Essex Property Trust REIT
Company History
Founded in 1971, Essex Property Trust is a fully integrated real estate investment trust (REIT) that is responsible for all aspects of running residential properties including the acquisition, development, and management of multifamily residential properties. It was not until 1994 however that Essex became publicly traded on the New York Stock Exchange under the ticker symbol “ESS”. Anchored by president and CEO Michael J. Schall, the management team of Essex has been together for over 22 years contributing to a level of continuity and leadership rarely seen in corporate America.
Since Essex operates as a REIT, it must distribute at least 90% of its net income as dividends to shareholders. This fact combined with the relatively steady cash flows associated with rental income has led to significant shareholder returns over the years which in turn increases investor confidence in the stock, leading to capital gains for investors as well. Over the past few years, since the stock’s low-point in February of 2009 (it was trading at $54.60/share), the price has increased 187.38% to $154.05/share.
Property Portfolio
Essex is primarily based in California with properties in Washington as well. By choosing to focus on premier markets, Essex has positioned itself as an upscale luxury company with monthly rents for a 1 bedroom apartment in excess of $1,300+ per month.
Operating 126 (76.11% of total portfolio) multi-family properties in California and another 40 (23.89% of total portfolio) in Washington, Essex boasts 29,440 total units across the west coast. The results of a breakdown by Metropolitan Statistical Area (MSA) are shown in Exhibit 1 below:

As shown by Exhibit 1, Essex has chosen to cluster their properties in wealthier areas which allow them to utilize the buying power of the residents to design a more luxurious building for their tenants that might not be appropriate or successful in areas with a different economic makeup. | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | Southern California | 96% | 95% | 95% | 97% | 96% | 96% | 96% | Northern California | 96% | 96% | 97% | 98% | 97% | 97% | 97% | Seattle Metropolitan Area | 96% | 96% | 96% | 98% | 95% | 96% | 96% |
Occupancy Rates for Essex Properties

The average occupancy rates for the geographical regions in which Essex operates are listed above (Exhibit 2) for the past 7 years, including data from before the housing crisis in 2008. As is evident by the table, Essex communities enjoy remarkably high occupancy rates throughout all of their regions that have stayed consistent for a number of years. Even in the economic downturn in 2008, occupancy rates either stayed or the same or went up (Northern California). This shows that despite the majority of the country cutting back on spending and choosing cheaper living alternatives, the patrons of Essex communities were not affected enough to find other cheaper homes. This consistency is fantastic for the shareholders of Essex since it results in steady cash flows to the company that are subsequently paid out in the form of dividends.
Same Property Revenue Growth YoY for Essex Properties | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | Southern California | 4.00% | 6.10% | 2.30% | -0.20% | -2.00% | 2.70% | 4.20% | Northern California | 5.00% | 8.90% | 11.80% | 5.00% | -3.70% | 5.70% | 9.60% | Seattle Metropolitan Area | 6.00% | 11.40% | 9.70% | 4.0% | -7.00% | 4.60% | 8.40% |

While specific rental rates were not available for the region due to fluctuations in the local counties, since income at these properties is generated through tenant rental payments, same-property revenue growth year over year is an effective metric to determine the relative changes in the trends. As shown by Exhibit 3 (above), over the past 7 years of data