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Table of Contents
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                          to                          
 
Commission File No. 333-44467-01
 
 
ESSEX PORTFOLIO, L.P.
(Exact name of Registrant as specified in its Charter)
 
Maryland
  
77-0369575
(State or other jurisdiction
of incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
925 East Meadow Drive, Palo Alto, California 94303
(Address of principal executive offices)
(Zip code)
 
(650) 494-3700
(Registrant’s telephone number, including area code)
 
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months for such shorter period that the Registrant was required to file such report, and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ¨
 

Table of Contents
TABLE OF CONTENTS
 
FORM 10-Q
 
           
Page No.
Part I
            
             
Item 1
        
3
             
         
4
             
         
5
             
         
6
             
         
7
             
         
8
             
         
9
             
Item 2
        
20
             
Item 3
        
30
             
Part II
            
             
Item 6
        
31
             
    
32

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Table of Contents
PART I    FINANCIAL INFORMATION
 
Item 1:     Financial Statements (Unaudited)
 
Essex Portfolio, L.P., a California limited partnership, (the “Operating Partnership”) effectively holds the assets and liabilities and conducts the operating activities of Essex Property Trust, Inc. (“Essex” or the “Company”). Essex Property Trust, Inc., a real estate investment trust incorporated in the State of Maryland, is the sole general partner of the Operating Partnership.
 
The information furnished in the accompanying consolidated unaudited balance sheets, statements of operations, partners’ capital and cash flows of the Operating Partnership reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the aforementioned financial statements for the interim periods.
 
The accompanying unaudited consolidated financial statements should be read in conjunction with the notes to such financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Table of Contents
 
ESSEX PORTFOLIO, L.P.
 
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
 
    
June 30,
2002
     
December 31,
2001
  
ASSETS
                  
Real estate:
                  
Rental properties:
                  
Land and land improvements
   
$
289,216
 
   
$
291,913
 
Buildings and improvements
   
 
884,136
 
   
 
883,287
 
    
  
    
 
1,173,352
 
   
 
1,175,200
 
Less accumulated depreciation
   
 
(172,883
)
   
 
(156,269
)
    
  
    
 
1,000,469
 
   
 
1,018,931
 
Investments
   
 
90,782
 
   
 
95,460
 
Real estate under development
   
 
123,280
 
   
 
93,256
 
    
  
    
 
1,214,531
 
   
 
1,207,647
 
Cash and cash equivalents-unrestricted
   
 
8,664
 
   
 
6,440
 
Cash and cash equivalents-restricted
   
 
17,875
 
   
 
17,163
 
Notes receivable from investees and other related parties
   
 
61,565
 
   
 
56,014
 
Notes and other receivables
   
 
28,250
 
   
 
29,771
 
Prepaid expenses and other assets
   
 
29,241
 
   
 
6,699
 
Deferred charges, net
   
 
6,207
 
   
 
5,724
 
    
  
    
$
1,366,333
 
   
$
1,329,458
 
    
  
LIABILITIES AND PARTNERS’ CAPITAL
                  
Mortgage notes payable
   
$
561,220
 
   
$
564,201
 
Lines of credit
   
 
106,459
 
   
 
74,459
 
Accounts payable and accrued liabilities
   
 
29,873
 
   
 
29,577
 
Distributions payable
   
 
18,156
 
   
 
16,559
 
Other liabilities
   
 
6,651
 
   
 
6,583
 
    
  
Total liabilities
   
 
722,359
 
   
 
691,379
 
Minority interests
   
 
5,706
 
   
 
6,352
 
Partners’ capital:
                  
General Partner:
                  
Common equity
   
 
392,305
 
   
 
386,599
 
Preferred equity
   
 
—  
 
   
 
—  
 
    
  
    
 
392,305
 
   
 
386,599
 
Limited Partners:
                  
Common equity
   
 
41,473
 
   
 
40,638
 
Preferred equity
   
 
204,490
 
   
 
204,490
 
    
  
    
 
245,963
 
   
 
245,128
 
    
  
Total partners’ capital
   
 
638,268
 
   
 
631,727
 
    
  
Total liabilities and partners’ capital
   
$
1,366,333
 
   
$
1,329,458
 
    
  
 
See accompanying notes to the consolidated unaudited fiancial statements.

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Table of Contents
ESSEX PORTFOLIO, L.P.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
 
    
Three months ended
  
    
June 30,
2002
     
June 30,
2001
  
Revenues:
                  
Rental
   
$
41,769
 
   
$
44,530
 
Other property
   
 
1,396
 
   
 
1,453
 
    
  
Total property
   
 
43,165
 
   
 
45,983
 
Interest and other
   
 
7,818
 
   
 
4,536
 
    
  
Total revenues
   
 
50,983
 
   
 
50,519
 
    
  
Expenses:
                  
Property operating expenses
                  
Maintenance and repairs
   
 
2,356
 
   
 
2,875
 
Real estate taxes
   
 
3,119
 
   
 
2,929
 
Utilities
   
 
2,253
 
   
 
2,435
 
Administrative
   
 
3,045
 
   
 
3,606
 
Advertising
   
 
732
 
   
 
641
 
Insurance
   
 
490
 
   
 
230
 
Depreciation and amortization
   
 
9,114
 
   
 
8,833
 
    
  
    
 
21,109
 
   
 
21,549
 
Interest
   
 
8,652
 
   
 
9,547
 
Amortization of deferred financing costs
   
 
147
 
   
 
207
 
General and administrative
   
 
1,565
 
   
 
1,854
 
    
  
Total expenses
   
 
31,473
 
   
 
33,157
 
    
  
Income from continuing operations before minority interests and discontinued operations
   
 
19,510
 
   
 
17,362
 
Minority interests
   
 
(46
)
   
 
(22
)
    
  
Income from continuing operations
   
 
19,464
 
   
 
17,340
 
Discontinued operations:
                  
Income from real estate sold
   
 
77
 
   
 
175
 
Gain on sale of real estate
   
 
9,051
 
   
 
—  
 
    
  
Income from discontinued operations
   
 
9,128
 
   
 
175
 
    
  
Net income
   
 
28,592
 
   
 
17,515
 
Dividends on preferred units-general partner
   
 
—  
 
   
 
—  
 
Dividends on preferred units-limited partner
   
 
(4,580
)
   
 
(4,580
)
    
  
Net income available to common units
   
$
24,012
 
   
$
12,935
 
    
  
Per operating partnership unit data:
                  
Basic:
                  
Income from continuing operations
   
$
0.71
 
   
$
0.61
 
Income from discontinued operations
   
 
0.44
 
   
 
0.01
 
    
  
Net income
   
$
1.15
 
   
$
0.62
 
    
  
Weighted average number of partnership units outstanding during the period
   
 
20,924,671
 
   
 
20,718,968
 
    
  
Diluted:
                  
Income from continuing operations
   
$
0.71
 
   
$
0.61
 
Income from discontinued operations
   
 
0.43
 
   
 
0.01
 
    
  
Net income
   
$
1.14
 
   
$
0.62
 
    
  
Weighted average number of partnership units outstanding during the period
   
 
21,115,264
 
   
 
21,034,367
 
    
  
Distributions per Operating Partnership common unit
   
$
0.77
 
   
$
0.70
 
    
  
 
See accompanying notes to the consolidated unaudited financial statements.

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Table of Contents
ESSEX PORTFOLIO, L.P.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
 
    
Six months ended
  
    
June 30,
2002
     
June 30,
2001
  
Revenues:
                  
Rental
   
$
83,888
 
   
$
88,617
 
Other property
   
 
2,712
 
   
 
2,904
 
    
  
Total property
   
 
86,600
 
   
 
91,521
 
Interest and other
   
 
13,795
 
   
 
8,596
 
    
  
Total revenues
   
 
100,395