Essex Property Trust (ESS) Q2 2024 earnings summary

Executive summary

• Core FFO per share for Q2 2024 grew 4.5% year-over-year to $3.94, exceeding guidance by $0.11, and net income per diluted share was $1.45, down from $1.55 in Q2 2023.

• Strong demand for West Coast multifamily housing, especially in Northern California and Seattle, outpaced expectations, with positive net domestic migration returning to Northern California.

• Owns or has interests in 255 apartment communities (62,510 homes) across Southern California, Northern California, and Seattle Metro as of June 30, 2024.

• Consolidated average financial occupancy for stabilized properties was 96.2% for Q2 2024, slightly down from 96.6% in Q2 2023.

• Acquired two apartment communities in Northern California for $147.7 million and three high-quality Bay Area communities with significant upside potential.

Financial highlights

• Q2 2024 total revenues were $442.4 million, up 6.3% year-over-year; net income available to common stockholders was $92.9 million ($1.45 per diluted share).

• Q2 2024 Core FFO per share was $3.94, $0.11 above the midpoint of guidance, and FFO per share was $3.89.

• Full-year Core FFO guidance raised by $0.27 to $15.50 per share, representing 3.1% year-over-year growth.

• Same-property revenue growth midpoint increased by 75 basis points to 3%, and same-property NOI growth now expected at 2.3% at the midpoint.

• Over $500 million in Bay Area acquisitions closed in Q2, including a $138.3 million gain on remeasurement from the BEXAEW portfolio.

Outlook and guidance

• Raised full-year 2024 guidance: Net income per diluted share midpoint increased by $0.11 to $8.35; Core FFO midpoint up $0.27 to $15.50.

• Blended rent growth forecasted to be 120 basis points higher than initial forecast, led by Northern California and Seattle.

• Q3 2024 Core FFO guidance set at $3.87 per share midpoint, with a sequential decline due to seasonality and one-time items.

• Full-year bad debt guidance at 1.1%, with 1% budgeted for the second half.

• Management expects continued strong liquidity and access to capital, with sufficient resources to meet anticipated needs over the next twelve months.