UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : December 1, 1997
----------------
ESSEX PROPERTY TRUST, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-13106 77-0369576
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
777 CALIFORNIA AVENUE, PALO ALTO, CALIFORNIA 94304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code : (650) 494-3700
Page 1 of 17
<PAGE>
Item 5. OTHER EVENTS
- --------------------
(Dollars in thousands)
1997 Acquisitions
- -----------------
On January 3, 1997, the Company acquired Wilshire Promenade, a 128 unit
apartment community in Fullerton, California, for a contract price of $10,250.
Wilshire Promenade Limited Partnership, a California limited partnership was the
arms-length unrelated third party seller of the property.
On January 28, 1997, the Company acquired Tara Village, a 168 unit apartment
community in Tarzana, California, for a contract price of $10,335. KLST
Partnership, a California general partnership was the arms-length unrelated
third party seller of the property.
On February 27, 1997, the Company acquired Foothill Gardens and Twin Creeks
located in San Ramon, California, adding 176 units to the Company's portfolio.
These properties were purchased for an aggregate contract price of $19,166. Dame
Construction Company, Inc., a California corporation was the arms-length
unrelated third party seller of the property.
On June 3, 1997, the Company purchased Kings Road, a 196 unit apartment
community located in Los Angeles, California, for a contract price of $12,895.
Kings Road Apartments, L.P., a California limited partnership was the
arms-length unrelated third party seller of the property.
On June 23, 1997, the Company purchased Evergreen Heights, a 200 unit apartment
community located in Kirkland, Washington, for a contract price of $15,800. In
connection with this transaction the Company assumed a $9,404, 8.78% fixed
interest rate loan. The loan matures in December, 2002. Lincoln Evergreen
Limited Partnership, a Washington limited partnership was the arms-length third
party seller of the property.
On June 25, 1997, the Company acquired Villa Scandia, a 118 unit apartment
community located in Ventura, California, for a contract price of $5,160. Tiger
Ventura County, L.P., a Delaware limited partnership was the arms-length third
party seller of the property.
On June 26, 1997, the Company acquired Casa Del Mar, a 96 unit apartment
community located in Pasadena, California, for a contract price of $6,075.
CEI-Pasadena Partners, Ltd., a California limited partnership was the
arms-length third party seller of the property.
On June 30, 1997, the Company, through an 85% interest in a newly formed limited
partnership, acquired The Bluffs II, a 224 unit apartment community located in
San Diego, California, for a contract price of $10,660. The property secures a
loan from the Company of $7,672, which may be replaced by third party financing.
The balance of the purchase price was paid by the issuance of (i) 18,473 limited
partnership units of Essex Portfolio L.P. (valued at $544) (ii) payment of $493
in cash by the 15% partners in the newly formed partnership and (iii) Essex's
cash investment. Lincoln-Bluffs II Associates, L.P., a California limited
partnership was the arms-length third party seller of the property.
On July 15, 1997, the Company acquired The Village Apartments, a 122 unit
apartment community, located in Oxnard, California, for a contract price of
$7,720. Pacifica Village, Ltd., a California limited partnership was the
arms-length third party seller of the property.
On August 6, 1997, the Company acquired a majority ownership interest in an
additional 193 units located adjacent to the 371 unit Camarillo Oaks property
which the Company has owned since 1996. The contract price of this property was
$12,000. In connection with this transaction the Company assumed $8,915 of tax
exempt variable rate bonds which mature in June 2018. Jimmie H. and Judy S.
Shinohara and Camarillo Investments, Inc. a California corporation were the
arms-length third party sellers of the property.
On August 6, 1997, the Company acquired Park Place and Windsor Court Apartments,
located in Los Angeles, California, adding 118 units to the Company's portfolio.
These properties were purchased for an
Page 2 of 17
<PAGE>
aggregate purchase price of $11,000. Detroit Properties, Inc., a California
corporation was the arms-length third party seller of the property.
On September 16, 1997, the Company acquired Windsor Terrace, a 104 unit
apartment community located in Pasadena, California, for a contract price of
$6,964. Leong Keng Lim, Perk Harn-Kuok Lim and 280 Pasadena Windsor Terrace,
Ltd., a California limited partnership were the arms-length third party sellers
of the property. Subsequent to this purchase the Company purchased in separate
transactions an additional two units for an aggregate contract price of $115
from arms-length third party sellers.
On October 1, 1997, the Company acquired Huntington Breakers, a 342 unit
apartment community located in Huntington Beach, California, for a contract
price of $30,400. In connection with this transaction the Company assumed
$16,000 of tax exempt variable rate bonds which mature in July 2014. Huntington
Breakers Apartments Limited Partnership, a California limited partnership is the
arms-length third party seller of the property.
On October 28, 1997, the Company purchased Stonehedge Village, a 196 unit
apartment community located in Bothel, Washington, for a contract price of
$14,160. In connection with this transaction the Company assumed an approximate
$9,254, 7.865% fixed interest rate loan. The loan matures in March 2007.
Stonehedge Village Limited Partnership, a Washington limited partnership was the
arms-length third party seller of the property.
On October 28, 1997, the Company purchased Bridle Trails, a 92 unit apartment
community located in Kirkland, Washington, for a contract price of $6,620. In
connection with this transaction the Company assumed an approximate $4,277,
8.055% fixed interest rate loan. The loan matures in February 2007. Bridle
Trails Partners Limited Partnership, a Washington limited partnership was the
arms-length third party seller of the property.
On October 28, 1997, the Company purchased Spring Lake, a 69 unit apartment
community located in Seattle, Washington, for a contract price of $3,860. In
connection with this transaction the Company assumed an approximate $2,289,
7.985% fixed interest rate loan. The loan matures in March 2007. Spring Lake
Associates Limited Partnership, a Washington limited partnership was the
arms-length third party seller of the property.
On October 28, 1997, the Company purchased Maple Leaf, a 48 unit apartment
community located in Seattle, Washington, for a contract price of $3,836. In
connection with this transaction the Company assumed an approximate $2,090,
7.985% fixed interest rate loan. The loan matures in March 2001. Maple Leaf
Associates Limited Partnership, a Washington limited partnership was the
arms-length third party seller of the property.
On October 30, 1997, the Company acquired Trabuco Villas, a 132 unit apartment
community located in Lake Forest, California, for a contract price of $11,750.
Reginald D. De La Cuesta and Margaret De La Cuesta, Co-Trustees of the De La
Cuesta Inter Vivos Trust, u/d/t/ July 21, 1987 were the arms-length third party
sellers of the property.
On November 7, 1997, the Company acquired Meadows at Cascade Park, a 198 unit
apartment community located in Vancouver, Washington, for a contract price of
$11,075. Columbia Glen Development Corporation, a Oregon corporation, also known
as CGC, Inc. was the arms-length third party seller of the property.
On November 7, 1997, the Company acquired an approximate 17,400 square foot
office building in Palo Alto, California for a contract price of $4,532. The
Company is planning to occupy a substantial portion of this building for its
corporate headquarters during the first quarter of 1998. Century Realty
Corporation, an Illinois corporation was the arms-length third party seller of
the property.
Page 3 of 17
<PAGE>
These acquisitions were funded with proceeds from the Company's December 1996,
March 1997 and September 1997 Common Stock offerings, the June 1997 Convertible
Preferred Stock offering, assumed loans or bonds secured by the properties as
indicated above, the Company's lines of credit and the proceeds from
dispositions of one multifamily property and three of the Company's retail
centers.
1997 Pending Acquisitions
- -------------------------
On November 12, 1997, the Company approved the acquisition of Village at Cascade
Park, a 198 unit apartment community located in Vancouver, Washington, for a
contract price of $10,430. The purchase is anticipated to close early in 1998.
WFRWW Partnership, Patricia Haugen and John Leyerzaph are the arms-length third
party sellers of the property.
On November 12, 1997, the Company approved the acquisition of Casa Mango, a 96
unit apartment community located in Del Mar, California, for a contract price of
$10,005. The purchase is anticipated to close late in 1997. Pardee Construction
Company, a California corporation is the arms-length third party seller of the
property.
In November 1997, the Company approved the acquisition of Castle Creek, a newly
constructed 216 unit apartment community located in Newcastle, Washington, for a
contract price of $20,000. The property is currently in tenant lease-up as is
approximately 40% occupied. The purchase is anticipated to close late in 1997.
Newcastle Apartments Limited Partnership, a Washington limited partnership is
the arms-length third party seller of the property.
These acquisitions are subject to a number of contingencies including the
satisfactory completion of due diligence, the negotiation of final terms of the
purchase agreement and customary closing conditions. Accordingly, there can be
no assurance that these acquisition will be completed.
It is anticipated that the Company will fund these pending acquisitions with the
Company's lines of credit and/or future common stock offerings.
1997 Dispositions
- -----------------
On April 23, 1997, the Company sold Cedar Mill Place, a retail shopping center
located in Portland, Oregon for a gross sales price of $1,950 resulting in a
gain of approximately $454. Tandem Properties, LLC was the arms-length third
party purchaser of the property.
On May 15, 1997, the Company sold Wichita Towne Center, a retail shopping center
located in Milwaukie, Oregon for a gross sales price of $1,617 resulting in a
loss of $40. Hsu-Chin Cheng and Kou-Ping Cheng, Co-Trustees of The Cheng Family
Trust were the arms-length third party purchasers of the property.
On September 11, 1997, the Company sold Countrywood, a 137 unit apartment
complex in Fremont, California for a gross sales price of $9,500 resulting in a
gain of $3,344. Woodmont Companies, a California corporation, TFT Properties,
Inc., a California corporation and Highlands Exchange Company, Inc., a
California corporation were the arms-length third party purchasers of the
property.
On September 22, 1997, the Company sold Riviera Plaza, a retail shopping center
located in Eugene, Oregon for a gross sales price of $3,086 resulting in a gain
of $1,369. Old Stratford LLC, a Nevada limited liability company was the
arms-length third party purchaser of the property.
All of the acquisition and disposition transactions were arms-length
transactions with unrelated third parties. In each case, the purchase price was
based upon a number of factors, including historical and projected rental
income, appropriate capitalization rates for similar properties, market
comparables, prevailing market conditions in the area and extensive due
diligence studies including review of financial operations and physical
inspections.
Page 4 of 17
<PAGE>
Page
Item 7. Financial Statements, Pro Forma Financial Information
- -------------------------------------------------------------
and Exhibits
- ------------
(A) Financial Statements - (Attachment "A") 6
- ---------------------------------
Combined Statement of Revenues and Certain Expenses for Stonehedge Village,
Bridle Trails, Spring Lake and Maple Leaf for the Year Ended December 31, 1996.
(B) Pro Forma Condensed Consolidated Financial Information
- ------------------------------------------------------------------
- - Unaudited (Attachment "B") 12
- -----------------------------
Pro forma condensed consolidated balance sheet for Essex Property Trust as of
September 30, 1997 and the related pro forma condensed consolidated statements
of operations for the nine months ended September 30, 1997 and the year ended
December 31, 1996.
(C) Exhibits
- ------------
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, hereunto duly authorized.
ESSEX PROPERTY TRUST, INC.
By: /s/ Mark J. Mikl
--------------------
Mark J. Mikl, Controller
(Principal Accounting Officer)
Date: December 1, 1997
----------------------
Page 5 of 17
<PAGE>
ATTACHMENT "A"
STONEHEDGE VILLAGE, BRIDLE TRAILS, SPRING LAKE
AND MAPLE LEAF
Combined Statement of Revenues and Certain Expenses
December 31, 1996
(With Independent Auditors' Report Thereon)
Page 6 of 17
<PAGE>
ATTACHMENT "A"
STONEHEDGE VILLAGE, BRIDLE TRAILS, SPRING LAKE
AND MAPLE LEAF
Combined Statement of Revenues and Certain Expenses
Year ended December 31, 1996
Contents
Page
Independent Auditors'Report................................... A-1
Combined Statement of Revenues and Certain Expenses........... A-2
Notes to Combined Statement of Revenues and Certain Expenses.. A-3
<PAGE>
Independent Auditors' Report
The Board of Directors
Essex Property Trust, Inc.:
We have audited the accompanying Combined Statement of Revenues and Certain
Expenses (the Statement) of Stonehedge Village, Bridle Trails, Spring Lake, and
Maple Leaf for the year ended December 31, 1996. The Statement is the
responsibility of management. Our responsibility is to express an opinion on the
Statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan an perform the audit to obtain reasonable
assurance about whether the Statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Statement. An audit also includes assessing the accounting
principles used and significant estimates made by mangement, as well as
evaluating the overall Statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying Statement was prepared to comply with the requirements of rule
3-14 of Regulation S-X of the Securities and Exchange Commission and excludes
certain expenses, described in note 1, that would not be comparable to those
resulting from the proposed future operations of the properties. It is not
intended to be a complete presentation of the operations of the properties.
In our opinion, the Statement referred to above presents fairly, in all material
respects, the gross combines income and direct operating expenses, exclusive of
expenses described in note 1, Stonehedge Village, Bridle Trails, Spring Lake,
and Maple Leaf for the year ended December 31, 1996, in conformity with
generally accepted accounted principles.
San Francisco, California
October 1, 1997
KPMG Peat Marwick LLP
Page A-1
<PAGE>
STONEHEDGE VILLAGE, BRIDLE TRAILS, SPRING LAKE
AND MAPLE LEAF
Combined Statement of Revenues and Certain Expenses
Year ended December 31, 1996
Revenues:
Rental income $ 3,342,050
Other 104,622
-------------
3,446,672
-------------
Certain expenses:
Salaries 301,298
Real estate taxes 286,718
Utilities 284,473
Maintenance and repairs 185,772
Advertising 58,536
Insurance 47,758
Administrative 31,614
-------------
1,196,169
-------------
Revenues in excess of certain expenses $ 2,250,503
=============
Page A-2
<PAGE>
STONEHEDGE VILLAGE, BRIDLE TRAILS, SPRING LAKE
AND MAPLE LEAF
Notes to Statement of Revenues and Certain Expenses
December 31, 1996
(1) Properties and Accounting Presentation
The Combined Statement of Revenues and Certain Expenses has been prepared
in accordance with Rule 3-14 of Regulation S-X of the Securities and
Exchange Commission and relates to the operations of Stonehedge Village,
Bridle Trails, Spring Lake and Maple Leaf, four apartment buildings which
were acquired by October 28, 1997
The four properties are Stonehedge Village Apartments, a 196 unit apartment
building located in Bothel, WA; Bridle Trails Apartments, a 92 unit
apartment building located in Kirkland, WA; Spring Lake Apartments, a 69
unit apartment building located in Seattle, WA; and Maple Leaf Apartments,
a 48 unit apartment building located in Seattle, WA.
In accordance with Rule 3-14, expenses are presented exclusive of
depreciation, management fees, interest and income taxes as these expenses
would not be comparable to the proposed future operations of the
properties.
The acquisition of the properties may result in a new valuation for
purposes of determining future property tax assessments.
Rental revenue is recognized on the accrual basis of accounting. Tenant
leases are generally for a one year period or less.
(Continued)
Page A-3
<PAGE>
STONEHEDGE VILLAGE, BRIDLE TRAILS, SPRING LAKE
AND MAPLE LEAF
Notes to Statement of Revenues and Certain Expenses
(2) Estimated Taxable Operating Results and Cash to be Made Available by
Operations (unaudited)
Pro forma cash available from operations and pro forma taxable income
for the twelve months ended September 30, 1997 are shown below. Pro
forma taxable operating results are derived by deducting depreciation
from net income before depreciation. However, Essex Property Trust, Inc.
(the Company) has and believes it will continue to qualify as a real
estate investment trust (REIT) under Sections 856 to 860 of the Internal
Revenue Code of 1986, as amended. REITs are allowed to deduct
distributions to shareholders from taxable income. The Company believes
that current distributions to shareholders will equal or exceed its
taxable income. Depreciation expense was estimated considering the
purchase price of each property, the appropriate income tax depreciation
method and a forty-year depreciable life.
Revenues $ 3,724,005
Operating expenses (excluding interest) 1,483,460
---------------
Cash available from operations 2,240,545
Depreciation expense 630,352
---------------
Taxable income $ 1,610,193
===============
Page A-4
<PAGE>
ATTACHMENT "B"
ESSEX PROPERTY TRUST, INC.
Pro Forma Condensed Consolidated Financial Information - Unaudited
Table of Contents
Page
----
Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1997 B-1
Pro Forma Condensed Consolidated Statement
of Operations for the nine months ended September 30, 1997 B-2
Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1996 B-3
Notes to Pro Forma Condensed Consolidated Financial Information B-4
Page 12 of 17
<PAGE>
ESSEX PROPERTY TRUST, INC.
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 1997
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Adjustments (2)
Acquisition
Historical Property Pro Forma
---------- ---------- ----------
<S> ................................................ <C> <C> <C>
ASSETS
Real estate
Rental properties
Land and land improvements ..................... $ 141,232 $ 29,643 $ 170,875
Buildings and improvements ..................... 425,179 92,493 517,672
--------- --------- ---------
566,411 122,136 688,547
Less accumulated depreciation .................... (53,916) 0 (53,916)
--------- --------- ---------
512,495 122,136 634,631
Real estate under development .................... 2,627 0 2,627
Investments ...................................... 22,663 0 22,663
--------- --------- ---------
537,785 122,136 659,921
Cash and cash equivalents - unrestricted ........... 18,781 (16,016) 2,765
Restricted cash .................................... 5,662 0 5,662
Notes and other related party receivables .......... 14,063 0 14,063
Notes and other receivables ........................ 8,086 0 8,086
Prepaid expenses and other assets .................. 9,333 0 9,333
Deferred charges, net .............................. 4,080 0 4,080
--------- --------- ---------
$ 597,790 $ 106,120 $ 703,910
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable ............................. $ 187,926 $ 33,910 $ 221,836
Lines of credit .................................... 0 72,210 72,210
Accounts payable and accrued liabilities ........... 19,657 0 19,657
Dividends payable .................................. 8,509 0 8,509
Other liabilities .................................. 3,542 0 3,542
--------- --------- ---------
Total liabilities ................................ 219,634 106,120 325,754
Minority interest .................................. 28,377 0 28,377
STOCKHOLDERS' EQUITY
8.75% convertible preferred stock, series 1996A,
$.001 par value, 1,600,000 authorized, 800,000
issued and outstanding ......................... 1 0 1
Common stock, $.0001 par value, 668,400,000 shares
authorized, 8,805,500 shares issued and ........ 1 0 1
outstanding
Additional paid in capital ....................... 380,563 0 380,563
Accumulated deficit .............................. (30,786) 0 (30,786)
--------- --------- ---------
349,779 0 349,779
--------- --------- ---------
$ 597,790 $ 106,120 $ 703,910
========= ========= =========
</TABLE>
See accompanying notes to pro forma consolidated financial information
Page B-1
<PAGE>
ESSEX PROPERTY TRUST, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the nine months ended September 30, 1997
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
<TABLE>
<CAPTION>
Pro Forma Adjustments (3)
-------------------------------
Acquisition Disposition
Historical Properties Properties Pro Forma
------------- ------------ ------------- -------------
<S> ............................................ <C> <C> <C> <C>
Revenues
Rental ....................................... $ 56,596 $ 18,176 $ 1,395 $ 73,377
Interest and other income .................... 3,510 204 23 3,691
------------ ------------ ------------ ------------
60,106 18,380 1,418 77,068
------------ ------------ ------------ ------------
Expenses
Property operating expenses
Maintenance and repairs .................... 4,765 1,690 137 6,318
Real estate taxes .......................... 4,473 1,718 111 6,080
Utilities .................................. 3,649 1,253 62 4,840
Administrative ............................. 3,845 1,496 58 5,283
Advertising ................................ 861 78 15 924
Insurance .................................. 688 258 16 930
Depreciation and amortization .............. 9,863 3,670 63 13,470
------------ ------------ ------------ ------------
28,144 10,163 462 37,845
------------ ------------ ------------ ------------
Interest ..................................... 9,348 3,404 0 12,752
Amortization of deferred financing costs...... 383 9 0 392
General and administrative ................... 1,682 0 0 1,682
Loss from hedge termination .................. 0 0 0 0
------------ ------------ ------------ ------------
Total expenses ............................. 39,557 13,576 462 52,671
------------ ------------ ------------ ------------
Income before gain on sales of real estate,
minority interests and extraordinary item..... 20,549 4,804 956 24,397
Gain on sales of real estate ................... 5,127 0 5,127 0
------------ ------------ ------------ ------------
Income before minority interests and
extraordinary item ........................... 25,676 4,804 6,083 24,397
Minority interests ............................. (3,483) (503) (105) (3,881)
------------ ------------ ------------ ------------
Income before extraordinary item ............... 22,193 4,301 5,978 20,516
Extraordinary item ............................. (104) 0 0 (104)
------------ ------------ ------------ ------------
Net income .................................... $ 22,089 $ 4,301 $ 5,978 $ 20,412
============ ============ ============ ============
Per share data
Primary:
Net income per share from operations
before extraordinary item .................. $ 1.54 $ 1.24
Extraordinary item - debt .................... (0.01) (0.01)
extinguishment
------------ ------------
Net income per share ......................... $ 1.53 $ 1.23
============ ============
Weighted average number of shares
outstanding during the period ................ 13,230,385 15,012,988
============ ============
Fully diluted:
Net income per share from operations
before extraordinary item .................. $ 1.53 $ 1.20
Extraordinary item - debt .................... (0.01) (0.01)
extinguishment
------------ ------------
Net income per share ......................... $ 1.52 $ 1.19
============ ============
Weighted average number of shares
outstanding during the period ................ 14,525,128 17,222,017
============ ============
Supplemental information - Funds from operations
Income before minority interests ............. $ 25,572 $ 4,804 $ 6,083 $ 24,293
Adjustments
Depreciation and amortization .............. 9,863 3,670 63 13,470
Adjustment for unconsolidated
joint ventures ........................... 690 0 0 690
Non-recurring items, including gain on
sales of real estate, loss from hedge
termination and extraordinary item ....... (5,023) 0 (5,127) 104
Minority interests ......................... (441) (503) (105) (839)
------------ ------------ ------------ ------------
Funds from operations ...................... $ 30,661 $ 7,971 $ 914 $ 37,718
============ ============ ============ ============
</TABLE>
See accompanying notes to pro forma condensed consolidated financial information
Page B-2
<PAGE>
<TABLE>
<CAPTION>
ESSEX PROPERTY TRUST, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the nine months ended September 30, 1997
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
Pro Forma Adjustments (3)
--------------------------------
Acquisition Disposition
Historical Properties Properties Pro Forma
------------- ------------- ------------ -------------
<S> ............................................ <C> <C> <C> <C>
Revenues
Rental ....................................... $ 47,780 $ 32,192 $ 2,167 $ 77,805
Interest and other income .................... 2,913 551 30 3,434
------------ ------------ ------------ ------------
50,693 32,743 2,197 81,239
------------ ------------ ------------ ------------
Expenses
Property operating expenses
Maintenance and repairs .................... 4,341 3,038 247 7,132
Real estate taxes .......................... 3,790 2,985 181 6,594
Utilities .................................. 3,175 2,252 102 5,325
Administrative ............................. 2,911 2,541 83 5,369
Advertising ................................ 653 242 20 875
Insurance .................................. 635 480 30 1,085
Depreciation and amortization .............. 8,855 6,240 372 14,723
------------ ------------ ------------ ------------
24,360 17,778 1,035 41,103
------------ ------------ ------------ ------------
Interest ..................................... 11,442 4,885 0 16,327
Amortization of deferred financing costs...... 639 17 0 656
General and administrative ................... 1,717 0 0 1,717
Loss from hedge termination .................. 42 0 0 42
------------ ------------ ------------ ------------
Total expenses ............................. 38,200 22,680 1,035 59,845
------------ ------------ ------------ ------------
Income before gain on sales of real estate,
minority interests and extraordinary item..... 12,493 10,063 1,162 21,394
Gain on sales of real estate ................... 2,477 0 0 2,477
------------ ------------ ------------ ------------
Income before minority interests and
extraordinary item ........................... 14,970 10,063 1,162 23,871
Minority interests ............................. (2,648) (1,245) (128) (3,765)
------------ ------------ ------------ ------------
Income before extraordinary item ............... 12,322 8,818 1,034 20,106
Extraordinary item ............................. (3,441) 0 0 (3,441)
------------ ------------ ------------ ------------
Net income .................................... $ 8,881 $ 8,818 $ 1,034 $ 16,665
============ ============ ============ ============
Per share data
Primary:
Net income per share from operations
before extraordinary item .................. $ 1.50 $ 1.48
Extraordinary item - debt .................... (0.38) (0.38)
extinguishment
------------ ------------
Net income per share ......................... $ 1.12 $ 1.10
============ ============
Weighted average number of shares
outstanding during the period ................ 7,347,527 13,536,960
============ ============
Fully diluted:
Net income per share from operations
before extraordinary item .................. $ 1.51 $ 1.49
Extraordinary item - debt .................... (0.36) (0.36)
extinguishment
------------ ------------
Net income per share ......................... $ 1.15 $ 1.13
============ ============
Weighted average number of shares
outstanding during the period ................ 7,707,236 14,810,955
============ ============
Supplemental information - Funds from operations
Income before minority interests ............. $ 11,529 $ 10,063 $ 1,162 $ 20,430
Adjustments
Depreciation and amortization .............. 8,855 6,240 372 14,723
Adjustment for unconsolidated
joint ventures ........................... 508 0 0 508
Non-recurring items, including gain on
sales of real estate, loss from hedge
termination and extraordinary item ....... 1,006 0 0 1,006
Minority interests ......................... (560) (1,245) (128) (1,677)
------------ ------------ ------------ ------------
Funds from operations ...................... $ 21,338 $ 15,058 $ 1,406 $ 34,990
============ ============ ============ ============
</TABLE>
See accompanying notes to pro forma condensed consolidated financial information
Page B-3
<PAGE>
ESSEX PROPERTY TRUST, INC.
Notes to Pro Forma Condensed Consolidated Financial Information
September 30, 1997 and December 31, 1996
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
(1) - Overview
Between January 1, 1997 and November 30,1997, Essex directly acquired twenty one
multifamily properties, totaling 2,922 units, at an aggregate contract price of
$209,841. In addition, Essex currently has three multifamily properties,
totaling 510 units, which would be considered probable acquisitions at an
aggregate contract price of $40,435. During this period the Company disposed of
one multifamily property for proceeds of $9,500 and three retail properties for
proceeds of $6,653. Greater details regarding these property transactions are
included in Item 5 of this form 8-K filing.
On March 31, 1997, Essex completed the sale of 2,000,000 shares of its Common
Stock to Cohen & Steers at a price of $29.125 per share. Net proceeds from the
sale were approximately $58,125.
On June 20, 1997, Essex completed the second phase of the Tiger/Westbrook
transaction with the sale of an additional $20,000 of its Convertible Preferred
Stock to Tiger/Westbrook. Net proceeds from the sale were $20,000.
On September 10, 1997, Essex completed a public offering of 1,300,000 shares of
its Common Stock at a net price of $31.00 per share. On September 19, 1997, the
underwriter exercised its "over-allotment" option and Essex sold an additional
195,000 shares at $31.00 per share. Net proceeds from the sale were
approximately $46,145.
The unaudited pro forma condensed consolidated balance sheet as of December 31,
1996 and pro forma condensed consolidated statements of operations for the nine
months ended September 30, 1997 and the year ended December 31, 1996, are
presented as if the property and equity transactions stated above occurred on
January 1, 1996.
(2) - Pro Forma Condensed Consolidated Balance Sheet Adjustments
The pro forma condensed consolidated balance sheet as of September 30, 1997
includes fourteen acquisitions with an aggregate cost of $128,140 in the
historical column and pro forma adjustments for seven property acquisitions and
three probable acquisitions all subsequent to September 30, 1997 with an
aggregate cost of $122,136. Real estate investments were increased by $250,276
based on the contracted acquisition prices. It is assumed that 75% of the
increase in real estate investment will be allocated to buildings and
improvements for purposes of depreciation.
The detail of the increase in real estate investment based on properties
acquisition since October 1, 1997 is as follows:
Huntington Breakers $ 30,400
Bridle Trails 6,620
Maple Leaf 3,836
Spring Lake 3,860
Stonehedge Village 14,160
Trabuco Villas 11,750
The Meadows at Cascade Park 11,075
Casa Mango (probable acquisition) 10,005
Village at Cascade Park (probable acquisition) 10,430
Castle Creek (probable acquisition) 20,000
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ESSEX PROPERTY TRUST, INC.
Notes to Pro Forma Condensed Consolidated Financial Information
September 30, 1997 and December 31, 1996
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
The Huntington Breakers acquisition was funded with $16,000 of assumed tax
exempt variable rate bonds and $14,400 with the Company's lines of credit.
The Bridle Trails, Maple Leaf, Spring Lake and Stonehedge Village acquisitions
were funded with approximately $17,910 of assumed fixed rate loans (originated
in 1997) and the balance with the Company's lines of credit.
The Trabuco Villas acquisition was funded with proceeds from the sale of the
multifamily residential property and the Company's lines of credit.
The Meadows at Cascade Park acquisition was funded with the Company's lines of
credit.
The Casa Mango, Village at Cascade Park and Castle Creeks acquisitions are
anticipated to be funded with the Company's lines of credit and excess cash
balances.
(3) - Pro Forma Condensed Consolidated Statements of Operations Adjustments
The pro forma condensed consolidated statement of operations for the nine months
ended September 30, 1997 include the following pro forma adjustments:
For Wilshire Promenade Apartments, acquired on January 3, 1997, actual operating
income through September 30, 1997 is reflected in the historical operating
results for the nine months ended September 30, 1997.
For Tara Village Apartments, acquired on January 28, 1997, pro forma adjustment
was made by extrapolating from the eight months actual operating income through
September 30, 1997. The first year property budget was used to derive the 1996
pro forma adjustment.
For Foothill and Twin Creek Apartments, acquired on February 27, 1997, pro forma
adjustment was made by extrapolating from the seven months actual operating
income through September 30, 1997. The first year property budget was used to
derive the 1996 pro forma adjustment.
For the Countrywood Apartments, Cedar Mill, Wichita Towne Center and Riviera
Square retail centers, the pro forma adjustment reflects the elimination of the
actual results of operations.
For Kings Road, Casa Del Mar, Evergreen Heights, Villa Scandia, The Bluffs II,
The Village Apartments, Camarillo Oaks (the additional 193 units), Park Place,
Windsor Court, Windsor Terrace, Huntington Breakers, Bridle Trails, Maple Leaf,
Spring Lake, Stonehedge Village, Trabuco Villas, The Meadows at Cascade Park,
Casa Mango, Village at Cascade Park and Castle Creek pro forma adjustments
incorporated into the nine months ended September 30, 1997 are based on their
respective internal operating budgets as reduced by their respective actual
operating income through September 30, 1997. The first year property budgets
were used to derive the 1996 pro forma adjustments.
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