Essex Property sees rental income down in 2009

PALO ALTO, Calif. - Essex Property Trust Inc., a real estate investment trust that develops apartments communities in the West Coast, on Wednesday forecast 2009 funds from operations mostly below analysts' projections.

The company estimates its full-year funds from operations, or FFO, will range between $5.50 to $5.90 a share. On average, analysts polled by Thomson Reuters expect annual FFO of $5.89 a share, with the 15 estimates ranging between $5.52 and $6.25.

FFO, which adds such items as amortization and depreciation to net income, is considered a key measure of REIT strength.

Essex said it based its 2009 guidance on the assumption that the U.S. economy will slow, resulting in a decline in gross domestic product of 1.3 percent and the loss of 2 million payroll jobs.

The company expects its portfolio will see a rental rate decline of 1.8 percent, due principally to job losses. It also anticipates occupancy levels in each of its markets to range between 94 percent and 95 percent.

Essex projects it will need to spend between $1,100 and $1,400 per unit this year to extend the useful life of its apartment communities. The company also noted it expects to dispose of about $100 million in assets this year and to incur about $110 million in development costs on its balance sheet.

Essex projects it will spend about $30 million on redevelopment this year, costs which will be funded by its secured credit line.

Shares of Essex fell $1.34, or about 2.1 percent, to close at $61.74 on Wednesday.

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