Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 05, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-13106 | |
Entity Registrant Name | ESSEX PROPERTY TRUST, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 77-0369576 | |
Entity Address, Address Line One | 1100 Park Place, Suite 200 | |
Entity Address, City or Town | San Mateo | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94403 | |
City Area Code | 650 | |
Local Phone Number | 655-7800 | |
Title of each class | Common Stock, $.0001 par value (Essex Property Trust, Inc.) | |
Trading Symbol | ESS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 65,417,355 | |
Entity Central Index Key | 0000920522 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Essex Portfolio, L.P. | ||
Entity Information [Line Items] | ||
Entity File Number | 333-44467-01 | |
Entity Registrant Name | ESSEX PORTFOLIO, L.P. | |
Entity Incorporation, State or Country Code | CA | |
Entity Tax Identification Number | 77-0369575 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Rental properties: | ||
Land and land improvements | $ 2,983,314 | $ 2,773,805 |
Buildings and improvements | 12,263,293 | 11,264,337 |
Total rental properties | 15,246,607 | 14,038,142 |
Less: accumulated depreciation | (3,818,489) | (3,689,482) |
Net real estate | 11,428,118 | 10,348,660 |
Real estate under development | 435,865 | 546,075 |
Co-investments | 997,137 | 1,335,339 |
Total real estate | 12,861,120 | 12,230,074 |
Cash and cash equivalents-unrestricted | 271,877 | 70,087 |
Cash and cash equivalents-restricted | 10,470 | 11,007 |
Marketable securities, net of allowance for credit losses of $13.6 million and zero as of March 31, 2020 and December 31, 2019, respectively | 148,139 | 144,193 |
Notes and other receivables, net of allowance for credit losses of $0.1 million and zero as of March 31, 2020 and December 31, 2019, respectively (includes related party receivables of $7.7 million and $90.2 million as of March 31, 2020 and December 31, 2019, respectively) | 34,867 | 134,365 |
Operating lease right-of-use assets | 74,428 | 74,744 |
Prepaid expenses and other assets | 49,940 | 40,935 |
Total assets | 13,450,841 | 12,705,405 |
LIABILITIES AND EQUITY/CAPITAL | ||
Unsecured debt, net | 5,258,263 | 4,763,206 |
Mortgage notes payable, net | 887,389 | 990,667 |
Lines of credit | 350,000 | 55,000 |
Accounts payable and accrued liabilities | 193,564 | 158,017 |
Construction payable | 50,538 | 48,912 |
Dividends/Distributions payable | 142,800 | 135,384 |
Operating lease liabilities | 76,405 | 76,740 |
Other liabilities | 41,290 | 36,565 |
Total liabilities | 7,000,249 | 6,264,491 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 32,643 | 37,410 |
Equity/Capital: | ||
Common stock; $.0001 par value, 670,000,000 shares authorized; 65,412,355 and 66,091,954 shares issued and outstanding, respectively | 7 | 7 |
Additional paid-in capital | 6,959,523 | 7,121,927 |
Distributions in excess of accumulated earnings | (708,697) | (887,619) |
Limited Partners: | ||
Accumulated other comprehensive loss, net | (22,668) | (13,888) |
Total stockholders' equity | 6,228,165 | 6,220,427 |
Noncontrolling interest | 189,784 | 183,077 |
Total equity | 6,417,949 | 6,403,504 |
Total liabilities and equity/capital | 13,450,841 | 12,705,405 |
Essex Portfolio, L.P. | ||
Rental properties: | ||
Land and land improvements | 2,983,314 | 2,773,805 |
Buildings and improvements | 12,263,293 | 11,264,337 |
Total rental properties | 15,246,607 | 14,038,142 |
Less: accumulated depreciation | (3,818,489) | (3,689,482) |
Net real estate | 11,428,118 | 10,348,660 |
Real estate under development | 435,865 | 546,075 |
Co-investments | 997,137 | 1,335,339 |
Total real estate | 12,861,120 | 12,230,074 |
Cash and cash equivalents-unrestricted | 271,877 | 70,087 |
Cash and cash equivalents-restricted | 10,470 | 11,007 |
Marketable securities, net of allowance for credit losses of $13.6 million and zero as of March 31, 2020 and December 31, 2019, respectively | 148,139 | 144,193 |
Notes and other receivables, net of allowance for credit losses of $0.1 million and zero as of March 31, 2020 and December 31, 2019, respectively (includes related party receivables of $7.7 million and $90.2 million as of March 31, 2020 and December 31, 2019, respectively) | 34,867 | 134,365 |
Operating lease right-of-use assets | 74,428 | 74,744 |
Prepaid expenses and other assets | 49,940 | 40,935 |
Total assets | 13,450,841 | 12,705,405 |
LIABILITIES AND EQUITY/CAPITAL | ||
Unsecured debt, net | 5,258,263 | 4,763,206 |
Mortgage notes payable, net | 887,389 | 990,667 |
Lines of credit | 350,000 | 55,000 |
Accounts payable and accrued liabilities | 193,564 | 158,017 |
Construction payable | 50,538 | 48,912 |
Dividends/Distributions payable | 142,800 | 135,384 |
Operating lease liabilities | 76,405 | 76,740 |
Other liabilities | 41,290 | 36,565 |
Total liabilities | 7,000,249 | 6,264,491 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 32,643 | 37,410 |
General Partner: | ||
Common equity (65,412,355 and 66,091,954 units issued and outstanding, respectively) | 6,250,833 | 6,234,315 |
Limited Partners: | ||
Common equity (2,296,043 and 2,301,653 units issued and outstanding, respectively) | 63,550 | 57,359 |
Accumulated other comprehensive loss, net | (19,519) | (10,432) |
Total partners' capital | 6,294,864 | 6,281,242 |
Noncontrolling interest | 123,085 | 122,262 |
Total capital | 6,417,949 | 6,403,504 |
Total liabilities and equity/capital | $ 13,450,841 | $ 12,705,405 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Marketable securities, allowance for credit loss | $ 13,644 | $ 0 |
Notes and other receivables, allowance for credit loss | 66 | 0 |
Related party receivables | $ 7,700 | $ 90,200 |
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) | 65,412,355 | 66,091,954 |
Common stock, shares outstanding (in shares) | 65,412,355 | 66,091,954 |
Essex Portfolio, L.P. | ||
Marketable securities, allowance for credit loss | $ 13,600 | $ 0 |
Notes and other receivables, allowance for credit loss | 100 | 0 |
Related party receivables | $ 7,700 | $ 90,200 |
Essex Portfolio, L.P. | General Partner | ||
Common stock, shares issued (in shares) | 65,412,355 | 66,091,954 |
Common stock, shares outstanding (in shares) | 65,412,355 | 66,091,954 |
Essex Portfolio, L.P. | Limited Partners | ||
Common stock, shares issued (in shares) | 2,296,043 | 2,301,653 |
Common stock, shares outstanding (in shares) | 2,296,043 | 2,301,653 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Rental and other property | $ 389,750 | $ 353,888 |
Management and other fees from affiliates | 2,617 | 2,335 |
Revenues | 392,367 | 356,223 |
Expenses: | ||
Property operating, excluding real estate taxes | 64,131 | 58,622 |
Real estate taxes | 43,012 | 39,418 |
Corporate-level property management expenses | 8,759 | 8,429 |
Depreciation and amortization | 131,559 | 120,568 |
General and administrative | 13,982 | 13,459 |
Expensed acquisition and investment related costs | 87 | 32 |
Total expenses | 261,530 | 240,528 |
Earnings from operations | 130,837 | 115,695 |
Interest expense | (55,147) | (53,643) |
Total return swap income | 1,984 | 2,045 |
Interest and other income (loss) | (5,221) | 12,261 |
Equity income from co-investments | 21,297 | 16,276 |
Gain on early retirement of debt, net | 321 | 1,336 |
Gain on remeasurement of co-investment | 234,694 | 31,535 |
Net income | 328,765 | 125,505 |
Net income attributable to noncontrolling interest | (13,759) | (6,647) |
Net income available to common stockholders | 315,006 | 118,858 |
Comprehensive income | 319,678 | 123,668 |
Comprehensive income attributable to noncontrolling interest | (13,452) | (6,585) |
Comprehensive income attributable to controlling interest | $ 306,226 | $ 117,083 |
Basic: | ||
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.77 | $ 1.81 |
Weighted average number of shares/common units outstanding during the period (in shares) | 66,043,831 | 65,702,788 |
Diluted: | ||
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.76 | $ 1.81 |
Weighted average number of shares/common units outstanding during the period (in shares) | 66,195,415 | 65,783,869 |
Essex Portfolio, L.P. | ||
Revenues: | ||
Rental and other property | $ 389,750 | $ 353,888 |
Management and other fees from affiliates | 2,617 | 2,335 |
Revenues | 392,367 | 356,223 |
Expenses: | ||
Property operating, excluding real estate taxes | 64,131 | 58,622 |
Real estate taxes | 43,012 | 39,418 |
Corporate-level property management expenses | 8,759 | 8,429 |
Depreciation and amortization | 131,559 | 120,568 |
General and administrative | 13,982 | 13,459 |
Expensed acquisition and investment related costs | 87 | 32 |
Total expenses | 261,530 | 240,528 |
Earnings from operations | 130,837 | 115,695 |
Interest expense | (55,147) | (53,643) |
Total return swap income | 1,984 | 2,045 |
Interest and other income (loss) | (5,221) | 12,261 |
Equity income from co-investments | 21,297 | 16,276 |
Gain on early retirement of debt, net | 321 | 1,336 |
Gain on remeasurement of co-investment | 234,694 | 31,535 |
Net income | 328,765 | 125,505 |
Net income attributable to noncontrolling interest | (2,773) | (2,476) |
Net income available to common stockholders | 325,992 | 123,029 |
Comprehensive income | 319,678 | 123,668 |
Comprehensive income attributable to noncontrolling interest | (2,773) | (2,476) |
Comprehensive income attributable to controlling interest | $ 316,905 | $ 121,192 |
Basic: | ||
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.77 | $ 1.81 |
Weighted average number of shares/common units outstanding during the period (in shares) | 68,344,012 | 68,007,852 |
Diluted: | ||
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.76 | $ 1.81 |
Weighted average number of shares/common units outstanding during the period (in shares) | 68,495,596 | 68,088,933 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Distributions in Excess of Accumulated Earnings | Accumulated Other Comprehensive Loss, Net | Noncontrolling Interest |
Balance at period beginning at Dec. 31, 2018 | $ 6,393,844 | $ 7 | $ 7,093,079 | $ (812,796) | $ (13,217) | $ 126,771 |
Balances (in shares) at Dec. 31, 2018 | 65,890 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 125,505 | 118,858 | 6,647 | |||
Reversal of unrealized gains upon the sale of marketable debt securities | 33 | 32 | 1 | |||
Change in fair value of derivatives and amortization of swap settlements | (1,993) | (1,926) | (67) | |||
Change in fair value of marketable debt securities, net | 123 | 119 | 4 | |||
Issuance of common stock under: | ||||||
Stock option and restricted stock plans, net | 3,204 | 3,204 | ||||
Stock option and restricted stock plans, net (in shares) | 51 | |||||
Sale of common stock, net | (20) | (20) | ||||
Equity based compensation costs | 2,600 | 2,301 | 299 | |||
Retirement of common stock, net | (56,989) | $ 0 | (56,989) | |||
Retirement of common stock, net (in shares) | (234) | |||||
Changes in the redemption value of redeemable noncontrolling interest | (1,767) | (3,027) | 1,260 | |||
Distributions to noncontrolling interest | (7,164) | (7,164) | ||||
Redemptions of noncontrolling interest | (12,213) | (10,394) | (1,819) | |||
Common stock dividends | (128,149) | (128,149) | ||||
Balance at period end at Mar. 31, 2019 | 6,317,195 | $ 7 | 7,028,154 | (822,087) | (14,817) | 125,938 |
Balances (in shares) at Mar. 31, 2019 | 65,716 | |||||
Balance at period beginning at Dec. 31, 2019 | 6,403,504 | $ 7 | 7,121,927 | (887,619) | (13,888) | 183,077 |
Balances (in shares) at Dec. 31, 2019 | 66,092 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 328,765 | 315,006 | 13,759 | |||
Change in fair value of derivatives and amortization of swap settlements | (8,782) | (8,486) | (296) | |||
Change in fair value of marketable debt securities, net | (305) | (294) | (11) | |||
Issuance of common stock under: | ||||||
Stock option and restricted stock plans, net | 8,665 | 8,665 | ||||
Stock option and restricted stock plans, net (in shares) | 89 | |||||
Sale of common stock, net | (70) | (70) | ||||
Equity based compensation costs | 1,698 | 1,619 | 79 | |||
Retirement of common stock, net | (176,311) | $ 0 | (176,311) | |||
Retirement of common stock, net (in shares) | (776) | |||||
Changes in the redemption value of redeemable noncontrolling interest | 4,767 | 4,741 | 26 | |||
Changes in noncontrolling interest from acquisition | 1,349 | 1,349 | ||||
Distributions to noncontrolling interest | (7,879) | (7,879) | ||||
Redemptions of noncontrolling interest | (1,368) | (1,048) | (320) | |||
Redemptions of noncontrolling interest (in shares) | 7 | |||||
Common stock dividends | (135,894) | (135,894) | ||||
Balance at period end at Mar. 31, 2020 | $ 6,417,949 | $ 7 | $ 6,959,523 | $ (708,697) | $ (22,668) | $ 189,784 |
Balances (in shares) at Mar. 31, 2020 | 65,412 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Common stock dividends (in dollars per share) | $ 2.0775 | $ 1.95 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Capital - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Jan. 01, 2020 | Jan. 01, 2019 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Net income | $ 328,765 | $ 125,505 | ||
Reversal of unrealized gains upon the sale of marketable debt securities | 33 | |||
Change in fair value of derivatives and amortization of swap settlements | (8,782) | (1,993) | ||
Change in fair value of marketable debt securities, net | (305) | 123 | ||
Issuance of common stock under: | ||||
Sale of common stock by general partner, net | (70) | (20) | ||
Retirement of common units, net | (176,311) | (56,989) | ||
Changes in the redemption value of redeemable noncontrolling interest | 4,767 | (1,767) | ||
Changes in noncontrolling interest from acquisition | 1,349 | |||
Distributions to noncontrolling interest | (7,879) | (7,164) | ||
Redemptions | (1,368) | (12,213) | ||
ASU 2016-13 | ||||
Issuance of common stock under: | ||||
Cumulative effect adjustment | $ (190) | |||
ASU 2017-12 | ||||
Issuance of common stock under: | ||||
Cumulative effect adjustment | $ 181 | |||
Essex Portfolio, L.P. | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Balance at period beginning | 6,403,504 | 6,393,844 | ||
Net income | 328,765 | 125,505 | ||
Reversal of unrealized gains upon the sale of marketable debt securities | 33 | |||
Change in fair value of derivatives and amortization of swap settlements | (8,782) | (1,993) | ||
Change in fair value of marketable debt securities, net | (305) | 123 | ||
Issuance of common stock under: | ||||
General partner's stock based compensation, net | 8,665 | 3,204 | ||
Sale of common stock by general partner, net | (70) | (20) | ||
Equity based compensation costs | 1,698 | 2,600 | ||
Retirement of common units, net | (176,311) | (56,989) | ||
Changes in the redemption value of redeemable noncontrolling interest | 4,767 | (1,767) | ||
Changes in noncontrolling interest from acquisition | 1,349 | |||
Distributions to noncontrolling interest | (3,107) | (2,667) | ||
Redemptions | (1,368) | (12,213) | ||
Distributions declared | (140,666) | (132,646) | ||
Balance at period end | 6,417,949 | 6,317,195 | ||
Essex Portfolio, L.P. | ASU 2016-13 | ||||
Issuance of common stock under: | ||||
Cumulative effect adjustment | (190) | |||
Essex Portfolio, L.P. | ASU 2017-12 | ||||
Issuance of common stock under: | ||||
Cumulative effect adjustment | 181 | |||
Essex Portfolio, L.P. | Common Equity | ASU 2016-13 | ||||
Issuance of common stock under: | ||||
Cumulative effect adjustment | (190) | |||
Essex Portfolio, L.P. | Common Equity | General Partner | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Balance at period beginning | $ 6,234,315 | $ 6,280,290 | ||
Balance at period beginning (in shares) | 66,092 | 65,890 | ||
Net income | $ 315,006 | $ 118,858 | ||
Issuance of common stock under: | ||||
General partner's stock based compensation, net | $ 8,665 | $ 3,204 | ||
General partner's stock based compensation, net (in shares) | 89 | 51 | ||
Sale of common stock by general partner, net | $ (70) | $ (20) | ||
Sale of common stock by general partner, net (in shares) | 0 | |||
Equity based compensation costs | $ 1,619 | 2,301 | ||
Retirement of common units, net | $ (176,311) | $ (56,989) | ||
Retirement of common units, net (in shares) | (776) | (234) | ||
Changes in the redemption value of redeemable noncontrolling interest | $ 4,741 | $ (3,027) | ||
Redemptions | $ (1,048) | $ (10,394) | ||
Redemptions (in shares) | (7) | (9) | ||
Distributions declared | $ (135,894) | $ (128,149) | ||
Balance at period end | $ 6,250,833 | $ 6,206,074 | ||
Balance at period end (in shares) | 65,412 | 65,716 | ||
Essex Portfolio, L.P. | Common Equity | Limited Partners | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Balance at period beginning | $ 57,359 | $ 59,061 | ||
Balance at period beginning (in shares) | 2,302 | 2,305 | ||
Net income | $ 10,986 | $ 4,171 | ||
Issuance of common stock under: | ||||
Equity based compensation costs | $ 79 | $ 299 | ||
Equity based compensation costs (in shares) | 2 | 3 | ||
Changes in the redemption value of redeemable noncontrolling interest | $ (18) | $ (2) | ||
Redemptions | $ (84) | $ (365) | ||
Redemptions (in shares) | (8) | (9) | ||
Distributions declared | $ (4,772) | $ (4,497) | ||
Balance at period end | $ 63,550 | $ 58,667 | ||
Balance at period end (in shares) | 2,296 | 2,299 | ||
Essex Portfolio, L.P. | Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Balance at period beginning | $ (10,432) | $ (9,738) | ||
Reversal of unrealized gains upon the sale of marketable debt securities | 33 | |||
Change in fair value of derivatives and amortization of swap settlements | (8,782) | (1,993) | ||
Change in fair value of marketable debt securities, net | (305) | 123 | ||
Issuance of common stock under: | ||||
Balance at period end | (19,519) | (11,394) | ||
Essex Portfolio, L.P. | Accumulated Other Comprehensive Loss | ASU 2016-13 | ||||
Issuance of common stock under: | ||||
Cumulative effect adjustment | $ 0 | |||
Essex Portfolio, L.P. | Accumulated Other Comprehensive Loss | ASU 2017-12 | ||||
Issuance of common stock under: | ||||
Cumulative effect adjustment | 181 | |||
Essex Portfolio, L.P. | Noncontrolling Interest | ||||
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||
Balance at period beginning | 122,262 | 64,231 | ||
Net income | 2,773 | 2,476 | ||
Issuance of common stock under: | ||||
Changes in the redemption value of redeemable noncontrolling interest | 44 | 1,262 | ||
Changes in noncontrolling interest from acquisition | 1,349 | |||
Distributions to noncontrolling interest | (3,107) | (2,667) | ||
Redemptions | (236) | (1,454) | ||
Balance at period end | $ 123,085 | $ 63,848 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Capital (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Essex Portfolio, L.P. | ||
Distribution declared (in dollars per share) | $ 2.0775 | $ 1.95 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net income | $ 328,765 | $ 125,505 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 131,559 | 120,568 | |
Amortization of discount on marketable securities | (2,394) | (5,311) | |
Amortization of discount and debt financing costs, net | 2,297 | 529 | |
Loss on sale of marketable securities | 13 | 58 | |
Provision for credit losses | (50) | ||
Unrealized (gain) loss on equity securities recognized through income | 8,696 | (4,510) | |
Earnings from co-investments | (21,297) | (16,276) | |
Operating distributions from co-investments | 19,388 | 17,804 | |
Accrued interest from notes and other receivables | (355) | (1,424) | |
Equity-based compensation | 1,405 | 2,068 | |
Gain on early retirement of debt, net | (321) | (1,336) | |
Gain on remeasurement of co-investment | (234,694) | (31,535) | |
Changes in operating assets and liabilities: | |||
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets | (172) | (4,730) | |
Accounts payable, accrued liabilities, and operating lease liabilities | 32,808 | 53,895 | |
Other liabilities | 1,278 | 454 | |
Net cash provided by operating activities | 266,926 | 255,759 | |
Additions to real estate: | |||
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired | (458,302) | (44,984) | |
Redevelopment | (18,296) | (14,157) | |
Development acquisitions of and additions to real estate under development | (25,681) | (39,306) | |
Capital expenditures on rental properties | (17,151) | (17,075) | |
Collections of notes and other receivables | 98,711 | 2,500 | |
Proceeds from insurance for property losses | 457 | 1,583 | |
Contributions to co-investments | (21,905) | (126,248) | |
Changes in refundable deposits | 96 | 5 | |
Purchases of marketable securities | (10,731) | (8,413) | |
Sales and maturities of marketable securities | 165 | 16,847 | |
Non-operating distributions from co-investments | 7,000 | 10,000 | |
Net cash used in investing activities | (445,637) | (219,248) | |
Cash flows from financing activities: | |||
Proceeds from unsecured debt and mortgage notes | 498,140 | 498,234 | |
Payments on unsecured debt and mortgage notes | (102,563) | (360,975) | |
Proceeds from lines of credit | 1,038,426 | 567,029 | |
Repayments of lines of credit | (743,426) | (567,029) | |
Retirement of common stock | (176,311) | (56,989) | |
Additions to deferred charges | (5,172) | (5,445) | |
Net proceeds from issuance of common stock | (70) | (20) | |
Net proceeds from stock options exercised | 14,329 | 6,699 | |
Payments related to tax withholding for share-based compensation | (5,664) | (3,495) | |
Distributions to noncontrolling interest | (7,478) | (6,978) | |
Redemption of noncontrolling interest | (1,368) | (12,213) | |
Redemption of redeemable noncontrolling interest | 0 | (73) | |
Common stock dividends paid | (128,879) | (122,525) | |
Net cash provided by (used in) financing activities | 379,964 | (63,780) | |
Net increase (decrease) in unrestricted and restricted cash and cash equivalents | 201,253 | (27,269) | |
Unrestricted and restricted cash and cash equivalents at beginning of period | 81,094 | 151,395 | $ 151,395 |
Unrestricted and restricted cash and cash equivalents at end of period | 282,347 | 124,126 | 81,094 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest (net of $4.8 million and $5.9 million capitalized in 2020 and 2019, respectively) | 52,487 | 41,914 | |
Operating cash flows from operating leases | 1,715 | 1,694 | |
Supplemental disclosure of noncash investing and financing activities: | |||
Transfers between real estate under development and rental properties, net | 131,841 | 0 | |
Transfer from real estate under development to co-investments | 824 | 313 | |
Reclassifications (from) to redeemable noncontrolling interest to/from additional paid in capital and noncontrolling interest | (4,767) | 1,767 | |
Initial recognition of operating lease right-of-use assets | 0 | 77,645 | |
Initial recognition of operating lease liabilities | 0 | 79,693 | |
Essex Portfolio, L.P. | |||
Cash flows from operating activities: | |||
Net income | 328,765 | 125,505 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 131,559 | 120,568 | |
Amortization of discount on marketable securities | (2,394) | (5,311) | |
Amortization of discount and debt financing costs, net | 2,297 | 529 | |
Loss on sale of marketable securities | 13 | 58 | |
Unrealized (gain) loss on equity securities recognized through income | 8,696 | (4,510) | |
Earnings from co-investments | (21,297) | (16,276) | |
Operating distributions from co-investments | 19,388 | 17,804 | |
Accrued interest from notes and other receivables | (355) | (1,424) | |
Equity-based compensation | 1,405 | 2,068 | |
Gain on early retirement of debt, net | (321) | (1,336) | |
Gain on remeasurement of co-investment | (234,694) | (31,535) | |
Changes in operating assets and liabilities: | |||
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets | (172) | (4,730) | |
Accounts payable, accrued liabilities, and operating lease liabilities | 32,808 | 53,895 | |
Other liabilities | 1,278 | 454 | |
Net cash provided by operating activities | 266,926 | 255,759 | |
Additions to real estate: | |||
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired | (458,302) | (44,984) | |
Redevelopment | (18,296) | (14,157) | |
Development acquisitions of and additions to real estate under development | (25,681) | (39,306) | |
Capital expenditures on rental properties | (17,151) | (17,075) | |
Collections of notes and other receivables | 98,711 | 2,500 | |
Proceeds from insurance for property losses | 457 | 1,583 | |
Contributions to co-investments | (21,905) | (126,248) | |
Changes in refundable deposits | 96 | 5 | |
Purchases of marketable securities | (10,731) | (8,413) | |
Sales and maturities of marketable securities | 165 | 16,847 | |
Non-operating distributions from co-investments | 7,000 | 10,000 | |
Net cash used in investing activities | (445,637) | (219,248) | |
Cash flows from financing activities: | |||
Proceeds from unsecured debt and mortgage notes | 498,140 | 498,234 | |
Payments on unsecured debt and mortgage notes | (102,563) | (360,975) | |
Proceeds from lines of credit | 1,038,426 | 567,029 | |
Repayments of lines of credit | (743,426) | (567,029) | |
Retirement of common stock | (176,311) | (56,989) | |
Additions to deferred charges | (5,172) | (5,445) | |
Net proceeds from issuance of common stock | (70) | (20) | |
Net proceeds from stock options exercised | 14,329 | 6,699 | |
Payments related to tax withholding for share-based compensation | (5,664) | (3,495) | |
Distributions to noncontrolling interest | (2,016) | (1,959) | |
Redemption of noncontrolling interest | (1,368) | (12,213) | |
Redemption of redeemable noncontrolling interest | 0 | (73) | |
Common stock dividends paid | (134,341) | (127,544) | |
Net cash provided by (used in) financing activities | 379,964 | (63,780) | |
Net increase (decrease) in unrestricted and restricted cash and cash equivalents | 201,253 | (27,269) | |
Unrestricted and restricted cash and cash equivalents at beginning of period | 81,094 | 151,395 | 151,395 |
Unrestricted and restricted cash and cash equivalents at end of period | 282,347 | 124,126 | $ 81,094 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest (net of $4.8 million and $5.9 million capitalized in 2020 and 2019, respectively) | 52,487 | 41,914 | |
Operating cash flows from operating leases | 1,715 | 1,694 | |
Supplemental disclosure of noncash investing and financing activities: | |||
Transfers between real estate under development and rental properties, net | 131,841 | 0 | |
Transfer from real estate under development to co-investments | 824 | 313 | |
Reclassifications (from) to redeemable noncontrolling interest to/from additional paid in capital and noncontrolling interest | (4,767) | 1,767 | |
Initial recognition of operating lease right-of-use assets | 0 | 77,645 | |
Initial recognition of operating lease liabilities | $ 0 | $ 79,693 |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Interest capitalized | $ 4.8 | $ 5.9 |
Essex Portfolio, L.P. | ||
Interest capitalized | $ 4.8 | $ 5.9 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
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 its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles ("U.S. 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, 2019 . 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 months ended March 31, 2020 and 2019 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership, with a 96.6% general partnership interest as of both March 31, 2020 and December 31, 2019 . Total Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") outstanding were 2,296,043 and 2,301,653 as of March 31, 2020 and December 31, 2019 , respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $505.7 million and $692.5 million as of March 31, 2020 and December 31, 2019 , respectively. As of March 31, 2020 , the Company owned or had ownership interests in 250 operating apartment communities, aggregating 60,770 apartment homes, excluding the Company’s ownership interest in preferred interest co-investments, loan investments, one operating commercial building, and a development pipeline comprised of four consolidated projects and two unconsolidated joint venture projects. The operating apartment 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. Accounting Pronouncements Adopted in the Current Year In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13 "Measurement 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. Previously, U.S. GAAP required entities to write down credit losses only when losses were probable and loss reversals were not permitted. The FASB additionally issued various updates to clarify and amend the guidance provided in ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," which, with respect to credit losses, among other things, clarifies and addresses issues related to accrued interest, transfers between classifications of loans or debt securities, recoveries, and variable interest rates. Additionally, in May 2019, the FASB issued ASU No. 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief," which allows entities to irrevocably elect the fair value option on certain financial instruments. The Company adopted ASU No. 2016-13, ASU No. 2019-04, and ASU No. 2019-05 as of January 1, 2020, using the modified retrospective approach by applying a cumulative effect adjustment of $0.2 million representing estimated accumulated credit losses to the opening balance of retained earnings. In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which eliminates certain disclosure requirements affecting all levels of measurements, and modifies and adds new disclosure requirements for Level 3 measurements. The Company adopted ASU No. 2018-13 as of January 1, 2020. This adoption did not have a material impact on the Company's consolidated results of operations or financial position. In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Marketable Securities The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured bonds and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements). As of March 31, 2020 and December 31, 2019 , $3.2 million and $3.6 million , respectively, of equity securities presented within common stock and stock funds in the tables below, represent investments measured at fair value, using net asset value as a practical expedient, and are not categorized in the fair value hierarchy. Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income (loss) on the condensed consolidated statements of income and comprehensive income. As of March 31, 2020 and December 31, 2019 , equity securities and available for sale debt securities consisted primarily of investment-grade unsecured bonds, U.S. treasury securities, common stock and stock funds. As of March 31, 2020 and December 31, 2019 , the Company classified its mortgage backed security investment, which matures in September 2020, as held to maturity, and accordingly, this security is stated at its amortized cost. The discount on the mortgage backed security is being amortized to interest income based on an estimated yield and the maturity date of the security. As of March 31, 2020 and December 31, 2019 , marketable securities consist of the following ($ in thousands): March 31, 2020 Amortized Cost/Cost Gross Unrealized Gain (Loss) Carrying Value Allowance for Credit Losses Equity securities: Investment funds - debt securities $ 29,685 $ (676 ) $ 29,009 Common stock and stock funds 45,395 (4,549 ) 40,846 Debt securities: Available for sale U.S. treasury securities 2,421 16 2,437 — Investment-grade unsecured debt 1,050 (248 ) 802 — Held to maturity Mortgage backed securities 75,045 — 75,045 13,644 Total - Marketable securities $ 153,596 $ (5,457 ) $ 148,139 $ 13,644 December 31, 2019 Amortized Cost/Cost Gross Unrealized Gain (Loss) Carrying Value Equity securities: Investment funds - debt securities $ 29,588 $ 544 $ 30,132 Common stock and stock funds 34,941 2,927 37,868 Debt securities: Available for sale U.S. treasury securities 2,421 13 2,434 Investment-grade unsecured bonds 1,048 60 1,108 Held to maturity Mortgage backed securities 72,651 — 72,651 Total - Marketable securities $ 140,649 $ 3,544 $ 144,193 The Company uses the specific identification method to determine the cost basis of a debt security sold and to reclassify amounts from accumulated other comprehensive income for such securities. For the three months ended March 31, 2020 and 2019 , the proceeds from sales and maturities of marketable securities totaled $0.2 million and $16.8 million , respectively, which resulted in $13 thousand and $0.1 million in realized losses, respectively, for such periods. For the three months ended March 31, 2020 and 2019, the portion of equity security unrealized losses or gains that were recognized in income totaled $8.7 million in losses and $4.5 million in gains, respectively, and were included in interest and other income (loss) on the Company's condensed consolidated statements of income and comprehensive income. Unrealized losses on Investment-grade unsecured bonds as of March 31, 2020 have not been recognized into income because the debts of the issuers are of high credit quality, management does not intend to sell the securities, it is likely that the Company will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to other market conditions. The Company monitors the credit quality of its held to maturity mortgage backed security through the review of remittance reports and individual loan watchlists, which are prepared quarterly and provide most recent debt service coverage ratios for each loan within the security, when available. The Company monitors such reports to determine the likelihood that a particular loan within the mortgage backed security may be foreclosed upon. The Company measures the expected credit loss on its held to maturity mortgage backed security based on the present value of expected future cash flows, which takes into account current market conditions and available credit information obtained from the individual loans held within the mortgage backed security. The following table presents the allowance for credit losses rollforward for the mortgage backed security ($ in thousands): Balance at December 31, 2019 $ — Impact of adoption ASC 326 (1) 13,644 Provision for credit losses — Balance at March 31, 2020 $ 13,644 (1) As part of the adoption of ASC 326, effective January 1, 2020, the Company recorded a gross up of the mortgage backed security and related allowance for credit losses of $13.6 million . This gross up had no effect on the Company's consolidated results of operations or financial position. Variable Interest Entities In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company consolidated the Operating Partnership, 17 DownREIT entities (comprising nine communities), and six co-investments as of both March 31, 2020 and December 31, 2019 . The Company consolidates these entities because it is deemed the primary beneficiary. Essex has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were approximately $1.1 billion and $348.9 million , respectively, as of March 31, 2020 and $1.0 billion and $364.3 million , respectively, as of December 31, 2019 . Noncontrolling interests in these entities were $122.3 million and $122.5 million as of March 31, 2020 and December 31, 2019 , respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of March 31, 2020 and December 31, 2019 , the Company 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 14, "Equity Based Compensation Plans," in the Company’s annual report on Form 10-K for the year ended December 31, 2019 ) 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 March 31, 2020 and December 31, 2019 , because interest rates, yields, and other terms for these instruments are consistent with interest rates, yields, and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.5 billion and $5.2 billion at March 31, 2020 and December 31, 2019 , respectively, was approximately $5.6 billion and $5.4 billion , respectively. Management has estimated that the fair value of the Company’s $955.3 million and $660.4 million of variable rate debt at March 31, 2020 and December 31, 2019 , respectively, was approximately $949.2 million and $655.8 million , respectively, 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 March 31, 2020 and December 31, 2019 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities, are carried at fair value as of March 31, 2020 and December 31, 2019 . At March 31, 2020 , the Company’s investment in its mortgage backed security had a carrying value of $75.0 million and the Company estimated the fair value to be approximately $75.1 million . At December 31, 2019 , the Company’s investment in its mortgage backed security had a carrying value of $72.7 million and the Company estimated the fair value to be approximately $72.7 million . The Company determines the fair value of the mortgage backed security based on unobservable inputs (level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing this security. Assumptions such as estimated default rates and discount rates are used to determine the expected, discounted cash flows to estimate fair value. Capitalization of Costs The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of interest and employee compensation and totaled $9.9 million and $10.7 million during the three months ended March 31, 2020 and 2019, respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented. Co-investments The Company owns investments in joint ventures in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company's equity in earnings less distributions received and the Company's share of losses. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects. Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the consolidated statement of income equal to the amount by which the fair value of the co-investment interest the Company previously owned exceeds its carrying value. A majority of the co-investments, excluding the preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments. Changes in Accumulated Other Comprehensive Loss, Net by Component Essex Property Trust, Inc. ($ in thousands): Change in fair value and amortization of swap settlements Unrealized gain/(loss) on available for sale securities Total Balance at December 31, 2019 $ (13,989 ) $ 101 $ (13,888 ) Other comprehensive loss before reclassification (7,178 ) (294 ) (7,472 ) Amounts reclassified from accumulated other comprehensive loss (1,308 ) — (1,308 ) Other comprehensive loss (8,486 ) (294 ) (8,780 ) Balance at March 31, 2020 $ (22,475 ) $ (193 ) $ (22,668 ) Changes in Accumulated Other Comprehensive Loss, by Component Essex Portfolio, L.P. ($ in thousands): Change in fair value and amortization of swap settlements Unrealized gain/(loss) on available for sale securities Total Balance at December 31, 2019 $ (10,536 ) $ 104 $ (10,432 ) Other comprehensive loss before reclassification (7,429 ) (305 ) (7,734 ) Amounts reclassified from accumulated other comprehensive loss (1,353 ) — (1,353 ) Other comprehensive loss (8,782 ) (305 ) (9,087 ) Balance at March 31, 2020 $ (19,318 ) $ (201 ) $ (19,519 ) Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the condensed consolidated statements of income and comprehensive income. Realized gains and losses on available for sale debt securities are included in interest and other income (loss) on the condensed consolidated statements of income and comprehensive income. Redeemable Noncontrolling Interest The carrying value of redeemable noncontrolling interest in the accompanying condensed consolidated balance sheets was $32.6 million and $37.4 million as of March 31, 2020 and December 31, 2019 , respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances. The changes to the redemption value of redeemable noncontrolling interests for the three months ended March 31, 2020 is as follows ($ in thousands): Balance at December 31, 2019 $ 37,410 Reclassification due to change in redemption value and other (4,767 ) Redemptions — Balance at March 31, 2020 $ 32,643 Cash, Cash Equivalents and Restricted Cash Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands): March 31, 2020 December 31, 2019 March 31, 2019 December 31, 2018 Cash and cash equivalents - unrestricted $ 271,877 $ 70,087 $ 107,034 $ 134,465 Cash and cash equivalents - restricted 10,470 11,007 17,092 16,930 Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows $ 282,347 $ 81,094 $ 124,126 $ 151,395 Accounting Estimates The preparation of condensed consolidated financial statements, in accordance with U.S. 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 Three Months Ended March 31, 2020 and Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Significant Transactions During The Three Months Ended March 31, 2020 and Subsequent Events | Significant Transactions During The Three Months Ended March 31, 2020 and Subsequent Events Significant Transactions Acquisitions In January 2020, the Company purchased Canada Pension Plan Investment Board's ("CPPIB") 45.0% interest in each of a land parcel and six communities totaling 2,020 apartment homes, valued at $1.0 billion on a gross basis. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $234.7 million . Furthermore, the Company recognized $6.5 million in promote income as a result of the transaction, which is included in equity income from co-investments on the condensed consolidated statements of income and comprehensive income. Co-Investments Preferred Equity Investments In the first quarter of 2020, the Company originated two preferred equity investments totaling $91.4 million in two multifamily communities located in California. The investments have a weighted average initial return of 11.3% with most of the proceeds expected to fund in late 2020 and early 2021. In March 2020, the Company received cash of $11.3 million , including an early redemption fee of $0.2 million , for the partial redemption of a preferred equity investment in a joint venture that holds property located in Los Angeles, CA. Notes Receivable In January 2020, the Company received cash of $16.9 million for the full redemption of a mezzanine loan in a property located in Anaheim, CA. In January 2020, the Company received $85.8 million for the payoff of a related party bridge loan to Wesco V, LLC ("Wesco V"). See Note 6, Related Party Transactions, for additional details. In March 2020, the Company committed to fund an investment in mezzanine loans totaling $15.0 million as part of the development of a multifamily community located in Los Angeles, CA. The investment has an initial 10.5% interest rate and maturity date of February 2023, with options to extend for up to two years . As of March 31, 2020, the Company had not funded this commitment. Common Stock During the three months ended March 31, 2020 , the Company repurchased and retired 776,261 shares totaling $176.3 million , including commissions. As of March 31, 2020, the Company had $73.7 million of purchase authority remaining under its $250.0 million stock repurchase plan. Senior Unsecured Debt In February 2020, the Operating Partnership issued $500.0 million of senior unsecured notes due on March 15, 2032 with a coupon rate of 2.650% per annum (the "2032 Notes"), which are payable on March 15 and September 15 of each year, beginning on September 15, 2020. The 2032 Notes were offered to investors at a price of 99.628% of par value. The 2032 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit, which had been used to fund the buyout of CPPIB's 45.0% joint venture interests discussed above, as well as repay $100.3 million of secured debt during the quarter. Subsequent Events In April 2020, the Company obtained a $200.0 million unsecured term loan with a one-year maturity and two 12 -month extension options, exercisable at the Company’s option. The unsecured term loan bears a variable interest rate of LIBOR plus 1.20% and the proceeds will be used to repay all remaining consolidated debt maturing in 2020, of which $169.6 million was prepaid in April 2020. During and subsequent to the first quarter of 2020, the world is experiencing an unprecedented health pandemic related to a novel coronavirus, COVID-19, creating unprecedented and extraordinary global economic distress, uncertainty and volatility. The extent to which COVID-19 impacts the Company's business, operations and financial results cannot be predicted and will depend on numerous current and evolving factors that the Company is not able to predict or anticipate at this time. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Disaggregated Revenue The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands): Three Months Ended March 31, 2020 2019 Rental income $ 383,498 $ 347,805 Other property 6,252 6,083 Management and other fees from affiliates 2,617 2,335 Total revenues $ 392,367 $ 356,223 The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment ($ in thousands): Three Months Ended March 31, 2020 2019 Southern California $ 155,642 $ 151,463 Northern California 164,079 136,745 Seattle Metro 63,844 60,413 Other real estate assets (1) 6,185 5,267 Total rental and other property revenues $ 389,750 $ 353,888 (1) Other real estate assets consists of revenues generated from retail space, commercial properties, held for sale properties, and disposition properties. The following table presents the Company’s rental and other property revenues disaggregated by current property category status ($ in thousands): Three Months Ended March 31, 2020 2019 Same-property (1) $ 346,456 $ 335,658 Acquisitions (2) 21,924 987 Development (3) 4,075 1,158 Redevelopment 5,401 5,229 Non-residential/other, net (4) 11,894 10,856 Total rental and other property revenues $ 389,750 $ 353,888 (1) Properties that have comparable stabilized results as of January 1, 2019 and are consolidated by the Company for the three months ended March 31, 2020 and 2019. A community is generally considered to have reached stabilized operations once it achieves an initial occupancy of 90% . (2) Acquisitions includes properties acquired which did not have comparable stabilized results as of January 1, 2019. (3) Development includes properties developed which did not have stabilized results as of January 1, 2019. (4) Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition properties, student housing, properties undergoing significant construction activities that do not meet our redevelopment criteria, and three communities located in the California counties of Riverside, Santa Barbara, and Santa Cruz, which the Company does not consider its core markets. Deferred Revenues and Remaining Performance Obligations When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $3.7 million and $3.9 million as of March 31, 2020 and December 31, 2019 , respectively, and was included in accounts payable and accrued liabilities within the accompanying condensed consolidated balance sheets. The amount of revenue recognized for the three months ended March 31, 2020 that was included in the December 31, 2019 deferred revenue balance was $0.2 million , which was included in interest and other income (loss) within the condensed consolidated statements of income and comprehensive income. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the revenue recognition accounting standard. As of March 31, 2020 , the Company had $3.7 million of remaining performance obligations. The Company expects to recognize approximately 15% of these remaining performance obligations in 2020, an additional 40% through 2022, and the remaining balance thereafter. |
Co-investments
Co-investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract] | |
Co-investments | Co-investments The Company has joint ventures and preferred equity investments in co-investments which are accounted for under the equity method. The co-investments, including BEXAEW, BEX II, BEX III, and BEX IV, Wesco I, LLC ("Wesco I"), Wesco III, LLC ("Wesco III"), Wesco IV, LLC ("Wesco IV"), and Wesco V, own, operate, and develop apartment communities. The carrying values of the Company's co-investments as of March 31, 2020 and December 31, 2019 are as follows ($ in thousands, except parenthetical amounts): Weighted Average Company Ownership Percentage (1) 3/31/2020 12/31/2019 Ownership interest in: CPPIB (2) — % $ — $ 345,466 Wesco I, Wesco III, Wesco IV, and Wesco V 51 % 209,742 216,756 BEXAEW, BEX II, BEX III, and BEX IV 50 % 156,869 160,888 Other 48 % 21,023 20,351 Total operating and other co-investments, net 387,634 743,461 Total predevelopment and development co-investments 50 % 158,145 146,944 Total preferred interest co-investments (includes related party investments of $75.3 million and $73.2 million as of March 31, 2020 and December 31, 2019, respectively) 451,358 444,934 Total co-investments, net $ 997,137 $ 1,335,339 (1) Weighted average Company ownership percentages are as of March 31, 2020 . (2) In January 2020, the Company purchased CPPIB's 45.0% interest in each of a land parcel and six communities totaling 2,020 apartment homes. The combined summarized financial information of co-investments is as follows ($ in thousands): 3/31/2020 12/31/2019 Combined balance sheets: (1) Rental properties and real estate under development $ 4,287,101 $ 4,733,762 Other assets 158,145 139,562 Total assets $ 4,445,246 $ 4,873,324 Debt $ 2,522,407 $ 2,442,213 Other liabilities 181,761 117,160 Equity 1,741,078 2,313,951 Total liabilities and equity $ 4,445,246 $ 4,873,324 Company's share of equity $ 997,137 $ 1,335,339 Three Months Ended March 31, 2020 2019 Combined statements of income: (1) Property revenues $ 77,369 $ 83,725 Property operating expenses (25,715 ) (28,719 ) Net operating income 51,654 55,006 Interest expense (20,853 ) (15,115 ) General and administrative (4,083 ) (1,928 ) Depreciation and amortization (28,437 ) (29,935 ) Net income (loss) $ (1,719 ) $ 8,028 Company's share of net income (2) $ 21,297 $ 16,276 (1) Includes preferred equity investments held by the Company. (2) Includes the Company's share of equity income from joint ventures 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 $2.1 million and $1.7 million for the three months ended March 31, 2020 and 2019 , respectively. |
Notes and Other Receivables
Notes and Other Receivables | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Notes and Other Receivables | Notes and Other Receivables Notes and other receivables consist of the following as of March 31, 2020 and December 31, 2019 ($ in thousands): March 31, 2020 December 31, 2019 Note receivable, secured, bearing interest at 9.00%, due May 2021 (Originated May 2017) (1) $ — $ 16,828 Note receivable, secured, bearing interest at 9.90%, due November 2021 (Originated November 2018) 13,168 12,838 Related party note receivable, secured, bearing variable rate interest, due February 2020 (Originated November 2019) (2)(3) — 85,713 Notes and other receivables from affiliates (4) 7,700 4,442 Other receivables 14,065 14,544 Allowance for credit losses (66 ) — Total notes and other receivables $ 34,867 $ 134,365 (1) In January 2020, the Company received cash of $16.9 million from the payoff of this note receivable. (2) See Note 6, Related Party Transactions, for additional details. (3) In January 2020, the Company received cash of $85.8 million from the payoff of this note receivable. (4) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2020 and December 31, 2019 . See Note 6, Related Party Transactions, for additional details. In the normal course of business, the Company originates and holds two types of loans: mezzanine loans issued to entities that are pursuing apartment development and short-term bridge loans issued to joint ventures with the Company. The Company categorizes development project mezzanine loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as: current financial information, credit documentation, public information, and previous experience with the borrower. The Company initially analyzes each mezzanine loan individually to classify the credit risk of the loan. On a periodic basis the Company evaluates and performs site visits of the development projects associated with the mezzanine loans to confirm whether they are on budget and whether there are any delays in development that could impact the Company's assessment of credit loss. All bridge loans that the Company issues are, by their nature, short-term and meant only to provide time for the Company’s joint ventures to obtain long-term funding for newly acquired communities. As the Company is a partner in the joint ventures that are borrowing such funds and has performed a detailed review of each community as part of the acquisition process, there is little to no credit risk associated with such loans. As such, the Company does not review credit quality indicators for bridge loans on an ongoing basis. The Company estimates the allowance for credit losses for each loan type using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made, if necessary, for differences in current loan-specific risk characteristics. For example, in the case of mezzanine loans, adjustments may be made due to differences in track record and experience of the mezzanine loan sponsor as well as the percent of equity that the sponsor has contributed to the project. The following table presents the activity in the allowance for credit losses for notes and other receivables by loan type ($ in thousands): Mezzanine Loans Bridge Loans Total Balance at December 31, 2019 $ — $ — $ — Impact of adoption ASC 326 147 43 190 Provision for credit losses (81 ) (43 ) (124 ) Balance at March 31, 2020 $ 66 $ — $ 66 No loans were placed on nonaccrual status or charged off during the three months ended March 31, 2020 or 2019 . |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $3.1 million and $3.4 million during the three months ended March 31, 2020 and 2019 , respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $0.4 million and $1.1 million against general and administrative expenses for the three months ended March 31, 2020 and 2019 , respectively. The Company’s Chairman and founder, Mr. George M. 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 New York Stock Exchange. For the three months ended March 31, 2020 , the Company paid brokerage commissions totaling $0.2 million to MMC and its affiliates related to real estate transactions. In November 2019, the Company provided an $85.5 million related party bridge loan to Wesco V in connection with the acquisition of Velo and Ray. The note receivable accrued interest at LIBOR plus 1.30% and was scheduled to mature in February 2020, but was paid off in January 2020. The bridge loan was classified within notes and other receivables in the accompanying condensed consolidated balance sheets. In August 2019, the Company provided an $89.0 million related party bridge loan to Wesco V in connection with the acquisition of The Courtyards at 65th Street. The note receivable accrued interest at LIBOR plus 1.30% and was paid off in November 2019. In August 2019, the Company provided a $44.4 million related party bridge loan to BEX IV in connection with the acquisition of 777 Hamilton. The note receivable accrued interest at 3.25% . In November 2019, the term of the bridge loan was extended to February 2020, but was paid off in December 2019. In June 2019, the Company acquired Brio, a 300 unit apartment home community located in Walnut Creek, CA. The Company issued DownREIT units to an affiliate of MMC, based on a contract price of $164.9 million . The property was encumbered by $98.7 million of mortgage debt which was assumed by the Company at the time of acquisition. As a result of this transaction, the Company consolidated the property, based on a VIE analysis performed by the Company. In February 2019, the Company funded a $24.5 million preferred equity investment in an entity whose sponsor is an affiliate of MMC, which owns a multifamily development community located in Mountain View, CA. The investment has an initial preferred return of 11.0% and is scheduled to mature in February 2024. In October 2018, the Company funded a $18.6 million preferred equity investment in an entity whose sponsor is an affiliate of MMC. The entity wholly owns a 268 apartment home community development located in Burlingame, CA. This investment accrues interest based on an initial 12.0% preferred return. The investment is scheduled to mature in April 2024. In May 2018, the Company made a commitment to fund a $26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400 apartment home community located in Ventura, CA. This investment accrues interest based on a 10.25% preferred return. The investment is scheduled to mature in May 2023. As of March 31, 2020 , the Company had funded $22.9 million of the commitment. The remaining committed amount will be funded if and when requested by the sponsors. In November 2016, the Company provided a $6.6 million mezzanine loan to a limited liability company in which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan was classified within notes and other receivables in the accompanying condensed consolidated balance sheets and was paid off in October 2019. In 2015, the Company made preferred equity investments totaling $20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earned a 9.5% preferred return on each such investment. One $5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2017. Another $5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2018. The remaining investment was fully redeemed in February 2019. As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of March 31, 2020 and December 31, 2019 , $7.7 million and $4.4 million , respectively, of short-term loans remained outstanding due from joint venture affiliates and is classified within notes and other receivables in the accompanying condensed consolidated balance sheets. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Essex does not have indebtedness as debt is incurred by the Operating Partnership. Essex guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities for the full term of the facilities. Debt consists of the following ($ in thousands): March 31, 2020 December 31, 2019 Weighted Average Maturity In Years as of March 31, 2020 Unsecured bonds private placement - fixed rate $ 199,852 $ 199,820 1.2 Term loan - variable rate 349,287 349,189 1.9 Bonds public offering - fixed rate 4,709,124 4,214,197 7.7 Unsecured debt, net (1) 5,258,263 4,763,206 Lines of credit (2) 350,000 55,000 Mortgage notes payable, net (3) 887,389 990,667 7.9 Total debt, net $ 6,495,652 $ 5,808,873 Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering 3.7 % 3.8 % Weighted average interest rate on variable rate term loan 2.7 % 2.7 % Weighted average interest rate on lines of credit 2.4 % 2.5 % Weighted average interest rate on mortgage notes payable 4.1 % 4.1 % (1) Includes unamortized discount of $14.1 million and $12.2 million and unamortized debt issuance costs of $27.6 million and $24.5 million , as of March 31, 2020 and December 31, 2019 , respectively. (2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion as of March 31, 2020 , excludes unamortized debt issuance costs of $4.5 million and $3.8 million as of March 31, 2020 and December 31, 2019 , respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of March 31, 2020 , the Company’s $1.2 billion credit facility had an interest rate of LIBOR plus 0.825% , which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of December 2023 with one 18 -month extension, exercisable at the Company’s option. As of March 31, 2020 , the Company’s $35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.825% , which is based on a tiered rate structure tied to the Company’s credit ratings, and a scheduled maturity date of February 2021. (3) Includes total unamortized premium of $5.0 million and $5.9 million , reduced by unamortized debt issuance costs of $2.4 million and $2.6 million , as of March 31, 2020 and December 31, 2019 , respectively. The aggregate scheduled principal payments of the Company’s outstanding debt, excluding lines of credit, as of March 31, 2020 are as follows ($ in thousands): Remaining in 2020 $ 185,493 2021 531,653 2022 693,188 2023 602,945 2024 403,109 Thereafter 3,768,383 Total $ 6,184,771 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
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. The Company's chief operating decision makers are comprised of several members of its executive management team who use net operating income ("NOI") to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenues less direct property operating expenses. The executive management team generally 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 NOI are management and other fees from affiliates and interest and other income (loss). Non-segment revenues and NOI included in the following schedule also consist of revenues generated from commercial properties and properties that have been sold. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, net, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets. The revenues and NOI for each of the reportable operating segments are summarized as follows for the three months ended March 31, 2020 and 2019 ($ in thousands): Three Months Ended March 31, 2020 2019 Revenues: Southern California $ 155,642 $ 151,463 Northern California 164,079 136,745 Seattle Metro 63,844 60,413 Other real estate assets 6,185 5,267 Total property revenues $ 389,750 $ 353,888 Net operating income: Southern California $ 111,097 $ 107,996 Northern California 120,981 101,214 Seattle Metro 44,993 41,699 Other real estate assets 5,536 4,939 Total net operating income 282,607 255,848 Management and other fees from affiliates 2,617 2,335 Corporate-level property management expenses (8,759 ) (8,429 ) Depreciation and amortization (131,559 ) (120,568 ) General and administrative (13,982 ) (13,459 ) Expensed acquisition and investment related costs (87 ) (32 ) Interest expense (55,147 ) (53,643 ) Total return swap income 1,984 2,045 Interest and other income (loss) (5,221 ) 12,261 Equity income from co-investments 21,297 16,276 Gain on early retirement of debt, net 321 1,336 Gain on remeasurement of co-investment 234,694 31,535 Net income $ 328,765 $ 125,505 Total assets for each of the reportable operating segments are summarized as follows as of March 31, 2020 and December 31, 2019 ($ in thousands): March 31, 2020 December 31, 2019 Assets: Southern California $ 4,198,656 $ 4,233,110 Northern California 5,748,062 4,622,268 Seattle Metro 1,469,297 1,481,061 Other real estate assets 12,103 12,221 Net reportable operating segment - real estate assets 11,428,118 10,348,660 Real estate under development 435,865 546,075 Co-investments 997,137 1,335,339 Cash and cash equivalents, including restricted cash 282,347 81,094 Marketable securities 148,139 144,193 Notes and other receivables 34,867 134,365 Operating lease right-of-use assets 74,428 74,744 Prepaid expenses and other assets 49,940 40,935 Total assets $ 13,450,841 $ 12,705,405 |
Net Income Per Common Share and
Net Income Per Common Share and Net Income Per Common Unit | 3 Months Ended |
Mar. 31, 2020 | |
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 ($ in thousands, except share and unit data): Essex Property Trust, Inc. Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 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 $ 315,006 66,043,831 $ 4.77 $ 118,858 65,702,788 $ 1.81 Effect of Dilutive Securities: Stock options — 57,337 — 81,081 DownREIT units 196 94,247 — — Diluted: Net income available to common stockholders $ 315,202 66,195,415 $ 4.76 $ 118,858 65,783,869 $ 1.81 The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,300,181 and 2,305,064 , which include vested Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units for the three months ended March 31, 2020 and 2019 , respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $11.0 million and $4.2 million for the three months ended March 31, 2020 and 2019 , respectively. Additionally, the table excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents. Stock options of 116,380 and 106,029 for the three months ended March 31, 2020 and 2019 , respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such 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 March 31, 2020 Three Months Ended March 31, 2019 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 $ 325,992 68,344,012 $ 4.77 $ 123,029 68,007,852 $ 1.81 Effect of Dilutive Securities: Stock options — 57,337 — 81,081 DownREIT units 196 94,247 — — Diluted: Net income available to common unitholders $ 326,188 68,495,596 $ 4.76 $ 123,029 68,088,933 $ 1.81 Stock options of 116,380 and 106,029 for the three months ended March 31, 2020 and 2019 , 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 period ended and, therefore, were anti-dilutive. Additionally, the table excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities As of March 31, 2020 , the Company had entered into interest rate swap contracts with an aggregate notional amount of $175.0 million that effectively fixed the interest rate on the $175.0 million unsecured term loan at 2.3% . These derivatives qualify for hedge accounting. As of March 31, 2020 and December 31, 2019 , the aggregate carrying value of the interest rate swap contracts was an asset of zero and $1.0 million , respectively, and is included in prepaid expenses and other assets on the condensed consolidated balance sheets, and a liability of $3.4 million and $0.2 million , respectively, and is included in other liabilities on the consolidated balance sheet. Hedge ineffectiveness related to cash flow hedges, which is included in interest expense on the condensed consolidated statements of income and comprehensive income, was not significant for the three months ended March 31, 2020 and 2019 . Additionally, the Company has four total return swap contracts, with an aggregate notional amount of $255.3 million , that effectively convert $255.3 million of mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to the 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 all of its total return swaps, with $255.3 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of zero at both March 31, 2020 and December 31, 2019 . These total return swaps are scheduled to mature between September 2021 and November 2022 . The realized gains of $2.0 million and $2.0 million for the three months ended March 31, 2020 and 2019 , respectively, were reported in the condensed consolidated statements of income and comprehensive income as total return swap income. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is subject to various lawsuits in the normal course of its business operations. Such lawsuits have not had a material adverse effect on the Company's financial condition, results of operations or cash flows. While no assurances can be given, the Company does not believe there is any pending or threatened litigation against the Company that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation Policy | 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 its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles ("U.S. 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, 2019 . |
New Accounting Pronouncements Adopted in the Current Year | Accounting Pronouncements Adopted in the Current Year In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13 "Measurement 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. Previously, U.S. GAAP required entities to write down credit losses only when losses were probable and loss reversals were not permitted. The FASB additionally issued various updates to clarify and amend the guidance provided in ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," which, with respect to credit losses, among other things, clarifies and addresses issues related to accrued interest, transfers between classifications of loans or debt securities, recoveries, and variable interest rates. Additionally, in May 2019, the FASB issued ASU No. 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief," which allows entities to irrevocably elect the fair value option on certain financial instruments. The Company adopted ASU No. 2016-13, ASU No. 2019-04, and ASU No. 2019-05 as of January 1, 2020, using the modified retrospective approach by applying a cumulative effect adjustment of $0.2 million representing estimated accumulated credit losses to the opening balance of retained earnings. In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which eliminates certain disclosure requirements affecting all levels of measurements, and modifies and adds new disclosure requirements for Level 3 measurements. The Company adopted ASU No. 2018-13 as of January 1, 2020. This adoption did not have a material impact on the Company's consolidated results of operations or financial position. In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. |
Marketable Securities | Marketable Securities The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured bonds and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements). As of March 31, 2020 and December 31, 2019 , $3.2 million and $3.6 million , respectively, of equity securities presented within common stock and stock funds in the tables below, represent investments measured at fair value, using net asset value as a practical expedient, and are not categorized in the fair value hierarchy. Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income (loss) on the condensed consolidated statements of income and comprehensive income. As of March 31, 2020 and December 31, 2019 , equity securities and available for sale debt securities consisted primarily of investment-grade unsecured bonds, U.S. treasury securities, common stock and stock funds. As of March 31, 2020 and December 31, 2019 , the Company classified its mortgage backed security investment, which matures in September 2020, as held to maturity, and accordingly, this security is stated at its amortized cost. The discount on the mortgage backed security is being amortized to interest income based on an estimated yield and the maturity date of the security. |
Variable Interest Entities | Variable Interest Entities In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company consolidated the Operating Partnership, 17 DownREIT entities (comprising nine communities), and six co-investments as of both March 31, 2020 and December 31, 2019 . The Company consolidates these entities because it is deemed the primary beneficiary. Essex has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were approximately $1.1 billion and $348.9 million , respectively, as of March 31, 2020 and $1.0 billion and $364.3 million , respectively, as of December 31, 2019 . Noncontrolling interests in these entities were $122.3 million and $122.5 million as of March 31, 2020 and December 31, 2019 , respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of March 31, 2020 and December 31, 2019 , the Company did not have any VIEs of which it was not deemed to be the primary beneficiary. |
Equity-based Compensation | 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 14, "Equity Based Compensation Plans," in the Company’s annual report on Form 10-K for the year ended December 31, 2019 ) are being amortized over the expected service periods. |
Fair Value of Financial Instruments | 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 March 31, 2020 and December 31, 2019 , because interest rates, yields, and other terms for these instruments are consistent with interest rates, yields, and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.5 billion and $5.2 billion at March 31, 2020 and December 31, 2019 , respectively, was approximately $5.6 billion and $5.4 billion , respectively. Management has estimated that the fair value of the Company’s $955.3 million and $660.4 million of variable rate debt at March 31, 2020 and December 31, 2019 , respectively, was approximately $949.2 million and $655.8 million , respectively, 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 March 31, 2020 and December 31, 2019 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities, are carried at fair value as of March 31, 2020 and December 31, 2019 . At March 31, 2020 , the Company’s investment in its mortgage backed security had a carrying value of $75.0 million and the Company estimated the fair value to be approximately $75.1 million . At December 31, 2019 , the Company’s investment in its mortgage backed security had a carrying value of $72.7 million and the Company estimated the fair value to be approximately $72.7 million . The Company determines the fair value of the mortgage backed security based on unobservable inputs (level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing this security. Assumptions such as estimated default rates and discount rates are used to determine the expected, discounted cash flows to estimate fair value. |
Capitalization of Costs | Capitalization of Costs The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of interest and employee compensation and totaled $9.9 million and $10.7 million during the three months ended March 31, 2020 and 2019, 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 | Co-investments The Company owns investments in joint ventures 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. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company's equity in earnings less distributions received and the Company's share of losses. 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 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 statements of income and comprehensive income. Realized gains and losses on available for sale debt securities are included in interest and other income (loss) on the condensed consolidated statements of income and comprehensive income. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt. |
Accounting Estimates | Accounting Estimates The preparation of condensed consolidated financial statements, in accordance with U.S. 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 Pre_3
Organization and Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Components of marketable securities | As of March 31, 2020 and December 31, 2019 , marketable securities consist of the following ($ in thousands): March 31, 2020 Amortized Cost/Cost Gross Unrealized Gain (Loss) Carrying Value Allowance for Credit Losses Equity securities: Investment funds - debt securities $ 29,685 $ (676 ) $ 29,009 Common stock and stock funds 45,395 (4,549 ) 40,846 Debt securities: Available for sale U.S. treasury securities 2,421 16 2,437 — Investment-grade unsecured debt 1,050 (248 ) 802 — Held to maturity Mortgage backed securities 75,045 — 75,045 13,644 Total - Marketable securities $ 153,596 $ (5,457 ) $ 148,139 $ 13,644 December 31, 2019 Amortized Cost/Cost Gross Unrealized Gain (Loss) Carrying Value Equity securities: Investment funds - debt securities $ 29,588 $ 544 $ 30,132 Common stock and stock funds 34,941 2,927 37,868 Debt securities: Available for sale U.S. treasury securities 2,421 13 2,434 Investment-grade unsecured bonds 1,048 60 1,108 Held to maturity Mortgage backed securities 72,651 — 72,651 Total - Marketable securities $ 140,649 $ 3,544 $ 144,193 |
Schedule of allowance for credit loss | The following table presents the allowance for credit losses rollforward for the mortgage backed security ($ in thousands): Balance at December 31, 2019 $ — Impact of adoption ASC 326 (1) 13,644 Provision for credit losses — Balance at March 31, 2020 $ 13,644 (1) As part of the adoption of ASC 326, effective January 1, 2020, the Company recorded a gross up of the mortgage backed security and related allowance for credit losses of $13.6 million . This gross up had no effect on the Company's consolidated results of operations or financial position. Mezzanine Loans Bridge Loans Total Balance at December 31, 2019 $ — $ — $ — Impact of adoption ASC 326 147 43 190 Provision for credit losses (81 ) (43 ) (124 ) Balance at March 31, 2020 $ 66 $ — $ 66 |
Changes in accumulated other comprehensive income (loss) | 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 gain/(loss) on available for sale securities Total Balance at December 31, 2019 $ (13,989 ) $ 101 $ (13,888 ) Other comprehensive loss before reclassification (7,178 ) (294 ) (7,472 ) Amounts reclassified from accumulated other comprehensive loss (1,308 ) — (1,308 ) Other comprehensive loss (8,486 ) (294 ) (8,780 ) Balance at March 31, 2020 $ (22,475 ) $ (193 ) $ (22,668 ) Changes in Accumulated Other Comprehensive Loss, by Component Essex Portfolio, L.P. ($ in thousands): Change in fair value and amortization of swap settlements Unrealized gain/(loss) on available for sale securities Total Balance at December 31, 2019 $ (10,536 ) $ 104 $ (10,432 ) Other comprehensive loss before reclassification (7,429 ) (305 ) (7,734 ) Amounts reclassified from accumulated other comprehensive loss (1,353 ) — (1,353 ) Other comprehensive loss (8,782 ) (305 ) (9,087 ) Balance at March 31, 2020 $ (19,318 ) $ (201 ) $ (19,519 ) |
Schedule of changes to the redemption value of noncontrolling interests | The changes to the redemption value of redeemable noncontrolling interests for the three months ended March 31, 2020 is as follows ($ in thousands): Balance at December 31, 2019 $ 37,410 Reclassification due to change in redemption value and other (4,767 ) Redemptions — Balance at March 31, 2020 $ 32,643 |
Schedule of cash and cash equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands): March 31, 2020 December 31, 2019 March 31, 2019 December 31, 2018 Cash and cash equivalents - unrestricted $ 271,877 $ 70,087 $ 107,034 $ 134,465 Cash and cash equivalents - restricted 10,470 11,007 17,092 16,930 Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows $ 282,347 $ 81,094 $ 124,126 $ 151,395 |
Schedule of restricted cash and cash equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands): March 31, 2020 December 31, 2019 March 31, 2019 December 31, 2018 Cash and cash equivalents - unrestricted $ 271,877 $ 70,087 $ 107,034 $ 134,465 Cash and cash equivalents - restricted 10,470 11,007 17,092 16,930 Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows $ 282,347 $ 81,094 $ 124,126 $ 151,395 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands): Three Months Ended March 31, 2020 2019 Rental income $ 383,498 $ 347,805 Other property 6,252 6,083 Management and other fees from affiliates 2,617 2,335 Total revenues $ 392,367 $ 356,223 The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment ($ in thousands): Three Months Ended March 31, 2020 2019 Southern California $ 155,642 $ 151,463 Northern California 164,079 136,745 Seattle Metro 63,844 60,413 Other real estate assets (1) 6,185 5,267 Total rental and other property revenues $ 389,750 $ 353,888 (1) Other real estate assets consists of revenues generated from retail space, commercial properties, held for sale properties, and disposition properties. The following table presents the Company’s rental and other property revenues disaggregated by current property category status ($ in thousands): Three Months Ended March 31, 2020 2019 Same-property (1) $ 346,456 $ 335,658 Acquisitions (2) 21,924 987 Development (3) 4,075 1,158 Redevelopment 5,401 5,229 Non-residential/other, net (4) 11,894 10,856 Total rental and other property revenues $ 389,750 $ 353,888 (1) Properties that have comparable stabilized results as of January 1, 2019 and are consolidated by the Company for the three months ended March 31, 2020 and 2019. A community is generally considered to have reached stabilized operations once it achieves an initial occupancy of 90% . (2) Acquisitions includes properties acquired which did not have comparable stabilized results as of January 1, 2019. (3) Development includes properties developed which did not have stabilized results as of January 1, 2019. (4) Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition properties, student housing, properties undergoing significant construction activities that do not meet our redevelopment criteria, and three communities located in the California counties of Riverside, Santa Barbara, and Santa Cruz, which the Company does not consider its core markets. |
Co-investments (Tables)
Co-investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 and December 31, 2019 are as follows ($ in thousands, except parenthetical amounts): Weighted Average Company Ownership Percentage (1) 3/31/2020 12/31/2019 Ownership interest in: CPPIB (2) — % $ — $ 345,466 Wesco I, Wesco III, Wesco IV, and Wesco V 51 % 209,742 216,756 BEXAEW, BEX II, BEX III, and BEX IV 50 % 156,869 160,888 Other 48 % 21,023 20,351 Total operating and other co-investments, net 387,634 743,461 Total predevelopment and development co-investments 50 % 158,145 146,944 Total preferred interest co-investments (includes related party investments of $75.3 million and $73.2 million as of March 31, 2020 and December 31, 2019, respectively) 451,358 444,934 Total co-investments, net $ 997,137 $ 1,335,339 (1) Weighted average Company ownership percentages are as of March 31, 2020 . (2) In January 2020, the Company purchased CPPIB's 45.0% interest in each of a land parcel and six communities totaling 2,020 apartment homes. |
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): 3/31/2020 12/31/2019 Combined balance sheets: (1) Rental properties and real estate under development $ 4,287,101 $ 4,733,762 Other assets 158,145 139,562 Total assets $ 4,445,246 $ 4,873,324 Debt $ 2,522,407 $ 2,442,213 Other liabilities 181,761 117,160 Equity 1,741,078 2,313,951 Total liabilities and equity $ 4,445,246 $ 4,873,324 Company's share of equity $ 997,137 $ 1,335,339 Three Months Ended March 31, 2020 2019 Combined statements of income: (1) Property revenues $ 77,369 $ 83,725 Property operating expenses (25,715 ) (28,719 ) Net operating income 51,654 55,006 Interest expense (20,853 ) (15,115 ) General and administrative (4,083 ) (1,928 ) Depreciation and amortization (28,437 ) (29,935 ) Net income (loss) $ (1,719 ) $ 8,028 Company's share of net income (2) $ 21,297 $ 16,276 (1) Includes preferred equity investments held by the Company. (2) Includes the Company's share of equity income from joint ventures 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 $2.1 million and $1.7 million for the three months ended March 31, 2020 and 2019 , respectively. |
Notes and Other Receivables (Ta
Notes and Other Receivables (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Notes and other receivables | Notes and other receivables consist of the following as of March 31, 2020 and December 31, 2019 ($ in thousands): March 31, 2020 December 31, 2019 Note receivable, secured, bearing interest at 9.00%, due May 2021 (Originated May 2017) (1) $ — $ 16,828 Note receivable, secured, bearing interest at 9.90%, due November 2021 (Originated November 2018) 13,168 12,838 Related party note receivable, secured, bearing variable rate interest, due February 2020 (Originated November 2019) (2)(3) — 85,713 Notes and other receivables from affiliates (4) 7,700 4,442 Other receivables 14,065 14,544 Allowance for credit losses (66 ) — Total notes and other receivables $ 34,867 $ 134,365 (1) In January 2020, the Company received cash of $16.9 million from the payoff of this note receivable. (2) See Note 6, Related Party Transactions, for additional details. (3) In January 2020, the Company received cash of $85.8 million from the payoff of this note receivable. (4) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2020 and December 31, 2019 . See Note 6, Related Party Transactions, for additional details. |
Schedule of allowance for credit loss | The following table presents the allowance for credit losses rollforward for the mortgage backed security ($ in thousands): Balance at December 31, 2019 $ — Impact of adoption ASC 326 (1) 13,644 Provision for credit losses — Balance at March 31, 2020 $ 13,644 (1) As part of the adoption of ASC 326, effective January 1, 2020, the Company recorded a gross up of the mortgage backed security and related allowance for credit losses of $13.6 million . This gross up had no effect on the Company's consolidated results of operations or financial position. Mezzanine Loans Bridge Loans Total Balance at December 31, 2019 $ — $ — $ — Impact of adoption ASC 326 147 43 190 Provision for credit losses (81 ) (43 ) (124 ) Balance at March 31, 2020 $ 66 $ — $ 66 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of debt and lines of credit | Debt consists of the following ($ in thousands): March 31, 2020 December 31, 2019 Weighted Average Maturity In Years as of March 31, 2020 Unsecured bonds private placement - fixed rate $ 199,852 $ 199,820 1.2 Term loan - variable rate 349,287 349,189 1.9 Bonds public offering - fixed rate 4,709,124 4,214,197 7.7 Unsecured debt, net (1) 5,258,263 4,763,206 Lines of credit (2) 350,000 55,000 Mortgage notes payable, net (3) 887,389 990,667 7.9 Total debt, net $ 6,495,652 $ 5,808,873 Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering 3.7 % 3.8 % Weighted average interest rate on variable rate term loan 2.7 % 2.7 % Weighted average interest rate on lines of credit 2.4 % 2.5 % Weighted average interest rate on mortgage notes payable 4.1 % 4.1 % (1) Includes unamortized discount of $14.1 million and $12.2 million and unamortized debt issuance costs of $27.6 million and $24.5 million , as of March 31, 2020 and December 31, 2019 , respectively. (2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion as of March 31, 2020 , excludes unamortized debt issuance costs of $4.5 million and $3.8 million as of March 31, 2020 and December 31, 2019 , respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of March 31, 2020 , the Company’s $1.2 billion credit facility had an interest rate of LIBOR plus 0.825% , which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of December 2023 with one 18 -month extension, exercisable at the Company’s option. As of March 31, 2020 , the Company’s $35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.825% , which is based on a tiered rate structure tied to the Company’s credit ratings, and a scheduled maturity date of February 2021. (3) Includes total unamortized premium of $5.0 million and $5.9 million , reduced by unamortized debt issuance costs of $2.4 million and $2.6 million , as of March 31, 2020 and December 31, 2019 , respectively. |
Summary of aggregate scheduled principal payments | The aggregate scheduled principal payments of the Company’s outstanding debt, excluding lines of credit, as of March 31, 2020 are as follows ($ in thousands): Remaining in 2020 $ 185,493 2021 531,653 2022 693,188 2023 602,945 2024 403,109 Thereafter 3,768,383 Total $ 6,184,771 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Reconciliation of revenues and operating profit (loss) from segments to consolidated | The revenues and NOI for each of the reportable operating segments are summarized as follows for the three months ended March 31, 2020 and 2019 ($ in thousands): Three Months Ended March 31, 2020 2019 Revenues: Southern California $ 155,642 $ 151,463 Northern California 164,079 136,745 Seattle Metro 63,844 60,413 Other real estate assets 6,185 5,267 Total property revenues $ 389,750 $ 353,888 Net operating income: Southern California $ 111,097 $ 107,996 Northern California 120,981 101,214 Seattle Metro 44,993 41,699 Other real estate assets 5,536 4,939 Total net operating income 282,607 255,848 Management and other fees from affiliates 2,617 2,335 Corporate-level property management expenses (8,759 ) (8,429 ) Depreciation and amortization (131,559 ) (120,568 ) General and administrative (13,982 ) (13,459 ) Expensed acquisition and investment related costs (87 ) (32 ) Interest expense (55,147 ) (53,643 ) Total return swap income 1,984 2,045 Interest and other income (loss) (5,221 ) 12,261 Equity income from co-investments 21,297 16,276 Gain on early retirement of debt, net 321 1,336 Gain on remeasurement of co-investment 234,694 31,535 Net income $ 328,765 $ 125,505 |
Reconciliation of assets from segment to consolidated | Total assets for each of the reportable operating segments are summarized as follows as of March 31, 2020 and December 31, 2019 ($ in thousands): March 31, 2020 December 31, 2019 Assets: Southern California $ 4,198,656 $ 4,233,110 Northern California 5,748,062 4,622,268 Seattle Metro 1,469,297 1,481,061 Other real estate assets 12,103 12,221 Net reportable operating segment - real estate assets 11,428,118 10,348,660 Real estate under development 435,865 546,075 Co-investments 997,137 1,335,339 Cash and cash equivalents, including restricted cash 282,347 81,094 Marketable securities 148,139 144,193 Notes and other receivables 34,867 134,365 Operating lease right-of-use assets 74,428 74,744 Prepaid expenses and other assets 49,940 40,935 Total assets $ 13,450,841 $ 12,705,405 |
Net Income Per Common Share a_2
Net Income Per Common Share and Net Income Per Common Unit (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 Three Months Ended March 31, 2019 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 $ 315,006 66,043,831 $ 4.77 $ 118,858 65,702,788 $ 1.81 Effect of Dilutive Securities: Stock options — 57,337 — 81,081 DownREIT units 196 94,247 — — Diluted: Net income available to common stockholders $ 315,202 66,195,415 $ 4.76 $ 118,858 65,783,869 $ 1.81 |
Essex Portfolio, L.P. | |
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 March 31, 2020 Three Months Ended March 31, 2019 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 $ 325,992 68,344,012 $ 4.77 $ 123,029 68,007,852 $ 1.81 Effect of Dilutive Securities: Stock options — 57,337 — 81,081 DownREIT units 196 94,247 — — Diluted: Net income available to common unitholders $ 326,188 68,495,596 $ 4.76 $ 123,029 68,088,933 $ 1.81 |
Organization and Basis of Pre_4
Organization and Basis of Presentation - Narrative (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020USD ($)communitybuildinginvestmentpartnershipapartmentprojectshares | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)communityinvestmentpartnershipshares | Jan. 01, 2020USD ($) | |
Real Estate Properties [Line Items] | ||||
Apartment communities owned (in communities) | community | 250 | |||
Apartment units owned (in apartments) | apartment | 60,770 | |||
Ownership interest, number of commercial buildings (in commercial buildings) | building | 1 | |||
Ownership interest, number of active development projects (in projects) | project | 4 | |||
Ownership interest, number of unconsolidated joint venture projects (in projects) | project | 2 | |||
Equity securities | $ 3,200 | $ 3,600 | ||
Sales and maturities of marketable securities | 200 | $ 16,800 | ||
Marketable securities, realized gain (loss) | 13 | (100) | ||
Gain (loss) on sale of equity securities | $ (8,696) | 4,510 | ||
DownREIT limited partnerships consolidated by company (in partnerships) | partnership | 17 | 17 | ||
Communities within DownREIT partnerships (in communities) | community | 9 | 9 | ||
Number of previously consolidated co-investments considered VIE (in investments) | investment | 6 | 6 | ||
Assets related to variable interest entities net of intercompany eliminations | $ 1,100,000 | $ 1,000,000 | ||
Liabilities related to variable interest entities net of intercompany eliminations | 348,900 | 364,300 | ||
Noncontrolling interest in variable interest entity | 122,300 | 122,500 | ||
Fixed rate debt carrying amount | 5,500,000 | 5,200,000 | ||
Fixed rate debt fair value | 5,600,000 | 5,400,000 | ||
Variable rate debt, carrying amount | 955,300 | 660,400 | ||
Variable rate debt fair value | 949,200 | 655,800 | ||
Investments in mortgage back securities, fair value | 75,100 | 72,700 | ||
Capitalized internal costs related to development and redevelopment projects | 9,900 | 10,700 | ||
Redeemable noncontrolling interest | 32,643 | 37,410 | ||
Mortgage backed securities | ||||
Real Estate Properties [Line Items] | ||||
Investments in mortgage backed securities, carrying value | 75,045 | $ 72,651 | ||
Interest And Other Income | ||||
Real Estate Properties [Line Items] | ||||
Gain (loss) on sale of equity securities | $ 8,700 | 4,500 | ||
Essex Portfolio, L.P. | ||||
Real Estate Properties [Line Items] | ||||
Operating Partnership units outstanding (in shares) | shares | 2,296,043 | 2,301,653 | ||
Redemption value of operating partnership units outstanding | $ 505,700 | $ 692,500 | ||
Gain (loss) on sale of equity securities | (8,696) | $ 4,510 | ||
Redeemable noncontrolling interest | $ 32,643 | $ 37,410 | ||
Partnership Interest | ||||
Real Estate Properties [Line Items] | ||||
Ownership interest in partnership | 96.60% | 96.60% | ||
Distributions in Excess of Accumulated Earnings | ||||
Real Estate Properties [Line Items] | ||||
Cumulative effect adjustment | $ (190) | |||
ASU 2016-13 | ||||
Real Estate Properties [Line Items] | ||||
Cumulative effect adjustment | (190) | |||
ASU 2016-13 | Essex Portfolio, L.P. | ||||
Real Estate Properties [Line Items] | ||||
Cumulative effect adjustment | (190) | |||
ASU 2016-13 | Distributions in Excess of Accumulated Earnings | ||||
Real Estate Properties [Line Items] | ||||
Cumulative effect adjustment | $ 200 |
Organization and Basis of Pre_5
Organization and Basis of Presentation - Summary of Financial Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Equity securities: | |||
Gross Unrealized Gain (Loss) | $ (8,696) | $ 4,510 | |
Carrying Value | 3,200 | $ 3,600 | |
Held to maturity | |||
Equity and Debt Securities, Amortized Cost | 153,596 | 140,649 | |
Equity and Debt Securities, Gross Unrealized Gain (Loss) | (5,457) | 3,544 | |
Equity and Debt Securities, Marketable Securities | 148,139 | 144,193 | |
Equity and Debt Securities, Allowance for Credit Loss | 13,644 | 0 | |
Investment funds - debt securities | |||
Equity securities: | |||
Amortized Cost/Cost | 29,685 | 29,588 | |
Gross Unrealized Gain (Loss) | (676) | 544 | |
Carrying Value | 29,009 | 30,132 | |
Common stock and stock funds | |||
Equity securities: | |||
Amortized Cost/Cost | 45,395 | 34,941 | |
Gross Unrealized Gain (Loss) | (4,549) | 2,927 | |
Carrying Value | 40,846 | 37,868 | |
U.S. treasury securities | |||
Available for sale | |||
Amortized Cost/Cost | 2,421 | 2,421 | |
Gross Unrealized Gain (Loss) | 16 | 13 | |
Carrying Value | 2,437 | 2,434 | |
Allowance for Credit Losses | 0 | ||
Investment-grade unsecured debt | |||
Available for sale | |||
Amortized Cost/Cost | 1,050 | 1,048 | |
Gross Unrealized Gain (Loss) | (248) | 60 | |
Carrying Value | 802 | 1,108 | |
Allowance for Credit Losses | 0 | ||
Mortgage backed securities | |||
Held to maturity | |||
Amortized Cost/Cost | 75,045 | 72,651 | |
Gross Unrealized Gain (Loss) | 0 | 0 | |
Carrying Value | 75,045 | $ 72,651 | |
Allowance for Credit Losses | $ 13,644 |
Organization and Basis of Pre_6
Organization and Basis of Presentation - Allowance For Credit Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Jan. 01, 2020 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning balance | $ 0 | |
Impact of adoption ASC 326 | 13,644 | |
Provision for credit losses | (50) | |
Ending balance | 13,644 | |
Mortgage Backed Securities | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning balance | 0 | |
Impact of adoption ASC 326 | 13,644 | |
Provision for credit losses | 0 | |
Ending balance | $ 13,644 | |
Cumulative Effect, Period Of Adoption, Adjustment | Mortgage Backed Securities | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Impact of adoption ASC 326 | $ 13,644 |
Organization and Basis of Pre_7
Organization and Basis of Presentation - Accumulated Other Comprehensive Loss Summary (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | $ 6,403,504 |
Balance at period end | 6,417,949 |
Accumulated Other Comprehensive Loss, Net | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (13,888) |
Other comprehensive loss before reclassification | (7,472) |
Amounts reclassified from accumulated other comprehensive loss | (1,308) |
Other comprehensive loss | (8,780) |
Balance at period end | (22,668) |
Change in fair value and amortization of swap settlements | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (13,989) |
Other comprehensive loss before reclassification | (7,178) |
Amounts reclassified from accumulated other comprehensive loss | (1,308) |
Other comprehensive loss | (8,486) |
Balance at period end | (22,475) |
Unrealized gain/(loss) on available for sale securities | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | 101 |
Other comprehensive loss before reclassification | (294) |
Amounts reclassified from accumulated other comprehensive loss | 0 |
Other comprehensive loss | (294) |
Balance at period end | $ (193) |
Organization and Basis of Pre_8
Organization and Basis of Presentation - Accumulated Other Comprehensive Loss - Partnership (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | $ 6,403,504 |
Balance at period end | 6,417,949 |
Essex Portfolio, L.P. | Accumulated Other Comprehensive Loss, Net | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (10,432) |
Other comprehensive loss before reclassification | (7,734) |
Amounts reclassified from accumulated other comprehensive loss | (1,353) |
Other comprehensive loss | (9,087) |
Balance at period end | (19,519) |
Essex Portfolio, L.P. | Change in fair value and amortization of swap settlements | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | (10,536) |
Other comprehensive loss before reclassification | (7,429) |
Amounts reclassified from accumulated other comprehensive loss | (1,353) |
Other comprehensive loss | (8,782) |
Balance at period end | (19,318) |
Essex Portfolio, L.P. | Unrealized gain/(loss) on available for sale securities | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Balance at period beginning | 104 |
Other comprehensive loss before reclassification | (305) |
Amounts reclassified from accumulated other comprehensive loss | 0 |
Other comprehensive loss | (305) |
Balance at period end | $ (201) |
Organization and Basis of Pre_9
Organization and Basis of Presentation - Redeemable Noncontrolling Interest (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Beginning balance | $ 37,410 |
Reclassification due to change in redemption value and other | (4,767) |
Redemptions | 0 |
Ending balance | $ 32,643 |
Organization and Basis of Pr_10
Organization and Basis of Presentation - Cash, Cash Equivalents and Restricted Cash And Cash Equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents-unrestricted | $ 271,877 | $ 70,087 | $ 107,034 | $ 134,465 |
Cash and cash equivalents-restricted | 10,470 | 11,007 | 17,092 | 16,930 |
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows | $ 282,347 | $ 81,094 | $ 124,126 | $ 151,395 |
Significant Transactions Duri_2
Significant Transactions During The Three Months Ended March 31, 2020 and Subsequent Events (Details) | 1 Months Ended | 3 Months Ended | ||||
Apr. 30, 2020USD ($)extension | Mar. 31, 2020USD ($) | Jan. 31, 2020USD ($)communityapartment | Mar. 31, 2020USD ($)shares | Mar. 31, 2019USD ($) | Feb. 29, 2020USD ($) | |
Other Commitments [Line Items] | ||||||
Gain on remeasurement of co-investment | $ 234,694,000 | $ 31,535,000 | ||||
Commitments to acquire equity method investment | $ 91,400,000 | |||||
Preferred return rate | 11.30% | |||||
Notes receivable, term of extension option | 2 years | |||||
Common Stock | ||||||
Other Commitments [Line Items] | ||||||
Shares repurchased during period (in shares) | shares | 776,261 | |||||
Shares repurchased during period, value | $ 176,300,000 | |||||
Purchase authority remaining under stock repurchase plan | $ 73,700,000 | 73,700,000 | ||||
Stock repurchase plan amount | 250,000,000 | 250,000,000 | ||||
CPPIB interest | ||||||
Other Commitments [Line Items] | ||||||
Investment interest acquired | 45.00% | |||||
Value of property held by acquired investment | $ 1,000,000,000 | |||||
Gain on remeasurement of co-investment | 234,700,000 | |||||
Promote income | 6,500,000 | |||||
Joint venture that holds property in Los Angeles, CA | ||||||
Other Commitments [Line Items] | ||||||
Proceeds from partial redemption of co-investment | 11,300,000 | |||||
Early redemption fee | 200,000 | |||||
Property Located In Anaheim, California | ||||||
Other Commitments [Line Items] | ||||||
Proceeds from redemption of notes receivable | $ 16,900,000 | |||||
Multifamily Development Communities In Los Angeles, California | ||||||
Other Commitments [Line Items] | ||||||
Notes receivable, commitment to fund, amount | $ 15,000,000 | $ 15,000,000 | ||||
Notes receivable, interest rate | 10.50% | 10.50% | ||||
Apartment Building | CPPIB interest | ||||||
Other Commitments [Line Items] | ||||||
Number of communities held by acquired investment | community | 6 | |||||
Number of units held by acquired investment | apartment | 2,020 | |||||
Essex Portfolio, L.P. | ||||||
Other Commitments [Line Items] | ||||||
Gain on remeasurement of co-investment | $ 234,694,000 | $ 31,535,000 | ||||
Essex Portfolio, L.P. | Senior Notes | 2032 Notes | ||||||
Other Commitments [Line Items] | ||||||
Debt issued | $ 500,000,000 | |||||
Debt coupon rate | 2.65% | |||||
Debt offering price, percentage of par value | 99.628% | |||||
Repayments of secured debt | $ 100,300,000 | |||||
Affiliated Entity | Related party bridge loan - Wesco V | ||||||
Other Commitments [Line Items] | ||||||
Proceeds from redemption of notes receivable | $ 85,800,000 | |||||
Subsequent Event | Unsecured Term Loan | ||||||
Other Commitments [Line Items] | ||||||
Debt issued | $ 200,000,000 | |||||
Number of extension options (in extensions) | extension | 2 | |||||
Extension period | 12 months | |||||
Prepayment of debt | $ 169,600,000 | |||||
Subsequent Event | LIBOR | Unsecured Term Loan | ||||||
Other Commitments [Line Items] | ||||||
Basis spread on variable rate | 1.20% |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)community | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Disaggregation of Revenue [Line Items] | |||
Rental and other property | $ 389,750 | $ 353,888 | |
Management and other fees from affiliates | 2,617 | 2,335 | |
Total revenues | $ 392,367 | 356,223 | |
Occupancy threshold for classification as stabilized | 90.00% | ||
Apartment communities owned (in communities) | community | 250 | ||
Deferred revenue | $ 3,700 | $ 3,900 | |
Deferred revenue, revenue recognized | 200 | ||
Deferred revenue balance from contracts with remaining performance obligations | 3,700 | ||
Rental income | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 383,498 | 347,805 | |
Other property | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 6,252 | 6,083 | |
Rental and other property revenues | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 389,750 | 353,888 | |
Rental and other property revenues | Same-property | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 346,456 | 335,658 | |
Rental and other property revenues | Acquisitions | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 21,924 | 987 | |
Rental and other property revenues | Development | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 4,075 | 1,158 | |
Rental and other property revenues | Redevelopment | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 5,401 | 5,229 | |
Rental and other property revenues | Non-residential/other, net | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | $ 11,894 | 10,856 | |
Apartment communities owned (in communities) | community | 3 | ||
Rental and other property revenues | Operating Segments | Southern California | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | $ 155,642 | 151,463 | |
Rental and other property revenues | Operating Segments | Northern California | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 164,079 | 136,745 | |
Rental and other property revenues | Operating Segments | Seattle Metro | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | 63,844 | 60,413 | |
Rental and other property revenues | Other real estate assets | |||
Disaggregation of Revenue [Line Items] | |||
Rental and other property | $ 6,185 | $ 5,267 |
Revenues - Deferred Revenues an
Revenues - Deferred Revenues and Remaining Performance Obligations (Details) | Mar. 31, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Percentage of remaining performance obligations due per period | 15.00% |
Expected timing of performance obligation satisfaction, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Percentage of remaining performance obligations due per period | 40.00% |
Expected timing of performance obligation satisfaction, period | 2 years |
Co-investments - Summary of Inv
Co-investments - Summary of Investments (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2020communityapartment | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Co-investments | $ 997,137 | $ 1,335,339 | |
Total operating and other co-investments, net | |||
Schedule of Equity Method Investments [Line Items] | |||
Co-investments | $ 387,634 | 743,461 | |
CPPIB | |||
Schedule of Equity Method Investments [Line Items] | |||
Weighted average company ownership percentage | 0.00% | ||
Co-investments | $ 0 | 345,466 | |
Wesco I, Wesco III, Wesco IV, and Wesco V | |||
Schedule of Equity Method Investments [Line Items] | |||
Weighted average company ownership percentage | 51.00% | ||
Co-investments | $ 209,742 | 216,756 | |
BEXAEW, BEX II, BEX III, and BEX IV | |||
Schedule of Equity Method Investments [Line Items] | |||
Weighted average company ownership percentage | 50.00% | ||
Co-investments | $ 156,869 | 160,888 | |
Other | |||
Schedule of Equity Method Investments [Line Items] | |||
Weighted average company ownership percentage | 48.00% | ||
Co-investments | $ 21,023 | 20,351 | |
Total predevelopment and development co-investments | |||
Schedule of Equity Method Investments [Line Items] | |||
Weighted average company ownership percentage | 50.00% | ||
Co-investments | $ 158,145 | 146,944 | |
Total preferred interest co-investments | |||
Schedule of Equity Method Investments [Line Items] | |||
Co-investments | 451,358 | 444,934 | |
Total preferred interest co-investments | Investments in Majority-owned Subsidiaries | |||
Schedule of Equity Method Investments [Line Items] | |||
Co-investments | $ 75,300 | $ 73,200 | |
CPPIB interest | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment interest acquired | 45.00% | ||
Apartment Building | CPPIB interest | |||
Schedule of Equity Method Investments [Line Items] | |||
Number of communities held by acquired investment | community | 6 | ||
Number of units held by acquired investment | apartment | 2,020 |
Co-investments - Combined Finan
Co-investments - Combined Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Equity Method Investment, Summarized Financial Information, Assets [Abstract] | |||
Rental properties and real estate under development | $ 435,865 | $ 546,075 | |
Other liabilities | 41,290 | 36,565 | |
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||
Interest expense | (55,147) | $ (53,643) | |
General and administrative | (13,982) | (13,459) | |
Total co-investment | |||
Equity Method Investment, Summarized Financial Information, Assets [Abstract] | |||
Rental properties and real estate under development | 4,287,101 | 4,733,762 | |
Other assets | 158,145 | 139,562 | |
Total assets | 4,445,246 | 4,873,324 | |
Debt | 2,522,407 | 2,442,213 | |
Other liabilities | 181,761 | 117,160 | |
Equity | 1,741,078 | 2,313,951 | |
Total liabilities and equity | 4,445,246 | 4,873,324 | |
Company's share of equity | 997,137 | $ 1,335,339 | |
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||
Property revenues | 77,369 | 83,725 | |
Property operating expenses | (25,715) | (28,719) | |
Net operating income | 51,654 | 55,006 | |
Interest expense | (20,853) | (15,115) | |
General and administrative | (4,083) | (1,928) | |
Depreciation and amortization | (28,437) | (29,935) | |
Net income (loss) | (1,719) | 8,028 | |
Company's share of net income | 21,297 | 16,276 | |
Total co-investment | Affiliated Entity | |||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||
Company's share of net income | $ 2,100 | $ 1,700 |
Notes and Other Receivables (De
Notes and Other Receivables (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 34,867 | $ 134,365 | |
Notes and other receivables, allowance for credit loss | (66) | 0 | |
Notes receivable, secured, bearing interest at 9.00%, due May 2021 (Originated May 2017) | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 0 | 16,828 | |
Stated interest rate | 9.00% | ||
Note receivable, secured, bearing interest at 9.90%, due November 2021 (Originated November 2018) | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 13,168 | 12,838 | |
Stated interest rate | 9.90% | ||
Related party note receivable, secured, bearing variable rate interest, due February 2020 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 0 | 85,713 | |
Notes and other receivables from affiliates | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | 7,700 | 4,442 | |
Other receivables | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 14,065 | $ 14,544 | |
Affiliated Entity | Notes receivable, secured, bearing interest at 9.00%, due May 2021 (Originated May 2017) | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Proceeds from redemption of notes receivable | $ 16,900 | ||
Affiliated Entity | Related party note receivable, secured, bearing variable rate interest, due February 2020 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Proceeds from redemption of notes receivable | $ 85,800 |
Notes and Other Receivables - A
Notes and Other Receivables - Allowance for credit loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Jan. 01, 2020 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 0 | |
Impact of adoption ASC 326 | 0 | |
Provision for credit losses | 50 | |
Ending balance | 66 | |
Mezzanine Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | 0 | |
Impact of adoption ASC 326 | 66 | |
Provision for credit losses | (81) | |
Ending balance | 66 | |
Bridge Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | 0 | |
Impact of adoption ASC 326 | 0 | |
Provision for credit losses | (43) | |
Ending balance | 0 | |
Mezzanine and Bridge Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | 0 | |
Impact of adoption ASC 326 | 66 | |
Provision for credit losses | (124) | |
Ending balance | $ 66 | |
Cumulative Effect, Period Of Adoption, Adjustment | Mezzanine Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Impact of adoption ASC 326 | $ 147 | |
Cumulative Effect, Period Of Adoption, Adjustment | Bridge Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Impact of adoption ASC 326 | 43 | |
Cumulative Effect, Period Of Adoption, Adjustment | Mezzanine and Bridge Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Impact of adoption ASC 326 | $ 190 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | 23 Months Ended | ||||||||||
Nov. 30, 2019USD ($) | Aug. 31, 2019USD ($) | Jun. 30, 2019USD ($)apartment | Feb. 28, 2019USD ($) | Oct. 31, 2018USD ($)apartment | May 31, 2018USD ($)apartment | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2015USD ($)investment | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Nov. 30, 2016USD ($) | |
Related Party Transaction [Line Items] | ||||||||||||||
Payments to acquire preferred equity investments | $ 21,905 | $ 126,248 | ||||||||||||
Preferred return rate | 11.30% | |||||||||||||
Commitment to fund preferred equity investment | $ 91,400 | |||||||||||||
Affiliated Entity | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Management and other fees from affiliates | 3,100 | 3,400 | ||||||||||||
Development and redevelopment fees | 400 | $ 1,100 | ||||||||||||
Short-term loans outstanding and due from affiliates | 7,700 | $ 7,700 | $ 4,400 | |||||||||||
Affiliated Entity | Related party bridge loan - Wesco V | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Notes receivable | $ 85,500 | $ 89,000 | ||||||||||||
Interest rate | 1.30% | 1.30% | ||||||||||||
Affiliated Entity | Related party bridge loan - BEX IV | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Notes receivable | $ 44,400 | |||||||||||||
Interest rate | 3.25% | |||||||||||||
Chairman and founder | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Payments to acquire preferred equity investments | $ 20,000 | |||||||||||||
Number of preferred equity method investments acquired during period (in investments) | investment | 3 | |||||||||||||
Preferred stock, stated interest percentage | 9.50% | |||||||||||||
Redeemed amount | $ 5,000 | $ 5,000 | ||||||||||||
Chairman and founder | Multifamily development community in La Mesa, CA | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Payments to acquire preferred equity investments | $ 24,500 | |||||||||||||
Preferred return rate | 11.00% | |||||||||||||
Chairman and founder | Apartment home community development development in Burlingame, CA | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Number of units acquired | apartment | 268 | |||||||||||||
Payments to acquire preferred equity investments | $ 18,600 | |||||||||||||
Preferred return rate | 12.00% | |||||||||||||
Chairman and founder | Marcus & Millichap Company (MMC) | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Brokerage commissions | $ 200 | |||||||||||||
Chairman and founder | Marcus & Millichap Company (MMC) | Brio, Walnut Creek, CA | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Number of units acquired | apartment | 300 | |||||||||||||
Payments to acquire real estate | $ 164,900 | |||||||||||||
Debt assumed in connection with acquisition | $ 98,700 | |||||||||||||
Chairman and founder | Marcus & Millichap Company (MMC) | Apartment home community in Ventura, CA | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Number of units acquired | apartment | 400 | |||||||||||||
Preferred return rate | 10.25% | |||||||||||||
Commitment to fund preferred equity investment | $ 26,500 | |||||||||||||
Commitment funded amount | $ 22,900 | |||||||||||||
Chairman and founder | Marcus & Millichap Company (MMC) | Related party note due October 2019 | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Notes receivable | $ 6,600 |
Debt - Debt Summary (Details)
Debt - Debt Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 5,258,263 | $ 4,763,206 |
Lines of credit | 350,000 | 55,000 |
Mortgage notes payable, net | 887,389 | 990,667 |
Total debt | 6,495,652 | 5,808,873 |
Unsecured bonds private placement - fixed rate | ||
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 199,852 | 199,820 |
Weighted average maturity | 1 year 2 months 12 days | |
Term loan - variable rate | ||
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 349,287 | $ 349,189 |
Weighted average interest rate | 2.70% | 2.70% |
Weighted average maturity | 1 year 10 months 24 days | |
Bonds public offering - fixed rate | ||
Debt Instrument [Line Items] | ||
Unsecured debt, net | $ 4,709,124 | $ 4,214,197 |
Weighted average interest rate | 3.70% | 3.80% |
Weighted average maturity | 7 years 8 months 12 days | |
Lines of credit | ||
Debt Instrument [Line Items] | ||
Lines of credit | $ 350,000 | $ 55,000 |
Weighted average interest rate | 2.40% | 2.50% |
Mortgage notes payable, net | ||
Debt Instrument [Line Items] | ||
Mortgage notes payable, net | $ 887,389 | $ 990,667 |
Weighted average interest rate | 4.10% | 4.10% |
Weighted average maturity | 7 years 10 months 24 days |
Debt - Narrative (Details)
Debt - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2020USD ($)instrumentextension | Dec. 31, 2019USD ($) | |
Unsecured debt | ||
Debt Instrument [Line Items] | ||
Unamortized discount (premium), net | $ 14,100,000 | $ 12,200,000 |
Unamortized debt issuance expense | 27,600,000 | 24,500,000 |
Lines of credit | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance expense | $ 4,500,000 | 3,800,000 |
Number of lines of unsecured credit (in instruments) | instrument | 2 | |
Aggregate borrowing capacity | $ 1,240,000,000 | |
Number of extension options (in extensions) | extension | 1 | |
Extension period | 18 months | |
Lines of credit | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.825% | |
Lines of credit | Working capital line of credit | ||
Debt Instrument [Line Items] | ||
Aggregate borrowing capacity | $ 35,000,000 | |
Lines of credit | Working capital line of credit | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.825% | |
Mortgage notes payable, net | ||
Debt Instrument [Line Items] | ||
Unamortized discount (premium), net | $ (5,000,000) | (5,900,000) |
Unamortized debt issuance expense | $ 2,400,000 | $ 2,600,000 |
Debt - Future Principal Payment
Debt - Future Principal Payments (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
Remaining in 2020 | $ 185,493 |
2021 | 531,653 |
2022 | 693,188 |
2023 | 602,945 |
2024 | 403,109 |
Thereafter | 3,768,383 |
Long-term debt | $ 6,184,771 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable operating segments (in segments) | segment | 3 | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net operating income | $ 282,607 | $ 255,848 | ||
Corporate-level property management expenses | (8,759) | (8,429) | ||
Depreciation and amortization | (131,559) | (120,568) | ||
General and administrative | (13,982) | (13,459) | ||
Expensed acquisition and investment related costs | (87) | (32) | ||
Interest expense | (55,147) | (53,643) | ||
Total return swap income | 1,984 | 2,045 | ||
Interest and other income (loss) | (5,221) | 12,261 | ||
Equity income from co-investments | 21,297 | 16,276 | ||
Gain on early retirement of debt, net | 321 | 1,336 | ||
Gain on remeasurement of co-investment | 234,694 | 31,535 | ||
Net income | 328,765 | 125,505 | ||
Net reportable operating segment - real estate assets | 11,428,118 | $ 10,348,660 | ||
Real estate under development | 435,865 | 546,075 | ||
Co-investments | 997,137 | 1,335,339 | ||
Cash and cash equivalents, including restricted cash | 282,347 | 124,126 | 81,094 | $ 151,395 |
Marketable securities | 148,139 | 144,193 | ||
Notes and other receivables | 34,867 | 134,365 | ||
Operating lease right-of-use assets | 74,428 | 74,744 | ||
Prepaid expenses and other assets | 49,940 | 40,935 | ||
Total assets | 13,450,841 | 12,705,405 | ||
Rental and Other Property Revenues | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenues | 389,750 | 353,888 | ||
Management and Other Fees From Affiliates Income | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenues | 2,617 | 2,335 | ||
Operating Segments | Southern California | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net operating income | 111,097 | 107,996 | ||
Net reportable operating segment - real estate assets | 4,198,656 | 4,233,110 | ||
Operating Segments | Southern California | Rental and Other Property Revenues | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenues | 155,642 | 151,463 | ||
Operating Segments | Northern California | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net operating income | 120,981 | 101,214 | ||
Net reportable operating segment - real estate assets | 5,748,062 | 4,622,268 | ||
Operating Segments | Northern California | Rental and Other Property Revenues | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenues | 164,079 | 136,745 | ||
Operating Segments | Seattle Metro | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net operating income | 44,993 | 41,699 | ||
Net reportable operating segment - real estate assets | 1,469,297 | 1,481,061 | ||
Operating Segments | Seattle Metro | Rental and Other Property Revenues | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenues | 63,844 | 60,413 | ||
Other real estate assets | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net operating income | 5,536 | 4,939 | ||
Net reportable operating segment - real estate assets | 12,103 | $ 12,221 | ||
Other real estate assets | Rental and Other Property Revenues | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenues | $ 6,185 | $ 5,267 |
Net Income Per Common Share a_3
Net Income Per Common Share and Net Income Per Common Unit (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic: | ||
Net income available to common stockholders/unitholders | $ 315,006 | $ 118,858 |
Weighted average common shares/units (in shares) | 66,043,831 | 65,702,788 |
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.77 | $ 1.81 |
Effect of Dilutive Securities: | ||
Stock options (in shares) | 57,337 | 81,081 |
DownREIT units (in shares) | 94,247 | 0 |
Diluted: | ||
Net income available to common stockholders/unitholders | $ 315,202 | $ 118,858 |
Weighted average common shares/units (in shares) | 66,195,415 | 65,783,869 |
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.76 | $ 1.81 |
Essex Portfolio, L.P. | ||
Basic: | ||
Net income available to common stockholders/unitholders | $ 325,992 | $ 123,029 |
Weighted average common shares/units (in shares) | 68,344,012 | 68,007,852 |
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.77 | $ 1.81 |
Effect of Dilutive Securities: | ||
Stock options (in shares) | 57,337 | 81,081 |
Diluted: | ||
Net income available to common stockholders/unitholders | $ 326,188 | $ 123,029 |
Weighted average common shares/units (in shares) | 68,495,596 | 68,088,933 |
Net income available to common stockholders/unitholders (in dollars per share) | $ 4.76 | $ 1.81 |
Convertible units | ||
Diluted: | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 2,300,181 | 2,305,064 |
Income allocated to convertible OP Units | $ 11,000 | $ 4,200 |
Stock options | ||
Diluted: | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 116,380 | 106,029 |
Stock options | Essex Portfolio, L.P. | ||
Diluted: | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 116,380 | 106,029 |
Subsidiaries | DownREIT Units | ||
Effect of Dilutive Securities: | ||
Income effect of Dilutive Securities | $ 196 | $ 0 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($)instrument | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Derivative [Line Items] | |||
Total return swap income | $ 1,984,000 | $ 2,045,000 | |
Multifamily Housing Mortgage Revenue Bonds | |||
Derivative [Line Items] | |||
Bond subject to interest rate caps | 255,300,000 | ||
Designated as Hedging Instrument | Interest Rate Swap | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 175,000,000 | ||
Interest rate | 2.30% | ||
Aggregate carrying value of the interest rate swap contracts, asset | $ 0 | $ 1,000,000 | |
Aggregate carrying value of the interest rate swap contracts, liability | 3,400,000 | 200,000 | |
Not Designated as Hedging Instrument | Total Return Swap, Callable | |||
Derivative [Line Items] | |||
Derivative, notional amount | 255,300,000 | ||
Derivative, fair value, net | $ 0 | $ 0 | |
Not Designated as Hedging Instrument | Total Return Swap, Callable | Multifamily Housing Mortgage Revenue Bonds | |||
Derivative [Line Items] | |||
Number of derivative instruments | instrument | 4 |
Uncategorized Items - ess-33120
Label | Element | Value |
Accounting Standards Update 2016-13 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |
Accounting Standards Update 2016-13 [Member] | Noncontrolling Interest [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
Accounting Standards Update 2017-12 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 175,000 |
Accounting Standards Update 2017-12 [Member] | Noncontrolling Interest [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 6,000 |