 114,435 |
Essex Portfolio, L.P. [Member] | ||
Cash flows from operating activities: | ||
Net income | 233,893 | 162,477 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 329,847 | 336,946 |
Amortization of discount on marketable securities and other investments | (10,771) | (9,012) |
Amortization of (premium) discount and debt financing costs, net | (11,432) | (15,064) |
Gain on sale of marketable securities | (2,876) | (598) |
Company's share of gain on the sales of co-investments | (13,046) | 0 |
Earnings from co-investments | (25,886) | (15,962) |
Operating distributions from co-investments | 45,342 | 28,632 |
Gain on the sale of real estate and land | (20,258) | (7,112) |
Equity-based compensation | 4,436 | 5,511 |
Loss on early retirement of debt | 211 | 0 |
Gain on remeasurement of co-investments | 0 | (34,014) |
Changes in operating assets and liabilities: | ||
Prepaid expenses, receivables and other assets | 656 | (1,851) |
Accounts payable and accrued liabilities | 49,739 | 36,480 |
Other liabilities | 420 | 1,475 |
Net cash provided by operating activities | 580,275 | 487,908 |
Additions to real estate: | ||
Acquisitions of real estate and acquisition related capital expenditures | (124,054) | (327,799) |
Redevelopment | (62,983) | (66,783) |
Development acquisitions of and additions to real estate under development | (58,575) | (138,101) |
Capital expenditures on rental properties | (40,503) | (42,809) |
Acquisition of membership interest in co-investments | 0 | (115,724) |
Investments in notes receivable | (4,375) | 0 |
Proceeds from insurance for property losses | 3,288 | 12,044 |
Proceeds from dispositions of real estate | 48,008 | 74,485 |
Contributions to co-investments | (121,972) | (119,120) |
Changes in restricted cash and refundable deposits | 65,858 | 38,282 |
Purchases of marketable securities | (18,779) | (14,300) |
Sales and maturities of marketable securities and other investments | 14,708 | 7,566 |
Non-operating distributions from co-investments | 34,564 | 31,938 |
Net cash used in investing activities | (264,815) | (660,321) |
Cash flows from financing activities: | ||
Borrowings under debt agreements | 821,097 | 1,068,032 |
Repayment of debt | (580,956) | (924,844) |
Repayment of cumulative redeemable preferred stock | (73,750) | 0 |
Additions to deferred charges | (5,300) | (4,320) |
Net proceeds from issuance of common stock | (382) | 307,835 |
Net proceeds from stock options exercised | 17,878 | 22,173 |
Distributions to noncontrolling interest | (5,171) | (6,455) |
Redemption of noncontrolling interest | (2,435) | (2,621) |
Common and preferred stock dividends paid | (320,957) | (281,334) |
Net cash (used in) provided by financing activities | (149,976) | 178,466 |
Cash acquired in consolidation of co-investment | 0 | 4,005 |
Net increase in cash and cash equivalents | 165,484 | 10,058 |
Cash and cash equivalents at beginning of period | 29,683 | 25,610 |
Cash and cash equivalents at end of period | 195,167 | 35,668 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest, net of $9.4 million and $12.2 million capitalized in 2016 and 2015, respectively | 140,183 | 135,736 |
Supplemental disclosure of noncash investing and financing activities: | ||
Transfers between real estate under development to rental properties, net | 106,255 | 308,069 |
Transfer from real estate under development to co-investments | 8,332 | 5,913 |
Reclassifications (from) to redeemable noncontrolling interest to or from additional paid in capital and noncontrolling interest | (1,343) | 1,333 |
Debt assumed in connection with acquisition | $ 48,832 | $ 114,435 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Interest capitalized | $ 9.4 | $ 12.2 |
Essex Portfolio, L.P. [Member] | ||
Interest capitalized | $ 9.4 | $ 12.2 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. (“Essex” or the “Company”), which include the accounts of the Company and Essex Portfolio, L.P. and subsidiaries (the “Operating Partnership,” which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included and are normal and recurring in nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2015 . All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. Certain reclassifications have been made to conform to the current year’s presentation. The unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2016 and 2015 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner in the Operating Partnership, with a 96.7% general partnership interest as of September 30, 2016 . Total Operating Partnership limited partnership units outstanding were 2,219,268 and 2,214,545 as of September 30, 2016 and December 31, 2015 , respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled $494.2 million and $530.2 million , as of September 30, 2016 and December 31, 2015 , respectively. As of September 30, 2016 , the Company owned or had ownership interests in 244 stabilized apartment communities, aggregating 59,290 apartment homes, excluding the Company’s ownership in preferred interest co-investments, (collectively, the “Communities”, and individually, a “Community”), three operating commercial buildings and six active developments (collectively, the “Portfolio”). The Communities are located in Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers." The new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. In August 2015, the FASB deferred the effective date of the new standard by one year, and it is now effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted but not before the original effective date. The new standard may be applied using either a full retrospective or a modified approach upon adoption. The Company has not yet selected a transition method and is currently evaluating the impact of adopting the new standard on its consolidated results of operations and financial position. In January 2016, the FASB issued ASU No. 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities", which requires changes to the classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes for financial liabilities measured at fair value. The new standard will be effective for the Company beginning on January 1, 2018 and early adoption is permitted. The Company does not expect that this will have a material effect on its consolidated results of operations or financial position. In February 2016, the FASB issued ASU No. 2016-02 "Leases", which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases today. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted, including adoption in an interim period. The new standard must be applied using a modified retrospective approach. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position. In March 2016, the FASB issued ASU No. 2016-07 "Simplifying the Transition to the Equity Method of Accounting", which eliminates the requirement to retroactively adjust an investment, results of operations, and retained earnings when the investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The new standard will be effective for the Company beginning on January 1, 2017 and early adoption is permitted. The Company does not expect the impact of this to be material on its consolidated results of operations or financial position. In March 2016, the FASB issued ASU No. 2016-09 "Improvement to Employee Share-Based Payment Accounting", which amends certain aspects of how an entity accounts for share-based payments to employees. This amendment requires entities to recognize the income tax effects of share-based awards in the income statement when the awards vest or are settled, rather than recording such effects in additional paid-in capital. Entities will also be permitted to elect to account for forfeitures of share-based payments as they occur or continue with the current practice which requires estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change. The new standard will be effective January 1, 2017, with early adoption permitted. The change in recognition of income tax effects of share-based awards will be applied prospectively. If the Company elects to account for forfeitures of share-based payments as they occur, such change will be applied using a modified retrospective approach, with a cumulative-effect adjustment to distributions in excess of accumulated earnings. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position. In June 2016, the FASB issued ASU No. 2016-13 "Measure of Credit Losses on Financial Instruments", which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires companies to write down credit losses only when losses are probable and loss reversals are not permitted. The new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position. In August 2016, the FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments", which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update provide guidance on eight specific cash flow issues. The new standard will be effective for the Company beginning on January 1, 2018 and early adoption is permitted, The Company does not expect the impact of the other items identified in the ASU to be material on its consolidated results of operations and financial position. Marketable Securities The Company reports its available for sale securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds and Level 2 for the unsecured bonds, as defined by the FASB standard for fair value measurements), and any unrealized gain or loss is recorded as other comprehensive income (loss). Realized gains and losses, interest income, and amortization of purchase discounts are included in interest and other income on the condensed consolidated statements of income and comprehensive income. As of September 30, 2016 and December 31, 2015 , marketable securities consisted primarily of investment-grade unsecured bonds, common stock, investments in mortgage backed securities, investment funds that invest in U.S. treasury or agency securities. As of September 30, 2016 and December 31, 2015 , the Company classified its investments in mortgage backed securities, which mature through November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost. As of September 30, 2016 and December 31, 2015 , marketable securities consist of the following (in thousands): September 30, 2016 Amortized Cost Gross Unrealized Gain Carrying Value Available for sale: Investment-grade unsecured bonds $ 19,604 $ 416 $ 20,020 Investment funds - U.S. treasuries 7,598 2 7,600 Common stock and stock funds 29,901 5,232 35,133 Held to maturity: Mortgage backed securities 90,950 — 90,950 Total - Marketable securities $ 148,053 $ 5,650 $ 153,703 December 31, 2015 Amortized Cost Gross Unrealized Gain (Loss) Carrying Value Available for sale: Investment-grade unsecured bonds $ 11,618 $ 68 $ 11,686 Investment funds - U.S. treasuries 3,675 (9 ) 3,666 Common stock and stock funds 34,655 7,091 41,746 Held to maturity: Mortgage backed securities 80,387 — 80,387 Total - Marketable securities $ 130,335 $ 7,150 $ 137,485 The Company uses the specific identification method to determine the cost basis of a security sold and to reclassify amounts from accumulated other comprehensive income for securities sold. For the three months ended September 30, 2016 and 2015 , the proceeds from sales of available for sale securities totaled $3.5 million and none , respectively, which resulted in $1.0 million realized gains and no realized gains or losses, respectively. For the nine months ended September 30, 2016 and 2015 , the proceeds from sales of available for sale securities totaled $14.7 million and $2.0 million , respectively, which resulted in $2.9 million realized gains and no realized gains or losses, respectively. For the three and nine months ended September 30, 2015 , the proceeds from sales of other investments totaled $5.6 million , which resulted in $0.6 million realized gains. The Company did not own any other investments during the nine months ended September 30, 2016 . Variable Interest Entities In February 2015, the FASB issued ASU No. 2015-02 "Consolidation: Amendments to the Consolidation Analysis," which provides new consolidation guidance and makes changes to both the variable interest model and the voting model. Among other changes, the new standard specifically eliminates the presumption in the current voting model that a general partner controls a limited partnership or similar entity unless that presumption can be overcome. The Company adopted ASU No. 2015-02 on January 1, 2016. Based on the Company’s evaluation of the new standard, it determined that no change was required to its accounting for variable interest entities (“VIEs”). However, under the guidance of ASU No. 2015-02, 9 previously consolidated co-investments now meet the definition of a VIE and requires additional disclosure about these VIEs which the Company continues to consolidate as they were determined to be the primary beneficiary. The Company continues to be the primary beneficiary and consolidates the Operating Partnership and 19 DownREIT limited partnerships (comprising eleven communities). Commencing on January 1, 2016, 9 other consolidated co-investments were determined to be VIEs and the Company continues to consolidate those co-investments as the Company was determined to be the primary beneficiary. The consolidated total assets and liabilities related to the 9 consolidated co-investments and 19 DownREIT limited partnerships, net of intercompany eliminations, were approximately $954.6 million and $267.3 million , respectively, as of September 30, 2016 and $893.1 million and $231.8 million , respectively, as of December 31, 2015 . Noncontrolling interests in these entities was $52.3 million and $54.6 million as of September 30, 2016 and December 31, 2015 , respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of September 30, 2016 and December 31, 2015 , the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary. Equity-based Compensation The cost of share and unit based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 13, “Equity Based Compensation Plans,” in the Company’s Form 10-K for the year ended December 31, 2015 ) are being amortized over the expected service periods. Fair Value of Financial Instruments Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of September 30, 2016 and December 31, 2015 , because interest rates, yields, and other terms for these instruments are consistent with yields and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s $5.0 billion of fixed rate debt, including unsecured debt, at September 30, 2016 is approximately $5.3 billion and the Company’s variable rate debt at September 30, 2016 and December 31, 2015 approximates its fair value based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities, and dividends payable approximate fair value as of September 30, 2016 and December 31, 2015 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities that are held to maturity, and derivatives are carried at fair value as of September 30, 2016 and December 31, 2015. At September 30, 2016 , the Company’s investments in mortgage backed securities had a carrying value of $91.0 million and the Company estimated the fair value to be approximately $105.9 million . At December 31, 2015 , the Company’s investments in mortgage backed securities had a carrying value of $80.4 million and the Company estimated the fair value to be approximately $110.2 million . The Company determines the fair value of the mortgage backed securities based on unobservable inputs (level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine expected discounted cash flows to estimate the fair value. Capitalization of Costs The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of employee compensation and totaled $3.8 million and $2.9 million during the three months ended September 30, 2016 and 2015 , respectively, and $10.6 million and $8.3 million during the nine months ended September 30, 2016 and 2015 , respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented. Co-investments The Company owns investments in joint ventures (“co-investments”) in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. The equity method employs the accrual basis for recognizing the investor’s share of investee income or losses. In addition, distributions received from the investee are treated as a reduction in the investment account, not as income. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects. Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the condensed consolidated statement of income equal to the amount by which the fair value of the co-investment interest the Company previously owned exceeds its carrying value. A majority of the co-investments, excluding the preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments. Changes in Accumulated Other Comprehensive Loss, Net by Component Essex Property Trust, Inc. (in thousands) Change in fair value and amortization of swap settlements Unrealized gains on available for sale securities Total Balance at December 31, 2015 $ (48,366 ) $ 6,355 $ (42,011 ) Other comprehensive (loss) income before reclassification (4,618 ) 1,330 (3,288 ) Amounts reclassified from accumulated other comprehensive loss 7,985 (2,781 ) 5,204 Other comprehensive income (loss) 3,367 (1,451 ) 1,916 Balance at September 30, 2016 $ (44,999 ) $ 4,904 $ (40,095 ) Changes in Accumulated Other Comprehensive Loss, by Component Essex Portfolio, L.P. (in thousands): Change in fair value and amortization of swap settlements Unrealized gains on available for sale securities Total Balance at December 31, 2015 $ (46,087 ) $ 6,489 $ (39,598 ) Other comprehensive (loss) income before reclassification (4,775 ) 1,376 (3,399 ) Amounts reclassified from accumulated other comprehensive loss 8,256 (2,876 ) 5,380 Other comprehensive income (loss) 3,481 (1,500 ) 1,981 Balance at September 30, 2016 $ (42,606 ) $ 4,989 $ (37,617 ) Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the condensed consolidated statement of income and comprehensive income. Realized gains and losses on available for sale securities are included in interest and other income on the condensed consolidated statement of income and comprehensive income. Accounting Estimates The preparation of condensed consolidated financial statements, in accordance with GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to acquiring, developing, and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, its notes receivables, and its qualification as a Real Estate Investment Trust (“REIT”). The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions. |
Significant Transactions During
Significant Transactions During the Third Quarter of 2016 and Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Significant Transactions During the Third Quarter of 2016 and Subsequent Events | Significant Transactions During the Third Quarter of 2016 and Subsequent Events Significant Transactions Preferred Equity Investments In August 2016, the Company made a commitment to fund a $11.6 million preferred equity investment in a limited liability company that owns The Line, a 228 apartment home community development project located in Santa Ana, CA. This investment is scheduled to mature in March 2020 and will accrue interest based on a 12.0% compounded preferred return. As of September 30, 2016, the Company has funded $1.9 million of the $11.6 million commitment. Notes Receivable In September 2016, the Company made a commitment to loan $26.3 million to a limited liability company that owns Oceanaire, a 216 apartment home community development project located in Long Beach, CA. The loan investment is scheduled to mature in September 2020 and will accrue interest based on a 10.75% compounded return. As of September 30, 2016, the Company has funded $4.4 million of the $26.3 million commitment. |
Co-investments
Co-investments | 9 Months Ended |
Sep. 30, 2016 | |
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract] | |
Co-investments | Co-investments The Company has joint ventures and preferred equity investments in co-investments which are accounted for under the equity method. The co-investments own, operate, and develop apartment communities. The carrying values of the Company's co-investments as of September 30, 2016 and December 31, 2015 are as follows (in thousands, except in parenthetical): Ownership Percentage September 30, 2016 December 31, 2015 Membership interest/Partnership interest in: CPPIB 55 % $ 426,259 $ 422,317 Wesco I, III and IV 50 % 202,531 218,902 BEXAEW 50 % 66,346 88,850 Palm Valley 50 % 68,403 68,525 Other 50%-55% 31,319 32,927 Total operating co-investments 794,858 831,521 Total development co-investments 50%-55% 141,666 98,214 Total preferred interest co-investments (includes related party investments of $35.9 million and $35.8 million of September 30, 2016 and December 31, 2015, respectively) 186,389 106,312 Total co-investments $ 1,122,913 $ 1,036,047 The combined summarized financial information of co-investments is as follows (in thousands). September 30, 2016 December 31, 2015 Combined balance sheets: (1) Rental properties and real estate under development $ 3,432,866 $ 3,360,360 Other assets 118,131 96,785 Total assets $ 3,550,997 $ 3,457,145 Debt $ 1,506,107 $ 1,499,601 Other liabilities 90,039 92,241 Equity (1) 1,954,851 1,865,303 Total liabilities and equity $ 3,550,997 $ 3,457,145 Company's share of equity $ 1,122,913 $ 1,036,047 Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Combined statements of income: (1) Property revenues $ 72,124 $ 65,869 $ 216,434 $ 191,458 Property operating expenses (24,976 ) (23,094 ) (75,377 ) (69,232 ) Net operating income 47,148 42,775 141,057 122,226 Gain on sale of real estate — — 28,291 14 Interest expense (10,978 ) (11,314 ) (35,260 ) (33,727 ) General and administrative (1,496 ) (1,335 ) (4,276 ) (4,414 ) Depreciation and amortization (25,569 ) (26,574 ) (79,676 ) (76,220 ) Net income $ 9,105 $ 3,552 $ 50,136 $ 7,879 Company's share of net income (2) $ 9,568 $ 7,179 $ 38,932 $ 15,962 (1) Includes preferred equity investments held by the Company. (2) Includes the Company's share of equity income from co-investments and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments. Includes related party income of $0.8 million and $0.8 million for the three months ended September 30, 2016 and 2015 , respectively and $2.5 million and $2.9 million for the nine months ended September 30, 2016 and 2015 , respectively. |
Notes and Other Receivables
Notes and Other Receivables | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Notes and Other Receivables | Notes and Other Receivables Notes receivable, secured by real estate, and other receivables consist of the following as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 December 31, 2015 Notes receivable, secured, bearing interest at 10.75%, due September 2020 $ 4,378 $ — Notes receivable, secured, bearing interest at 6.0%, due December 2016 3,199 3,219 Notes and other receivables from affiliates (1) 3,602 3,092 Other receivables 11,762 12,974 Total notes and other receivables $ 22,941 $ 19,285 (1) The Company had $3.6 million and $3.1 million of short-term loans outstanding and due from various joint ventures as of September 30, 2016 and December 31, 2015 , respectively. See Note 5, Related Party Transactions, for additional details. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company charges certain fees to its co-investments for asset management, property management, development, and redevelopment services. These fees from affiliates totaled $3.1 million and $3.3 million during the three months ended September 30, 2016 and 2015 , respectively, and $9.6 million and $12.5 million during the nine months ended September 30, 2016 and 2015 , respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $1.0 million and $1.2 million against general and administrative expenses for the three months ended September 30, 2016 and 2015 , respectively, and $3.4 million and $5.8 million for the nine months ended September 30, 2016 and 2015 , respectively. The Company’s Chairman and founder, Mr. George Marcus, is the Chairman of the Marcus & Millichap Company (“MMC”), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-Chairman of Marcus & Millichap, Inc. (“MMI”), and Mr. Marcus owns a controlling interest in MMI, a national brokerage firm listed on the NYSE. In March 2015, a multifamily property, located in Anaheim, CA that was owned by an entity affiliated with MMC, in which the Company held a $13.7 million preferred equity investment, was sold. That investment of $13.7 million plus an additional $1.3 million in cash was invested as outlined in the following two paragraphs. Prior to the property sale, the $13.7 million preferred equity investment earned a 9.0% preferred return and was scheduled to mature in September 2020. In June 2015, the Company made a $10.0 million preferred equity investment in an entity affiliated with MMC that owns Greentree Apartments, a 220 apartment community located in San Jose, CA. This investment earns a 9.5% preferred return and is scheduled to mature in June 2022 . In June 2015, the Company made a $5.0 million preferred equity investment in an entity affiliated with MMC that owns Sterling Cove Apartments, a 218 apartment community located in Concord, CA. This investment earns a 9.5% preferred return and is scheduled to mature in June 2022 . In August 2015, the Company made a $5.0 million preferred equity investment in an entity affiliated with MMC that owns Alta Vista Apartments, a 92 apartment community located in Los Angeles, CA. This investment earns a 9.5% preferred return and is scheduled to mature in August 2022 . In January 2013, the Company invested $8.6 million as a preferred equity interest investment in an entity affiliated with MMC that owns an apartment development in Redwood City, CA. In March 2015, the Company's preferred interest investment was prepaid and the Company recognized a gain of $0.5 million as a result of the prepayment. The Company has provided short-term bridge loans to affiliates. As of September 30, 2016 and December 31, 2015 , $3.6 million and $3.1 million , respectively, of short-term loans remained outstanding due from joint venture affiliates and is classified within notes and other receivables in the accompanying condensed consolidated balance sheets. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company does not have indebtedness as debt is incurred by the Operating Partnership. The Company guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities for the full term of such debt. Debt consists of the following ($ in thousands): September 30, 2016 December 31, 2015 Weighted Average Maturity In Years Unsecured bonds private placement - fixed rate $ 314,128 $ 463,891 3.9 Term loan - variable rate 224,719 224,467 0.2 Bonds public offering - fixed rate 2,836,763 2,400,322 6.6 Unsecured debt, net (1) 3,375,610 3,088,680 Lines of credit, net (2) — 11,707 Mortgage notes payable, net (3) 2,209,077 2,215,077 5.3 Total debt, net $ 5,584,687 $ 5,315,464 Weighted average interest rate on fixed rate unsecured and unsecured private placement bonds 3.6 % 3.6 % Weighted average interest rate on variable rate term loan 2.4 % 2.4 % Weighted average interest rate on lines of credit 2.2 % 1.9 % Weighted average interest rate on mortgage notes payable 4.3 % 4.4 % (1) Includes unamortized premium and discounts of $2.8 million and $14.3 million and reduced by unamortized debt issuance costs of $17.2 million and $15.6 million , as of September 30, 2016 and December 31, 2015 , respectively. (2) Lines of credit, net, related to the Company's two lines of unsecured credit aggregating $1.0 billion , excludes unamortized debt issuance costs of $3.6 million as of September 30, 2016 as the net effect resulted in a negative debt balance and as such the amount was reclassified to prepaid expenses and other assets on the condensed consolidated balance sheets. The December 31, 2015 amount includes $3.3 million of unamortized debt issuance costs because the net balance resulted in a positive debt balance and is presented on a net basis. (3) Includes unamortized premium of $55.3 million and $64.8 million and reduced by unamortized debt issuance costs of $7.4 million and $8.0 million , as of September 30, 2016 and December 31, 2015 , respectively. The aggregate scheduled principal payments of the Company’s outstanding debt as of September 30, 2016 are as follows (excluding lines of credit) (in thousands): Remaining in 2016 $ 207,668 2017 493,007 2018 321,328 2019 661,954 2020 693,868 Thereafter 3,173,339 Total $ 5,551,164 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company's segment disclosures present the measure used by the chief operating decision makers for purposes of assessing each segment's performance. Essex's chief operating decision makers are comprised of several members of its executive management team who use NOI to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenue less direct property operating expenses. The executive management team evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the three geographical regions in which its communities are located: Southern California, Northern California, and Seattle Metro. Excluded from segment revenues and net operating income are management and other fees from affiliates and interest and other income. Non-segment revenues and net operating income included in the following schedule also consist of revenue generated from commercial properties and properties that have been sold. Other non-segment assets include real estate under development, co-investments, cash and cash equivalents, marketable securities, notes and other receivables, prepaid expenses, and other assets. The revenues and net operating income for each of the reportable operating segments are summarized as follows for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenues: Southern California $ 147,953 $ 135,900 $ 434,217 $ 390,381 Northern California 117,699 106,428 345,793 308,118 Seattle Metro 55,544 51,181 161,192 149,661 Other real estate assets 5,882 9,013 17,616 28,692 Total property revenues $ 327,078 $ 302,522 $ 958,818 $ 876,852 Net operating income: Southern California $ 100,447 $ 90,377 $ 295,834 $ 261,320 Northern California 84,790 76,327 249,011 219,906 Seattle Metro 37,688 34,484 109,352 101,288 Other real estate assets 4,792 7,215 14,691 22,971 Total net operating income 227,717 208,403 668,888 605,485 Management and other fees from affiliates 2,093 2,104 6,145 6,809 Depreciation and amortization (110,467 ) (116,308 ) (329,847 ) (336,946 ) General and administrative (9,647 ) (11,129 ) (28,527 ) (31,223 ) Merger and integration expenses — — — (3,798 ) Acquisition and investment related costs (284 ) (381 ) (1,379 ) (1,357 ) Interest expense (56,693 ) (50,053 ) (164,727 ) (148,401 ) Total return swap income 3,143 — 9,080 — Interest and other income 4,943 7,367 19,560 14,820 Equity income in co-investments 9,568 7,179 38,932 15,962 Loss on early retirement of debt (211 ) — (211 ) — Gain on sale of real estate and land — — 20,258 7,112 Deferred tax expense on gain on sale of real estate and land — — (4,279 ) — Gain on remeasurement of co-investment — — — 34,014 Net income $ 70,162 $ 47,182 $ 233,893 $ 162,477 Total assets for each of the reportable operating segments are summarized as follows as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 December 31, 2015 Assets: Southern California $ 4,830,293 $ 4,912,264 Northern California 3,844,421 3,749,072 Seattle Metro 1,679,303 1,613,175 Other real estate assets 89,895 107,066 Net reportable operating segment - real estate assets 10,443,912 10,381,577 Real estate under development 170,972 242,326 Co-investments 1,122,913 1,036,047 Real estate held for sale, net — 26,879 Cash and cash equivalents, including restricted cash 211,055 123,055 Marketable securities 153,703 137,485 Notes and other receivables 22,941 19,285 Prepaid expenses and other assets 51,700 38,437 Total assets $ 12,177,196 $ 12,005,091 |
Net Income Per Common Share and
Net Income Per Common Share and Net Income Per Common Unit | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share and Net Income Per Common Unit | Net Income Per Common Share and Net Income Per Common Unit (Amounts in thousands, except share and unit data) Essex Property Trust, Inc. Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Income Weighted- average Common Shares Per Common Share Amount Income Weighted- average Common Shares Per Common Share Amount Basic: Net income available to common stockholders $ 65,561 65,507,669 $ 1.00 $ 42,323 65,138,868 $ 0.65 Effect of Dilutive Securities — 109,882 — 158,682 Diluted: Net income available to common stockholders $ 65,561 65,617,551 $ 1.00 $ 42,323 65,297,550 $ 0.65 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Income Weighted- Per Income Weighted- Per Basic: Net income available to common stockholders $ 215,555 65,455,004 $ 3.29 $ 147,241 64,714,994 $ 2.28 Effect of Dilutive Securities — 123,657 — 177,776 Diluted: Net income available to common stockholders $ 215,555 65,578,661 $ 3.29 $ 147,241 64,892,770 $ 2.27 The tables above exclude from the calculations of diluted EPS weighted average convertible limited partnership units of 2,220,952 and 2,177,630 , which include vested Series Z Incentive Units, Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units, for the three months ended September 30, 2016 and 2015 , respectively, and 2,224,236 and 2,181,299 for the nine months ended September 30, 2016 , and 2015 , respectively, because they were anti-dilutive. The related income allocated to these convertible limited partnership units aggregated $2.2 million and $1.5 million for the three months ended September 30, 2016 and 2015 , respectively, and $7.5 million and $5.1 million for the nine months ended September 30, 2016 and 2015 , respectively. Additionally, excludes all DownREIT units as they are anti-dilutive. Stock options of 40,900 and 24,500 for the three months ended September 30, 2016 and 2015 , respectively, and 76,054 and 24,500 for the nine months ended September 30, 2016 and 2015 , respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of these options plus the average unearned compensation were greater than the average market price of the common stock for the periods ended and, therefore, were anti-dilutive. Essex Portfolio, L.P. Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Income Weighted- average Common Units Per Common Unit Amount Income Weighted- average Common Units Per Common Unit Amount Basic: Net income available to common unitholders $ 67,784 67,728,621 $ 1.00 $ 43,794 67,316,498 $ 0.65 Effect of Dilutive Securities — 109,882 — 158,682 Diluted: Net income available to common unitholders $ 67,784 67,838,503 $ 1.00 $ 43,794 67,475,180 $ 0.65 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Income Weighted- Per Income Weighted- Per Basic: Net income available to common unitholders $ 223,012 67,679,240 $ 3.30 $ 152,356 66,896,293 $ 2.28 Effect of Dilutive Securities — 123,657 — 177,776 Diluted: Net income available to common unitholders $ 223,012 67,802,897 $ 3.29 $ 152,356 67,074,069 $ 2.27 Stock options of 40,900 and 24,500 for the three months ended September 30, 2016 and 2015 , respectively, and 76,054 and 24,500 for the nine months ended September 30, 2016 and 2015 , respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the periods ended and, therefore, were anti-dilutive. Additionally, excludes all DownREIT units as they are anti-dilutive. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities As of September 30, 2016 , the Company has entered into interest rate swap contracts with an aggregate notional amount of $225 million that effectively fixed the interest rate on the $225 million unsecured term loan at 2.4% . These derivatives qualify for hedge accounting. As of September 30, 2016 , the Company has interest rate caps, which are not accounted for as hedges, totaling a notional amount of $20.7 million that effectively limit the Company’s exposure to interest rate risk by providing a ceiling on the underlying variable interest rate for $20.7 million of the Company’s tax exempt variable rate debt. As of September 30, 2016 and December 31, 2015 , the aggregate carrying value of the interest rate swap contracts was a liability of $0.2 million and $1.0 million , respectively, and is included in other liabilities on the condensed consolidated balance sheets. The aggregate carrying value of the interest rate caps was zero on the condensed consolidated balance sheets as of both September 30, 2016 and December 31, 2015 . Hedge ineffectiveness related to cash flow hedges, which is included in interest expense on the condensed consolidated income statements, net was not significant for both the three and nine months ended September 30, 2016 and 2015 . Additionally, the Company has entered into total return swaps that effectively convert $257.3 million of mortgage notes payable to a floating interest rate based on SIFMA plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to our counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call the total return swaps with $114.4 million of the outstanding debt at par, while the call option on the total return swaps relating to the remaining $142.9 million of outstanding debt can be exercised starting on January 1, 2017. These derivatives do not qualify for hedge accounting and had a carrying and fair value of $16 thousand and $4 thousand at September 30, 2016 and December 31, 2015 , respectively. These total return swaps are scheduled to mature between September 2021 and November 2022 . Realized gains of $3.1 million and $9.1 million are reported in the condensed consolidated income statements as total return swap income for the three and nine months ended September 30, 2016 , respectively. There was no total return swap income for both the three and nine months ended September 30, 2015 . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies To the extent that an environmental matter arises or is identified in the future that has other than a remote risk of having a material impact on the condensed consolidated financial statements, the Company will disclose the estimated range of possible outcomes associated with it, and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, impairment will be recognized. The Company is subject to various lawsuits in the normal course of its business operations. Such lawsuits could, but are not expected to, have a material adverse effect on the Company's financial condition, results of operations or cash flows. |
Organization and Basis of Pre19
Organization and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements | In February 2015, the FASB issued ASU No. 2015-02 "Consolidation: Amendments to the Consolidation Analysis," which provides new consolidation guidance and makes changes to both the variable interest model and the voting model. Among other changes, the new standard specifically eliminates the presumption in the current voting model that a general partner controls a limited partnership or similar entity unless that presumption can be overcome. The Company adopted ASU No. 2015-02 on January 1, 2016. Based on the Company’s evaluation of the new standard, it determined that no change was required to its accounting for variable interest entities (“VIEs”). However, under the guidance of ASU No. 2015-02, 9 previously consolidated co-investments now meet the definition of a VIE and requires additional disclosure about these VIEs which the Company continues to consolidate as they were determined to be the primary beneficiary. In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers." The new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. In August 2015, the FASB deferred the effective date of the new standard by one year, and it is now effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted but not before the original effective date. The new standard may be applied using either a full retrospective or a modified approach upon adoption. The Company has not yet selected a transition method and is currently evaluating the impact of adopting the new standard on its consolidated results of operations and financial position. In January 2016, the FASB issued ASU No. 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities", which requires changes to the classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes for financial liabilities measured at fair value. The new standard will be effective for the Company beginning on January 1, 2018 and early adoption is permitted. The Company does not expect that this will have a material effect on its consolidated results of operations or financial position. In February 2016, the FASB issued ASU No. 2016-02 "Leases", which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases today. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted, including adoption in an interim period. The new standard must be applied using a modified retrospective approach. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position. In March 2016, the FASB issued ASU No. 2016-07 "Simplifying the Transition to the Equity Method of Accounting", which eliminates the requirement to retroactively adjust an investment, results of operations, and retained earnings when the investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The new standard will be effective for the Company beginning on January 1, 2017 and early adoption is permitted. The Company does not expect the impact of this to be material on its consolidated results of operations or financial position. In March 2016, the FASB issued ASU No. 2016-09 "Improvement to Employee Share-Based Payment Accounting", which amends certain aspects of how an entity accounts for share-based payments to employees. This amendment requires entities to recognize the income tax effects of share-based awards in the income statement when the awards vest or are settled, rather than recording such effects in additional paid-in capital. Entities will also be permitted to elect to account for forfeitures of share-based payments as they occur or continue with the current practice which requires estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change. The new standard will be effective January 1, 2017, with early adoption permitted. The change in recognition of income tax effects of share-based awards will be applied prospectively. If the Company elects to account for forfeitures of share-based payments as they occur, such change will be applied using a modified retrospective approach, with a cumulative-effect adjustment to distributions in excess of accumulated earnings. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position. In June 2016, the FASB issued ASU No. 2016-13 "Measure of Credit Losses on Financial Instruments", which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires companies to write down credit losses only when losses are probable and loss reversals are not permitted. The new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position. In August 2016, the FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments", which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update provide guidance on eight specific cash flow issues. The new standard will be effective for the Company beginning on January 1, 2018 and early adoption is permitted, The Company does not expect the impact of the other items identified in the ASU to be material on its consolidated results of operations and financial position. |
Marketable Securities | The Company reports its available for sale securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds and Level 2 for the unsecured bonds, as defined by the FASB standard for fair value measurements), and any unrealized gain or loss is recorded as other comprehensive income (loss). Realized gains and losses, interest income, and amortization of purchase discounts are included in interest and other income on the condensed consolidated statements of income and comprehensive income. |
Variable Interest Entities | The Company continues to be the primary beneficiary and consolidates the Operating Partnership and 19 DownREIT limited partnerships (comprising eleven communities). Commencing on January 1, 2016, 9 other consolidated co-investments were determined to be VIEs and the Company continues to consolidate those co-investments as the Company was determined to be the primary beneficiary. The consolidated total assets and liabilities related to the 9 consolidated co-investments and 19 DownREIT limited partnerships, net of intercompany eliminations, were approximately $954.6 million and $267.3 million , respectively, as of September 30, 2016 and $893.1 million and $231.8 million , respectively, as of December 31, 2015 . Noncontrolling interests in these entities was $52.3 million and $54.6 million as of September 30, 2016 and December 31, 2015 , respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of September 30, 2016 and December 31, 2015 , the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary. |
Equity-based Compensation | The cost of share and unit based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 13, “Equity Based Compensation Plans,” in the Company’s Form 10-K for the year ended December 31, 2015 ) are being amortized over the expected service periods. |
Fair Value of Financial Instruments | Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of September 30, 2016 and December 31, 2015 , because interest rates, yields, and other terms for these instruments are consistent with yields and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s $5.0 billion of fixed rate debt, including unsecured debt, at September 30, 2016 is approximately $5.3 billion and the Company’s variable rate debt at September 30, 2016 and December 31, 2015 approximates its fair value based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities, and dividends payable approximate fair value as of September 30, 2016 and December 31, 2015 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities that are held to maturity, and derivatives are carried at fair value as of September 30, 2016 and December 31, 2015. At September 30, 2016 , the Company’s investments in mortgage backed securities had a carrying value of $91.0 million and the Company estimated the fair value to be approximately $105.9 million . At December 31, 2015 , the Company’s investments in mortgage backed securities had a carrying value of $80.4 million and the Company estimated the fair value to be approximately $110.2 million . The Company determines the fair value of the mortgage backed securities based on unobservable inputs (level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine expected discounted cash flows to estimate the fair value. |
Capitalization of Costs | The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of employee compensation and totaled $3.8 million and $2.9 million during the three months ended September 30, 2016 and 2015 , respectively, and $10.6 million and $8.3 million during the nine months ended September 30, 2016 and 2015 , respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented. |
Co-investments | The Company owns investments in joint ventures (“co-investments”) in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. The equity method employs the accrual basis for recognizing the investor’s share of investee income or losses. In addition, distributions received from the investee are treated as a reduction in the investment account, not as income. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects. Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the condensed consolidated statement of income equal to the amount by which the fair value of the co-investment interest the Company previously owned exceeds its carrying value. A majority of the co-investments, excluding the preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments. |
Changes in Accumulated Other Comprehensive Loss | Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the condensed consolidated statement of income and comprehensive income. Realized gains and losses on available for sale securities are included in interest and other income on the condensed consolidated statement of income and comprehensive income. |
Accounting Estimates | The preparation of condensed consolidated financial statements, in accordance with GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to acquiring, developing, and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, its notes receivables, and its qualification as a Real Estate Investment Trust (“REIT”). The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions. |
Organization and Basis of Pre20
Organization and Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Components of marketable securities | As of September 30, 2016 and December 31, 2015 , marketable securities consist of the following (in thousands): September 30, 2016 Amortized Cost Gross Unrealized Gain Carrying Value Available for sale: Investment-grade unsecured bonds $ 19,604 $ 416 $ 20,020 Investment funds - U.S. treasuries 7,598 2 7,600 Common stock and stock funds 29,901 5,232 35,133 Held to maturity: Mortgage backed securities 90,950 — 90,950 Total - Marketable securities $ 148,053 $ 5,650 $ 153,703 December 31, 2015 Amortized Cost Gross Unrealized Gain (Loss) Carrying Value Available for sale: Investment-grade unsecured bonds $ 11,618 $ 68 $ 11,686 Investment funds - U.S. treasuries 3,675 (9 ) 3,666 Common stock and stock funds 34,655 7,091 41,746 Held to maturity: Mortgage backed securities 80,387 — 80,387 Total - Marketable securities $ 130,335 $ 7,150 $ 137,485 |
Changes in accumulated other comprehensive income (loss) | Essex Property Trust, Inc. (in thousands) Change in fair value and amortization of swap settlements Unrealized gains on available for sale securities Total Balance at December 31, 2015 $ (48,366 ) $ 6,355 $ (42,011 ) Other comprehensive (loss) income before reclassification (4,618 ) 1,330 (3,288 ) Amounts reclassified from accumulated other comprehensive loss 7,985 (2,781 ) 5,204 Other comprehensive income (loss) 3,367 (1,451 ) 1,916 Balance at September 30, 2016 $ (44,999 ) $ 4,904 $ (40,095 ) Changes in Accumulated Other Comprehensive Loss, by Component Essex Portfolio, L.P. (in thousands): Change in fair value and amortization of swap settlements Unrealized gains on available for sale securities Total Balance at December 31, 2015 $ (46,087 ) $ 6,489 $ (39,598 ) Other comprehensive (loss) income before reclassification (4,775 ) 1,376 (3,399 ) Amounts reclassified from accumulated other comprehensive loss 8,256 (2,876 ) 5,380 Other comprehensive income (loss) 3,481 (1,500 ) 1,981 Balance at September 30, 2016 $ (42,606 ) $ 4,989 $ (37,617 ) |
Co-investments (Tables)
Co-investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract] | |
Summary of co-investments | The carrying values of the Company's co-investments as of September 30, 2016 and December 31, 2015 are as follows (in thousands, except in parenthetical): Ownership Percentage September 30, 2016 December 31, 2015 Membership interest/Partnership interest in: CPPIB 55 % $ 426,259 $ 422,317 Wesco I, III and IV 50 % 202,531 218,902 BEXAEW 50 % 66,346 88,850 Palm Valley 50 % 68,403 68,525 Other 50%-55% 31,319 32,927 Total operating co-investments 794,858 831,521 Total development co-investments 50%-55% 141,666 98,214 Total preferred interest co-investments (includes related party investments of $35.9 million and $35.8 million of September 30, 2016 and December 31, 2015, respectively) 186,389 106,312 Total co-investments $ 1,122,913 $ 1,036,047 |
Summarized financial information for co-investments accounted for under the equity method | The combined summarized financial information of co-investments is as follows (in thousands). September 30, 2016 December 31, 2015 Combined balance sheets: (1) Rental properties and real estate under development $ 3,432,866 $ 3,360,360 Other assets 118,131 96,785 Total assets $ 3,550,997 $ 3,457,145 Debt $ 1,506,107 $ 1,499,601 Other liabilities 90,039 92,241 Equity (1) 1,954,851 1,865,303 Total liabilities and equity $ 3,550,997 $ 3,457,145 Company's share of equity $ 1,122,913 $ 1,036,047 Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Combined statements of income: (1) Property revenues $ 72,124 $ 65,869 $ 216,434 $ 191,458 Property operating expenses (24,976 ) (23,094 ) (75,377 ) (69,232 ) Net operating income 47,148 42,775 141,057 122,226 Gain on sale of real estate — — 28,291 14 Interest expense (10,978 ) (11,314 ) (35,260 ) (33,727 ) General and administrative (1,496 ) (1,335 ) (4,276 ) (4,414 ) Depreciation and amortization (25,569 ) (26,574 ) (79,676 ) (76,220 ) Net income $ 9,105 $ 3,552 $ 50,136 $ 7,879 Company's share of net income (2) $ 9,568 $ 7,179 $ 38,932 $ 15,962 (1) Includes preferred equity investments held by the Company. (2) Includes the Company's share of equity income from co-investments and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments. Includes related party income of $0.8 million and $0.8 million for the three months ended September 30, 2016 and 2015 , respectively and $2.5 million and $2.9 million for the nine months ended September 30, 2016 and 2015 , respectively. |
Notes and Other Receivables (Ta
Notes and Other Receivables (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Notes and other receivables | Notes receivable, secured by real estate, and other receivables consist of the following as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 December 31, 2015 Notes receivable, secured, bearing interest at 10.75%, due September 2020 $ 4,378 $ — Notes receivable, secured, bearing interest at 6.0%, due December 2016 3,199 3,219 Notes and other receivables from affiliates (1) 3,602 3,092 Other receivables 11,762 12,974 Total notes and other receivables $ 22,941 $ 19,285 (1) The Company had $3.6 million and $3.1 million of short-term loans outstanding and due from various joint ventures as of September 30, 2016 and December 31, 2015 , respectively. See Note 5, Related Party Transactions, for additional details. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of debt and lines of credit | Debt consists of the following ($ in thousands): September 30, 2016 December 31, 2015 Weighted Average Maturity In Years Unsecured bonds private placement - fixed rate $ 314,128 $ 463,891 3.9 Term loan - variable rate 224,719 224,467 0.2 Bonds public offering - fixed rate 2,836,763 2,400,322 6.6 Unsecured debt, net (1) 3,375,610 3,088,680 Lines of credit, net (2) — 11,707 Mortgage notes payable, net (3) 2,209,077 2,215,077 5.3 Total debt, net $ 5,584,687 $ 5,315,464 Weighted average interest rate on fixed rate unsecured and unsecured private placement bonds 3.6 % 3.6 % Weighted average interest rate on variable rate term loan 2.4 % 2.4 % Weighted average interest rate on lines of credit 2.2 % 1.9 % Weighted average interest rate on mortgage notes payable 4.3 % 4.4 % (1) Includes unamortized premium and discounts of $2.8 million and $14.3 million and reduced by unamortized debt issuance costs of $17.2 million and $15.6 million , as of September 30, 2016 and December 31, 2015 , respectively. (2) Lines of credit, net, related to the Company's two lines of unsecured credit aggregating $1.0 billion , excludes unamortized debt issuance costs of $3.6 million as of September 30, 2016 as the net effect resulted in a negative debt balance and as such the amount was reclassified to prepaid expenses and other assets on the condensed consolidated balance sheets. The December 31, 2015 amount includes $3.3 million of unamortized debt issuance costs because the net balance resulted in a positive debt balance and is presented on a net basis. (3) Includes unamortized premium of $55.3 million and $64.8 million and reduced by unamortized debt issuance costs of $7.4 million and $8.0 million , as of September 30, 2016 and December 31, 2015 , respectively. |
Summary of aggregate scheduled principal payments | The aggregate scheduled principal payments of the Company’s outstanding debt as of September 30, 2016 are as follows (excluding lines of credit) (in thousands): Remaining in 2016 $ 207,668 2017 493,007 2018 321,328 2019 661,954 2020 693,868 Thereafter 3,173,339 Total $ 5,551,164 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Reconciliation of revenues and operating profit (loss) from segments to consolidated | The revenues and net operating income for each of the reportable operating segments are summarized as follows for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenues: Southern California $ 147,953 $ 135,900 $ 434,217 $ 390,381 Northern California 117,699 106,428 345,793 308,118 Seattle Metro 55,544 51,181 161,192 149,661 Other real estate assets 5,882 9,013 17,616 28,692 Total property revenues $ 327,078 $ 302,522 $ 958,818 $ 876,852 Net operating income: Southern California $ 100,447 $ 90,377 $ 295,834 $ 261,320 Northern California 84,790 76,327 249,011 219,906 Seattle Metro 37,688 34,484 109,352 101,288 Other real estate assets 4,792 7,215 14,691 22,971 Total net operating income 227,717 208,403 668,888 605,485 Management and other fees from affiliates 2,093 2,104 6,145 6,809 Depreciation and amortization (110,467 ) (116,308 ) (329,847 ) (336,946 ) General and administrative (9,647 ) (11,129 ) (28,527 ) (31,223 ) Merger and integration expenses — — — (3,798 ) Acquisition and investment related costs (284 ) (381 ) (1,379 ) (1,357 ) Interest expense (56,693 ) (50,053 ) (164,727 ) (148,401 ) Total return swap income 3,143 — 9,080 — Interest and other income 4,943 7,367 19,560 14,820 Equity income in co-investments 9,568 7,179 38,932 15,962 Loss on early retirement of debt (211 ) — (211 ) — Gain on sale of real estate and land — — 20,258 7,112 Deferred tax expense on gain on sale of real estate and land — — (4,279 ) — Gain on remeasurement of co-investment — — — 34,014 Net income $ 70,162 $ 47,182 $ 233,893 $ 162,477 |
Reconciliation of assets from segment to consolidated | Total assets for each of the reportable operating segments are summarized as follows as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 December 31, 2015 Assets: Southern California $ 4,830,293 $ 4,912,264 Northern California 3,844,421 3,749,072 Seattle Metro 1,679,303 1,613,175 Other real estate assets 89,895 107,066 Net reportable operating segment - real estate assets 10,443,912 10,381,577 Real estate under development 170,972 242,326 Co-investments 1,122,913 1,036,047 Real estate held for sale, net — 26,879 Cash and cash equivalents, including restricted cash 211,055 123,055 Marketable securities 153,703 137,485 Notes and other receivables 22,941 19,285 Prepaid expenses and other assets 51,700 38,437 Total assets $ 12,177,196 $ 12,005,091 |
Net Income Per Common Share a25
Net Income Per Common Share and Net Income Per Common Unit (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Net Income Per Share and Net Income Per Unit [Line Items] | |
Schedule of net income per common share | Essex Property Trust, Inc. Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Income Weighted- average Common Shares Per Common Share Amount Income Weighted- average Common Shares Per Common Share Amount Basic: Net income available to common stockholders $ 65,561 65,507,669 $ 1.00 $ 42,323 65,138,868 $ 0.65 Effect of Dilutive Securities — 109,882 — 158,682 Diluted: Net income available to common stockholders $ 65,561 65,617,551 $ 1.00 $ 42,323 65,297,550 $ 0.65 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Income Weighted- Per Income Weighted- Per Basic: Net income available to common stockholders $ 215,555 65,455,004 $ 3.29 $ 147,241 64,714,994 $ 2.28 Effect of Dilutive Securities — 123,657 — 177,776 Diluted: Net income available to common stockholders $ 215,555 65,578,661 $ 3.29 $ 147,241 64,892,770 $ 2.27 |
Essex Portfolio, L.P. [Member] | |
Net Income Per Share and Net Income Per Unit [Line Items] | |
Schedule of net income per common share | Essex Portfolio, L.P. Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Income Weighted- average Common Units Per Common Unit Amount Income Weighted- average Common Units Per Common Unit Amount Basic: Net income available to common unitholders $ 67,784 67,728,621 $ 1.00 $ 43,794 67,316,498 $ 0.65 Effect of Dilutive Securities — 109,882 — 158,682 Diluted: Net income available to common unitholders $ 67,784 67,838,503 $ 1.00 $ 43,794 67,475,180 $ 0.65 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Income Weighted- Per Income Weighted- Per Basic: Net income available to common unitholders $ 223,012 67,679,240 $ 3.30 $ 152,356 66,896,293 $ 2.28 Effect of Dilutive Securities — 123,657 — 177,776 Diluted: Net income available to common unitholders $ 223,012 67,802,897 $ 3.29 $ 152,356 67,074,069 $ 2.27 |
Organization and Basis of Pre26
Organization and Basis of Presentation - Summary of Financial Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, carrying value | $ 153,703 | $ 137,485 |
Marketable securities and other investments, amortized cost | 148,053 | 130,335 |
Marketable securities and other investments, gross unrealized gain (loss) | 5,650 | 7,150 |
Marketable securities | 153,703 | 137,485 |
Investment-Grade Unsecured Bonds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, amortized cost | 19,604 | 11,618 |
Available-for-sale securities, gross unrealized gain (loss) | 416 | 68 |
Available-for-sale securities, carrying value | 20,020 | 11,686 |
Investment Funds-U.S. Treasuries [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, amortized cost | 7,598 | 3,675 |
Available-for-sale securities, gross unrealized gain (loss) | 2 | (9) |
Available-for-sale securities, carrying value | 7,600 | 3,666 |
Common Stock and Stock Funds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, amortized cost | 29,901 | 34,655 |
Available-for-sale securities, gross unrealized gain (loss) | 5,232 | 7,091 |
Available-for-sale securities, carrying value | 35,133 | 41,746 |
Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Held-to-maturity Securities, amortized cost | 90,950 | 80,387 |
Held-to-maturity securities, gross unrealized gain (loss) | 0 | 0 |
Held-to-maturity securities, carrying value | $ 90,950 | $ 80,387 |
Organization and Basis of Pre27
Organization and Basis of Presentation - Accumulated Other Comprehensive Loss Summary (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | $ 6,337,023 |
Balance at period end | 6,183,902 |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (42,011) |
Other comprehensive (loss) income before reclassification | (3,288) |
Amounts reclassified from accumulated other comprehensive loss | 5,204 |
Other comprehensive income (loss) | 1,916 |
Balance at period end | (40,095) |
Change in fair value and amortization of swap settlements | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (48,366) |
Other comprehensive (loss) income before reclassification | (4,618) |
Amounts reclassified from accumulated other comprehensive loss | 7,985 |
Other comprehensive income (loss) | 3,367 |
Balance at period end | (44,999) |
Unrealized gains on available for sale securities | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | 6,355 |
Other comprehensive (loss) income before reclassification | 1,330 |
Amounts reclassified from accumulated other comprehensive loss | (2,781) |
Other comprehensive income (loss) | (1,451) |
Balance at period end | $ 4,904 |
Organization and Basis of Pre28
Organization and Basis of Presentation - Accumulated Other Comprehensive Loss - Partnership (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | $ 6,337,023 |
Balance at period end | 6,183,902 |
Essex Portfolio, L.P. [Member] | AOCI Including Portion Attributable to Noncontrolling Interest [Member] | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (39,598) |
Other comprehensive (loss) income before reclassification | (3,399) |
Amounts reclassified from accumulated other comprehensive loss | 5,380 |
Other comprehensive income (loss) | 1,981 |
Balance at period end | (37,617) |
Essex Portfolio, L.P. [Member] | Change in fair value and amortization of swap settlements | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (46,087) |
Other comprehensive (loss) income before reclassification | (4,775) |
Amounts reclassified from accumulated other comprehensive loss | 8,256 |
Other comprehensive income (loss) | 3,481 |
Balance at period end | (42,606) |
Essex Portfolio, L.P. [Member] | Unrealized gains on available for sale securities | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | 6,489 |
Other comprehensive (loss) income before reclassification | 1,376 |
Amounts reclassified from accumulated other comprehensive loss | (2,876) |
Other comprehensive income (loss) | (1,500) |
Balance at period end | $ 4,989 |
Organization and Basis of Pre29
Organization and Basis of Presentation - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016USD ($)projectcommunitybuildingpartnershipapartmentshares | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)projectcommunitybuildingpartnershipapartmentshares | Sep. 30, 2015USD ($) | Jan. 01, 2016investment | Dec. 31, 2015USD ($)shares | |
Real Estate Properties [Line Items] | ||||||
Ownership interest in partnership (as a percent) | 96.70% | |||||
Apartment communities owned (in communities) | community | 244 | 244 | ||||
Apartment units owned (in units) | apartment | 59,290 | 59,290 | ||||
Ownership interest, number of commercial buildings (in commercial buildings) | building | 3 | 3 | ||||
Ownership interest, number of active development projects (in projects) | project | 6 | 6 | ||||
Sales and maturities of marketable securities | $ 3,500,000 | $ 0 | $ 14,700,000 | $ 2,000,000 | ||
Available-for-sale securities, gross realized gain (loss) | $ 1,000,000 | 0 | 2,900,000 | 0 | ||
Proceeds from sale of other investments | 5,600,000 | 0 | 5,600,000 | |||
Gain (loss) on sale of other investments | 600,000 | $ 0 | 600,000 | |||
Number of previously consolidated co-investments considered VIE (in variable interest entities) | investment | 9 | |||||
Downreit limited partnerships consolidated by company (in number of partnerships) | partnership | 19 | 19 | ||||
Communities within Downreit partnerships (in communities) | community | 11 | 11 | ||||
Assets related to variable interest entities net of intercompany eliminations | $ 954,600,000 | $ 954,600,000 | $ 893,100,000 | |||
Liabilities related to variable interest entities net of intercompany eliminations | 267,300,000 | 267,300,000 | 231,800,000 | |||
Noncontrolling interest in variable interest entity | 52,300,000 | 52,300,000 | 54,600,000 | |||
Fixed rate debt carrying amount | 5,000,000,000 | 5,000,000,000 | ||||
Fixed rate debt fair value | 5,300,000,000 | 5,300,000,000 | ||||
Investments in mortgage back securities, fair value | 105,900,000 | 105,900,000 | 110,200,000 | |||
Capitalized internal costs related to development and redevelopment projects | 3,800,000 | $ 2,900,000 | 10,600,000 | $ 8,300,000 | ||
Mortgage Backed Securities [Member] | ||||||
Real Estate Properties [Line Items] | ||||||
Held-to-maturity securities, carrying value | $ 90,950,000 | $ 90,950,000 | $ 80,387,000 | |||
Essex Portfolio, L.P. [Member] | ||||||
Real Estate Properties [Line Items] | ||||||
Operating Partnership units outstanding (in units) | shares | 2,219,268 | 2,219,268 | 2,214,545 | |||
Redemption value of operating partnership units outstanding | $ 494,200,000 | $ 494,200,000 | $ 530,200,000 |
Significant Transactions Duri30
Significant Transactions During the Third Quarter of 2016 and Subsequent Events (Details) $ in Millions | 1 Months Ended | ||
Sep. 30, 2016USD ($)apartment | May 31, 2016apartment | Aug. 31, 2016USD ($) | |
Preferred Equity Investment In Limited Liability Company [Member] | 624 Yale Apartments [Member] | |||
Other Commitments [Line Items] | |||
Other commitment | $ 11.6 | ||
Number of units acquired (in number of units) | apartment | 228 | ||
Preferred stock, stated interest percentage | 12.00% | ||
Commitment, funded amount | $ 1.9 | ||
Loan Commitment In Limited Liability Company [Member] | |||
Other Commitments [Line Items] | |||
Other commitment | $ 26.3 | ||
Number of units acquired (in number of units) | apartment | 216 | ||
Note receivable, interest rate (as a percent) | 10.75% | ||
Commitment, funded amount | $ 4.4 |
Co-investments - Summary of Inv
Co-investments - Summary of Investments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 1,122,913 | $ 1,036,047 |
Total operating co investments [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | 794,858 | 831,521 |
Membership Interest In Limited Liability Company That Owns Connolly Station [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 426,259 | 422,317 |
Limited partnership interest in partnership investments | 55.00% | |
Membership interest in Wesco I, III, and IV [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 202,531 | 218,902 |
Limited partnership interest in partnership investments | 50.00% | |
Membership interest in BEXAEW [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 66,346 | 88,850 |
Limited partnership interest in partnership investments | 50.00% | |
Membership Interest In Palm Valley [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 68,403 | 68,525 |
Limited partnership interest in partnership investments | 50.00% | |
Partnership interest in Other Funds [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 31,319 | 32,927 |
Partnership interest in Other Funds [Member] | Minimum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Limited partnership interest in partnership investments | 50.00% | |
Partnership interest in Other Funds [Member] | Maximum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Limited partnership interest in partnership investments | 55.00% | |
Total development co investments [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 141,666 | 98,214 |
Total development co investments [Member] | Minimum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Limited partnership interest in partnership investments | 50.00% | |
Total development co investments [Member] | Maximum [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Limited partnership interest in partnership investments | 55.00% | |
Total preferred interest investments [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 186,389 | 106,312 |
Total preferred interest investments [Member] | Investments in Majority-owned Subsidiaries [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Co-investments | $ 35,900 | $ 35,800 |
Co-investments - Combined Finan
Co-investments - Combined Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Equity Method Investment, Summarized Financial Information, Assets [Abstract] | |||||
Rental properties and real estate under development | $ 170,972 | $ 170,972 | $ 242,326 | ||
Equity Method Investment, Summarized Financial Information, Liabilities and Equity [Abstract] | |||||
Other liabilities | 34,172 | 34,172 | 34,518 | ||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||||
Interest expense | (56,693) | $ (50,053) | (164,727) | $ (148,401) | |
General and administrative | (9,647) | (11,129) | (28,527) | (31,223) | |
Total co investment [Member] | |||||
Equity Method Investment, Summarized Financial Information, Assets [Abstract] | |||||
Rental properties and real estate under development | 3,432,866 | 3,432,866 | 3,360,360 | ||
Other assets | 118,131 | 118,131 | 96,785 | ||
Total assets | 3,550,997 | 3,550,997 | 3,457,145 | ||
Equity Method Investment, Summarized Financial Information, Liabilities and Equity [Abstract] | |||||
Debt | 1,506,107 | 1,506,107 | 1,499,601 | ||
Other liabilities | 90,039 | 90,039 | 92,241 | ||
Equity | 1,954,851 | 1,954,851 | 1,865,303 | ||
Total liabilities and equity | 3,550,997 | 3,550,997 | 3,457,145 | ||
Company's share of equity | 1,122,913 | 1,122,913 | $ 1,036,047 | ||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||||
Property revenues | 72,124 | 65,869 | 216,434 | 191,458 | |
Property operating expenses | (24,976) | (23,094) | (75,377) | (69,232) | |
Net operating income | 47,148 | 42,775 | 141,057 | 122,226 | |
Gain on sale of real estate | 0 | 0 | 28,291 | 14 | |
Interest expense | (10,978) | (11,314) | (35,260) | (33,727) | |
General and administrative | (1,496) | (1,335) | (4,276) | (4,414) | |
Depreciation and amortization | (25,569) | (26,574) | (79,676) | (76,220) | |
Net income | 9,105 | 3,552 | 50,136 | 7,879 | |
Company's share of net income | 9,568 | 7,179 | 38,932 | 15,962 | |
Total co investment [Member] | Affiliated Entity [Member] | |||||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||||
Company's share of net income | $ 800 | $ 800 | $ 2,500 | $ 2,900 |
Notes and Other Receivables (D
Notes and Other Receivables (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 22,941 | $ 19,285 |
Bridge loan | 3,600 | 3,100 |
Secured Due September 2020 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 4,378 | $ 0 |
Stated interest rate (in hundredths) | 10.75% | 10.75% |
Secured Due December 2016 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 3,199 | $ 3,219 |
Stated interest rate (in hundredths) | 6.00% | 6.00% |
Notes And Other Receivables From Affiliates [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 3,602 | $ 3,092 |
Other Receivables [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 11,762 | $ 12,974 |
Related Party Transactions (De
Related Party Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Aug. 31, 2015USD ($)apartment | Jun. 30, 2015USD ($)apartment | Mar. 31, 2015USD ($) | Jan. 31, 2013USD ($) | Sep. 30, 2016USD ($)apartment | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)apartment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Related Party Transaction [Line Items] | |||||||||
Management and other fees from affiliates | $ 3,100 | $ 3,300 | $ 9,600 | $ 12,500 | |||||
Development and redevelopment fees | $ 1,000 | $ 1,200 | 3,400 | 5,800 | |||||
Payments to acquire preferred equity investments | $ 121,972 | 119,120 | |||||||
Apartment units owned (in units) | apartment | 59,290 | 59,290 | |||||||
Company's share of gain on the sales of co-investments | $ 13,046 | $ 0 | |||||||
Notes and other receivables | $ 22,941 | 22,941 | $ 19,285 | ||||||
Notes Receivable [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Notes and other receivables | 3,600 | 3,600 | |||||||
Notes And Other Receivables From Affiliates [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Notes and other receivables | $ 3,602 | $ 3,602 | $ 3,092 | ||||||
Marcus and Millichamp Company TMMC Affiliate [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Preferred equity interest investment related party entity | $ 8,600 | ||||||||
Company's share of gain on the sales of co-investments | $ 500 | ||||||||
Anaheim, CA Multifamily Property [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Preferred equity investments | 13,700 | ||||||||
Payments to acquire preferred equity investments | 1,300 | ||||||||
Company's share of gain on the sales of co-investments | $ 13,700 | ||||||||
Preferred stock, stated interest percentage | 9.00% | ||||||||
Greentree Apartments [Member] | Limited Liability Company [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to acquire preferred equity investments | $ 10,000 | ||||||||
Preferred stock, stated interest percentage | 9.50% | ||||||||
Apartment units owned (in units) | apartment | 220 | ||||||||
Sterling Cove [Member] | Limited Liability Company [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to acquire preferred equity investments | $ 5,000 | ||||||||
Preferred stock, stated interest percentage | 9.50% | ||||||||
Apartment units owned (in units) | apartment | 218 | ||||||||
Alta Vista Apartments [Member] | Limited Liability Company [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to acquire preferred equity investments | $ 5,000 | ||||||||
Preferred stock, stated interest percentage | 9.50% | ||||||||
Apartment units owned (in units) | apartment | 92 |
Debt - Debt Summary (Details)
Debt - Debt Summary (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 3,375,610 | $ 3,088,680 |
Lines of credit, net | 0 | 11,707 |
Mortgage notes payable, net | 2,209,077 | 2,215,077 |
Total debt | 5,584,687 | 5,315,464 |
Unsecured bonds private placement - fixed rate [Member] | ||
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 314,128 | 463,891 |
Debt, weighted average maturity (years) | 3 years 10 months 15 days | |
Term loan - variable rate [Member] | ||
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 224,719 | $ 224,467 |
Debt, weighted average maturity (years) | 2 months 15 days | |
Weighted average interest rate | 2.40% | 2.40% |
Bonds public offering - fixed rate [Member] | ||
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 2,836,763 | $ 2,400,322 |
Debt, weighted average maturity (years) | 6 years 7 months | |
Weighted average interest rate | 3.60% | 3.60% |
Unsecured Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Lines of credit, net | $ 0 | $ 11,707 |
Weighted average interest rate | 2.20% | 1.90% |
Mortgage Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt, weighted average maturity (years) | 5 years 3 months | |
Mortgage notes payable, net | $ 2,209,077 | $ 2,215,077 |
Weighted average interest rate | 4.30% | 4.40% |
Debt - Future Principal Payment
Debt - Future Principal Payments (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Debt Disclosure [Abstract] | |
Remaining in 2016 | $ 207,668 |
2,017 | 493,007 |
2,018 | 321,328 |
2,019 | 661,954 |
2,020 | 693,868 |
Thereafter | 3,173,339 |
Long-term debt | $ 5,551,164 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 9 Months Ended | |
Sep. 30, 2016USD ($)instrument | Dec. 31, 2015USD ($) | |
Unsecured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized premium | $ 2,800,000 | $ 14,300,000 |
Unamortized debt issuance expense | 17,200,000 | 15,600,000 |
Unsecured Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance expense | $ 3,600,000 | 3,300,000 |
Number of lines of unsecured credit | instrument | 2 | |
Aggregate borrowing capacity | $ 1,000,000,000 | |
Mortgage Notes [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized premium | 55,300,000 | 64,800,000 |
Unamortized debt issuance expense | $ 7,400,000 | $ 8,000,000 |
Segment Information (Details)
Segment Information (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)segment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment Reporting [Abstract] | |||||
Number of reportable operating segments defined by geographical regions | segment | 3 | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property revenues | $ 327,078,000 | $ 302,522,000 | $ 958,818,000 | $ 876,852,000 | |
Net operating income | 227,717,000 | 208,403,000 | 668,888,000 | 605,485,000 | |
Management and other fees from affiliates | 2,093,000 | 2,104,000 | 6,145,000 | 6,809,000 | |
Depreciation and amortization | (110,467,000) | (116,308,000) | (329,847,000) | (336,946,000) | |
General and administrative | (9,647,000) | (11,129,000) | (28,527,000) | (31,223,000) | |
Merger and integration expenses | 0 | 0 | 0 | (3,798,000) | |
Acquisition and investment related costs | (284,000) | (381,000) | (1,379,000) | (1,357,000) | |
Interest expense | (56,693,000) | (50,053,000) | (164,727,000) | (148,401,000) | |
Total return swap income | 3,143,000 | 0 | 9,080,000 | 0 | |
Interest and other income | 4,943,000 | 7,367,000 | 19,560,000 | 14,820,000 | |
Equity income in co-investments | 9,568,000 | 7,179,000 | 38,932,000 | 15,962,000 | |
Loss on early retirement of debt | (211,000) | 0 | (211,000) | 0 | |
Gain on sale of real estate and land | 0 | 0 | 20,258,000 | 7,112,000 | |
Deferred tax expense on gain on sale of real estate and land | 0 | 0 | (4,279,000) | 0 | |
Gain on remeasurement of co-investment | 0 | 0 | 0 | 34,014,000 | |
Net income | 70,162,000 | 47,182,000 | 233,893,000 | 162,477,000 | |
Net reportable operating segment - real estate assets | 10,443,912,000 | 10,443,912,000 | $ 10,381,577,000 | ||
Real estate under development | 170,972,000 | 170,972,000 | 242,326,000 | ||
Co-investments | 1,122,913,000 | 1,122,913,000 | 1,036,047,000 | ||
Real estate held for sale, net | 0 | 0 | 26,879,000 | ||
Cash and cash equivalents, including restricted cash | 211,055,000 | 211,055,000 | 123,055,000 | ||
Marketable securities | 153,703,000 | 153,703,000 | 137,485,000 | ||
Notes and other receivables | 22,941,000 | 22,941,000 | 19,285,000 | ||
Prepaid expenses and other assets | 51,700,000 | 51,700,000 | 38,437,000 | ||
Total assets | 12,177,196,000 | 12,177,196,000 | 12,005,091,000 | ||
Reportable Geographical Components [Member] | Southern California [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property revenues | 147,953,000 | 135,900,000 | 434,217,000 | 390,381,000 | |
Net operating income | 100,447,000 | 90,377,000 | 295,834,000 | 261,320,000 | |
Net reportable operating segment - real estate assets | 4,830,293,000 | 4,830,293,000 | 4,912,264,000 | ||
Reportable Geographical Components [Member] | Northern California [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property revenues | 117,699,000 | 106,428,000 | 345,793,000 | 308,118,000 | |
Net operating income | 84,790,000 | 76,327,000 | 249,011,000 | 219,906,000 | |
Net reportable operating segment - real estate assets | 3,844,421,000 | 3,844,421,000 | 3,749,072,000 | ||
Reportable Geographical Components [Member] | Seattle Metro [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property revenues | 55,544,000 | 51,181,000 | 161,192,000 | 149,661,000 | |
Net operating income | 37,688,000 | 34,484,000 | 109,352,000 | 101,288,000 | |
Net reportable operating segment - real estate assets | 1,679,303,000 | 1,679,303,000 | 1,613,175,000 | ||
Segment Reconciling Items [Member] | Other Real Estate Assets [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property revenues | 5,882,000 | 9,013,000 | 17,616,000 | 28,692,000 | |
Net operating income | 4,792,000 | $ 7,215,000 | 14,691,000 | $ 22,971,000 | |
Net reportable operating segment - real estate assets | $ 89,895,000 | $ 89,895,000 | $ 107,066,000 |
Net Income Per Common Share a39
Net Income Per Common Share and Net Income Per Common Unit (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Basic [Abstract] | ||||
Income from discontinued operations available to common stockholders | $ 65,561 | $ 42,323 | $ 215,555 | $ 147,241 |
Weighted average number of shares outstanding during the period (in shares) | 65,507,669 | 65,138,868 | 65,455,004 | 64,714,994 |
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.29 | $ 2.28 |
Effect of dilutive securities | $ 0 | $ 0 | $ 0 | $ 0 |
Effect of dilutive securities (in shares) | 109,882 | 158,682 | 123,657 | 177,776 |
Diluted [Abstract] | ||||
Income from continuing operations available to common stockholders | $ 65,561 | $ 42,323 | $ 215,555 | $ 147,241 |
Adjusted income from continuing operations available to common stockholders (in shares) | 65,617,551 | 65,297,550 | 65,578,661 | 64,892,770 |
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.29 | $ 2.27 |
Essex Portfolio, L.P. [Member] | ||||
Basic [Abstract] | ||||
Income from discontinued operations available to common stockholders | $ 67,784 | $ 43,794 | $ 223,012 | $ 152,356 |
Weighted average number of shares outstanding during the period (in shares) | 67,728,621 | 67,316,498 | 67,679,240 | 66,896,293 |
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.30 | $ 2.28 |
Effect of dilutive securities | $ 0 | $ 0 | $ 0 | $ 0 |
Effect of dilutive securities (in shares) | 109,882 | 158,682 | 123,657 | 177,776 |
Diluted [Abstract] | ||||
Income from continuing operations available to common stockholders | $ 67,784 | $ 43,794 | $ 223,012 | $ 152,356 |
Adjusted income from continuing operations available to common stockholders (in shares) | 67,838,503 | 67,475,180 | 67,802,897 | 67,074,069 |
Net income available to common stockholders (in dollars per share) | $ 1 | $ 0.65 | $ 3.29 | $ 2.27 |
Convertible Limited Partnership Units [Member] | ||||
Diluted [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 2,220,952 | 2,177,630 | 2,224,236 | 2,181,299 |
Antidilutive securities excluded from computation of earnings per share, value | $ 2,200 | $ 1,500 | $ 7,500 | $ 5,100 |
Employee Stock Option [Member] | ||||
Diluted [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 40,900 | 24,500 | 76,054 | 24,500 |
Employee Stock Option [Member] | Essex Portfolio, L.P. [Member] | ||||
Diluted [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 40,900 | 24,500 | 76,054 | 24,500 |
Derivative Instruments and He40
Derivative Instruments and Hedging Activities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Derivative [Line Items] | |||||
Cash flow hedge ineffectiveness | $ 0 | $ 0 | $ 0 | $ 0 | |
Total return swap income | 3,143,000 | $ 0 | 9,080,000 | $ 0 | |
Multifamily Housing Mortgage Revenue Bonds [Member] | |||||
Derivative [Line Items] | |||||
Bond subject to interest rate caps | 257,300,000 | 257,300,000 | |||
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | $ 225,000,000 | $ 225,000,000 | |||
Interest rate (in hundredths) | 2.40% | 2.40% | |||
Aggregate carrying value of the interest rate swap contracts | $ 200,000 | $ 200,000 | $ 1,000,000 | ||
Designated as Hedging Instrument [Member] | Interest Rate Cap [Member] | |||||
Derivative [Line Items] | |||||
Aggregate carrying value of the interest rate swap contracts | 0 | 0 | 0 | ||
Not Designated as Hedging Instrument [Member] | Total Return Swap [Member] | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 20,700,000 | 20,700,000 | |||
Derivative, fair value, net | 16,000 | 16,000 | $ 4,000 | ||
Not Designated as Hedging Instrument [Member] | Total Return Swap, Callable [Member] | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 114,400,000 | 114,400,000 | |||
Not Designated as Hedging Instrument [Member] | Total Return Swap, January 1, 2017 [Member] | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | $ 142,900,000 | $ 142,900,000 |