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Essex Property Trust 10-Q 2009 UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
T QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended September 30, 2009
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 number
001-13106
ESSEX
PROPERTY TRUST, INC.
(Exact
name of Registrant as Specified in its Charter)
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 T
NO £
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). YES £
NO £
Indicate
by check mark whether the registrant is a large accelerated filer an accelerated
file, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” ”accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act. Yes £
No T
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 29,117,693 shares of Common Stock as
of November 3, 2009.>
 ESSEX PROPERTY TRUST, INC.
FORM
10-Q
INDEX
Part
I -- Financial Information
Item 1: Condensed Financial Statements (Unaudited)
"Essex"
or the "Company" means Essex Property Trust, Inc., a real estate investment
trust incorporated in the State of Maryland, or where the context otherwise
requires, Essex Portfolio, L.P., a limited partnership (the "Operating
Partnership") in which Essex Property Trust, Inc. is the sole general
partner.
The
information furnished in the accompanying unaudited condensed consolidated
balance sheets, statements of operations, stockholders' equity, noncontrolling
interest, and comprehensive income and cash flows of the Company reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the aforementioned condensed consolidated financial statements
for the interim periods and are normal and recurring in nature, except as
otherwise noted.
The
accompanying unaudited condensed consolidated financial statements should be
read in conjunction with the notes to such unaudited condensed consolidated
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations herein. Additionally, these
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in the
Company's annual report on Form 10-K for the year ended December 31,
2008. ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(Unaudited)
(Dollars
in thousands, except per share amounts)
See
accompanying notes to the unaudited condensed consolidated financial
statements. ESSEX PROPERTY TRUST, INC. AND SUBSIDIARES
Condensed
Consolidated Statements of Operations
(Unaudited)
(Dollars
in thousands, except per share amounts)
See
accompanying notes to the unaudited condensed consolidated financial
statements. ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Stockholders' Equity, Noncontrolling Interest,
and
Comprehensive
Income for the nine months ended September 30, 2009
(Unaudited)
(Dollars
and shares in thousands)
See
accompanying notes to the unaudited condensed consolidated financial
statements ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars
in thousands)
See
accompanying notes to the unaudited condensed consolidated financial
statements. ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Notes
to Condensed Consolidated Financial Statements
September
30, 2009 and 2008
(Unaudited)
(1) Organization
and Basis of Presentation
The
unaudited condensed consolidated financial statements of the Company are
prepared in accordance with U.S. generally accepted accounting principles for
interim financial information and in accordance with the instructions to Form
10-Q. In the opinion of management, all adjustments necessary for a
fair presentation of the financial position, results of operations and cash
flows for the periods presented have been included and are normal and recurring
in nature, except as otherwise noted. These unaudited condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements included in the Company's annual report on
Form 10-K for the year ended December 31, 2008.
All
significant intercompany balances and transactions have been eliminated in the
condensed consolidated financial statements.
The
unaudited condensed consolidated financial statements for the three and nine
months ended September 30, 2009 and 2008 include the accounts of the Company and
Essex Portfolio, L.P. (the "Operating Partnership", which holds the operating
assets of the Company). See below for a description of entities
consolidated by the Operating Partnership. The Company is the sole
general partner in the Operating Partnership, with a 92% general partnership
interest as of September 30, 2009. Total Operating Partnership units
outstanding were 2,449,317 and 2,413,078 as of September 30, 2009 and December
31, 2008, respectively, and the redemption value of the units, based on the
closing price of the Company’s common stock totaled $194.9 million and $185.2
million, as of September 30, 2009 and December 31, 2008,
respectively.
As of
September 30, 2009, the Company owned or had ownership interests in 133
apartment communities, (aggregating 27,221 units) (collectively, the
“Communities”, and individually, a “Community”), five office and commercial
buildings and three active development projects (collectively, the
“Portfolio”). The Communities are located in Southern California (Los
Angeles, Orange, Riverside, Santa Barbara, San Diego, and Ventura counties),
Northern California (the San Francisco Bay Area) and the Seattle metropolitan
area.
Fund
Activities
Essex
Apartment Value Fund II, L.P. (“Fund II”) is an investment fund formed by the
Company to add value through rental growth and asset appreciation, utilizing the
Company’s development, redevelopment and asset management
capabilities.
Fund II
has eight institutional investors, and the Company, with combined partner equity
contributions of $265.9 million. The Company contributed $75.0
million to Fund II, which represents a 28.2% interest as general partner and
limited partner. Fund II utilized leverage equal to approximately 55%
upon the initial acquisition of the underlying real estate. Fund II
invested in apartment communities in the Company’s targeted West Coast markets
and, as of September 30, 2009, owned 14 apartment communities. The
Company records revenue for its asset management, property management,
development and redevelopment services when earned, and promote income when
realized if Fund II exceeds certain financial return benchmarks.
Marketable
Securities
As of
September 30, 2009 marketable securities consisted primarily of investment-grade
unsecured bonds and investment funds that invest in U.S. treasury or agency
securities. As of September 30, 2009 the Company had classified the
marketable securities as available for sale and the Company reports these
securities at fair value, based on quoted market prices (Level 2 for the
unsecured bonds and level 1 for the investment funds, as defined by the
Financial Accounting Standards Board ("FASB") standard entitled “Fair Value Measurements and
Disclosures” as discussed later in Note 1), and any unrealized
gain or loss is recorded as other comprehensive income
(loss). Realized gains and losses and interest income are included in
interest and other income on the condensed consolidated statement of
operations. Amortization of unearned discounts is included in
interest income.
Variable
Interest Entities
The
Company consolidates 19 DownREIT limited partnerships (comprising twelve
communities), an office building that is subject to loans made by the Company,
and 55 low income housing units since the Company is the primary beneficiary of
these variable interest entities (“VIEs”). As of December 31, 2008
the consolidated VIEs include a development joint venture, which is no longer a
VIE as of September 30, 2009 as a result of the Company’s buyout of almost all
of the co-investment’s interests. Total DownREIT units outstanding
were 1,137,623 and 1,148,510 as of September 30, 2009 and December 31, 2008
respectively, and the redemption value of the units, based on the closing price
of the Company’s common stock totaled $90.5 million and $88.1 million, as of
September 30, 2009 and December 31, 2008, respectively. The
consolidated total assets and liabilities related to these VIEs, net of
intercompany eliminations, were approximately $237.0 million and $163.1 million,
respectively, as of September 30, 2009 and $256.0 million and $169.1 million,
respectively, as of December 31, 2008. Interest holders in VIEs
consolidated by the Company are allocated net income equal to the cash payments
made to those interest holders or distributions from cash flow. The
remaining results of operations are generally allocated to the
Company. As of September 30, 2009 and December 31, 2008, the Company
did not have any VIE’s of which it was not deemed to be the primary
beneficiary. Stock-Based
Compensation
The
Company accounts for share based compensation using the fair value method of
accounting. The estimated fair value of stock options granted by the
Company is being amortized over the vesting period of the stock
options. The estimated grant date fair values of the long term
incentive plan units (discussed in Note 13, “Stock Based Compensation Plans,” in
the Company’s Form 10-K for the year ended December 31, 2008) are being
amortized over the expected service periods.
Stock-based
compensation expense for options and restricted stock totaled $0.2 million and
$0.4 million for the three months ended September 30, 2009 and 2008,
respectively, and $0.7 million and $0.9 million for the nine months ended
September 30, 2009 and 2008, respectively. The intrinsic value of the
stock options exercised during the three months ended September 30, 2009 and
2008 totaled $0.1 million and $1.4 million, respectively and $0.5 million and
$4.1 million for the nine months ended September 30, 2009 and 2008
respectively. As of September 30, 2009, the intrinsic value of the
stock options outstanding and fully vested totaled $3.3 million. As
of September 30, 2009, total unrecognized compensation cost related to unvested
share-based compensation granted under the stock option and restricted stock
plans totaled $2.9 million. The cost is expected to be recognized
over a weighted-average period of 2 to 5 years for the stock option plans and is
expected to be recognized straight-line over 7 years for the restricted stock
awards.
The
Company has adopted an incentive program involving the issuance of Series Z and
Series Z-1 Incentive Units (collectively referred to as “Z Units”) of limited
partnership interest in the Operating Partnership. Stock-based
compensation expense for Z Units totaled $0.4 million for the three months ended
September 30, 2009 and 2008, respectively, and $1.1 million for the nine months
ended September 30, 2009 and 2008, respectively.
Stock-based
compensation capitalized for stock options, restricted stock awards, and the Z
Units totaled $0.1 million and $0.2 million for the three months ended September
30, 2009 and 2008, respectively, and $0.3 million and $0.6 million for the nine
months ended September 30, 2009 and 2008, respectively. As of
September 30, 2009, the intrinsic value of the Z Units subject to future vesting
totaled $8.7 million. As of September 30, 2009, total unrecognized
compensation cost related to Z Units subject to future vesting granted under the
Z Units totaled $5.0 million. The unamortized cost is expected to be
recognized over the next 2 to 10 years subject to the achievement of the stated
performance criteria.
Stock-based
compensation expense for the Outperformance Plan, (the “OPP”) adopted in
December 2007 totaled approximately $0.3 million for three months ended
September 30, 2009 and 2008, respectively and $0.9 million for the nine months
ended September 30, 2009 and 2008. During September 2009, the Company
elected to cancel the OPP for senior officers and non-employee directors and
wrote-off $3.8 million in unamortized costs related to the OPP.
Fair
Value of Financial Instruments
The
Company adopted an accounting standard issued by the FASB entitled “Fair Value Measurements and
Disclosures” as of January 1, 2008, which provides guidance on using fair
value to measure assets and liabilities. The Company values its
financial instruments based on the fair value hierarchy of valuation techniques
described in this standard. Level 1 inputs are unadjusted, quoted
prices in active markets for identical assets or liabilities at the measurement
date. Level 2 inputs include quoted prices for similar assets and
liabilities in active markets and inputs other than quoted prices observable for
the asset or liability. Level 3 inputs are unobservable inputs
for the asset or liability.
The
Company uses Level 1 inputs for the fair values of its cash equivalents and its
marketable securities except for unsecured bonds. The Company uses
Level 2 inputs for its investments in unsecured bonds, notes receivable, notes
payable, and cash flow hedges. These inputs include interest rates
for similar financial instruments. The Company’s valuation
methodology for cash flow hedges is described in more detail in Note
8. The Company does not use Level 3 inputs to estimate fair values of
any of its financial instruments. The Company’s assessment of the
significance of a particular input to the fair value measurement in its entirety
requires judgment, and considers factors specific to the asset or
liability. Management
believes that the carrying amounts of its amounts outstanding under lines of
credit, notes receivable and other receivables from related parties, and notes
and other receivables approximate fair value as of September 30, 2009 and
December 31, 2008, because interest rates, yields and other terms for these
instruments are consistent with yields and other terms currently available for
similar instruments. Management has estimated that the fair value of
the Company’s $1.46 billion of fixed rate debt at September 30, 2009 is
approximately $1.48 billion and the fair value of the Company’s $251.6 million
of variable rate debt at September 30, 2009 is $228.5 million based on the terms
of existing mortgage notes payable and variable rate demand notes compared to
those available in the marketplace. Management believes that the
carrying amounts of cash and cash equivalents, restricted cash, accounts payable
and accrued liabilities, other liabilities and dividends payable approximate
fair value as of September 30, 2009 due to the short-term maturity of these
instruments. Marketable securities and cash flow hedge liabilities
are carried at fair value as of September 30, 2009, as discussed further above
and in Note 8.
Accounting
Estimates and Reclassifications
The
preparation of condensed consolidated financial statements, in accordance with
U.S. generally accepted accounting principles, requires the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosures of contingent assets and
liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to acquiring, developing and assessing the carrying
values of its real estate properties, its investments in and advances to joint
ventures and affiliates, its notes receivables and its qualification as a Real
Estate Investment Trust (“REIT”). The Company bases its estimates on historical
experience, current market conditions, and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results may vary from
those estimates and those estimates could be different under different
assumptions or conditions. Reclassifications
for discontinued operations and noncontrolling interest have been made to prior
year statements of operations balances in order to conform to current year
presentation. Such reclassifications have no impact on reported
earnings, cash flows, total assets or total liabilities.
New
Accounting Pronouncements and the Resulting Revision of Previously Reported
Amounts
In July
2009, the FASB established a codification as the single source of authoritative
nongovernmental US GAAP (except for SEC rules and interpretive releases) which
is effective for interim and annual reporting periods ending after September 15,
2009 (the "Codification"). The Codification is intended to
reorganize, rather than change, existing US GAAP. However, all
existing accounting standard documents are superseded by the Codification and
all accounting literature excluded from the Codification became nonauthoritative
upon the effective date in September 2009. Accordingly, all
references to currently existing US GAAP have been removed and have been
replaced with references to the Codification or plain English explanations of
our accounting policies. The adoption of the Codification did not
have a material impact on the Company’s financial position or results of
operations.
In
December 2007, the FASB issued a standard entitled “Noncontrolling Interests in
Consolidated Financial Statements” which establishes accounting and
reporting standards that require the ownership interests in subsidiaries held by
parties other than the parent be clearly identified, labeled, and presented in
the consolidated balance sheet within equity, but separate from the parent’s
equity; the amount of consolidated net income attributable to the parent and to
the noncontrolling interest be clearly identified and presented on the face of
the consolidated statement of operations; changes in a parent’s ownership
interest while the parent retains its controlling financial interest in its
subsidiary be accounted for consistently; when a subsidiary is deconsolidated,
any retained noncontrolling equity investment in the former subsidiary be
initially measured at fair value; and entities provide sufficient disclosures
that clearly identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners. The standard is
effective for fiscal years beginning on or after December 15,
2008. As summarized in the table below, the accompanying 2008
condensed consolidated financial statements have been revised to record the
impact of the adoption of the standard.
In May
2008, the FASB issued FASB a standard entitled “Accounting for Convertible Debt
Instruments That May be Settled in Cash Upon Conversion,” which requires
the issuer of certain convertible debt instruments that may be settled in cash
(or other assets) upon conversion to separately account for the liability (debt)
and equity (conversion option) components of the instruments in a manner that
reflects the issuer’s nonconvertible debt borrowing rate. This
standard requires the initial debt proceeds from the sale of a company’s
convertible debt instrument to be allocated between the liability component and
the equity component. The resulting debt discount will be amortized
over the period during which the debt is expected to be outstanding (i.e.,
through the first optional redemption dates) as additional non-cash interest
expense. The standard is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15,
2008. Accounting for the Company’s $225.0 million exchangeable bonds
(the “Bonds”) with a coupon rate of 3.625% due November 2025, which were issued
in the fourth quarter of 2005, was impacted by the standard. During
the fourth quarter of 2008, the Company repurchased $53.3 million of the Bonds,
and during the first quarter of 2009 the Company repurchased an additional $71.3
million of the Bonds. On
January 1, 2009, the Company retrospectively adopted the standard discussed
above for the Bonds. The Company estimated that the market interest
rate for the debt only portion of the Bonds as of the date of issuance was
5.75%, compared to the coupon rate of 3.625%. The Company computed
the estimated fair value of the debt portion of the Bonds as the present value
of the expected cash flows discounted at 5.75%. The difference
between the fair value of the debt portion of the Bonds and the carrying value
as previously reported was added to additional paid in capital as of the date of
issuance. The discount on the debt is amortized over the period from
issuance to the date of the first call option by the holders of the Bonds which
occurs in November 2010 resulting in non-cash interest expense in addition to
the interest expense calculated based on the coupon rate. This
resulted in non-cash interest charges of $0.5 million and $1.0 million for the
three months ended September 30, 2009 and 2008, respectively, and $1.6 million
and $3.0 million for the nine months ended September 30, 2009 and 2008,
respectively. The standard requires that the fair value of the debt
portion of any bonds that are retired early be estimated to calculate the gain
on retirement. The difference between the estimated fair value
of the debt portion of the Bonds and the standard carrying value of the debt
portion of the Bonds is recorded as gain on early retirement of debt
and additional paid in capital is reduced to reflect the remaining
portion of the total amount paid to retire the Bonds.
The
following is a summary of the impact to the December 31, 2008 consolidated
balance sheet and the three and nine months ended September 30, 2008
consolidated statement of operations from amounts previously reported to amounts
included in the accompanying condensed consolidated financial statements as a
result of the retrospective adoption of the standards discussed above (in
thousands except per share amounts):
In June
2009, the FASB issued a standard entitled, “Business Combinations” which
establishes principles and requirements for how the acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree; recognizes
and measures the goodwill acquired in a business combination or a gain from a
bargain purchase; and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. This standard is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. The
adoption of this standard on January 1, 2009 did not have any impact on the
Company’s consolidated financial position, results of operations or cash flows
as it relates only to business combinations for the Company that take place on
or after January 1, 2009. In June
2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation
No. 46(R)”, which amends existing standards to replace the
quantitative-based risks and rewards calculation for determining which
enterprise, if any, has a controlling financial interest in a variable interest
entity with an approach focused on identifying which enterprise has the power to
direct the activities of a variable interest entity that most significantly
impact the entity’s economic performance and (1) the obligation to absorb losses
of the entity or (2) the right to receive benefits from the entity. An approach
that is expected to be primarily qualitative will be more effective for
identifying which enterprise has a controlling financial interest in a variable
interest entity. This Statement has not been incorporated into the
FASB Accounting Standards Codification as of September 30, 2009. The
new standard shall be effective as of the beginning of each reporting
entity’s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and
annual reporting periods thereafter. Earlier application is prohibited.
Management is currently evaluating the impact this standard will have
on the Company’s condensed consolidated financial statements.
In May
2009, the FASB issued a standard entitled “Subsequent Events” which
defines subsequent events as events or transactions that occur after the balance
sheet date but before financial statements are issued or available to be issued.
Under the standard, the requirements for disclosing subsequent events remain
unchanged from the previous requirements. However, the standard contains an
additional requirement that companies must disclose the date through which
subsequent events have been evaluated and the rationale for selecting that
date. The Company has adopted the provisions of the
standard and has evaluated subsequent events for the period ended
September 30, 2009 through November 4, 2009, the date the financial statements
were issued. There were no events or transactions subsequent to
September 30, 2009 that required recognition or disclosure in the financial
statements.
(2) Significant
Transactions During the Third Quarter
(a) Dispositions
During
the third quarter, the Company sold Spring Lake, a 69-unit community located in
Seattle, Washington for $5.7 million and recognized a gain of $2.5
million.
(b)
Equity
During
the third quarter, the Company issued 1,130,800 shares of common stock at an
average price of $75.56 for $84.2 million, net of fees and commissions through
the Company’s Controlled Equity Offering Program.
During
the third quarter, the Company repurchased $81.9 million of its Series G
Cumulative Convertible Preferred Stock, at a $23.9 million discount to its
carrying value.
(c) Debt and
Financing Activities>
The
Company obtained a fixed rate mortgage loan secured by Huntington Breakers
totaling $40.5 million at a fixed rate of 5.4% which matures in October 2019,
during the third quarter. Additionally, the Company paid-off a $5.6
million mortgage loan secured by Mt. Sutro at a fixed rate of 7.7%.
(d)
Outperformance Plan
During
the third quarter, the Company elected to cancel the Outperformance Plan (the
“OPP”) for senior officers and non-employee directors and wrote-off $3.8 million
in unamortized costs related to the OPP. The costs were included in
impairment and other charges in the accompanying consolidated statement of
operations.
(e)
Land Impairment
The
Company wrote-off development costs totaling $6.7 million related to two land
parcels that will no longer be developed by the Company. The costs
were included in impairment and other charges in the accompanying consolidated
statement of operations. (3)
Co-investments
The
Company has joint venture investments in co-investments, which are accounted for
under the equity method. The joint ventures own, operate and develop
apartment communities. The following table details the Company's
co-investments (dollars in thousands):
During
2006, the Company made a contribution to a development with a joint venture
partner totaling $3.4 million, and over the past three years the Company made
additional contributions and capitalized costs to this joint venture totaling
$2.4 million for a total investment of $5.8 million. This joint
venture was to obtain entitlements and make option payments towards the purchase
of land parcels in Marina del Rey, California for a proposed development
project. During the first quarter of 2009, the Company wrote-off its
investment in the joint venture development project of $5.8 million, and the
write-off of these costs is included in other non-cash expenses in the
accompanying consolidated condensed statements of operations. The combined
summarized balance sheet and statements of operations for co-investments, which
are accounted for under the equity method, are as follows (dollars in
thousands).
In
January 2008, the Company received $7.5 million and recognized $6.3 million of
preferred interest in the joint venture which is included in equity income in
co-investments from the repayment of its investment in Mountain Vista
Apartments, LLC.
(4)
Notes and Other Receivables
Notes
receivable secured by real estate, and other receivables consist of the
following as of September 30, 2009 and December 31, 2008 (dollars in
thousands):
In
September 2007, the Company originated a loan to the owners of an apartment
community under development in Vancouver, Washington, with a maturity date of
February 2009. The proceeds from the loan refinanced the property and
provided funding for the completion of the 146-unit apartment
community. In July 2008, the Company ceased recording interest income
and issued a notice of monetary default to the borrower, and the borrower filed
for bankruptcy. During the fourth quarter of 2008, the Company
recorded a loan loss reserve in the amount of $0.7 million with an additional
reserve of $0.4 million recorded during the second quarter of 2009 on this
non-performing note receivable. The Company recorded an additional
$0.6 million loan loss reserve during the third quarter of 2009. In
October the property was sold through the bankruptcy trustee and the loan was
repaid at no additional loss to the Company.
In the
second quarter of 2009, the borrower on the loan secured by Emeryville
Marketplace, a mixed use commercial property located in Emeryville, California
made a principal payment of $0.5 million to pay down the loan to $6.8 million
and the Company extended the maturity of the loan until June 2010. In
the first quarter of 2009, the borrower on the bridge loan secured by 301 Ocean
Avenue, a 47-unit apartment community located in Santa Monica, California, made
a principal payment of $1.6 million to pay down the loan to $12.5 million and
the Company extended the maturity of the loan until December 2010.
(5)
Related Party Transactions
Management
and other fees from affiliates includes management, development and
redevelopment fees from Fund II of $1.0 million and $1.3 million for the three
months ended September 30, 2009 and 2008 respectively, and $3.4 million and $4.0
million for the nine months ended September 30, 2009 and 2008
respectively. As discussed in Note 3, in January 2008, the Company
received $7.5 million from an investment held in an affiliate of TMMC and
recognized $6.3 million of preferred income which is included in equity (loss)
income from co-investments. (6)
Segment Information
The
Company defines its reportable operating segments as the three geographical
regions in which its apartment communities are located: Southern California,
Northern California and Seattle Metro. Excluded from segment revenues
are properties classified in discontinued operations, management and other fees
from affiliates, and interest and other income. Non-segment revenues
and net operating income included in the following schedule also consist of
revenue generated from commercial properties which are primarily office
buildings. Other non-segment assets include co-investments, real
estate under development, cash and cash equivalents, marketable securities,
notes receivable, other assets and deferred charges. The revenues,
net operating income, and assets for each of the reportable operating segments
are summarized as follows for the three months ended September 30, 2009 and 2008
(dollars in thousands):
The
revenues, net operating income, and assets for each of the reportable operating
segments are summarized as follows for the nine months ended September 30, 2009
and 2008 (dollars in thousands):
(7) Net
Income Per Common Share
(Amounts
in thousands, except per share and unit data)
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