Essex Property Trust (ESS) 5 Feb 252024 Q4 Earnings call transcript

Company Profile

Participants

Angela Kleiman	executive
Barb Pak	executive
Nicholas Yulico	analyst
Eric Wolfe	analyst
Austin Wurschmidt	analyst
Steve Sakwa	analyst
Jeffrey Spector	analyst
Rylan Burns	executive
James Feldman	analyst
Brad Heffern	analyst
Adam Kramer	analyst
Alexander Goldfarb	analyst
Haendel St. Juste	analyst
John Kim	analyst
Wesley Golladay	analyst
Richard Hightower	analyst
Julien Blouin	analyst
Michael Goldsmith	analyst
Richard Anderson	analyst
Omotayo Okusanya	analyst
Alex Kalmus	analyst

Call transcript

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Operator

Good day, and welcome to Essex Property Trust Fourth Quarter 2024 Earnings Call.

As a reminder, today's call -- conference is being recorded. Statements made on this conference call regarding expected operating results and other future events are forward-looking statements that involve risks and uncertainties.

Forward-looking statements are made based on current expectations, assumptions and beliefs as well as information available to the company at this time.

could results factors from differ of anticipated. those number cause to actual materially A these be risks company's about information Further can the filings found SEC. with the on introduce It host, pleasure now to is Ms. my your and Chief for Trust. Angela Kleiman, Executive President Essex Officer Property Thank you, Ms. may begin. Kleiman, you

Angela Kleiman

you for Essex's Fourth Thank Q&A. Pak call. Quarter Rylan and joining prepared with follow remarks for Burns morning. Earnings Barb Good will is here

tragic want wildfires begin, Before Los affected of to I express behalf company, those our on we by entire the in Angeles. to condolences the

While did goes incur those loss, to Angeles several transition any the we Los helping our the policies portfolio. as our proactively into not properties within my new to ease Essex gratitude team displaced housing adopted for

cover XXXX and fourth our full As our investment on for year results, for XXXX by will quarter our an outlook update market. the earnings call I followed and today,

to pleased of are X.X% growth growth revenue FFO of We original core end exceeding year and achieve high our both of X.X%, same-property the guidance.

Our delinquency curve strong patterns in affordability typical we rent result attractive a including first demand, the hard-working with combined and improving at to experienced of office several by With return years. this migration our seasonal associates. backdrop, performance time for resolution was the

the Additionally, market XX properties yields. mode, we at successfully company acquiring shifted above growth into and consolidating

As for operations highlights, Fourth generally consistent quarter expectations. were with results

with XX concessions half points to demand In blended of lifting to XX.X% on occupancy growth points averaged Clara quarter. while week than picked portfolio one Santa and rate by concessions basis growth. X.X% the for basis XX were portfolio and plan, County land lease up less more a week rate On line fourth in operating with counties blended average. granular in January, our led growth, same-store a X.X% the improved and achieved perspective, LA We County blended and [indiscernible] the Orange rate

improving overall, in we is convert hires case driver resulting the growth. to Steady home Turning to proceedings GDP ownership moderate and demand of is detailed stock lagging XX growth Consensus U.S. growth anticipate basis total forecast better technology is on XXXX. Coast but job a the is into with to job outperform the The had fundamentals healthy to growth our of in Job relative housing affordability the S-XX. level. remain new positioned as job of as overall and forecasted in West in outlook economic supply rent with XXXX to sector after only outlook this combined forecasted U.S. our XXXX, low at of level for Page points market base key attractive deliveries growth. leads X% to well

Seattle projected to and X%. San are approximately the portfolio lead Jose at

as mainly and to the of delinquency range uncertainty our recovery. end far this of policy the As attributed guidance is low outcomes, of timing

for our for optimism cycle. precedent, end postings based supported of job grow phase and innovation the to Our still on past guidance that a high runway is have the fundamentals by of solid this tech

be focused particularly It Coast demonstrate expansion which regions. headquarter new the West will in that of announcements notable intention is economy, majority office hirings locations, northern recent the favors the that the

job Over supply Coast continue U.S. combined West growth. wealth the driven to a to with centers the we growth markets innovation, with outperform path limited of term, long apartment average of see the creation better for by and level

in West level meaningful market. average. experienced reaching Coast Lastly, pre-COVID uptick to volume, close a the XXXX, an In investment a the

at range. eager properties pool high rates remained the properties of the increased remains mid West fourth there and to capital a to high-quality quarter interest deep in around quarter, Coast X% the in Although cap consistent acquire on fourth rates for

our expect acquiring capital. several XXXX, efficiently. operating be property acquisition these by collections we yield consolidating proximity In we to more enhance by optimizing joint where its significant generating in successfully cost In XXXX, in and efforts, communities to can X Essex of was acquirers ventures on net accretion close the opportunistic our while day communities again,

and per creative being share drive to on our remains and shareholders. for NAV opportunistic growth FFO focus Our

Barb. I'll turn call that, With the over to

Barb Pak

Thanks, Angela. assumptions results, on followed discuss guidance, our balance by our to Today, XXXX will quarter comments I fourth the sheet. key

We our our from are were driven which with our of entities. primarily higher pleased ahead fourth venture income quarter slightly results, joint expectations by

which we improved cash basis. of to rent saw in basis relates points the during it a same-property continued scheduled operations, on to As reduction a delinquency XX quarter,

XX% bad the For X our substantial made by year delinquency over from reducing front, debt year, we ago. the progress on

the are growth position resulted revenue of this in pleased such, during X.X% Without balance receivable we basis. to remaining a X.X% the be have year-over-year adjustment, a in revenue on for been would same-property eliminate As accounts which to the growth fully noncash quarter. quarter,

are Continuing are supplemental. growth West the outlook. to hiring low Page to revenues our outlined industries, X%. grow leads blended of stable to at increased Turning drivers of key The Same-property for on and Angela's XXXX comments, economic growth of S-XX.X conditions, key forecasted our among the Coast supply X% on for this rent midpoint. with expectations by forecast

demand year In and the the second increased and accelerates the terms of blended for year of the in rent the hiring cadence, housing. expect first improve half be we full half to midpoint into below translates growth as in

Our in basis XX the to and anticipate higher guidance contribution out combined XX components, occupancy remaining Rounding as from improvement returning delinquency progress we continue to run points basis long-term we points other income. a rate. assumes that make

from a The growth in December this outcome past factor two at driving prior expenses. our renewed Moving insurance years. property a midpoint, our premium saw reduction compared significant property is expense. year. to the We small to lower insurance operating We biggest same forecast experienced X.XX% as and the in improvement what we've expense the

pressures. controllable Putting midpoint. the seek to growth wage than X.X% offset it as X% ways growth NOI less to expected continue increase efficiencies together, are we forecasting operating our same-property all expenses, at Regarding to we enhance of is to

per represent to headwind core increase equates FFO, factors, growth. midpoint of our driven $XX.XX year-over-year X% is which two growth. around to by The X.X% As modest combined

interest first expense, to by in the unsecured $XXX million bonds. refinance The of higher driven relates primarily

Our half guidance of this the all-in given current is to in And meaningfully rate higher environment, the first we rate year. bonds. maturing the be the refinance expected on assumes rate the the interest debt than X.X%

income in The factor finance expected lower second structured and is those redemptions in of a XXXX as XXXX. result

the approximately occur Our midpoint, in $XXX redemptions guidance mid-year. to is at which by XX% assumes expected of million

FFO X% shareholders term. book will our we and X%. around and income of expected XXXX, portion total, core for to finance As reinvest structured proceeds In offset expect result target communicated, growth into long our a acquisitions, better this to NAV which core new previously the the the our in over represent range of FFO is with X% to consistent in of

our we apartment to acquire in communities. The assumes of billion Turning investments. guidance $X new midpoint

be will allocation. on the it a and our funding, equity with cost the for leverage-neutral source utilizing executed As basis, available of dependent time conditions, consistent on at of capital, attractive and our market capital disciplined record capital most track

the to is and metrics for back Concluding billion balance strong, available and the sources turn well of company I with positioned. credit and the now sheet ample $X with operator questions. call balance will The liquidity the over capital, sheet. in remained

Operator

[Operator Instructions]

question Scotiabank. first Our from is Nick Yulico with

Nicholas Yulico

I regulatory the that's is L.A. sort in you for of growth be clear wanted L.A. And end specifically? what that. impact, and also if range provide some said guidance that Angela, I low could same-store guidance assuming revenue I'm in you potential to just on believe the assumed assumes

Angela Kleiman

the Legislation outcome. is question. little your for at point. an Yes. thanks this a It's And to unknown early predict factor too

as our guidance, a And have it guidance, that's we didn't so relates range. factor that why component our but we into

we in aware eviction more of L.A. So moratorium is enacted. freeze currently, considered proposal. a and What a downside if gets are nature. is contemplated being something rent in That's extreme there's

already in more an path deters an housing area more that is just concerned, all -- eviction and shortage more as is is a asset extreme And bad is providers L.A. hoping in what affordable L.A. we that investments during only produce that approach because what understand it and for and best policy eviction sensible the that housing the because housing punitive far for to a has legislatures know the an homes. moratorium are housing as to was production in unlike COVID to we moratorium in

to And conversation that so better visibility working organization that closely get ongoing, on at is some point. our with and we are

the to rent we as is increases end and pre-emergency rent triggers which so once for the to far already As Governor nothing place, limit related and be extreme hoping passed above scenario, of more declared that California we're fires an the reason a that's what state the the freeze protection that's of the Newsom the to XX% is since emergency again, to anti-gouging law the to there's And will impact downside support, in levels. existing range. also lower concerned, that related

Nicholas Yulico

get helpful. Is of L.A. it the in terms this for That's what's for year? growth same-store the Okay. revenue assumed to possible specific just

Barb Pak

Yes, it's Barb.

in So for from that it are we XXXX. L.A., will we have where improve assumed

improves of supplemental, challenged modest and in to And level low can occupancy at stabilized XX X.X%. very our occupancy we you 'XX in is a X%. that As was see at growth that were we with rent and think negative L.A. growth. about rent

that starts from of been assumed from our what's some in recover in XXXX. occurred that's had noise numbers. the we No impact It So in. the forecasted has just wildfires market eviction baked was the to

Operator

Our with next Citibank. Eric Wolfe question is from

Eric Wolfe

about the of last be market part why higher year. it be given trying last how seeing? trying you you up your I'm As I with understand growth lower X% renewal guidance, did a would to think growth. through estimate rate this year I'm it weaker why just and for the you've wouldn't an And just to But you expectation X.X% been than came understand bit turnover low year. with rent gave

Angela Kleiman

approach to be would here. our And been and expect what you Angela is, means the rents with our time, to renewal over generally question. a And it's appropriate has market that market rates rates. It's Eric, renewal converge. good essentially

be quite revenues focus lumpy than why on timing will the continue -- individual And growth lower. a renewal net-net X% be bit market rates our which But a we in concessionary be rather even environment year-to-year. rent could was Now the on from is experienced been has depending saw to maximizing that lumpy XXXX though lease a it of terms, renewal side, these renewal the and can year-over-year rates. and is you

Eric Wolfe

half and year? the then from look a you know sort you gives don't demand the you of you expect half, better what second but for of Got see first confidence it. you want the conviction what give to the And you hiring can you'll be back half half I that if expect perspective. in that the at just mentioned -- sort second of that Obviously, you blended to the that trends? curious that but incremental you'll that increased gives see what listings,

Angela Kleiman

Yes, it's demand two really both supply. a It's and factors. function of

half And X, anticipating X so we're to the that the the say a say, so as X.XX I'll low more ] cover midpoint as there. from Xs, first far half perspective, and in I a high second Xs, straightforward, so supply to be around And think the that above the around in [ be cadence, that's first.

half the to We first heavier. delivery are anticipating be that

at So first look when half. is so supply XX% our supply or coming cadence, the of about we in the

the to that have been that, far as especially takes the assume the if just companies in And seeing gradually half job second we the have also power. footage number have steady, in Bay X,XXX our you and on square growth, as seeing postings leases that to impact Area, new a of that So would we're hire. from will job happen actual And time increasing signed, meaningful expansion. is of And imply take around somewhere but office what it course, because actually that, the just we're been taken pricing headcounts. the

place. the takes quarter Well, all not to time. in put again, time and to because and the recruit And going once happen certainly, of the at to possible it all people same that's happen first for us most it's not interview where in happened that

half why indicators, as leading is from our course, and coming office the that we're activities. so the is condition leasing the assuming openings and And of second course, of job such

Operator

Capital KeyBanc next with Our question Austin is from Wurschmidt Markets.

Austin Wurschmidt

rent same-store you or the half revenue into you the X.X% Angela, the half softer? rate know I of you second benefit growth little new reasons from expect being peak digging guess, the there many term of, guess, to a don't blends have But we your and lease the ramp long I at the growth kind market. how normal cited. curious, into lower assumed more the kind I much market units be one season mentioned should in of a Barb leasing assumption, year another year coming guidance, delinquent for if of where as guess And a than gradual just or I shoulder kind back is then long-term of will growth also midpoint periods any,

there's that in if any wondering number. kind Just concession benefit of burn-off

Angela Kleiman

Austin, to expect that's We curve do a question. leasing continue the good normalize. to

in first year. a So several years we in normal XXXX, the leasing saw time it's where

what expecting so we're in it And will that that XXXX, continue.

L.A. Alameda haven't market We lot as our forecast, than our rent else far in and a it provide happened is anything that's to created last disruption that but noise. slightly that. actual a will of really is look what at economy that really concerned, by if the And delinquency lower market year as was you seen our rent, driven meaningful

in, And curve more that, is factor so that are the behind that's market you steady. rent much now assuming and we once us

Austin Wurschmidt

That's helpful. quarter, FFO first in fourth on kind you bridge And did result you [ XQ do of have that some the of you ] in blended to the just quarter assumes remove growth. dips, reacceleration guidance. yet the X.XX charge quarter rate then touching After the the guidance $X.XX fourth that, in core from noncash the

You the in versus occupancy fourth cited you pickup quarter. were January where

that what's there. core decrease sequential of I driving if just items So there's to FFO. kind any I'm guess, wondering highlight in

Barb Pak

Yes, Barb. Austin, this is

there's OpEx. It's on two really factors. timing So really

then in big seeing So is other the line driver assumptions spend. higher first as we fourth we're interest more higher sequentially bit between expense other guidance. balance the little And quarter have a OpEx the the and and quarter, various a in

FFO. So key core that's on really drivers the sequential in two the change

Operator

with is from Sakwa ISI. next Evercore Our question Steve

Steve Sakwa

and are there's something some power pricing just I a relates I the as blended if the just of of have more to whether more I and new back surprised guess many and I really year renewal. your there? renewal. I'm between and going And just spread into number was wanted narrowness leases there's much between and a I it guess to of new that guess, come delta new peers between at turning kind just the wider, on little renewals the these this wondering comps those lack the to or renewals of of two.

Angela Kleiman

for market is one good related to a that's rates because another question think operating close causing from And is there's been the focusing is possible. and to our the us, No, we're And here. some have of variation time, Angela I more what to sending what it's these Steve, negotiating. to company renewal on as we really strategy. bring in as ahead

So and maximize occupancy, renewals because to we then rates and it's new our not And the all price that exact. optimal ultimately, appropriately benefit be going will if ultimately, run so an can we lease to how relates revenues.

to difference. running is is much renewal where And be would of spread and that's were FX, would really or what the that to the where in course, all but there's spread of an factors for it, which range wider. spread subject -- in probably the going an environment accelerating, I and and is is the been means spread other how market spread new growth is understand we're signed, that conditions. what to -- like moderate market that the us be rent But be. environment timing concessions hard growth, there's makes really spreads prolonged exactly pinpoint so driving leases of But for narrower, that lease And company

Steve Sakwa

growing this then And in connectivity some guys doing income XX, I for know number the XX, that basis XX that XX like just points. your is more of for are a other points. only basis more peers Wi-Fi, Again, you of Okay. follow-up. is

and there for XX something income? points. understand you Or not kind So have is maybe holding kind basis out, on taken you back differently? that to that trying that's other same the this something that Are roll coming of to steps Just you have guys of you? they doing

Barb Pak

so Barb. Steve, this is Yes.

So factors of that here. at play there's couple are a

fees. So talked outsized kind that level. a 'XX last outsized in we that, we call. normalized in we some And think, what of to on installation XXXX, about we lease moderates And consider would had our more

little pay to a on few benefit And we're the factor like is, in to and highlighting second we time it's growth we And them that's will other things. to vet out. And really We're make going we some going got rolled not So sure we 'XX. a them roll need to We if then income roll muting off. the in we're 'XX. the sure full out bit side. initiatives, now, out 'XX, benefit right

kind piloting a on now few different right we're so phase that And of in initiatives.

what's this year. that XX leading that's basis to So points growth

Operator

Spector from of question next Our with is Jeff Bank America.

Jeffrey Spector

Great.

in high past cap that to the terms remarks, talk about well that company mode. do if is can question, you've talking in acquire of just I as bit again, year, could Xs again, the been impetus little expectations. into mentioned you First you plan guess, you know really, a rates your you are in mid- I mentioned the Angela, acquisitions, about opening the dive maybe more, how just as growth that to you in but IRR --

Angela Kleiman

good no, question. Jeff,

Rylan. some turn On then it to high-level strategy the just I'll over -- and cover

stock As generating as course, far price of isn't as in accretion, environment our attractive. an where

expecting were the and see to would we've of portfolio. rest if is heavily where northern sell the of of the you've acquired that in sell relative XXXX the seen obviously, We -- the growth pretty because of us growth But you outperformance have accretion, But that in assets, generate will the company. so done we offsets and in If growth. we ways. terms it benefit we do region, it in can the other portfolio, what the seen

XXXX-built value. a million we $XXX the same at time, an At property sold attractive

So And to see some opportunities. continue venture in to Rylan, ultimately, do talk from a in us addition want and accretive. dispositions. that's have you'll on have we funding multiple to -- be joint as about way cash and you transact sources operations to other course, aware, you're of going We, hand returns stuff?

Rylan Burns

Jeff, it's here. Rylan

market participants, high we in buying think high-quality cap Xs properties. mid- well-located, mentioned, the as for rates I to

we think underwriting an is I better to do and IRR than around today expectation a buyer that. unlevered X are obviously trying marginal

Jeffrey Spector

that that Can January. weaker pickup Was And follow-up there it that normal? than January? was a in see you is then pickup Was it about my stronger normal mentioned you historical in talk you context? a than in normal,

Angela Kleiman

expectations. Yes, our Jeff. consistent This with is

And so gradually it's typical, strength the was And which improved Northern what is expected finally well. when rates, because it occupancy new pickup just in generally also all January starting. was we look at in a lease that from as we California, had

all so out planned. what we January on exactly is And fronts, playing as had

Operator

next is Our Fargo. question Feldman with from Jamie Wells

James Feldman

Great.

COVID, So your we've some suburban, finer urban given theme suburban has your heavily seen you portfolio and portfolios? 'XX talk expect performed the more tilts on submarkets. on in to point in can suburban since We're growth maybe wondering views put your if of versus urban of through better urban it, in which you same a challenges outperforming the rent

Angela Kleiman

-- and a thoughtful that's it's a Jamie, one. good question

reason. are to where concerned, all particular portfolio, it companies located. a suburban a outperform portfolio favor far our suburban As time, location have time our the allocation major for specific short as the might we is area Yes, But term. from for

Google or in East is View have the is the in in Apple Mountain Midwest, in and unlike Menlo Coast So Park. Meta Cupertino, even you

the these major not so are in And hubs downtowns.

But I getting still terms to the is we more the of is challenging think have so lives. the reason needs to addressed. key are in their favored addition that, be homeless And And hopefully downtowns better. why the suburban crimes that There's issues of quality in locations. a

it's expect think not long And that, centers just the but areas outperform -- should for we rebound, they those done not I do term. to a suburban the so because so urban yes, over have do the

James Feldman

versus a second rent the urban your I about versus how rent your quantify you've in your suburban you outlook? 'XX I first your -- can would you half know growth mean lot talked growth the half. compare in So

Angela Kleiman

front in it's of to detail differently. [indiscernible] do -- we are outperform the going expecting the We to that continue have me. don't But to I urban. suburban vary

than Francisco more be Downhill So is going because to example, San for different Downhill supply. very Downhill, L.A. has L.A.

spread. so don't have exact And I that

James Feldman

like maybe growth with leasing the had you cost-cutting demand just that business in guys baking I guys all we've then Area. outlook the into for just of my But seems expected a your I'm change Bay impact major -- industry expectations outlook? I in seen are think how your did DeepSeek. And [indiscernible] rent How for mode Area, on for or Okay. you a that pickup and hiccup commented the be will It AI back seen the the in did at follow-up, office that? the half some mean, to curious, your in year? Bay you you've some AI

Angela Kleiman

It's DeepSeek leases impact dominated the Yes. AI. as it's The -- company. been the data the materially business. expect a companies we not at all, when to Snowflake signed, -- all don't of And by look that like we first now have

We have fintech. some

We software some companies. have

well need DeepSeek, said, companies far sector. and So end need. as competition spur top what end is users create what more do still pretty a and will the and as it more is that concerned, ultimately, there think provide innovation for this it's investments of that these the products disconnect And in to And DeepSeek you But they diversed. tools and users. between on in we come

robust can what remain as as far And so will business that see. we

Operator

Our next RBC Capital Brad Heffern is from question with Markets.

Brad Heffern

how immigration uncertainty of of about visas. comes H-XB lot political in could you potential talk would shifts of much and great it a about impact also how talk can the demand thinking if about be but from you're policy your Obviously, you right now,

Angela Kleiman

an how that's Their we far communicated is see. of one can change from as illegal immigration. been unfortunately, because as can stance. from immigration But The what terms administration the to hour their of it the focus in administration has an it, interesting question hour pretty been has part steady

impact such portfolio housing since have especially that want heard of chronic don't our shortage And the comments brightest. than as And greater meaningful we we've the so we I think of a expect at level have anecdotally, average. best a the and national we on a all will

And in and the the so to H-XB pro administration visa a is students gather, path foreign stay country. wants for we from actually college what to provide

as in business the tenants concerned portion be is a we up they to far to double and our have from past, they do As small tend of transient visa, more tend H-XB more.

once during they so And Obama administration, we the when early see portfolio. exited didn't on again, any impact our to

Brad Heffern

Got the Okay. And core Barb. then S-XX.X. for on it. maybe walk XXXX looking FFO I'm at

the some You than have large. have potentially maybe a you nonsame-property from go properties same the wondering but I the from larger offset so think that? growth bar, why just nonsame NOI contribution Can you interest through by it's just being property.

Barb Pak

the we there this consolidated that several takeaway is key acquisitions others. and did and then that The we JV we Yes. properties, out year, bought

it. So it's big the contribution. of really It's the component that -- it's

happy go financials movement from and -- So unconsolidated details with what's there's driving to need And to consolidated I'm of that's the you if anything more within offline consolidated else. that. lot a on you

Operator

Adam Our Stanley. is Kramer Morgan with next from question

Adam Kramer

Great.

everyone to been you so and much and ask although with there. thoughts region. guess obviously, in based in it's Maybe there. your occupancy to in maybe comments, January? wildfires the just been it more like a wanted be side the kind if L.A. again given unfortunate think, And these seems not maybe it, earlier there's just the It in case, the of about rate on portfolio, Just Angela, obviously on wondering first, not side likely any mentioned January, but wondering just I I pickup contribution the or

Angela Kleiman

Yes.

the not seen waiting -- lead It's mean the decisions. I volume, activities providers any the seen victims was from we've because not insurance We translated. have making that heard inquiries, clarity fire we've really what but in increase for housing before we have fires. not from actual the are

that going So be the it's more before of a impact multiple mostly the time it's may work terms to secondarily, in has going lot need any looking single-family to impact larger for and the going -- home, bedrooms. it new system take that units, they're tenants and through housing, to to

I that once impact term. as again, so huge And a the don't see near just in

Adam Kramer

then Angela. I the just of maybe kind helpful, And guide, growth the expense wanted That's it. same-store midpoint just of Got ask it. taking to about

just maybe taxes, some guide? walk kind could there, to of you just If through growth expense operating utilities, the contribution that drivers of expenses, the key overall

Barb Pak

Yes. Barb. This is

is as mentioned in our comments, X.XX% my the insurance So driver of same-store in reduction growth biggest [ year ]. kind prepared I X.X% expense this of to from

to estate insurance, down XXXX. to be as we from December we big that's up it And our year. renewal, So expect last then little from think they're saw bit what a based where on were reduction we X% relates a real taxes, do they that in

Seattle in is do think may Seattle high Given come this wildcard, a in we again double-digit range year.

the what utilities it of a saw still outsized or real than -- XXXX, pressure in above moderate and little moderate about inflationary estate probably 'XX tax in we more bit year total. overall, same think more And terms in versus increases next is in maybe 'XX. increases, little number then But a utility have went elevated there has also been we we seen and the wildcard, in

the will about piece be be piece then just -- core up we is number. up X.X%, So noncontrollable the will blended of think. how controllable our under And get X.XX% we to X% kind

Operator

Our is with Goldfarb question Alexander next Piper from Sandler.

Alexander Goldfarb

surprising a selling XX-year-old pretty so asset well on congrats a done. at price, Rylan,

tech trying talked Just, have you office question out crime, landscape still we in Feldman's of markets. area dealing hear that to Francisco, San people about big also make about narrative follow The back things push and job political come on comment with urban made the and Seattle, coming changing a tech as openings you Angela, result and back, and and it, return up of is to elections I but on a the the to wanted yet, to homeless a both suburban. Jamie guys markets urban the to people, positive

is So when be you markets to time but stuff done? changed still we positive interpret now, I suburbs two you and a comments really cut of -- it's -- as being Obviously, the still through those the -- the on not know quality changes much far why there's versus are or the is that the that's it, takes prefer that that's But how work do right a rebound like the of life, has ground versus hope. real while, as urban?

Angela Kleiman

then One through question. we've in and policy, policy right get political funding -- you it's to great But they a that it is two this It's think it in things and and all public and and implement things. multiyear you that a especially these comes find think set can hopeful New have talk really I to It's experienced, York, not there. direction, even program. headed have we once I just you when are you to that's term. plan, Alex, have went have short you a to the

one And why take to time. so view is hopeful, some reasons but are of that's going believe we our the we it's

the maybe close it's another But View, South companies in predominantly of far the great. in tech not in the have companies companies with rebound and we've been or AI in small suburbs. Park, The which the is xAI, suburbs, as have companies. one to is I two the all I'll Menlo activities a you San jobs but Snowflake's Robinhood leasing in in Park. San is couple small by the close As Francisco, that's in seen. mean place it. Mountain expansion Menlo that's taking and Francisco, in share what to we CBD,

with consistent pretty patterns. that's and -- historical so And

Alexander Goldfarb

Okay. very the CEQA imagine on is the There's powers. both regulatory And front. protective actions Commission, the their I governor's and also Coastal which entities question are of those then of with just the second

slips, the rigorous that L.A. a of and that back those back this about those part about improve the rebuilding is alleviation ultimate L.A. sort have As there power any is go force. is Or is these of you that discussion accelerating one-time entities both construction? this will, view full of larger dialing permission entities to process, once and if in the rebuilt, conversation

Angela Kleiman

crystal Well, wish Alex, I I that had ball.

about complicated. also is take need to right now there's it seeing is on that rebuilding massive to effort we're go to needs Having what think a I place. that, said and interest an the how focus

in here. people has to play think own agencies everyone And multiple thing, do their -- process. want the As I I right you mentioned, there what but think are is

so And are for is to far going area. populated to out play and can the What L.A. bit little try more But efficient. going a process think keep approval the to more densely to I that be large rebuilding we the a take mind, as legislatures it's and as hope time very process. in is

$X area. remain the trillion And huge. And still with the GDP. in it's largest in the county economy is lost, jobs close the intact, in county is home's L.A. well, the to the U.S. The and

Olympics benefit are will World And catalyst Cup so out from and tax coming credit. that we they time -- the first and we that several in L.A. By the itself and growth improved investments first infrastructure the in the it's for figure will optimistic with time and jobs way, sell film fourth film industry the industry the years. is quarter the of for

these So L.A. things hope about give us do

Operator

St. Our is from next question Haendel

is line and check see Please muted. securities. your Mizuho if with Juste

Haendel St. Juste

I So I'm -- guess Yes. here.

first is question So my on starts. development guess the I

you X Here, about years. in start first X,

can bit and more want in the thinking you too. opportunity explain you're yields, -- where how IRRs you for So about focused might development, book how markets about the a more be seeing to you're the we grow you're about bit potentially on here appetite development set should a and thinking

Rylan Burns

Haendel, Rylan here.

the highest we high do to develop really West trying is sense risk-reward just Coast. years development level, over So as we're didn't because haven't the it you capital, our make aware, challenging seeking with very risk-adjusted the started at And X a the returns. you're all to on as we're mentioned, limited what

have is in of the like feel world, at hubs low land largest the biotech adjacent we one Oyster Point, basis. location opportunity a to an very This in a today. So we

digits are costs single XXXX, the in down rents 'XX. momentum in some have Our to high from and the show started

cap at rate, where that's think will And So mid- think with we and are XX% stabilize a buy, project that is a to a and a range. untrended X% project think we can achieve fully least GMP the high buffer. contingency we to we have today, healthy we [indiscernible] to this we high negotiated rents in looking and spread this for projected

Haendel St. Juste

back Appreciate concessions. you wanted helpful. I follow about comment That's And made a color. to up I that think on

versus but declines year think your You mentioned improvement last in reflects XXXX this I don't concessions recently, guide there some seeing any year.

And fair you're us of can concessions portfolio more this improvement today. whether with where in So a think maybe in be the you Seattle think, the of upside a give seeing it's to had where a concessions could sense demand a are late? you've of sort Francisco, San bit and market, I

Angela Kleiman

half concessions. the portfolio would see an little if But and like that, of smaller quickly did, we over in December the terms a course, said on you concession of And Jose, at of which have less a that's market week, San normally it's slow up than improvement a supply and season of deliveries, and week. a Seattle. Yes. Haendel, is abated. a we fortunately, in that's number question from we pick sitting Jose having deliveries Today, the and saw December in San so we good

delivery supply the year. to Seattle, is comparable last

moving in And expect of don't the change a supply we of actually bulk fact, we the east so some our is have side, terms in And environment. meaningful to the portfolio. where the of concession

so think the I the of Northern though end an will even better, California Seattle with offset be at And day. there's

So year-to-year from the be about net-net, same. position going is concessionary to our

Operator

with Markets. from is John Capital question next Our Kim BMO

John Kim

the on like And if and I'm not change? So gross your basis include of delinquency up. does XX the delinquency about comment that. number. but reported cash the improvement impact that was sequentially, for it when the the accounting But wondering can year, point you talk I looks is if you same improved sure your then went the growth

Barb Pak

John, Barb. yes, it's

eliminating accounts this the does quarter charge in noncash for receivable reported factor the So the balance.

number slightly this impacted QX. have that improve other to numbers it from Cash, show higher and So been a than hand, did reporting. on we QX what the did the quarter,

basis XX And so as then relates expect we're QX, we in of the we basis. our seeing the and to it which accounting 'XX, that consistent the And charge guidance cash pattern last to to a impact improvement XX is on to of couple basis that about related points have we've talked impact years. for assumed over points delinquency a XX points basis

which cash in is points, were to XXXX, fourth where for be expect the basis we we So XX around delinquency quarter. for

John Kim

was And it where remind pre-COVID? us

Barb Pak

back the around And the the be we points. to half levels. XX do so expect will we'll basis was for that level it and half back be at then first year, points XX by Pre-COVID, the that of slightly above XXXX pre-COVID XX basis

John Kim

debt guidance today XX-year in you and can the that what's And year? where on on the you have this raise us your unsecured you Barb, could for notes incorporated maturities update year,

Barb Pak

Yes.

X- terms papers in the So cheaper XX-year is unsecured bond at mid-Xs where the the well. mid-X us around for unsecured in of debt debt slightly we're as agencies market is X-year or today, and secured than

XX-year we we at to unsecured attractive when that like debt, the bond look to to the our we'll at all So But go most do look see options refinance point. market. what's

In a guidance terms of of of the what's assumptions timing our in in and rates is in variety numbers. terms

the bouncing of But the So into We're kind of I'm were last going we with consistent of last to today year. go not we as mid-X for where that well. around of is where kind specifically. most are year range most

Operator

with from is Wes question Baird. next Our Golladay

Wesley Golladay

finance I had quick a the book. question just structured on

you Do of the X.X of of look, it redeeming said multiyear mature $XXX about next looks that? like term have you Will then year. about think million you most million that this under have just And the years investments. $XXX for timing a it on year? has I of

Barb Pak

good a question. It's Barb. is This Yes.

the be in So expect the about we by terms do million of to redemptions, of midyear. $XXX in XX% timing

to of us but redemptions Sponsors permanent early. that's obviously the as than second turn of are some 'XX in movement construction as then XXXX. And So -- maturity later in the is financing the to out cheaper subject terms a getting year of couple one loans. And most is in then timing quarter. that in in our are looking

those of short could around us. our on some bit or to So our a And then based yes, that But terms there maturities, sponsors. best does that's move is the move guess of in timing -- talking little on duration.

maturing but of are options. the them couple have next do A some in extension year,

conditions. it or not may on It So get redeemed. market depends may

Wesley Golladay

be think business you you timing Okay. now? do structured to And not finance. to may invest you expect of the I wanted then right the X% replenish X% Will just in to or more? this be you mentioned

Barb Pak

I think risk-adjusted it that's the right? appropriate opportunity basis, if good a on depends look it. on So we at see a we'll opportunities,

this competitive. lot product those. of for is so raised There haven't seen become We type, a and a money lot it's of very

that's long We better for assets. And so we think focus more actually term shareholders. on buying hard

see and market we but conditions So it dependent of be in on opportunities there. terms out what will

Operator

Barclays. is with Our Rich next question from Hightower

Richard Hightower

of the together, broader a related piecing couple just to market. I'm guess, made transaction I comments

are financing I in rates So the mid-Xs. maybe said think you Rylan, in agency I And markets perhaps products, if the cap heard your for high-quality in correctly, mid-Xs.

sure maybe kind make that just negative and push forward. I of So as growth I want implies guess, going to that, leverage outsized you in model the

in that market more on pretty a just and is in marketplace guys with maybe the the little So color you consistent transaction seeing are what general.

Rylan Burns

a is fair your I correct. think And assessment that's Rich, question.

negative out assuming leverage are say of buyers year for get solve of how they quickly lot a think I can trying it. in one and to

a and 'XX in billion $XX transaction $X our type to transactions product and California billion of and level, XXXX XXXX 'XX Washington low compared market XXs. in high in relates it there around at the to in the watermarks As was high in

So a traded that there more There's targeting. year. It process. lot competitive was mentioned Again, very are the volume I product a bidding feels we last for relatively healthy. that

and and West growing came more bidder there So it And healthy about where I deep, a there think, deploy. NMHC, are, optimistic people is it out Coast. there's looking feels the of was from the message increasingly to feels lot we a and pool just similar capital

out in us grow is competitive the despite 'XX we for is that challenge the figure to how can market. accretively So

Richard Hightower

know policy And the December. then maybe a quick -- things. of you I in the said said renewed you just helpful. very on you That's you side insurance follow-up Angela,

a so also before to happening maybe other Essex their bit that. after companies think, the there. spot different relation wildfires And But insurance is in most, little the I policies, of in timing renew

So might you negotiations pricing maybe feel forecast how XXXX. the and round guys like out you go of in later if could next

much too the not based yesterday hand, of incremental gets anticipate insurance the residential they an priced impact equity did wildfires other way alone. the said to On on

out as just point? this at even that XXXX understand how we help So think play us might about

Barb Pak

Rich, it's Barb.

correct. December. in renew insurance are our you So We property did

XXXX. So months we're locked XX in of for

risk be. renewal we on way what will our the this And had fire. to year. [ no outcome damage to It's from insurance early know really the ] no So too

actively discussions in we're not So that. like insurance with claims anything any carrier on or our

the just we'll to goes have So it year as plays out how see on.

XX%. I is is last two thing our insurance years, over note up One will the

increase a seen limited. in have more steep was we unlike market So where the home residential it

that's fall know we enter the Otherwise, on. we'll as year. this would thing comment of I the say more only would So I

Operator

question from with Sachs. Julien is next Goldman Blouin Our

Julien Blouin

first rent on touched Seattle and also of supply sort is San guess, portfolio far to sort so little year? of what this I sort this confidence sort looked Angela, giving the those you year. hold expectations? guess, Those the you approximately that market where quarter, about what markets the bit will at earlier, of you and this up of X% were in but You growth to a sort that rent the the are lead sort had of Jose commented at I markets projected previously growth quarter pocket. compared you're fourth of as is how And seeing you your warned

Angela Kleiman

what for got the Julien, we which are landscape, as fourth in in was far pressure and rents supply and supply an to on experienced Jose uptick delivery, put concerned, quarter the normalized environment. of there course, that on months terms is about absorbed a was the we San supply the as of two then back

there pricing but where expect the a And is to see stronger southern we region. the environment to And so low with supply. an relative in that that, course, provide occur, -- region is going power what that of the Northern is to demand is we difference

what absorption than which occur similarly, seeing period delivery half happens have of XXXX is delivery, And the during what second demand, that that though because is disruption, the it's to a supply of Seattle, is supply some quickly the you the when So we're to permanent. cause and supply interim better first really the expecting is is level not the similar destruction and to year, but strong minimized. with cadence comes in even much half delivery, we're it's going the

all, when more therefore, in healthy. lingers or absorbed It's the through our and is and to come to pace. these economy in typical be a And we November, similar and concessions But they that takes it. longer quite net-net supply on all work takes fundamentals it then are expect December to delivers

from there And overall, well are so may month. year. set be up we But interim lumpiness for month the to

Julien Blouin

on up John's following question And helpful. That's bad it. Got on debt.

So basis sort guess could the 'XX, of baking noncash you year. like benefit still above in eviction moratoriums, right I you're see levels, just would points absent delinquency seem now. the XX in bps doesn't of improvement sit the charge, the Alameda it same-store where ended wondering we much if excluding if improvement from XXX L.A. some in

Barb Pak

Yes. This is Barb.

the taken progress where I our need to to we see made to XXXX, of Alameda. long-term make us get to run improvement. but It's need lot back we us still to rate. progress continued further the We've in a that's improve longest L.A. think

it not already. in of much because relative making we've the that's prior years so as we're made And to progress vast majority why 'XX

incremental, be year. most prior tailwind the will had but it in the of we've think already we So

Operator

Our next Michael Goldsmith question is from with UBS.

Michael Goldsmith

X% blended return kind supply, X% growth -- growth growth good the midpoint, line this term, of relatively seen at the in conditions conditions generally low low. muted is We've pretty favorable the year And favorable. the with XXXX. of improvement seem we're long yet this for in in forecasting off over to affordability pretty office, operating Yes, with still last turnover partners, our of

next like about gets So to as good [indiscernible] are rates continuing like years, kind expand given or favorable is as as of it thinking over we growth few the environment. the this

Angela Kleiman

is one Yes, build of consensus year We is to the and continue question. fundamentals that the from that improvement by do gradual moderating XXXX, forecast. that's see a more economy it's that's why and And overall good will strength. reasons the this

disconnect from can't too much. And so we that

-- to is to West the talked to build fundamentals we about given that do that earlier. gradual. be and all And Coast we expect the outperform Now that we expect

to top X steady. And continue we pre-COVID since has job gain So That's And build But it to and the you are saw we seeing time to months, that October the average. first remained XX tech companies that's that for from that. momentum. example, was want fantastic. reach the openings and will then, so

So it's this for and more following what going we'll to see be year, the gradual in years. happens

Michael Goldsmith

this half And clarification. context. blends assuming helpful of the year? Are of just for curve normal a That's a quick seasonal you first

Barb Pak

Yes.

seasonal budget a Our the for assume curve does year. entire normal

Operator

Anderson with is question Securities. next from Our Rich Wedbush

Richard Anderson

me. hanging with for Thanks

kind wonder things of of Northern pie leaning of the the footprint, in chart be geographical this more up you'd the its in on into regions call terms they if regulatory some the light company, that brought of of in driving So in I tech see leaning L.A. aggressive could if selling [indiscernible], more I and out more offense wonder point in -- Southern guess, external your growth into northern start California. potentially. President on to we and with areas of I running

Angela Kleiman

our in as and And in Area it heavily course, and most in of with midst of other focused the demand recovery Northern to drivers, activities, activities Rich, region glad recovery. that regions. the and growing really and of centers Bay the supply saw the investment -- favorable you -- expanding hang technology the -- all you supply in that with and all And was us focus well. and because relative innovation the the was the our of lowest affordability companies XXXX and Area. our On dominate we actually it Bay

wise and XX%, digits Area since in So average. XX% as still single has Southern COVID the Bay is low an rent California grown

gets throw has affordability you most really and upside it potential compelling. metrics the in So for it

focus for else nothing most that continue in really And the if has from our regions, recovery. to upside, just will the reasons the be so the northern it

far dealing lives. our with legislation As legislation, entire been as the we've

from be a So region would to pivot reason itself another. one that to in significantly not

And long-term to than property above all talking example. L.A., rather all we're so asking approached We've They which a divestitures, markets. just out we're generated if of like when sell We us specific city. you're for our returns. average is U.S. more going it have particular

reasons. going by And to be asset specific driven it's so

the Rylan the it in earlier, duper it asset and at an valuation, Bay talked million attractive sold we when was was example, for Area So old. $XXX about super that

Richard Anderson

Super super-duper. Duper. Like the technical term,

The the said shorter-term today accretive redeploying you kind finance other -- ownership, of me said the would NAV redemptions finance. FFO not this, structured second accretive, And as but was It proceeds question feasible accretive. to for earlier that structured on to from the is nature is of NAV. be relative

that also X% in your being selling point it's structured for of you're mentioned the targeting XXXX, You low. business finance

why case, rounding the Or or matters step -- you some lower? then doesn't in that's of if longer So amount sort Why why the and you that it is trend firm. to of portfolio don't you out this there of term? the business reason

Angela Kleiman

Well, a business near. costs a let We double were little rents got at digits in where this you growing and me provide time nowhere into were with context. just construction

in being provided for business business. pipeline equity was development preferred that very so attractive And developing those the thesis because primary during stopped that a times. And complemented have yield our and risk-adjusted we effectively really

visibility local also the we the over that business. like not in and activities grown a lumpy, such us like It's we small business the that still as and that as not it's keep of it's gives to it So sense that the having But and percentage don't of that us way that into it's a platform. connected it's predictable well made way. developers time, additional rightsize

still of region. California went through it's Northern simple, I mean, in on business. fee decent a the But terms fundamentals I overall, just the So compelling

the growth per us and simple our durable be focus owning share so that And for having to key cycle. really NAV is at this

Operator

[Operator Instructions]

Okusanya Tayo is Bank. Deutsche question from next Our with

Omotayo Okusanya

Yes.

to could it very this is Just about it thing was kind noncash decided was AR an reason one. be there quick not accounting charge-offs, the why days talk a XX you or Barb, just AR Or at purely to you going off. Is collectible point thought it again, you more? why particular why exactly going where forward? of charge some that

Barb Pak

Yes. No, question. that's good a

our Let of me and step back give kind just history. you

always Essex cash had policy. pre-COVID a So

had no COVID the to small it had rent we delinquency wasn't and we on a revenues collected unprecedented we book. hit, collect in When time. had that over our of because XXXX, that and would uncollected if accrued we revenue we yet in amount we against reserved revenue collect month, knew So

is that industry. uncommon the not And in

balance where feel given of some accounts And given is that behind their most we I books. us. seen, receivable all actually down and we and our we've slowly few peers last have XXXX, the are over back in this the years, it think on we've write to the improvements prudent always there. We taken goal remainder charge the X and was to felt finally accounting basis and the of accounting and And get just get that policy years later, revenues to our on cash back off we're take historical there. like was

with haven't pleased no in booked that. the to risk there's happy collected. of we're So financials any we've We're terms refactor, revenues that we to

so And about on policy current front. good that feel we conservative our

Operator

with Alex & Our final Kalmus question Zelman from is Associates.

Alex Kalmus

with for basis spread about your 'XX I you're then, assuming there converge. once just a guess, wanted for Is markets, that this to any spread this in into risk in again? supply year-over-year to market rents actually renewals any your there I tighten? is timeline widens on ask that mid- 'XX to and to even late assumptions easing And

Angela Kleiman

to to tough timing does just It's relate predict on question. good because it a that's No, conditions. market

as where which have means achieve is job renewals, thing, you but example, growth landscape get notable. see to with much what base landscape, means demand widen we in a new of our are actually don't for if upside that a case, and confident we relates can renewal is very that -- it spread within the the expected that given is to numbers. than rents. more What this spreads, as great lot far supply So lease app we because need And our better stronger market we on achieve, our supply a we'll

in shape are good midpoint. with we that is view our so our And

Operator

is quarter earnings would thank your joining have all today's conference. you This call. participation. for for Essex again today. we like the That you for conclude us the to for fourth Thank time will

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