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UNITED STATES

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 September 30, 2004

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number 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 Number)

925 East Meadow Drive
Palo Alto, California 94303
(Address of Principal Executive Offices including 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 (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x No o


  
1
 


ESSEX PORTFOLIO, L.P.
FORM 10-Q
INDEX

     Page No.
PART I. FINANCIAL INFORMATION
  
   
Item 1.
Financial Statements (Unaudited):

3

     
 
Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003

4

     
 
Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003

5

     
 
Consolidated Statements of Partners’ Capital for the nine months ended September 30, 2004 and the year ended December 31, 2003

6

     
 
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003

7

     
 
Notes to Consolidated Financial Statements

8

     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations

23

     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk

39

     
Item 4.
Controls and Procedures

39

     
PART II. OTHER INFORMATION
  
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

40

     
Item 6.
Exhibits and Reports on Form 8-K

40

     
Signature

41


  
2
 

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 consolidated financial statements for the interim periods.

The accompanying unaudited consolidated financial statements should be read in conjunction with the notes to such consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations herein. Additionally, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Operating Partnership’s annual report on Form 10-K for the year ended December 31, 2003.

  
3
 


ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)

 
  

 September 30,

 

 December 31,

     

2004 

    

2003 (1) 

             
 Assets            
 Real estate:            
Rental properties:
            
Land and land improvements
  
$
500,589
  
$
469,347
Buildings and improvements
    
1,720,517
   
1,514,775
     
   
     
2,221,106
   
1,984,122
Less accumulated depreciation
    
(317,299)
 
  
(265,763)
     
   
     
1,903,807
   
1,718,359
Investments
    
88,357
   
79,567
Real estate under development
    
69,790
   
55,183
     
   
     
2,061,954
   
1,853,109
Cash and cash equivalents-unrestricted
    
16,224
   
14,768
Cash and cash equivalents-restricted
    
19,863
   
11,175
Notes and other receivables from related parties
    
5,256
   
5,738
Notes and other receivables
    
10,076
   
6,021
Prepaid expenses and other assets
    
24,574
   
17,426
Deferred charges, net
    
11,178
   
8,574
     
   
   
$
2,149,125
  
$
1,916,811
     
   
Liabilities and Partners' Capital
            
Mortgage notes payable
  
$
1,094,209
  
$
895,945
Lines of credit
    
169,235
   
93,100
Accounts payable and accrued liabilities
    
32,484
   
20,834
Dividends payable
    
22,596
   
22,379
Other liabilities
    
11,335
   
17,153
Deferred gain
    
5,000
   
-
     
   
Total liabilities
    
1,334,859
   
1,049,411
Minority interests
    
52,013
   
55,592
Redeemable convertible limited partnership units
    
4,750
   
-
             
Partners' capital:
            
General partner:
            
Common equity
    
554,047
    
556,987
Preferred equity (liquidation value of $25,000)
    
24,412
    
24,412
             
     
578,459
    
581,399
             
Limited partners:
            
Common equity
    
52,354
    
50,294
Preferred equity (liquidation value of of $130,000)
    
126,690
    
180,115
             
     
179,044
    
230,409
             
Total partners' capital
    
757,503
    
811,808
             
Commitments and contingencies
            
Total liabilities and partners' capital
  
$
2,149,125
  
$
1,916,811
             


  (1) The December 31, 2003 consolidated balance sheet included in the Operating Partnership’s Form 10-K filed on March 15, 2004 has been restated for the retroactive adoption of the provisions of FIN 46 Revised and SFAS 123 as discussed in Note 1.
See accompanying notes to the unaudited consolidated financial statements.
 
 

 
4
 

 

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per unit amounts
 

   
Three Months Ended
  
Nine Months Ended
     
September 30,
    
September 30,
     

2004 

    

2003 (1) 

    

2004 

    

2003 (1) 

Revenues:
    
   
   
   
Rental
  
$
69,823
  
$
60,850
  
$
201,960
  
$
182,833
Other property
    
2,609
   
2,095
   
7,111
   
6,095
Total property revenues
    
72,432
   
62,945
   
209,071
   
188,928
Expenses:
    
   
   
   
Property operating expenses:
                        
Maintenance and repairs
    
6,210
   
5,040
   
15,418
   
13,869
Real estate taxes
    
6,340
   
4,809
   
18,080
   
14,431
Utilities
    
3,188
   
3,440
   
9,703
   
9,431
Administrative
    
6,839
   
5,116
   
21,268
   
17,230
Advertising
    
1,444
   
1,115
   
3,250
   
3,115
Insurance
    
1,174
   
1,029
   
3,364
   
2,899
Depreciation and amortization
    
18,273
   
14,506
   
54,416
   
40,995
     
43,468
   
35,055
   
125,499
   
101,970
Interest
    
16,394
   
12,949
   
45,785
   
39,070
Amortization of deferred financing costs
    
449
   
380
   
1,179
   
962
General and administrative
    
7,761
   
2,288
   
14,193
   
6,962
Total expenses
    
68,072
   
50,672
   
186,656