Essex Property Trust

Essex Property Trust is one of the six real estate investment trusts comprising the REITs pool of investment for this site’s value investment fund. 

Bought Essex Property Trust

Essex Property Trust

On June 14, 2022, the Value Investment Fund purchased 77.7000 shares of Essex Property Trust at $256.40 per share. Adding the $1 per share transaction fee, a total of $20,000 was invested into this security.

In addition, the Fund sold a PUT option for 100 shares at $9.90 netting $8.80 per share. The strike price is $240 per share with an expiration date of October 21, 2022.

Essex Property Trust – Value Investment Fund Buy

Value Investment Fund

Recently, the Fund reevaluated Essex Property Trust Inc. and increased the company’s intrinsic value to $291 per share. In an article written in January of 2021, the Facilitator determined intrinsic value at $256 per share. In the course of one year, many market forces have elevated this intrinsic value higher. With real estate investment trusts (REITs), intrinsic value is strongly tied to fair market value of properties. At the end of 2020, the overall fair market value of the entire portfolio of apartments for Essex was estimated at net assets value (adjusted for closing costs, costs to sell, pay-off of associated debt and costs to eliminate book balance of financing outlays) of $19.14 Billion. This made each share worth approximately $283. During the last 16 months, the market value of real estate has jumped over 16%. Using a mere 12% adjustment to this portfolio, the modified net assets value now exceeds $21.8 Billion. This alone adds $36 per share in value. Utilizing net assets value by itself warrants an intrinsic value of $319 per share. And this assumes only a 12% increase in value over 16 months.

Value Investment Fund – Status on June 30, 2021

Value Investment Fund

The Club’s Value Investment Fund glided along during June 2021. The Fund grew a meager .4% driven by the sale of Essex Property Trust on June 18, 2021. Total actual gain during June was $582 as illustrated in the report below. During this time period, the Dow Jones Industrial Average decreased about one-tenth of a percent.

As stated multiple times throughout the lessons and tutorials, high quality stocks have less risk and thus, resist remarkably well when the market goes down or is stagnant and recover quickly upon market rebound. Furthermore, high quality stocks provide many opportunities to earn good rewards if properly purchased at less than intrinsic value and sold upon market price recovery. Here is the Value Investment Fund’s status report for the end of June 2021.

Sold Essex Property Trust – 74.07% Annual Return

Value Investment Fund

On June 18, 2021 at 2:56 PM, Essex’s share price dropped to $304 per share triggering a stop-loss order purchased a month earlier. This automatic sale of all 92.2638 shares netted $302 per share. The Value Investment Fund pays $1 per share for any transaction and also pays $1 per share for any option or market mechanism such as the stop-loss directive. Total adjusted sales revenue equals $27,863.67 ($302/Share X 92.2638 Shares). Basis in Essex Property Trust is $20,000 including the original purchase price plus the purchase transaction fee of $1 per share.

The Fund profited $7,863.67. The total holding period was 201 days. Thus, the actual return on the investment was 39.32%. The effective annual return equates to 71.4%.

Purchased 43.2994 Shares Essex Property Trust

Essex Property Trust

Today, the Value Investment Fund purchased a second tranche of Essex Property Trust. After calculating the intrinsic value of Essex Property Trust at $256, the REITs Pool allocated $10,000 for a second purchase of Essex once the price dipped below $230 per share. Today, 01/11/21 at 12:38 PM, the stock price dropped to $229.95.

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