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Item 6. Selected Financial Data

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Item 6. Selected Financial Data

The following tables set forth summary financial and operating information for the Company and the Operating Partnership from January 1, 2009 through December 31, 2013.

Essex Property Trust, Inc. and Subsidiaries

Years Ended December 31,
20132012201120102009
($ in thousands, except per share amounts)
OPERATING DATA:
Rental and other property$602,003$526,696$460,660$400,841$396,498
Management and other fees from affiliates11,70011,4896,7804,5514,325
Income before discontinued operations$140,882$127,653$46,958$47,424$41,244
Income from discontinued operations31,17311,93710,5583,35812,495
Net income172,055139,59057,51650,78253,739
Net income available to common stockholders$150,811$119,812$40,368$33,764$82,200
Per share data:
Basic:
Income before discontinued operations available to common stockholders$3.26$3.10$0.94$1.03$2.59
Net income available to common stockholders$4.05$3.42$1.24$1.14$3.01
Weighted average common stock outstanding37,24935,03232,54229,66727,270
Diluted:
Income before discontinued operations available to common stockholders$3.25$3.09$0.94$1.03$2.51
Net income available to common stockholders$4.04$3.41$1.24$1.14$2.91
Weighted average common stock outstanding37,33535,12532,62929,73429,747
Cash dividend per common share$4.84$4.40$4.16$4.13$4.12
As of December 31,
20132012201120102009
($ in thousands)
BALANCE SHEET DATA:
Investment in rental properties (before accumulated depreciation)$5,443,757$5,033,672$4,313,064$3,964,561$3,412,930
Net investment in rental properties4,188,8713,952,1553,393,0383,189,0082,663,466
Real estate under development50,43066,85144,280217,531274,965
Total assets5,186,8394,847,2234,036,9643,732,8873,254,637
Total secured indebtedness1,404,0801,565,5991,745,8582,082,7451,832,549
Total unsecured indebtedness1,629,4441,253,084615,000176,00014,893
Cumulative convertible preferred stock4,3494,3494,3494,3494,349
Cumulative redeemable preferred stock73,75073,75073,75025,00025,000
Stockholders' equity1,884,6191,764,8041,437,5271,149,9461,053,096
As of and for the years ended December 31,
20132012201120102009
($ in thousands, except per share amounts)
OTHER DATA:
Funds from operations (FFO)(1):
Net income available to common stockholders$150,811$119,812$40,368$33,764$82,200
Adjustments:
Depreciation and amortization193,518170,686152,543129,711118,522
Gains not included in FFO, net of internal disposition costs(67,975)(60,842)(7,543)-(7,943)
Depreciation add back from unconsolidated co-invetsments and other, net23,37721,19414,8047,8937,607
Funds from operations$299,731$250,850$200,172$171,368$200,386
Non-core items:
Loss (gain) on early retirement of debt3005,0091,163-(4,750)
Acquisition and merger costs5,4452,2551,2311,250-
Gain on sale of marketable securities and note prepayment(2,519)(819)(4,956)(12,491)(1,014)
Co-investment promote income-(2,299)-(500)-
CEO retirement and non-recurring payroll costs---2,1274,358
Redemption of preferred stock--1,949-(49,952)
Impairment of development projects----12,428
Other items. net (2)(2,861)-(2,780)(959)32
Core funds from operations (Core FFO)$300,096$254,996$196,779$160,795$161,488
Weighted average number of shares outstanding, diluted (FFO)(3)39,50137,37834,86132,02829,747
Funds from operations per share - diluted$7.59$6.71$5.74$5.35$6.74
Core funds from operations per share - diluted$7.60$6.82$5.64$5.02$5.43
(1)FFO is a financial measure that is commonly used in the REIT industry. The Company presents funds from operations as a supplemental operating performance measure. FFO is not used by the Company, nor should it be considered to be, as an alternative to net earnings computed under GAAP as an indicator of the Company’s operating performance or as an alternative to cash from operating activities computed under GAAP as an indicator of the Company's ability to fund its cash needs.

FFO is not meant to represent a comprehensive system of financial reporting and does not present, nor does it intend to present, a complete picture of the Company's financial condition and operating performance. The Company believes that net earnings computed under GAAP remain the primary measure of performance and that FFO is only meaningful when it is used in conjunction with net earnings. The Company considers FFO and FFO excluding non-routine items (referred to as “Core FFO”) to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO provides investors with an additional basis to evaluate operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and its ability to pay dividends. Further, the Company believes that its consolidated financial statements, prepared in accordance with GAAP, provide the most meaningful picture of its financial condition and its operating performance.

In calculating FFO, the Company follows the definition for this measure published by the National Association of Real Estate Investment Trusts (“NAREIT”), which is a REIT trade association. The Company believes that, under the NAREIT FFO definition, the three most significant adjustments made to net income are (i) the exclusion of historical cost depreciation, (ii) the exclusion of gains and losses from the sale of previously depreciated properties and (iii) the exclusion of impairment losses on depreciated properties. Essex agrees that these three NAREIT adjustments are useful to investors for the following reasons:

(a)historical cost accounting for real estate assets in accordance with GAAP assumes, through depreciation charges, that the value of real estate assets diminishes predictably over time. NAREIT stated in its White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.” Consequently, NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time and depreciation charges required by GAAP do not reflect the underlying economic realities.
(b)REITs were created as a legal form of organization in order to encourage public ownership of real estate as an asset class through investment in firms that were in the business of long-term ownership and management of real estate. The exclusion, in NAREIT’s definition of FFO, of gains from the sales and impairment losses of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods.

Management has consistently applied the NAREIT definition of FFO to all periods presented. However, other REITs in calculating FFO may vary from the NAREIT definition for this measure, and thus their disclosure of FFO may not be comparable to the Company’s calculation.

(2)Other items, net are non-recurring in nature and include items such as gains on non-operating assets, tax related items and early redemption of preferred equity investments.
(3)Assumes conversion of all dilutive outstanding operating partnership interests in the Operating Partnership

Essex Portfolio, L.P. and Subsidiaries

Years Ended December 31,
20132012201120102009
($ in thousands, except per unit amounts)
OPERATING DATA:
Rental and other property$602,003$526,696$460,660$400,841$396,498
Management and other fees from affiliates11,70011,4896,7804,5514,325
Income before discontinued operations$140,882$127,653$46,958$47,424$41,244
Income from discontinued operations31,17311,93710,5583,35812,495
Net income172,055139,59057,51650,78253,739
Net income available to common unitholders$159,749$127,771$43,593$42,842$92,724
Per unit data:
Basic:
Income before discontinued operations available to common unitholders$3.27$3.11$0.95$1.04$2.49
Net income available to common unitholders$4.06$3.43$1.25$1.14$2.91
Weighted average common units outstanding39,38037,25234,77431,96129,717
Diluted:
Income before discontinued operations available to common unitholders$3.26$3.10$0.95$1.03$2.49
Net income available to common unitholders$4.05$3.42$1.25$1.14$2.91
Weighted average common units outstanding39,46737,34434,86132,02829,747
Cash distributions per common unit$4.84$4.40$4.16$4.13$4.12
As of December 31,
20132012201120102009
($ in thousands)
BALANCE SHEET DATA:
Investment in rental properties (before accumulated depreciation)$5,443,757$5,033,672$4,313,064$3,964,561$3,412,930
Net investment in rental properties4,188,8713,952,1553,393,0383,189,0082,663,466
Real estate under development50,43066,85144,280217,531274,965
Total assets5,186,8394,847,2234,036,9643,732,8873,254,637
Total secured indebtedness1,404,0801,565,5991,745,8582,082,7451,832,549
Total unsecured indebtedness1,629,4441,253,084615,000176,00014,893
Cumulative convertible preferred interest4,3494,3494,3494,3494,349
Cumulative redeemable preferred interest71,20971,20971,209104,412104,412
Partners' capital1,932,1081,811,4271,486,9141,284,5151,200,208

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