Essex Property Trust (ESS) Nareit REIT Week: 2024 Investor Conference summary

Company overview and performance

• Operates 62,000 apartment homes across 255 communities, focused exclusively on West Coast markets.

• Celebrating 30 years as a public company and recognized as a Dividend Aristocrat with 30 consecutive years of dividend increases.

• Achieved a 13.8% CAGR in total returns since IPO, outperforming peers in Core FFO per share growth.

• Key success factors include disciplined capital allocation, efficient operations, and investing in high-demand, low-supply markets.

Market dynamics and operating trends

• Portfolio shows steady improvement, with a blended lease rate of 3.7% in May and pricing power in most markets except L.A. and Alameda.

• Renewals and new lease rates are ahead of revised guidance, supported by stronger-than-expected job growth and low supply.

• Delinquency rates are improving, expected to contribute 80 basis points to growth in 2024, with court processing times for evictions halved to six months.

• L.A. and Alameda still face delinquency overhang, but improvement is expected to turn this into a tailwind by year-end or early next year.

Supply, demand, and affordability

• West Coast markets remain underhoused, with new supply at 0.6% of existing stock, much lower than Sunbelt markets.

• Permits for new housing are declining, suggesting continued supply constraints through 2025–2026.

• Renting is over 2.5x more affordable than owning in these markets, especially in Northern California, supporting strong rental demand.

• Renter demographics remain stable, but demand is rising due to high homeownership costs.