• Core FFO per Share: Exceeded the midpoint of guidance range by $0.05.
• Acquisitions: $305 million in Northern California, funded by dispositions in Southern California.
• Blended Net Effective Rent Growth: 2.8% for the same property portfolio.
• Delinquency Rate: Improved to 1.3% in Los Angeles, down from 3.9% last year.
• Turnover Rate: Low turnover rate of 35%.
• New Lease Rates: Positive in all major regions; Northern California at 1.5%, Seattle at 1.3%, Southern California at 0.2%.
• Same Property Revenue Growth: 3.4% year-over-year, 40 basis points ahead of plan.
• Transaction Volume: $2.5 billion in the first quarter with cap rates in the mid- to high 4% range.
• Preferred Equity Redemptions: $27 million received year-to-date, with $125 million expected in the third and fourth quarters.
• Debt Refinancing: Majority of 2025 maturities refinanced with an unsecured bond offering in February.
• Available Liquidity: Over $1 billion.

• Warning! GuruFocus has detected 10 Warning Signs with ESS.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Essex Property Trust Inc (NYSE:ESS) reported a healthy first quarter with core FFO per share exceeding the midpoint of their guidance range.
• The company successfully executed $305 million in acquisitions in Northern California, funded by dispositions in Southern California, optimizing their portfolio for higher rent growth markets.
• Delinquency rates improved significantly, particularly in Los Angeles, contributing to better-than-expected financial performance.
• The company maintained a notably low turnover rate of 35%, while achieving positive new lease rate growth and stable occupancy levels.
• Essex Property Trust Inc (NYSE:ESS) has a strong balance sheet with minimal refinancing needs in 2025 and over $1 billion in available liquidity, positioning them well for future opportunities.

Negative Points

• Macroeconomic uncertainty, including unclear US and global trade policies, has led Essex Property Trust Inc (NYSE:ESS) to refrain from revising their guidance upward despite strong performance.
• Southern California's new lease rates lagged behind other regions, with only a 20 basis point increase, reflecting ongoing challenges in that market.
• The company faces heightened economic uncertainty, which has led them to take a cautious approach in making any adjustments to their forecast.
• Oakland's market remains challenging due to elevated supply, although there are signs of incremental improvement.
• The tech sector's job growth, a significant factor for Essex Property Trust Inc (NYSE:ESS), remains uncertain, although recent data shows steady job openings.

Q & A Highlights

Q: Can you discuss the confidence level in achieving the original guidance for blended rate growth in the second half of the year? A: Angela Kleiman, President and CEO, explained that the original assumption included a slight increase in the second half, and the relationship should remain intact. The first quarter outperformed, and the guidance was not revised, so the second quarter's blended lease rate growth appears more incremental.

Q: How is the tech sector impacting your portfolio, given concerns about job growth? A: Angela Kleiman noted that the top 20 tech companies' job openings have remained steady and are incrementally increasing each month, indicating potential hiring. There is no sign of softness, which suggests stability in the tech sector's impact on their portfolio.

Q: What is your occupancy strategy for the second quarter, considering the current environment? A: Angela Kleiman stated that the occupancy strategy remains consistent with their approach as they enter the peak leasing season. They are pushing occupancy in Northern California, transitioning in Seattle due to supply, and focusing on occupancy in Southern California, which peaks later.

Q: Can you provide insights into the blended net effective rent growth assumption for the second quarter? A: Angela Kleiman mentioned that the second quarter blended lease rate guide of 3% is consistent with their original plan. The first quarter outperformed, and they have not changed their guidance. New lease rates in April are consistent with the plan.

Q: How do you view the potential impact of California's CEQA reform on development? A: Angela Kleiman expressed optimism about the direction of CEQA reform, noting that regulation does not solve the housing crisis and often worsens it. They are pleased with California's movement towards a better environment but acknowledge it will take time.

Q: What are your thoughts on the West Coast multifamily fundamentals compared to other markets? A: Angela Kleiman highlighted that the West Coast has lower downside risk due to limited supply, which means less reliance on broad economic performance. The fundamentals are strong, and there is potential upside with companies like Google changing remote work policies.

Q: How is the transaction market, and should we expect more trades from Southern to Northern California? A: Rylan Burns, SVP of Investment Strategy, stated they are pleased with first-quarter transactions and will continue to pursue opportunities. They are focused on long-term FFO accretion and will consider trades that make sense.

Q: What is the outlook for Oakland, and can it become a positive contributor? A: Angela Kleiman noted that Oakland is showing improvement, with 75% of supply delivering in the first half. They expect it to revert to a more normalized market dynamic by mid-year, providing a positive outlook.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.