AGM 2021

May 11, 2021

Good afternoon. This meeting will please come to order. Welcome to the 2021 Annual Meeting of Stockholders of Essex Property Trust Incorporated. Due to the continued impact of the COVID-nineteen pandemic and to support the health and well-being of our stockholders and employees and their families, we are hosting this meeting in a virtual only format with our stockholders participating via the web portal. I am George Marcus, Chairman of the Board and Directors of the company and I will act as Chairman of this meeting. I would like to introduce the other directors of the company who are present on the webcast. The following directors are joining us today virtually during the meeting. Keith Goerke, Maria Hawthorne, Amel Johnson, Mary Kacares, Irving Lyons, Thomas Robertson, Michael Shaw and Byron Skordelis. Also present at today's meeting will be the General Counsel for the firm, Anne Robertson, who will act as the Secretary of the meeting and Brandon Wilcox, prior to the accounting firm of KPMG Independent Registered Public Accountants to the company. Each of you has received a copy of the notice of the annual meeting and the availability of proxy materials for this meeting, which will be mailed on or about March 26, 2021. There are present and this meeting attending virtually or via proxy stockholders representing at least 45,000,000 shares of common stock of this company out of a total of approximately 65,000,000 shares of common stock outstanding and entitled to vote at this meeting. Therefore, a core of this present, at this time, I appoint Chris Melco, a representative of Broadridge to act as a spectrum of elections. First order of business is to describe the proposals properly before the meeting followed by voting of these proposals. All the proposals and the votes required for each proposal have been described in detail in the proxy statement. As explained in our proxy statement, our bylaws have advanced notice provisions for proposals intended to be made by stockholders. There are no stockholder proposals and therefore the proposals that I will discuss are the only business properly brought before this meeting. Our Board of Directors unanimously approved and recommend the adoption of the following proposals, which hereby present excuse me, hereby presented for a vote at this meeting. First is election of 9 directors of the company as described in our proxy statement. 2nd is the ratification of appointment of KPMG public accountants as the independent registered public account firm for the company for the year ending December 31, 2021. Advisory vote on the company's named executive officer compensation. If there are any questions concerning any of these proposals, please submit your questions through the web portal. The time for submitting questions is now closed. We will now move on to the booking. If there is anyone who has not submitted a proxy or wish to change his or her vote at any on any proposals, you may do so now by clicking the voting button on the web portal and following the instructions there. We will pause to permit anyone who desires to vote to do so on this web portal. The polls are now closed. The Secretary of the meeting will now report on the results of the voting. Thank you, Mr. Chairman. As secretary of the meeting is based on information given to me by the Inspector of Elections, I report that each of the nominees for to the Board of Directors, the ratification of KPMG as the company's independent registered public accounting firm and the advisory vote on the company's named executive officer compensation received sufficient form of to be approved. Thank you. I now declare that the 2021 Annual Meeting of Addicts Property Trust is hereby formally adjourned. I will now turn the remainder of the meeting over to our CEO of Addicts Property Trust, Michael Schall, who will give a brief presentation. Michael? Thank you, George. As we have customarily done, we have a brief presentation to share with you. And maybe as a quick introduction, I want to note that 2021 is Essex's 27th year as a public company and it is also the 50th year since George Marcus founded the company in 1971. George's vision early on, I'm not that old. Georgia's vision early on was to identify a competitive advantage by using housing supply demand research, which is a discipline that we follow and actually is at the core of our strategy many years later today. So that has worked out very well, I think, for everyone involved. As a reminder, I want to note that we will be making some forward looking statements today, which involve risk and uncertainty, and we direct you to our recent SEC filings, including our report on KVK as updated by other recent filings, which are available from the SEC website. So turning to 2020, I would say that 2020 was a year that was unlike any other in my 35 years here at Essex. We had a very strong Q1 and then the world very abruptly changed as a result of the pandemic. Throughout the West Coast, there were shelter in place orders that were made put in effect and that effectively shut down many of the cities and led to extraordinary job losses throughout the West Coast and the nation. And these job losses especially affected certain industries, certainly travel and entertainment, hospitality, motion picture industry in Los Angeles. And as a result of those components, had an especially difficult impact on the city centers and while the suburban areas in our portfolio performed much better. As a result, we had much higher delinquencies than we've ever had in our many years as a public company and even before that, which are attributable to the eviction prohibition laws. And these forces led to core FFO declining 4.2% in 2020. And the chart in the middle of the slide goes through the revenues by major geography. In essence, that was based on 3.9% decline in same store revenue. Virtually all of that decline was attributable to higher delinquency and higher concessions on the same store pool. When the pandemic hit, we responded very quickly and our priorities changed as a company to focus on the safety of employees and residents, different operating metrics, I. E. Maintaining high occupancy and try to maintain as high a coupon rent as we could and then focus on the balance sheet liquidity and cash flow from that point on. And so next page, accomplishments overall, I think we came through the pandemic, very well positioned for the recovery. And again, we were successful in maintaining high occupancy, which was 96% for the year. The balance sheet was as strong as it has ever been and it made stronger actually after this pandemic. We refinanced a number of our bonds outstanding bond issuances and we extended our maturities. We included a 30 year bond that was priced at 2.67%. We lowered our average interest rate to 3.2% for all of our debt. And we have very little variable rate debt and so our floating rate exposure is very limited. And we also had a number of accomplishments on the investment front, including the sale of 4 properties in 2020 for $343,000,000 essentially to match fund all of our investment needs for the year and to finish out our development pipeline, funding our development pipeline, increased amount of structured finance investments both for pro equity and mezzanine debt. And in addition to that, we repurchased about $269,000,000 of common stock at $2.25 a share. So we thought we used the proceeds of the sales in a very productive manner during the year. We also focus much more time these days on corporate social responsibility and so I wanted to outline a couple of those accomplishments. A year ago, we published our 2nd annual CSR, Corporate Social Responsibility Report. And last week, we published our 3rd report, which both of which are available on our website. The results were recognized in the results that we have in CSR were recognized in a variety of awards, including NAREIT's bronze award for diversity and inclusion. We're proud of the progress that we made in a number of categories. Certainly within the social area, for example, we formed a Woman at Essex Affinity Group. We achieved a 0% pay gap for men and women at Essex, and we adopted a $15 minimum wage for all of our workers. So had good progress given the dramatic challenges posed by COVID-nineteen throughout the year. Looking forward to 2021, operationally, we hit the bottom, we believe is the bottom in Q4 of 2020 and in the Q1 of 2021. And rents are starting to grow once more. And so we're looking forward to a full recovery of the company beginning in 2021 and over the next several years. Definitely helped by vaccine rollouts and cities reopening as they're an essential part of the recovery. We need to recover the jobs that were lost, extraordinary number of jobs that were lost during the pandemic. And we think we're on track to do so. Our guidance for 2021 again reflects this. The first half of the year will be we will have negative rent growth and then the second half of the year will turn positive is our expectation. And overall, we expect to hit gross revenues averaging about minus 2.5%. And again, our results should improve every quarter from this point forward. And then finally, under the other key assumptions, we are also beginning to see more apartment transactions in the market. And so we think that that will lead to resumption of external growth of the company. And so we have acquisition and disposition goals of $300,000,000 to $500,000,000 in 2021. And we expect to continue to fund our remaining development pipeline, which require about $60,000,000 Again, overall, the balance sheet is in great shape. And by the end of the year, we expect to be very much back in the deal making mode going forward. The success of the business model and the team ultimately comes down to our results And I wanted to share with you 3 key metrics used by our Board of Directors, our leadership to gauge our performance. And so in each of these three key categories, we outperform the peer group fairly handily. So one is the 10 year compounded annual growth rate of same store NOI, which is 5.3% for Essex and the CAGR of core FFO growth, which is 9.8% for Essex and the CAGR of dividend growth, which is 7.8% for the company. So in each of these cases, we handily beat the peer group. And which leads to our final page of the presentation, which is the overall shareholder returns since the IPO back in 1994. So the shareholder returns is a compounded annual growth rate of 15% over 27 years as a public company. We've grown our dividend each year. And currently, our dividend is about 4 times the dividend that we had at the IPO. And the consistency and extraordinary performance of of dividends at the company has made us an S and G 500 Dividend Aristocrat. Shareholders that bought the company at the IPO now receive the dividend about 42% annual return on the $19.50 IPO price. And so all of that is pretty outstanding and we're very excited about these results obviously. So that concludes our presentation. We want to thank our shareholders for joining us and have a good day. Goodbye.