Article Excerpt:
TWST: We would like to begin with a brief historical sketch of Essex Property and a picture of the things you are doing at the present time.Mr. Guericke: Essex Property Trust is a real estate investment trust or better known as a REIT. We acquire, manage, develop and redevelop apartment buildings in California, Washington, and Oregon. Essex has been operating with essentially the same core group of executives since 1971. We went public in June 1994 with a stock price of $19.50. At that time, Essex was about a $250 million company. Today, we are almost a $4 billion company, with a stock price north of $100. Our portfolio has grown to almost 27,000 units, or apartment homes, from about 4,410 units at the time of our IPO. To date, our portfolio concentration has been in highly desirable, supply-constrained markets along the West Coast. Our strategy has been to operate in markets that have significant supply constraints, above-average job growth, limited development of new housing supply and where the high price of for-sale housing makes rental housing a more viable option. Going forward, we expect to apply the same economic strategy to target supply-constrained markets primarily through acquisitions and development. We have built the company over the last 10 years primarily on acquisitions. Currently, acquisition yields within our West Coast markets have become very expensive, so we are anticipating that more of our new external growth will come from development. We have a strong development team that has been in place since our IPO. However, development activities have only accounted for approximately 20% of our external growth, whereas acquisitions have accounted for about 80%. We expect that in the coming years it will be more evenly split between acquisitions and development. Right now we see the most rental growth in the San Francisco Bay Area and the Seattle metropolitan area. Southern California, which is 50% of our portfolio, is still a very strong market. However, it has had several years of strong rental growth, it didn't get crushed by the dot-com implosion and remains a very vibrant real estate market. Therefore, we think that there are more opportunities in the San Francisco Bay Area and the Seattle metropolitan area where rents have been significantly depressed over the last five years.
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