Yahoo Finance

• Full Year Same-Property Revenue Growth: 3.3%

• Core FFO Growth: 3.8%

• Fourth Quarter Blended Lease Rate Growth: 1.6%

• Occupancy Rate in January: 96.3%

• Fourth Quarter Same-Property Revenue Growth: 2.6% year over year

• 2025 Forecasted Same-Property Revenue Growth: 3% at the midpoint

• 2025 Forecasted Blended Rent Growth: 3%

• 2025 Forecasted Same-Property Expense Growth: 3.75% at the midpoint

• 2025 Forecasted Same-Property NOI Growth: 2.7% at the midpoint

• 2025 Core FFO Midpoint: $15.81, equating to 1.3% year over year growth

• 2025 Structured Finance Income: Expected to represent around 4% of core FFO

• 2025 Planned Acquisitions: $1 billion in new apartment communities

• Liquidity: Over $1 billion

• Warning! GuruFocus has detected 6 Warning Sign with ESS.

Release Date: February 05, 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) achieved full year same-property revenue growth of 3.3% and core FFO growth of 3.8%, both exceeding the high end of their original guidance.

• The company successfully shifted into growth mode by acquiring and consolidating 13 properties at above market yields.

• Demand picked up in January, lifting occupancy by 40 basis points to 96.3%, and concessions improved to less than half a week on average.

• Essex Property Trust Inc (NYSE:ESS) forecasts a 3% market rent growth for 2025, with Seattle and San Jose projected to lead the portfolio at approximately 4%.

• The company has over $1 billion in liquidity and ample sources of available capital, positioning it well for future opportunities.

Negative Points

• The company faces potential regulatory impacts in Los Angeles, including an eviction moratorium and rent freeze proposals, which could affect revenue growth.

• Higher interest expenses are expected due to the refinancing of $500 million in unsecured bonds at a higher rate than the maturing bonds.

• Lower structured finance income is anticipated as a result of redemptions in 2024 and those expected in 2025.

• The company anticipates a 3.75% same-property expense growth at the midpoint, driven by factors such as real estate taxes and utilities.

• Essex Property Trust Inc (NYSE:ESS) faces challenges in the transaction market with competitive bidding and negative leverage in year one for high-quality properties.

Q & A Highlights

Q: Angela, I believe you said that the low end of guidance assumes some sort of potential regulatory impact and I'm assuming that's in LA. Can you clarify this and provide the same-store revenue growth range assumed for LA specifically? A: Yes, legislation is an unknown factor at this point, and we didn't factor it into our guidance, which is why we have a range. Currently, there's an eviction moratorium and a rent freeze proposal being considered in LA. We hope for a sensible approach unlike during COVID. For LA, we assumed an improvement from 2024, with occupancy stabilizing at 96% and modest rent growth of about 2%.