Maryland
|
77-0369576
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification Number)
|
Page
No.
|
||||
PART
I. FINANCIAL INFORMATION
|
||||
Item
1.
|
Financial
Statements (Unaudited):
|
3
|
||
Consolidated
Balance Sheets as of June 30, 2006 and December 31, 2005
|
||||
Consolidated
Statements of Operations for the three and six months ended June
30, 2006
and 2005
|
||||
Consolidated
Statements of Stockholders' Equity and Comprehensive Income for the
six
months ended June 30, 2006
|
||||
Condensed
Consolidated Statements of Cash Flows for the six months ended June
30,
2006 and 2005
|
||||
Notes
to Consolidated Financial Statements
|
||||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of Operations
|
|||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
27
|
||
Item
4.
|
Controls
and Procedures
|
28
|
||
PART
II. OTHER INFORMATION
|
||||
Item
1.
|
Legal
Proceedings
|
28
|
||
Item
1A.
|
Risk
Factors
|
28
|
||
Item
4.
|
Submissions
of Matters to a Vote of Security Holders
|
29
|
||
Item
6.
|
Exhibits
|
29
|
||
Signatures
|
June
30,
|
December
31,
|
||||||
Assets
|
2006
|
2005
|
|||||
Real
estate:
|
|||||||
Rental
properties:
|
|||||||
Land
and land improvements
|
$
|
561,560
|
$
|
551,132
|
|||
Buildings
and improvements
|
1,994,741
|
1,932,113
|
|||||
2,556,301
|
2,483,245
|
||||||
Less
accumulated depreciation
|
(437,154
|
)
|
(398,476
|
)
|
|||
2,119,147
|
2,084,769
|
||||||
Real
estate under development
|
75,429
|
54,416
|
|||||
Investments
|
36,498
|
27,228
|
|||||
2,231,074
|
2,166,413
|
||||||
Cash
and cash equivalents-unrestricted
|
9,022
|
14,337
|
|||||
Cash
and cash equivalents-restricted
|
14,035
|
13,937
|
|||||
Notes
and other receivables from related parties
|
2,258
|
1,173
|
|||||
Notes
and other receivables
|
29,845
|
5,237
|
|||||
Prepaid
expenses and other assets
|
27,632
|
23,078
|
|||||
Deferred
charges, net
|
14,378
|
15,115
|
|||||
Total
assets
|
$
|
2,328,244
|
$
|
2,239,290
|
|||
Liabilities
and Stockholders' Equity
|
|||||||
Mortgage
notes payable
|
$
|
1,100,965
|
$
|
1,104,918
|
|||
Exchangeable
bonds
|
225,000
|
225,000
|
|||||
Lines
of credit
|
95,030
|
25,000
|
|||||
Accounts
payable and accrued liabilities
|
37,567
|
32,982
|
|||||
Dividends
payable
|
23,317
|
22,496
|
|||||
Other
liabilities
|
13,696
|
12,520
|
|||||
Deferred
gain
|
2,193
|
2,193
|
|||||
Total
liabilities
|
1,497,768
|
1,425,109
|
|||||
Minority
interests
|
229,694
|
233,214
|
|||||
Stockholders'
equity:
|
|||||||
Common
stock, $.0001 par value, 655,682,178
|
|||||||
authorized,
23,047,162 and
|
|||||||
22,851,953
issued and outstanding
|
2
|
2
|
|||||
Cumulative
redeemable preferred stock; $.0001 par value:
|
|||||||
No
shares issued and outstanding:
|
|||||||
7.875%
Series B 2,000,000 shares authorized
|
-
|
-
|
|||||
7.875%
Series D 2,000,000 shares authorized
|
-
|
-
|
|||||
7.8125%
Series F 1,000,000 shares authorized,
|
|||||||
1,000,000
and 1,000,000 shares issued and outstanding,
|
|||||||
liquidation
value
|
25,000
|
25,000
|
|||||
Excess
stock, $.0001 par value, 330,000,000 shares
|
|||||||
authorized
and no shares issued and outstanding
|
-
|
-
|
|||||
Additional
paid-in capital
|
648,142
|
632,646
|
|||||
Distributions
in excess of accumulated earnings
|
(84,066
|
)
|
(77,341
|
)
|
|||
Accumulated
other comprehensive income
|
11,704
|
660
|
|||||
Total
stockholders' equity
|
600,782
|
580,967
|
|||||
Commitments
and contingencies
|
|||||||
Total
liabilities and stockholders' equity
|
$
|
2,328,244
|
$
|
2,239,290
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
Revenues:
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Rental
and other property
|
$
|
86,656
|
$
|
79,662
|
$
|
171,919
|
$
|
157,938
|
|||||
Management
and other fees from affiliates
|
830
|
931
|
1,654
|
7,507
|
|||||||||
87,486
|
80,593
|
173,573
|
165,445
|
||||||||||
Expenses:
|
|||||||||||||
Property
operating, excluding real estate taxes
|
22,095
|
20,685
|
44,710
|
40,913
|
|||||||||
Real
estate taxes
|
7,374
|
6,610
|
14,770
|
13,451
|
|||||||||
Depreciation
and amortization
|
20,675
|
20,043
|
40,766
|
39,622
|
|||||||||
Interest
|
19,497
|
18,153
|
38,487
|
36,300
|
|||||||||
Amortization
of deferred financing costs
|
497
|
563
|
1,193
|
1,039
|
|||||||||
General
and administrative
|
5,002
|
4,573
|
9,901
|
9,014
|
|||||||||
Other
expenses
|
800
|
1,500
|
1,770
|
1,500
|
|||||||||
75,940
|
72,127
|
151,597
|
141,839
|
||||||||||
Gain
on sale of real estate
|
-
|
5,276
|
-
|
6,391
|
|||||||||
Interest
and other income
|
654
|
2,431
|
3,048
|
2,954
|
|||||||||
Equity
income in co-investments
|
(374
|
)
|
2,724
|
(816
|
)
|
17,316
|
|||||||
Minority
interests
|
(4,760
|
)
|
(5,360
|
)
|
(9,687
|
)
|
(11,801
|
)
|
|||||
Income
from continuing operations before income
|
|||||||||||||
tax
provision
|
7,066
|
13,537
|
14,521
|
38,466
|
|||||||||
Income
tax provision
|
(138
|
)
|
(1,100
|
)
|
(175
|
)
|
(1,201
|
)
|
|||||
Income
from continuing operations
|
6,928
|
12,437
|
14,346
|
37,265
|
|||||||||
Income
from discontinued operations (net of
|
|||||||||||||
minority
interests)
|
15,584
|
26,441
|
18,488
|
28,491
|
|||||||||
Net
income
|
22,512
|
38,878
|
32,834
|
65,756
|
|||||||||
Dividends
to preferred stockholders
|
(489
|
)
|
(488
|
)
|
(977
|
)
|
(977
|
)
|
|||||
Net
income available to common stockholders
|
$
|
22,023
|
$
|
38,390
|
$
|
31,857
|
$
|
64,779
|
|||||
Per
common share data:
|
|||||||||||||
Basic:
|
|||||||||||||
Income
from continuing operations available to
|
|||||||||||||
common
stockholders
|
$
|
0.28
|
$
|
0.52
|
$
|
0.58
|
$
|
1.57
|
|||||
Income
from discontinued operations
|
0.68
|
1.14
|
0.81
|
1.24
|
|||||||||
Net
income available to common stockholders
|
$
|
0.96
|
$
|
1.66
|
$
|
1.39
|
$
|
2.81
|
|||||
Weighted
average number of common shares
|
|||||||||||||
outstanding
during the period
|
22,950,172
|
23,069,620
|
22,911,202
|
23,056,918
|
|||||||||
Diluted:
|
|||||||||||||
Income
from continuing operations available to
|
|||||||||||||
common
stockholders
|
$
|
0.28
|
$
|
0.51
|
$
|
0.58
|
$
|
1.55
|
|||||
Income
from discontinued operations
|
0.67
|
1.13
|
0.80
|
1.22
|
|||||||||
Net
income available to common stockholders
|
$
|
0.95
|
$
|
1.64
|
$
|
1.38
|
$
|
2.77
|
|||||
Weighted
average number of common shares
|
|||||||||||||
outstanding
during the period
|
23,226,466
|
23,372,873
|
23,154,818
|
23,363,756
|
|||||||||
Dividend
per common share
|
$
|
0.84
|
$
|
0.81
|
$
|
1.68
|
$
|
1.62
|
|
|||||||||||||||||||||||||
Additional
|
Accumulated
other
|
Distributions
in
excess of
|
|||||||||||||||||||||||
Preferred
stock
|
Common
stock
|
paid-in
|
comprehensive
|
accumulated
|
|||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
income
|
earnings
|
Total
|
||||||||||||||||||
Balances
at December 31, 2005
|
1,000
|
$ |
25,000
|
22,851
|
$ |
2
|
$ |
632,646
|
$ |
660
|
$ |
(77,341
|
)
|
$ |
580,967
|
||||||||||
Comprehensive
income:
|
|||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
32,834
|
32,834
|
||||||||||||||||||
Change in fair value of cash flow hedges
|
-
|
-
|
-
|
-
|
-
|
11,044
|
-
|
11,044
|
|||||||||||||||||
Comprehensive
income
|
43,878
|
||||||||||||||||||||||||
Issuance
of common stock under:
|
|||||||||||||||||||||||||
Stock-based
compensation plans
|
-
|
-
|
56
|
-
|
2,709
|
-
|
-
|
2,709
|
|||||||||||||||||
Sale
of common stock
|
-
|
-
|
140
|
-
|
14,813
|
-
|
-
|
14,813
|
|||||||||||||||||
Redemptions
of minority interests, net
|
-
|
-
|
-
|
-
|
(2,026
|
)
|
-
|
-
|
(2,026
|
)
|
|||||||||||||||
Dividends
declared
|
-
|
-
|
-
|
-
|
-
|
-
|
(39,559
|
)
|
(39,559
|
)
|
|||||||||||||||
Balances
at June 30, 2006
|
1,000
|
$
|
25,000
|
23,047
|
$
|
2
|
$
|
648,142
|
$
|
11,704
|
$
|
(84,066
|
)
|
$
|
600,782
|
||||||||||
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2006
|
2005
|
||||||
Net
cash provided by operating activities
|
$
|
69,253
|
$
|
66,629
|
|||
Cash
flows (used in) provided by investing activities:
|
|||||||
Additions
to real estate:
|
|||||||
Acquisitions
and improvements to recent acquisitions
|
(60,115
|
)
|
(16,090
|
)
|
|||
Redevelopment
|
(11,455
|
)
|
(7,711
|
)
|
|||
Revenue
generating capital expenditures
|
(1,092
|
)
|
(115
|
)
|
|||
Other
capital expenditures
|
(7,485
|
)
|
(6,116
|
)
|
|||
Additions
to real estate under development
|
(20,346
|
)
|
(15,031
|
)
|
|||
Dispositions
of real estate and investments
|
8,349
|
6,585
|
|||||
Changes
in restricted cash and refundable deposits
|
6,271
|
7,646
|
|||||
Additions
to notes receivable from related parties and other
receivables
|
(8,284
|
)
|
(3,643
|
)
|
|||
Repayments
of notes receivable from related parties and other
receivables
|
456
|
5,005
|
|||||
Net
(contributions to) distributions from limited partnerships
|
(8,261
|
)
|
41,336
|
||||
Net
cash (used in) provided by investing activities
|
(101,962
|
)
|
11,866
|
||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from mortgage notes payable and lines of credit
|
159,429
|
96,629
|
|||||
Repayment
of mortgage notes payable and lines of credit
|
(93,030
|
)
|
(99,840
|
)
|
|||
Additions
to deferred charges
|
(456
|
)
|
(885
|
)
|
|||
Net
proceeds from stock options exercised
|
2,113
|
1,881
|
|||||
Net
sale of common stock
|
14,813
|
-
|
|||||
Distributions
to minority interest partners
|
(11,679
|
)
|
(11,545
|
)
|
|||
Redemption
of minority interest limited partnership units
|
(5,073
|
)
|
(4,466
|
)
|
|||
Common
and preferred stock dividends paid
|
(38,723
|
)
|
(37,837
|
)
|
|||
Net
cash provided by (used in) financing activities
|
27,394
|
(56,063
|
)
|
||||
Net
(decrease) increase in cash and cash equivalents
|
(5,315
|
)
|
22,432
|
||||
Cash
and cash equivalents at beginning of period
|
14,337
|
10,644
|
|||||
Cash
and cash equivalents at end of period
|
$
|
9,022
|
$
|
33,076
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid for interest, net of $1,260 and $511 capitalized
|
|||||||
in
2006 and 2005, respectively
|
$
|
36,858
|
$
|
35,600
|
|||
|
June
30,
|
December
31,
|
|||||
|
2006
|
2005
|
|||||
|
|
|
|||||
Investments
in joint ventures accounted for under the equity
|
|
|
|||||
method of accounting:
|
|
|
|||||
|
|
|
|||||
Limited
partnership interest of 20.4% and general partner
|
|
|
|||||
interest
of 1% in Essex Apartment Value Fund, L.P (Fund I)
|
$
|
582
|
$
|
582
|
|||
Limited partnership interest of 27.2% and general partner
|
|||||||
interest
of 1% in Essex Apartment Value Fund II, L.P (Fund II)
|
28,610
|
19,340
|
|||||
Preferred limited partnership interests in Mountain Vista
|
|||||||
Apartments
(A)
|
6,806
|
6,806
|
|||||
|
35,998
|
26,728
|
|||||
Investments
accounted for under the cost method of accounting:
|
|||||||
|
|||||||
Series
A Preferred Stock interest in Multifamily Technology
|
|||||||
Solutions, Inc.
|
500
|
500
|
|||||
Total
investments
|
$
|
36,498
|
$
|
27,228
|
|||
|
(A) |
The
investment is held in an entity that includes an affiliate of The
Marcus
& Millichap Company (“TMMC”). TMMC’s Chairman is also the Chairman of
the Company.
|
|
|
|
|
||||||||||
|
June
30,
|
December
31,
|
|
|
|||||||||
|
2006
|
2005
|
|
|
|||||||||
Balance
sheets:
|
|
|
|
|
|||||||||
Real
estate and real estate under development
|
$
|
474,100
|
$
|
431,655
|
|||||||||
Other
assets
|
20,509
|
18,655
|
|||||||||||
|
|||||||||||||
Total
assets
|
$
|
494,609
|
$
|
450,310
|
|||||||||
Mortgage
notes payable
|
$
|
266,380
|
$
|
268,325
|
|||||||||
Other
liabilities
|
95,538
|
83,979
|
|||||||||||
Partners'
equity
|
132,691
|
98,007
|
|||||||||||
Total
liabilities and partners' equity
|
$
|
494,609
|
$
|
450,311
|
|||||||||
|
|||||||||||||
Company's
share of equity
|
$
|
35,998
|
$
|
26,728
|
|||||||||
|
|||||||||||||
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
|
June
30,
|
June
30,
|
|||||||||||
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|||
Statements
of operations:
|
|||||||||||||
Total
property revenues
|
$
|
10,231
|
$
|
6,354
|
$
|
19,741
|
$
|
13,854
|
|||||
Total
gain on the sales of real estate
|
-
|
4,422
|
-
|
33,008
|
|||||||||
Depreciation
and amortization
|
(2,937
|
)
|
(1,536
|
)
|
(5,822
|
)
|
(3,240
|
)
|
|||||
Interest
expense
|
(4,407
|
)
|
(2,712
|
)
|
(8,562
|
)
|
(5,048
|
)
|
|||||
Other
operating expenses
|
(4,353
|
)
|
(3,088
|
)
|
(8,508
|
)
|
(6,100
|
)
|
|||||
Total
net (loss) income
|
$
|
(1,466
|
)
|
$
|
3,440
|
$
|
(3,151
|
)
|
$
|
32,474
|
|||
Company's
share of net (loss) income
|
$
|
(374
|
)
|
$
|
2,724
|
$
|
(816
|
)
|
$
|
17,316
|
|||
|
|
June
30,
|
December
31,
|
|||||
|
2006
|
2005
|
|||||
Related
party receivables, unsecured:
|
|
|
|||||
Loans to officers made prior to July 31, 2002, secured,
|
|
|
|||||
bearing
interest at 8%, due beginning April 2007
|
$
|
375
|
$
|
375
|
|||
Other related party receivables, substantially due on
demand
|
1,883
|
798
|
|||||
Total
notes and other receivable from related parties
|
$
|
2,258
|
$
|
1,173
|
|||
|
|
|
|
|||||
June
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Note
receivable from Pacifica Companies, LLC, secured,
|
|||||||
bearing interest at 12%, due June 2008
|
2,193
|
2,193
|
|||||
Note
receivable from Marketplace Mortgage, LLC, secured
|
|||||||
bearing interest at LIBOR + 3.69%, due June 2009
|
7,293
|
-
|
|||||
Other
receivables
|
20,359
|
3,044
|
|||||
Total
notes and other receivables
|
$
|
29,845
|
$
|
5,237
|
|||
Three
Months Ended
|
|||||||
|
June
30,
|
||||||
|
2006
|
2005
|
|||||
Revenues:
|
|
|
|||||
Southern
California
|
$
|
51,567
|
$
|
46,968
|
|||
Northern
California
|
18,057
|
16,796
|
|||||
Pacific
Northwest
|
15,911
|
14,849
|
|||||
Other
non-segment areas
|
1,121
|
1,049
|
|||||
Total
property revenues
|
$
|
86,656
|
$
|
79,662
|
|||
|
|||||||
Net
operating income:
|
|||||||
Southern
California
|
$
|
34,975
|
$
|
31,458
|
|||
Northern
California
|
12,235
|
11,457
|
|||||
Pacific
Northwest
|
10,030
|
9,379
|
|||||
Other
non-segment areas
|
(53
|
)
|
73
|
||||
Total
net operating income
|
57,187
|
52,367
|
|||||
|
|||||||
Depreciation
and amortization:
|
|||||||
Southern
California
|
(11,506
|
)
|
(10,360
|
)
|
|||
Northern
California
|
(4,161
|
)
|
(3,998
|
)
|
|||
Pacific
Northwest
|
(3,915
|
)
|
(3,706
|
)
|
|||
Other
non-segment areas
|
(1,093
|
)
|
(1,979
|
)
|
|||
|
(20,675
|
)
|
(20,043
|
)
|
|||
Interest
expense:
|
|||||||
Southern
California
|
(7,550
|
)
|
(7,692
|
)
|
|||
Northern
California
|
(4,338
|
)
|
(3,777
|
)
|
|||
Pacific
Northwest
|
(1,731
|
)
|
(1,888
|
)
|
|||
Other
non-segment areas
|
(5,878
|
)
|
(4,796
|
)
|
|||
|
(19,497
|
)
|
(18,153
|
)
|
|||
|
|||||||
Amortization
of deferred financing costs
|
(497
|
)
|
(563
|
)
|
|||
General
and administrative
|
(5,002
|
)
|
(4,573
|
)
|
|||
Other
expenses
|
(800
|
)
|
(1,500
|
)
|
|||
Management
and other fees from affiliates
|
830
|
931
|
|||||
Gain
on sale of real estate
|
-
|
5,276
|
|||||
Interest
and other income
|
654
|
2,431
|
|||||
Equity
income in co-investments
|
(374
|
)
|
2,724
|
||||
Minority
interests
|
(4,760
|
)
|
(5,360
|
)
|
|||
Income
tax provision
|
(138
|
)
|
(1,100
|
)
|
|||
Income
from continuing operations
|
$
|
6,928
|
$
|
12,437
|
|||
|
Six
Months Ended
|
|||||||
|
June
30,
|
||||||
|
2006
|
2005
|
|||||
Revenues:
|
|
|
|||||
Southern
California
|
$
|
102,686
|
$
|
93,260
|
|||
Northern
California
|
35,501
|
33,293
|
|||||
Pacific
Northwest
|
31,443
|
29,407
|
|||||
Other
non-segment areas
|
2,289
|
1,978
|
|||||
Total
property revenues
|
$
|
171,919
|
$
|
157,938
|
|||
|
|||||||
Net
operating income:
|
|||||||
Southern
California
|
$
|
69,475
|
$
|
62,642
|
|||
Northern
California
|
23,761
|
22,541
|
|||||
Pacific
Northwest
|
19,652
|
18,429
|
|||||
Other
non-segment areas
|
(449
|
)
|
(38
|
)
|
|||
Total
net operating income
|
112,439
|
103,574
|
|||||
|
|||||||
Depreciation
and amortization:
|
|||||||
Southern
California
|
(22,568
|
)
|
(20,496
|
)
|
|||
Northern
California
|
(8,236
|
)
|
(7,915
|
)
|
|||
Pacific
Northwest
|
(7,690
|
)
|
(7,334
|
)
|
|||
Other
non-segment areas
|
(2,272
|
)
|
(3,877
|
)
|
|||
|
(40,766
|
)
|
(39,622
|
)
|
|||
Interest
expense:
|
|||||||
Southern
California
|
(14,694
|
)
|
(15,161
|
)
|
|||
Northern
California
|
(8,781
|
)
|
(7,568
|
)
|
|||
Pacific
Northwest
|
(3,421
|
)
|
(3,338
|
)
|
|||
Other
non-segment areas
|
(11,591
|
)
|
(10,233
|
)
|
|||
|
(38,487
|
)
|
(36,300
|
)
|
|||
|
|||||||
Amortization
of deferred financing costs
|
(1,193
|
)
|
(1,039
|
)
|
|||
General
and administrative
|
(9,901
|
)
|
(9,014
|
)
|
|||
Other
expenses
|
(1,770
|
)
|
(1,500
|
)
|
|||
Management
and other fees from affiliates
|
1,654
|
7,507
|
|||||
Gain
on sale of real estate
|
-
|
6,391
|
|||||
Interest
and other income
|
3,048
|
2,954
|
|||||
Equity
income in co-investments
|
(816
|
)
|
17,316
|
||||
Minority
interests
|
(9,687
|
)
|
(11,801
|
)
|
|||
Income
tax provision
|
(175
|
)
|
(1,201
|
)
|
|||
Income
from continuing operations
|
$
|
14,346
|
$
|
37,265
|
June
30,
|
December
31,
|
||||||
|
2006
|
2005
|
|||||
Assets:
|
|
|
|||||
Net
real estate assets:
|
|
|
|||||
Southern California
|
$
|
1,270,774
|
$
|
1,211,373
|
|||
Northern California
|
451,850
|
456,093
|
|||||
Pacific Northwest
|
358,892
|
359,432
|
|||||
Other
non-segment areas
|
37,631
|
57,871
|
|||||
Total
net real estate assets
|
2,119,147
|
2,084,769
|
|||||
Other
non-segment assets
|
209,097
|
154,521
|
|||||
Total
assets
|
$
|
2,328,244
|
$
|
2,239,290
|
Three
Months Ended
|
Three
Months Ended
|
||||||||||||||||||
|
June
30, 2006
|
June
30, 2005
|
|||||||||||||||||
|
|
Weighted
|
Per
|
|
Weighted
|
Per
|
|||||||||||||
|
|
Average
|
Common
|
|
Average
|
Common
|
|||||||||||||
|
|
Common
|
Share
|
|
Common
|
Share
|
|||||||||||||
|
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||
Basic:
|
|
|
|
|
|
|
|||||||||||||
Income
from continuing operations available
|
|
|
|
|
|
|
|||||||||||||
to
common stockholders
|
$
|
6,439
|
22,950
|
$
|
0.28
|
$
|
11,949
|
23,070
|
$
|
0.52
|
|||||||||
Income
from discontinued operations
|
15,584
|
22,950
|
0.68
|
26,441
|
23,070
|
1.14
|
|||||||||||||
|
22,023
|
$
|
0.96
|
38,390
|
$
|
1.66
|
|||||||||||||
|
|||||||||||||||||||
Effect
of Dilutive Securities (1)
|
-
|
276
|
-
|
303
|
|||||||||||||||
|
|||||||||||||||||||
Diluted:
|
|||||||||||||||||||
Income
from continuing operations available
|
|||||||||||||||||||
to
common stockholders
|
6,439
|
23,226
|
$
|
0.28
|
11,949
|
23,373
|
$
|
0.51
|
|||||||||||
Income
from discontinued operations
|
15,584
|
23,226
|
0.67
|
26,441
|
23,373
|
1.13
|
|||||||||||||
|
$
|
22,023
|
$
|
0.95
|
$
|
38,390
|
$
|
1.64
|
|
|
|
Six
Months Ended
|
|
|
Six
Months Ended
|
|||||||||||
|
|
|
June
30, 2006
|
|
|
June
30, 2005
|
|||||||||||
|
|
|
|
|
Weighted
|
|
|
Per
|
|
|
|
|
|
Weighted
|
|
|
Per
|
|
|
|
|
|
Average
|
|
|
Common
|
|
|
|
|
|
Average
|
|
|
Common
|
|
|
|
|
|
Common
|
|
|
Share
|
|
|
|
|
|
Common
|
|
|
Share
|
|
|
|
Income
|
Shares
|
|
|
Amount
|
|
|
Income
|
Shares
|
|
|
Amount
|
|||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations available
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to
common stockholders
|
|
$
|
13,369
|
|
22,911
|
|
$
|
0.58
|
|
$
|
36,288
|
|
|
23,057
|
|
$
|
1.57
|
Income
from discontinued operations
|
|
|
18,488
|
|
22,911
|
|
|
0.81
|
|
|
28,491
|
|
|
23,057
|
|
|
1.24
|
|
|
|
31,857
|
|
|
|
$
|
1.39
|
|
|
64,779
|
|
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities (1)
|
|
|
-
|
|
244
|
|
|
|
|
|
-
|
|
|
307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations available
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to
common stockholders
|
|
|
13,369
|
|
23,155
|
|
$
|
0.58
|
|
|
36,288
|
|
|
23,364
|
|
$
|
1.55
|
Income
from discontinued operations
|
|
|
18,488
|
|
23,155
|
|
|
0.80
|
|
|
28,491
|
|
|
23,364
|
|
|
1.22
|
|
|
$
|
31,857
|
|
|
|
$
|
1.38
|
|
$
|
64,779
|
|
|
|
|
$
|
2.77
|
(1) |
Weighted
convertible limited partnership units of 2,286,291 and 2,299,361
for the
three months ended June 30, 2006 and 2005, respectively, and 2,290,113
and
2,312,216 for the six months ended June 30, 2006 and 2005, respectively,
and Series Z incentive units of 184,000 for the three and six months
ended
June 30, 2006, were not included in the determination of diluted
EPS
because they were anti-dilutive. The Company has the ability and
intent to
redeem Down REIT Limited Partnership units for cash and does not
consider
them to be common stock
equivalents.
|
(9) |
Derivative
Instruments and Hedging
Activities
|
(10) |
Discontinued
Operations
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
|
June
30,
|
June
30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
|
|
|
|
|
|||||||||
Rental
revenues
|
$
|
-
|
$
|
574
|
$
|
-
|
$
|
1,233
|
|||||
Interest
and other
|
119
|
119
|
238
|
1,373
|
|||||||||
Revenues
|
119
|
693
|
238
|
2,606
|
|||||||||
|
|||||||||||||
Property
operating expenses
|
-
|
(114
|
)
|
-
|
(506
|
)
|
|||||||
Minority
interests
|
(11
|
)
|
(52
|
)
|
(22
|
)
|
(190
|
)
|
|||||
Operating
income from real estate sold
|
108
|
527
|
216
|
1,910
|
|||||||||
|
|||||||||||||
Gain
on sale of real estate
|
8,800
|
28,484
|
11,862
|
29,219
|
|||||||||
Promote
interest and fees
|
8,221
|
-
|
8,221
|
-
|
|||||||||
Minority
interests
|
(1,545
|
)
|
(2,570
|
)
|
(1,811
|
)
|
(2,638
|
)
|
|||||
Net gain on sale of real estate
|
15,476
|
25,914
|
18,272
|
26,581
|
|||||||||
|
|||||||||||||
Income
from discontinued operations
|
$
|
15,584
|
$
|
26,441
|
$
|
18,488
|
$
|
28,491
|
|||||
|
|
As
of June 30, 2006
|
|
As
of June 30, 2005
|
|
|
Number
of Apartment Homes
|
%
|
Number
of Apartment Homes
|
%
|
Southern
California
|
12,957
|
55%
|
12,724
|
54%
|
Northern
California
|
4,621
|
19%
|
4,621
|
20%
|
Pacific
Northwest
|
5,847
|
25%
|
5,831
|
25%
|
Other
|
302
|
1%
|
302
|
1%
|
Total
|
23,727
|
100%
|
23,478
|
100%
|
|
|
|
|
|
|
|
|
Three
months ended
|
||
|
|
|
June
30,
|
||
|
|
|
2006
|
|
2005
|
Southern
California
|
|
|
95.9%
|
|
96.5%
|
Northern
California
|
|
|
97.8%
|
|
97.2%
|
Pacific
Northwest
|
|
|
97.5%
|
|
96.8%
|
|
|
|
|
|
||||||||||||
|
|
Three
Months Ended
|
|
|
||||||||||||
|
Number
of
|
June
30,
|
Dollar
|
Percentage
|
||||||||||||
|
Properties
|
2006
|
2005
|
Change
|
Change
|
|||||||||||
Revenues:
|
|
(dollars
in thousands)
|
|
|||||||||||||
Property
revenues
|
|
|
|
|
|
|||||||||||
Quarterly
Same-Properties:
|
|
|
|
|
|
|||||||||||
Southern
California
|
56
|
$
|
46,314
|
$
|
43,954
|
$
|
2,360
|
5.4
|
%
|
|||||||
Northern
California
|
20
|
18,057
|
16,796
|
1,261
|
7.5
|
|||||||||||
Pacific
Northwest
|
25
|
13,926
|
12,879
|
1,047
|
8.1
|
|||||||||||
Total
property revenues
|
||||||||||||||||
Quarterly
Same-Properties
|
101
|
78,297
|
73,629
|
4,668
|
6.3
|
|||||||||||
Property
revenues - properties acquired
|
||||||||||||||||
subsequent to March 31, 2005 (1)
|
8,359
|
6,033
|
2,326
|
38.6
|
||||||||||||
Total
property revenues
|
$
|
86,656
|
$
|
79,662
|
$
|
6,994
|
8.8
|
%
|
||||||||
|
|
|
Six
Months Ended
|
|
||||
|
|
|
June
30,
|
|
|||
|
|
|
2006
|
|
|
2005
|
|
Southern
California
|
|
|
96.1%
|
|
|
96.3%
|
|
Northern
California
|
|
|
97.1%
|
|
|
97.0%
|
|
Pacific
Northwest
|
|
|
97.1%
|
|
|
96.7%
|
|
|
Six
Months Ended
|
|
|
|||||||||||||
|
Number
of
|
June
30,
|
Dollar
|
Percentage
|
||||||||||||
|
Properties
|
2006
|
2005
|
Change
|
Change
|
|||||||||||
Revenues:
|
|
(dollars
in thousands)
|
|
|
||||||||||||
Property
revenues
|
|
|
|
|
|
|||||||||||
Same-Properties:
|
|
|
|
|
|
|||||||||||
Southern
California
|
55
|
$
|
90,648
|
$
|
85,934
|
$
|
4,714
|
5.5
|
%
|
|||||||
Northern
California
|
20
|
35,501
|
33,292
|
2,209
|
6.6
|
|||||||||||
Pacific
Northwest
|
24
|
26,368
|
24,699
|
1,669
|
6.8
|
|||||||||||
Total
property revenues
|
||||||||||||||||
Same-Properties
|
99
|
152,517
|
143,925
|
8,592
|
6.0
|
|||||||||||
Property
revenues - properties acquired
|
||||||||||||||||
subsequent to December 31, 2004 (1)
|
19,402
|
14,013
|
5,389
|
38.5
|
||||||||||||
Total
property revenues
|
$
|
171,919
|
$
|
157,938
|
$
|
13,981
|
8.9
|
%
|
||||||||
|
|
|
2007
and
|
2009
and
|
|
|
|||||||||||
(In
thousands)
|
2006
|
2008
|
2010
|
Thereafter
|
Total
|
|||||||||||
Mortgage
notes payable
|
$
|
-
|
$
|
217,705
|
$
|
182,828
|
$
|
700,432
|
$
|
1,100,965
|
||||||
Exchangeable
bonds
|
-
|
-
|
-
|
225,000
|
225,000
|
|||||||||||
Lines
of credit
|
-
|
-
|
95,030
|
-
|
95,030
|
|||||||||||
Interest
on indebtedness
|
36,705
|
110,918
|
66,134
|
262,774
|
476,531
|
|||||||||||
Development
commitments
|
98,100
|
34,100
|
-
|
-
|
132,200
|
|||||||||||
Redevelopment
commitments
|
13,120
|
2,341
|
-
|
-
|
15,461
|
|||||||||||
Essex
Apartment Value Fund II, L.P.
|
||||||||||||||||
capital commitment
|
45,412
|
-
|
-
|
-
|
45,412
|
|||||||||||
|
$
|
193,337
|
$
|
365,064
|
$
|
343,992
|
$
|
1,188,206
|
$
|
2,090,599
|
||||||
|
|
· funds
may be expended and management's time devoted to projects that may
not be
completed;
|
|
· construction
costs of a project may exceed original estimates possibly making
the
project economically unfeasible;
|
|
· projects
may be delayed due to, among other things, adverse weather conditions;
|
|
· occupancy
rates and rents at a completed project may be less than anticipated;
and
|
|
· expenses
at a completed development project may be higher than anticipated.
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
|
June
30,
|
June
30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Net
income available to common stockholders
|
$
|
22,023
|
$
|
38,390
|
$
|
31,857
|
$
|
64,779
|
|||||
Adjustments:
|
|||||||||||||
Depreciation and amortization
|
20,675
|
20,043
|
40,766
|
39,770
|
|||||||||
Co-investments (1)
|
876
|
207
|
1,751
|
356
|
|||||||||
Gains not included in FFO
|
(8,800
|
)
|
(35,072
|
)
|
(11,862
|
)
|
(51,303
|
)
|
|||||
Minority interests
|
2,378
|
3,972
|
3,555
|
6,770
|
|||||||||
Funds
from operations
|
$
|
37,152
|
$
|
27,540
|
$
|
66,067
|
$
|
60,372
|
|||||
|
|||||||||||||
Funds
from operations per share - diluted
|
$
|
1.45
|
$
|
1.07
|
$
|
2.58
|
$
|
2.35
|
|||||
|
|||||||||||||
Weighted
average number
|
|||||||||||||
shares
outstanding diluted (2)
|
25,697,237
|
25,672,234
|
25,628,728
|
25,675,972
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
For
the Years Ended
|
2006
|
2007(1)
|
2008(2)
|
2009
|
2010(3)
|
Thereafter
|
Total
|
Fair
value
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Fixed
rate debt
|
$
|
-
|
69,960
|
147,745
|
24,937
|
157,891
|
738,900
|
(4
|
)
|
$
|
1,139,433
|
$
|
1,176,570
|
|||||||||||||||
Average
interest rate
|
-
|
6.0
|
%
|
6.8
|
%
|
6.9
|
%
|
8.0
|
%
|
5.7
|
%
|
|||||||||||||||||
Variable
rate LIBOR debt
|
$
|
-
|
-
|
-
|
95,030
|
-
|
186,532
|
(5
|
)
|
$
|
281,562
|
$
|
281,562
|
|||||||||||||||
Average
interest
|
-
|
-
|
-
|
5.8
|
%
|
-
|
4.7
|
%
|
||||||||||||||||||||
|
(a) |
The
following persons were duly elected by the stockholders of the Company
as
Class III directors of the Company, each for a three (3) year term
(until
2009) and until their successors are elected and
qualified:
|
(1) |
George
M. Marcus, 20,822,252 votes for and 967,854 votes
withheld;
|
(2) |
Gary
P. Martin, 21,635,890 votes for and 154,216 votes withheld;
and
|
(3) |
William
A. Millichap, 21,473,164 votes for and 835,708 votes withheld;
and
|
(b) |
The
stockholders ratified the appointment of KPMG LLP as the Company’s
independent public auditors for the year ended December 31, 2006
by a vote
of 21,473,164 for, 313,273 votes against and 3,670 votes
abstaining.
|
A.
|
Exhibits
|
3.1
|
Articles
Supplementary designating the 4.875% Series G Cumulative Convertible
Preferred Stock, filed as Exhibit 3.1 to the Company’s Form 8-K, filed on
August 1, 2006, and incorporated herein by
reference.
|
4.1
|
Form
of 4.875% Series G Cumulative Convertible Preferred Stock Certificate,
filed as Exhibit 4.1 to the Company’s 8-K, filed on July 27, 2006, and
incorporated herein by reference.
|
10.1
|
Fourth
Amended and Restated Revolving Credit Agreement dated as of March
24,
2006, by and among Essex Portfolio, L.P., and Bank of America, N.A.
as
Administrative Agent, Bank of America Securities LLC as Sole Lead
Arranger
and Sole Book Manager, PNC Bank, National Association as Documentation
Agent, Union Bank of California, N.A. as Syndication Agent, Comerica
Bank
as Managing Agent, KeyBank National Association as Managing Agent,
and
JPMorgan Chase Bank, N.A., as Managing Agent, attached as Exhibit
10.1 to
the Company’s current report on Form 8-K, filed March 31, 2006, and
incorporated herein by reference.
|
10.2
|
Twelfth
Amendment to the First Amended and Restated Agreement of Limited
Partnership of Essex Portfolio, L.P., dated as of July 26, 2006,
filed as
Exhibit 10.1 to the Company’s Form 8-K, filed on July 27, 2006, and
incorporated herein by reference.
|
12.1
|
Ratio
of Earnings to Fixed Charges
|
31.1
|
Certification
of Keith R. Guericke, Chief Executive Officer, pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification
of Michael T. Dance, Chief Financial Officer, pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification
of Keith R. Guericke, Chief Executive Officer, pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification
of Michael T. Dance, Chief Financial Officer, pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|
|
ESSEX
PROPERTY TRUST, INC.
|
|
(Registrant)
|
||
|
||
Date: August 4, 2006
|
||
|
|
By:
/S/ MICHAEL T. DANCE
|
|
Michael
T. Dance
|
|
|
Executive
Vice President, Chief Financial Officer
Authorized
Officer, Principal Financial Officer)
|
|
By: /S/ BRYAN HUNT
|
||
Bryan
Hunt
|
||
Vice
President, Chief Accounting
Officer
|