Essex Property Trust (ESS) 25 Jul 192019 Q2 Earnings call transcript

Good day and welcome to the Essex Property Trust Second Quarter 2019 Earnings Conference Call.

As a reminder, today's conference call 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. A number of factors could cause actual results to differ materially from those anticipated. risks SEC. found these filings the about the with information can in be company's Further

now pleasure for is begin. President Thank It my Mr. and Michael host, you, Chief Schall, Mr. Executive you Officer Schall, Essex Trust. to Property may introduce your

you, comments to second before the to conference welcome we quarter Kleiman will everyone and Q&A. John open Burkart Angela We follow operator. earnings Thank our call. me with call

growing with the compared second XXXX core quarter second FFO of to X.X% expectations quarter share for the Results exceeded per of our XXXX.

$X.XX details to year from We execution the are about the full our to cost raise is our pleased improving the guidance in strong year more solid and the which quarter to and Essex her core of full FFO operations remarks. capital and team. guidance by Angela increase midpoint, attributable provide at will

playing XXXX tech California by Essex at and Southern remaining has unchanged out expected for the Seattle, San rents lagged generally as detailed of the is outperform with while led metros continue F-XX to supplemental, as mostly X.X% Francisco market expectations. on markets the

to at rent pushing on job San X.X% F-XX estimated its growth Looking was from upward estimated Page job XXXX X.X%. growth revised to Francisco's growth X.X%

last quarter. As noted

in California growth F-XX. experienced Southern year a page California a to Southern job X.X% forecast three slow since on job had was the and modest trailing has growth start to month acceleration. our June equal

development is vibrant a to on well continues and at job belief are for healthy comment our economies briefly that consistent our for growth which Coast growth. with perform pace growth, housing the beginning positioned will We of job indicators remain West and office future that for all required which support expectation several demand, continued with

existing within the greater are and office space the under Essex of average. new all counties represent Orange producing national a pace construction office the than Ventura except footprint stock; nation, office X.X% For properties at

nearly office in including office million under feet expansion office the X.X% of feet planned an Bay Microsoft with currently feet space. West or stock The million development million not Coast of production of square Seattle, square XX X of with leads estimated of campus stock, the Area X In square over X.X% construction. or the was under

We job tech all in at top XX the also Essex track of companies, the market. are openings public an headquartered which

openings As years were several since and job up near year-over-year of ago. remain XX, June all-time began XX% these tracking the we highs data

remains in to markets openings. Amazon Essex State It's job worth hire past invested US where levels committed for $XX all billion in year year US actively the almost Area over Bay mentioning past Venture capital by note at billion that funding. financing XX Washington the venture years. the the invested, XX,XXX about continues capital and billion record has XX% of approximately it $XX followed markets with accounted almost San all with $XX led in BC past with highest Valley Silicon the funding Francisco recorded levels this

Pinterest to attract many and should they West improved Lyft, to expand capital which and Recent publicly catalyze Coast. to the Uber, skilled growth of and capital in Bay continue access given companies, workers tech to IPOs entrepreneurs Slack Area. other to Unparalleled access traded growth greater continue join the liquidity,

illiquid the other estimate, recent believe County, We Silicon market By unlock and Park. equity in Burlingame, IPOs local ultimately benefits which will created likely Bruno, expanded San several was leasing and one Menlo economies. will to example IPO San Mountain have long-term Valley Mateo Jose. space communities stronger and for X,XXX a In previously that positions. in drive millionaires Facebook Francisco Sunnyvale office the YouTube Google and actively San buying of or additional View, San

start-ups new road. incomes consumption was increase will rate point, push unemployment May quarter. higher. in redeployed, affordability that median of stage low X.X% to of of and continue growing unemployment of continues and some likely be will markets. the for labor market which market, A X% rates the average some to set rents down workers, skilled strong shortages wealth At With weighted in of range, X.X% the and grew as Essex all in the second an household average rental income improve our the

in in apartment markets Essex changed expect similar estimate with and XX,XXX delay of we XXXX not variations. to adjusted briefly around Turning meaningful our some regional XXXX level the has supply of in apartment deliveries a albeit deliveries

Turning reinvest our markets improved in were interest equity using the rates our to and of equity to to development, seller fund a lower substantially in proceeds the In significantly has we outlook much markets, capital. repurchases. net preferred of stock XXXX, improved cost to have investment strong and relative conditions XXXX experienced apartments

are preferred now mostly on We acquisitions investments. equity focused and

acquisitions have despite buyers the We of leads core high this dramatic which range that guidance to in are and cap property Overall end market market value-add acquisition At high-quality pleased compression to value-add our rates. accretive conditions this which greater acquisition exceed in spreads interest target these a to continue much of to $XXX properties. this results Apartment hope for know announce quarter, a was between the rate deals not point, we opportunities, in and another million. changed year reduction we competition for well.

component. In and environment, remain concern. disciplined are selection our on marketed, primary value-add a focused our with properties this of with claim process being newer we underwriting market a timing Even

other million the the $XXX on low of end of guidance likely our end will activity range up our hand cost $XXX below million given improved to disposition Our capital.

development pipeline continue more Essex the in the broadly. note and construction delays, we force Finally, that cost labor to in both shortages

markets development combination processes significantly time growing long on at a costs noted construction compresses of are entitlement the when in calls, than prior the faster NOI our As coastal yields.

in believe we development. generally For apartment continue preferred investments superior development over these reasons, returns adjusted deals offer equity to risk that direct

the my Essex employees concludes wish of with for our all are and company's year-to-date thank Overall, work. comments. That their we pleased hard very progress to

over call the turn now I'll to John.

Mike. you, Thank

the prior year's less second than second period the year peak We the X.X% basis revenue same-store are starting XX momentum, over the below portfolio achieving XX in us growth XX.X%, rents. Financial strong and down market setting of with average was points quarter. period, while the of for in up occupancy rents the were in year's as QX, an favorable a the we basis quarter, lock prior X.X% market points position first half

Our period XX-month the turnover in trailing XX.X% XXXX. X.X% down QX ending on a which from XXXX was basis, comparable is QX

supply Area. there overall The in growth by are Although largely the expectation, to interest market better local our Coast above employment concessions. offering of driven markets pockets West original some in large are weakness the Bay performing

same-store rent revenue guidance raising full the our midpoint note As to for estimates of a inaccurate. economic to XX I'll basis year third-party by continues for be a are gross growth market that result, Essex research points we X.X%.

up For in stated prior vendor were reality, the they June year over example, that XXXX our rents one points when up basis were XX X.X%. only

we rents in Strategically, achieving rents. favor will strong to over continue conditions taking to occupancy, higher lock market the advantage higher market of

supply, estimate is units the deliveries adjusted consistent forecast line of remains with volumes. pace our new and XX,XXX in this last are roughly in markets Essex we maintaining year, apartment with we fall of which Regarding multifamily introduced XXXX the delay

submarkets to concentrated half projections, urban by to third-party back below to estimates Deliveries poised led Angeles and a in the of also units third-party additional deliveries core this downtowns strong the the rapid we of that figures decelerate the delays Our elevated new in Construction bring we closer handful but our XXXX. construction in growth year of in Los absorption of year job new remain is Seattle are remains is remain down but encouraged expect pace forecast. Oakland. Seattle, of supporting and the in

would basis, past on of suggesting Beyond XXXX, down deliveries that highlight trailing XX-month a followed new growth. multifamily supply gradual that Essex permits are in deceleration the we near-term markets over XX% represents a plateau new of the by year the pace

Seattle, as office submarkets Seattle North, In Moving well, Eastside Amazon while at and our other between second the US growth on to and outpace markets XXXX. South, stored of occupied. absorption CBD the East to of of for the four growing continues major openings second levels deals and X.X%. a quarter employment were and peak in Each delivered job year-over-year growth X.X% quarter revenues remain large market posting Coast X.X% update. performed

Northern job averaged in Francisco X.X% growth in San San the Bay led California, Area QX Francisco down by year-over-year to at Moving X.X% growth.

is As Area Mike the Bay highs evident recent mentioned, the IPOs in in of sustained in the expansion continued funding. VC

revenue Station In Jose XX% started same-store X.X% leased X.X% now downtown month Milo, San Clara offering achieving the Year-over-year the lease-ups. achieving with Francisco a was with Last, Phase came Francisco compared units on year's offering free second cemetery Green weeks. in six X.X% Peninsula the in initial X% Ramon we to the quarter at San II one in third quarter. concessions Park Fremont two XXX-unit quarter, quarter. occupancy and prior San the with pre-leasing submarkets XXX scheduled followed Santa up started X.X% in is Folsom rent. XX% to second growth CBD at of we Mateo San for and XXX X.X%. Oakland by with growth in in property respectively units pre-leased San is and strong XXX

at with led on and in California Hills Page each Southern largely the by with Tri-Cites was X.X%, growth X.X% which with lower growth, year-over-year region Beach at job X.X%. of in our employment achieved due to X.X%, our West growth, to South, forecast LA perform jobs lower County continues Continuing line S-XX. and end LA X.X% Revenue with markets, the is Long Woodland QX

offering eight incentives, weeks the free down Our supply were due LA of the parking. CBD revenues downtown plus to ups to free six impact the such with as rent lease X.X% other

the up X.X% achieved growth the prior South submarket jobs County, over submarket Orange in growth, while Revenue the In growth year's ticked in quarter. year-over-year. North Orange X.X% Orange X.X% quarter achieved second

our Diego, X.X%. the in to in submarket Finally, occupancy at than the the now City and turn XX our in X.X% lead higher job San market XX the and growth points will Diego quarter Chula revenues X.X%, achieving with CFO Kleimen. XX.X% QX, US, , Angela Thank growth And is you. to year-over-year followed X.X% days X.X% Vista call our availability submarkets I in portfolio continues basis year-over-year is San respectively. was over second the North growth by Currently, and Oceanside out

high year of and to savings represents guidance. same start This interest I'll that revenues, tax growth past report year-over-year mid the from experience XXXX. on we Seattle a our XX the midpoint, our brief a the key in to John. second increase of $X.XX Seattle $X.XX achieved miscellaneous Beginning guidance other and the result property exceeded double-digit had is X.X%. to basis for second with the refunds I'm property quarter our rate and components core FFO quarter us of share and from from follows, per revenues lower $X.XX increase primarily enabled from rates review beat which Favorable from full you, Thank revenue to where then results our as pleased range. end results $X.XX focus the an the of our This tax $X.XX have this lower are a millage out-performance non-same-store performance. represents the to several of by of expense, year-to-date same-property contrary items, property our points. midpoint been increase years, with

than revisions our XX at While basis near of a to lower of same-property which the expenses original year growth full initial of X.X% of end higher from these combination by XX in us points. the range. refunds high is savings our The the points midpoint, basis tax outlook the enabled and and guidance benefits NOI our same-property midpoint resulted

In this the FFO time core our per second for guidance addition, are we year. raising share

preferred made $XX.XX we $X.XX at FFO raising approximately combination a year, from core interest relate to improved full date. $X.XX $X.XX expectations, raise the are to to investments of acquisitions per the expense, and share remaining the NOI lower of For midpoint, and this comes by equity

in the we is equity year's high larger and end of have million deal exceeded of investments, preferred primarily transactions. On this our this size $XXX a guidance the of result

to which and we XXXX sheet. we debt, around the matures million In the of of half $XXX ability debt in the onto incurring of million prepay any have balance maturities $XXX year, the without second prepayment Lastly, penalty. have

of credit to opportunistic available conservative cost our our capital. have X.X continue debt to our $X approximately we billion remains billion lines at will consider We as us alternatives of Currently, and EBITDA. our be and leverage to times we refinancing level X.X to optimize

Q&A. back turn I will now call for the operator the to

Hill [Operator comes the you. Thank Morgan from Richard with Instructions] first question your with Stanley. of Our Please proceed question. line

line your your Hill, is Please Richard proceed now live. with question.

with proceed Scotiabank. comes question Trent the next of Our Please from your Trujillo line question. with

there. Good out Hi. morning

was raise nice guidance to very So same-store see. these revenue

You brought up range. the low end of the

So, give top you you of Mike, conditions the the the market end to much adjusting with range? how did positive cited, consideration

a we California, were maybe a hit and and of will start bit end to midpoint the comment. have I'll that top but midpoint Northern range or Angelo then above close we the with the the markets. in little the Obviously, other pretty

plenty there so, was thought of room we the And within range.

to in the turned didn't to need of we the move We because of super half first year. And we we move the So than quickly we cannot have in leases. year do turn fewer the half rents leases second it. the

now. range So to think Angela, guidance is is I do you anything that add? where have the appropriate it

point. where the the contemplate this half second guidance We mind that tougher lighter first had supply. having a a And came that, we will comfortable in is to certainly, with originally range at second with half first But at in, heavier keep guided and where given now the said half half our midpoint X. are

that end so, the range. the make for guidance in didn't raise sense And it to environment, us of high

of the larger rate at Okay. long say will keeps sustainable a is is appreciate there. that basis. implementing level which there turnover, and John, I you increases? year-over-year you point on commentary start How a you mentioned improving turnover

focused as they of which, on rental far as includes very experience increases, course, Well, the what their in customers fair pay. are being we entire our

typically raise marketplace, we the marketplace. so, And rents the set will that's in above not effectively

can As to I continue far love lower. go to see would as it how low go, turnover

point them lower the of a well have I fact always think located, of our turnover what's being are combination that of this time been. one are driving factors, they course, assets at the in

increase So that metros, options. makes increases change is as the But quality and the better it other hasn't does changed. life than to it many assets our traffic in what of of continues the relatively

one is angle. that So

continue experience improve do we at we angle that. have to to sites, and the continue to on customer Another is focus the room

in on continue markets than as possible. faster And will finally, We continues significantly our work overall to best of experience improve our customers to affordability grow all making have the of all rents. incomes

lot pressure other jobs to putting less move on away And whether so, a or reasons, their further it's financial people areas. it's it's from for

there some continued to So run. I do think room is

turnover. our for it works think to customers both I ourselves best and lower have

pretty we're with So it. pleased

question with the next Our comes proceed Nick question. of Joseph with Citi. from your line Please

Thanks.

past. You're seeing more the attractive versus acquisition recent opportunities

acquisition you have high exceeded guidance. may of mentioned You end

is So how pipeline acquisition large today?

say exceed of of pipeline more having Nick, the pretty it's pretty Yeah. Hey, lot year, the we range capital. more is a acquisition real fact of the And as property. a range at beginning the today, forward a given Mike. that in The of and interest conditions have the end dramatically to which high high to we're would had a there's decent. end cost higher rates going declined fast we I that not is function aggressive of interest the much

you no but there's of deals and a there few So were or more it's able million, are the year. a back is to hundred to this close of in Again, hunt there make all we more property. but even I is if year, pipeline the selling we're guarantee last to weren't go some those function we work. numbers our deals, We think much enough out going

so are downtown seller sub-X stock back, LA, conditions much Hope We property, for are rate a just a cap in for the property example, net Xth selling buying and of & different.

more are So acquisition in back we the much interested market.

Thanks.

you're use issuing funding pipeline second on second been NAV, but the for pretty trading kind quarter? ATM of if I makes repurchase given the like equities think maybe Looks just that the most you've so acquisition in on of sense. and So the capital, it you're net for above then to side, shares issuing active historically, quarter,

have Angela start. is we're the an this, simple about mean, to I'll is XX%. cap but will answer I answer that debt-to-market

sheet. we just need don't So to balance the deleverage

we of fact, to we at all be managed And sheet in deleveraging we like balance sort a want In cycle. have feel any where don't economic we've in the further. to it late interest

where feel increase we add that. leverage but fact little And now to we're want with is doing planning so bit, that, comfortable to perfectly necessarily and in do you not that? it Angela, comfortable could to do we're that a

Sure thing. Nick. Hey,

we capital if will via the acquisitions a fund over a activity, terms it to equity our inevitably because and small. In and time have optimize equity structure you require is date, to But of of investments the they issuance really our in at cost need so the funding investments, didn't addition the Mike's look down we our to match yield. preferred very to comment generally fund on speaking, level, look that do to leverage relative

be given -- so for the an trading to our consensus how at to any still point can and attractive make will know time NAV, may is ways look alternatives And that at several they as in though even you we staff fund sure most we above have, we funding investment.

may, thing. equity common it the so may And be the or may issuance not as first

Our of Please question comes the KeyBanc your Markets. proceed next question. Austin Capital with Wurschmidt with from line

you a Hi, the more preferred thanks development. view attractive you Mike, mentioned time. versus there return for risk-adjusted equity, is

So restart pipeline risks justify to take spread see for would the rates need today. development you'd you I'm between you it what to just or the cap curious maybe what

out And up on question. than construction. in preferred a faster with the Yeah, coming otherwise and many yields with where construction I potential you in in there rents are we're out in X cases, driving you in cross for years, a the of development that before costs than the have. general just Austin, end lower X can equity it's start processes entitlement growing years again California good stretching to is dynamic

starting and construction So we're period past the next pre-development all the in about is day. and coming in

lot them are in to not to we not and in are equation so we in cycle, Having around we trying would stabilize make different. and to property, is been where like basis so given to X% are, a now. selective say, We just equation. which quality work. transactions we for see said cap for rate point XXX the of get interested where And XXX development, look to development let's risk-reward a the economic premium yields, us our had that, much pretty direct the at risk-reward between And right perception it's

of in risk again, to we'd entitlement be those looks for the direct of like, development other And it's looking considerations in the process appetite. at going long how our looking what some So that. profile terms of be

there. discuss XXXX supply second or appreciate I variations is supply just to some at just XXXX. for thoughts moving going to the you in detail that Could by concentrated. did this where of point is more projected level then you little a me,you And are as But region? be us some mention, parts there is of the give similar be a

Sure, of course.

team all and goes research most of Our drives sites. these

vendors data so we and of as accurate. John different numbers some And have really good the much and multifamily for have we our think have supply mentioned, projections, pretty numbers intelligence proven

So units a and then It's But, in number Seattle will -- and about about as and third the County X,XXX from of same really, about goes down tremendous actually about we so, will goes about XXXX that. Oakland units, and units. kudos a we The same units out, point for have movers up goes XX% you which XXXX. San economic the units in Orange XX,XXX one about down that X,XXX are percentage. number Jose team number yes, up to in not XX%. go at then research And big X,XXX goes

driving increase. So it to about forces. out again, the those nets zero are And

All you. right. Thank

Thank you.

of comes of Shirley with proceed question Please the your Wu next line Our with America. from question. Bank

taking question. there Good thanks morning the guys for and

a occupancy. XX you So, have mentioned earlier growth down emphasizing it's call more imagined XX this occupancy to basis points points in this that earlier and drive of rate compared from you basis you And was your with year. mentioned what year you previously, actually John, would even

mentioned year. that's that to what's about to you're was to strong expect to previously? just wondering XX just the there seeing I continue you point you down Or and and continue going basis on rest come if So that the occupancy in demand of the if going

Sure.

So answer the is simple yes.

it was where the within down expect For to I basis from But points tick more bit year, detail. XX last year. little that, it a

is mentioned our down, supply expectation normal of half, was coming picture, XX% about the So, the aspect that markets. supply to seasonally yeah, more it's in goes on my a there's as demand second increase about and market because of earlier, just the an is it

the there'll So offering of as the either demand concessions at concessions the be part as things that supply bit what that's increasing think harder at go we're seasonal cause did to end stabilized it. and us vacant will longer. the the of doing slightly to a the decreases the in increase we comfortable day, of and we I compete just At of some end expect increases day to and just that or where guidance little of allowing be why increased by and we're more because factors, some an assets or there'll pressure I answer with

Great, for thanks color. that

Sure.

was slightly the moving thing And to year. XQ, you I that that, CapEx little noticed side, of expect more color the the trend a was usual run the capex bit rate we one-time get rest wondering and if can should and it for if than that a and how on in higher was I

drive increase Sure. increase rate basis, development that a where Yes, have that factors materials I to the an labor that on this, factors be increased that same about and in a we are run numerous costs. unit guidance There talked a X,XXX that closer the costs to expect -- regular the were. anticipated original we range than to and drive

bought we unit built, not a but factor the a in of run course then and unit higher basis. newer a on also per some systems and and that's the as capex with typically we buildings have of things big the other per that percentage they So that basis,

ISI. from of with Evercore Rich question next comes Our Hightower with question. proceed the line Please your

out Hi, guys. good morning there

Rich. morning, Good

affordability on here. two-parter a got I've So

empirically values income affordability of that, signing, related actually terms mechanism. the screening if you to you're markets that Coast you're of growth to then out and and I'm So well. that read that separately put terms rent prices that in the is growth. that new I improved there if a leases noticing heard sort seeing as in through and in maybe over a you're stats, the wondering roll of issue? affordability in Mike, little home maybe West home sort we've Bay see any Is the or in affordability bit, of from other separate Area on started And

Yeah, a issue. now, those couple are, of of indicators, all It's picture XX get would hard important been say, granular to and those years We've it's to that very questions. great down give market those part that, statistics. let are indicators one a tracking great, is I of kind the me level bigger know by affordability we better of and on this for you really this

rent XXXX XX% between XXXX and household So income growth versus higher we growth. had

and XX% XX%, income had then significantly of to talking we we've couple concerns rent and moved that And think that issue we've look been the dramatically that we've it that rent if income affordability rent statistic. higher at now, growth last of as income I growth this from to needle to pretty XXXX ratio. relates household So for some it exceeded so had of actually because that is that years, from, now about the growth caused household largely the that, and I

the couple and considerations for top that one put it's of I incredibly markets. would So these I think things of think that on is important the we

over of grown have periods rents time. substantially We long very

average revenue to has gone up same-store by I XXXX year. by XXXX X% our per about of between think an --

know, financial of, a pretty that's lot incomes coming a of So growth. crisis. And were of as stagnant lot the we out

as that relates again, really And and think up out, we, Jose as lagging are else, respect metros X% of home before is and everything down San there think San those pointed important numbers. it our Francisco prices, And they're exactly was to which in I issue think with home two guess the I X% all a in say so I here we a to is would exceptional you I the interest opposite, price growth rate. what year and had between indicator other is about

So I rates. don't pretty prices significantly recover seen given lower you've interest think home

on home price from expect given So point mortgage I would this these just get better rates. to numbers

Okay. signatures And opine that care a Do initiative as ballot Yeah, gathering that's this helpful the far I I next as as in at second think my here, for think Act calendar to the on maybe topic. year? the one follow-on color. is Rental you point currently Affordability

Yeah.

You it. the know, And it to for a Housing our Prop is, and entity, and the of this. we money would don't well obviously a ballot. X.X what track a in calling where going, been that keep has that I Costa-Hawkins Californians on the, organized and It's, potential amend alive ballot industry there of is been those is where it's for by for support contributed know exactly case certain in, Responsible we kept Michael of amount early and Weinstein that effort. too carefully to proposition think, that a essentially there XX XXXX And tell signature-gathering pretty that's Rich. We track it has

see what and happens. we'll So wait

XX governor's campaigning going balance that's currently as here. But Again, about cap law, could statewide again, background, type Assembly the started rents and pretty last an produced respect XXXX and the years homes producing out need gouging I And back for that million because there's control XX,XXX plus CPI housing it's a, in the with Senate, current year. about X, the think modified in a of would the the California at to by it's housing, in a proposal, it proposal way better campaign, XXXX, which indicative from the still to we for anti also By the be on of in X.X Bill is least which on the is California. at on average. year discussion rent on a that's Senate of XXX,XXX that

more And the and so well. the base he balance housing tenant need as at trying time for to the as with same the recognized of that protection

I balanced have more things that think discussion where we come. will see a and I So these it's to think

long XXXX before you You're going update might XX get what happen on action on see Prop respect to X.X. an AB to see with --

Thanks, Very right. good. All Mike.

Thanks.

comes from the Goldfarb line Sandler of with Our with question. proceed next question your Alexander Please O'Neill.

just outmaneuvered Hey, whole on or onerous that any they New York where out landscape housing you the that on factors actually Newsom regulation and that that landlords New into here of you would and rent to that question when good more rent York is that? was in legislation is passed and there. California following Governor where happened restrictions it morning up wants of Mike, political seepage the by last creep sort so of control what housing, California. seeing discourages of the in are Sacramento are then maybe California the, the it renewed promote by that where or to any and Are control cognizant led want be seeing being wouldn't inhibit discussion

question, New suddenly good people proposal a guess I that. in there thank very It's could was before my is and York, almost Alex, passed and all happened perception that for that you it was a and

dialog the thing control year again he to reasons, housing to Prop of equation. because ago, that ongoing. governor, again, and is it. think consequences California in and it's think in unintended to this that so perverse need balance a in had we've different are noted I XX especially why for has dialog the this another back California recognizing time rent there general produce a understand of is noting, comments incentive to and been I the not have so And it doing is react this the of his Whereas variety for was important he regarding properly in in going

level better so it greater and discussion I at other a than of the have it's probably been around that in thought-through countries. And some has states here a the think think I we

then with And think Amazon the in of or you're investment Amazon that Bellevue is looking there, investment specifically market, guys that maybe play Seattle your it we see reassessing moving is doing you to actually based is for do at growth would do the footprint, on with happy Bellevue? in more development existing and you Bellevue where or Okay. the Bellevue want you you guys Seattle their sort all how that to office are focusing

risk. say focused development supply because general, It the yields I'd respect but respect on also suburban urban say to to with more Bellevue. both becoming a office in we're all depends downtown issues. We apartment I'd actually in development. core. of than of love Seattle. We number urban more focused and with There's love

And another trying got at to concessions having avoid are with four time. cities that competing the the three, one large these so or five because ups lease you've same

So weekly concessions basis. it's a project These on far. that literally difficult forward change to

given that long rent our that think growth just in areas Hey, And for try periods suppressed massive evolving to areas so now. avoid of I is been the development too. let's pretty has those the have strategy time

to So deal. until we continue a can't will to a we're predict at lot or I whether going and Seattle outperform to is Bellevue monitor closer looking

you. Thank

line comes Rob next of Montgomery from with Janney the Our proceed Stevenson question with Scott. question. your Please

its that John, first morning. about any said When earlier. and are developments of Green, to was in layer I pipeline those either range? was that think was year of of weeks. terms or lease-up guys the that a going supply a free. of And renewal, will in stuff might first currently having going Anything month outside Good be sort it then some Station you in that concern concessions lease currently you six Milo I one new on of you're so, think that's think to next the you that be talked you or concessions up? ago have was five need you completed quarter phase the and that the development to

Well, kind me answer a give broad a let there. of

delivered free a the It's it's It's this as far doing flow. is logical rent. matter is vacant drive we is why the a that they're weak. lower vacant are market net of really the developers they're that as a unit, what incented absorption we getting matter two option trying to qualified resident fast effective cash and is why doing and with one option many because are your amount the significant when not of unit, greatly So

the economics one we assets, for different we mean, So development. those we on have have own the when when the course, and, But I same our right. asset, we same-store of players of there -- it's are

is best and are the for try what the look what consumers that. So marketplace what in we for to looking to react and works do

into is as time. So and our daily quarter. get weekly. fourth to the concessions It But intensely within that these we definitely we we'll increase over it usually I do our expect plan decisions happens make because literally reviewed

where of So good it. very all all of But at. we'll and follow just can markets by the about we pre-leasing our strong, our -- they're tell you developments performance, are feel the

was extreme alluding them supply Any new before? Mike to as of facing

in No, extreme we're we this are at we a where not have situation combat. point in -- not

expense X.X% or half Okay. year-to-date 'XX, Angela, store range X% back implies low the low drive if back taxes same XXXX? else that to the down all the growth same-store I going something And of there is for a to then, the of at expenses ones sort that's property is for on look of half

by it's you're right, taxes. actually, property Yeah, mostly driven

second lower we some So rate key than have expected, in refunds the two course recognizing drivers. of millage half. between that in and the the we're coming Those are

Okay.

than one So BBB+ the like and other agencies more A- market concentration, of keeping from if you squeeze Equity? in. rating an Maybe what's I sort guys versus Avalon can

Believe it concentration. really not, or it's market

Okay.

That's driver. the key

the one the rating state. mean, fact Having so states are it's with Yeah, on the the versus know, agencies I focused tough all GDP I agencies just the large. and as that underwrite. of think is the incredibly third what's of and number that, it's the to we actual relevance California has said rating largest -- like the state think I diverse

line Ford the of your from question. with comes question Karin MUFG proceed next Securities. Our Please with

is supply about residential. potentially of this medium- $XX rent in that looking the with to billion in like it affect Lendlease, to chunk was morning. sounds significant significant real Bay develop good long-term of rent large announced growth, estate region? that as the growth for Area market see you earmarked Do be a the Hi, to a could it Google threat enough

alone. is not Microsoft has Mike. program. this a Yeah, They're

are has housing, impact, I any corporations other to difficult of think figure longer but think there going time. I that reasons a short-term there'll important And student corporate one periods hiring some short lot It mainly some the remains over not in out term, exactly to them what's don't housing probably concern the University proposals key housing discussions the strategically to about to Stanford getting to actually housing. happen involved I of Bay be and is is mostly housing Area of over given are and think the come these of their price. in

the in they So of I markets, impact road this the that major hiring given these Overall, have programs, think think the material face ways. housing Area process. home, if relocating the assure we'll it's that's of to I don't any think someone cost positive a and have to the you down but I a the size don't that's can a again on of Bay that that going

Got going development to pipeline. it. And back then my your second is question

in underwriting you got could fulsome You've can extraordinary are quarters, those your an of a and today markets. share the development today? the your amount XXX penciling and including and Bay six lease-up Area outperform think coming Do those about in deals in environment talked you next on you the were lot yields strong

And stabilizing not of those will out. X.X and talked about and echo in comments the it this be I a little year, a but bit stabilized yields maybe it is range. won't think couple years next that somewhere today we've be I'll

for As people that all to want a move construction because have of -- don't and deals projects, example, you can be imagine, into development don't components done. want a construction the to retail retail you to important so have, of want components are you lot

few is out. that a So yield years

so think will for next see some I increment positive dramatic. so, year that but not the And or you

on on rents that yield are number trended is today? And X.X rents

stabilized rents. on No,

Stabilized rents.

thank you. Okay,

Please the Baird. Drew proceed next Our line Babin question comes with from of with question. your

on question follow-on quick A morning. the… good Hey,

morning. Good

morning. Good

increase in delayed, occur these of might explicitly obviously, there drag, lease-up next that that an have did taking coming pushed early kind there projects guidance out? with getting year? in some properties of caused development or 'XX where any versus the lease-up FFO might expenses, those to on the getting some dynamic initial Is you the properties mid On now 'XX

ultimately say couple for pennies, of you're Yeah, capitalized I Drew higher at our the interest looking let's impact guidance, on on think $X.XX FFO delay year. the and a which S-XX, it's this the

this manageable. what is as that of is means if It's year dilution to tougher ratably concentrated say, occur if delivery, continue instead next to So think that just out, that obviously one time more more the much be supply being we going time. it's course, that once of moderated happen and to, all to it'll that dilution as lease but the we come more impasse is, will it I push they over some this occur year, of of over similar were get as positive they to much at digest saw

one for some that meet that. of partnering corporations And question. to proceed, to of topic need you in ever for see projects of kind thanks would them some he economic under more conditions project? these of of some the consider related make would corporate what with Okay, for I Essex guess, right housing Essex? I one kind sense rubber the some And guess and really, of Should them titled, the to road, the getting

A and with entities there work of included development some of opportunity or have have to more -- exposed Mike. companies, the these and proposals housing these so process, community. is an this broadly lot might to Drew, be corporate be RFP-type they'll some

So will it to it periods projects probably time. of isn't several just be over going be us and

I'd you it's closely too So property the tell say it the again, early we total going And pretty exactly what to to that's competing track means. rental amount the be of pool down know entering road. as

time impact, us So I during to huge well. a react gives as the if we construction period think saw

have development them venture in you're complicated change We're many reduce acquisitions much how the as what function deals deals enough for with So joint those to at They're more of different. today venture it magnitude. is we I in whether what a spec is deal that actually you do exactly be, today look pre-development markets going about do a money yield measured a talked upon period to and and terms time a work a premiums it joint over or period how time. spec ourselves a every in of the we're depending before don't terms at on deal, the I would construction, think really much to to we on risk market can and have side long rents is the development we we -- there bit that how looking while in those begin to venture to speak. that broadly upfront do we And joint some I And little ago. at

appreciate Thank I you. color. Okay. the

Did don't we I -- hear anything. lose the

Operator, still there? you are

Operator?

line of from comes question Wes Our Golladay Markets. your next Capital question. Please the with with proceed RBC

everyone. we're still good Hey, morning on. Glad

use supply give be think be as good comparable, in like last looking put permits and be it the the supply going well us your it markets, some bit, trying to had quite to I'm in you slide in will but peak wonder about XXXX will next on XXXX? you when a if thing slides have you guys year data. Going one at that quarter, falling you that I can to insight in is the looks same

this John. no, yeah, is Well,

Our expectations, to starts it tick down.

So slowly mentioned, plateau next a starts to expect after right going now down tick as I and we it really we're at year.

now. way, at supply right that we're peak it put like, you, where yeah, So

that big when Okay, enough you a then the those uncertainty political mean, bit falling cost we quite the rents also having middle is that? or I And by think growing fantastic. since permits, of last the fast you a the cite not mainly they're to that factor year, look are started at where we is do due in

yeah, think, I I mean…

all It's take increased bigger has I'd for bigger to adding getting are project unit and that that yields you -- dramatically. Both, you per the pretty say much get It's expecting, cost how compensated you and do and maybe risk. yeah, are is is the above. the risk how sizes types And that both. what of do

preferred there. we more costs So that of where equity and these and increases when rents pre-development causing come short in environment this equity some that's delays with you going a given up cost equity period lot are preferred more, and deals these And are in deals. need of as the than we sometimes, equity faster see in

construction relationship the So yes, all it it's all involves this. between deals. costs But and development

loss you you're quarter -- final if leasing may. and I and for the new and one, Do one to have lease? most Okay, renewal your the

Sure, you. I can that give to

in quarter, X.X% X.X%, came are year, So of lease were year-over-prior the or the time X.X% is be this at the to at going because which up seasonality at high and for year-over-year in year's renewals prior new we QX point and loss quarter you second leases asked at quarter to in point. the

So June. to it I'll compare last

better points X%, up, loss X.X%, Seattle a it's Seattle and all June at we're about down have last to June. X.X% basis X% Cal has so than X.X% so last so and Nor some, rate So So gone Cal XX year within it's lease ticked and and that, is a Nor Cal for is average of

proceed question. line with SMBC. your Rich Next Anderson from question Please the comes of with

good out Thanks, there. morning

rent you've that ago and go there get, if of many side over offer to to to today. I'm cap there higher where annual And that your kind So situation rent that were enough And, rent dare sort on it or there, you I could is a you years asking is growth Mike, to moot get of supply you has is or level? the markets conversation again you kind the fundamentally opinion excessive I'm in that control political simply reignite readjust of that's a a point XX% wondering, your guys increases. in obviously, recall

a Yeah. Hey, Rich. good It's question.

think there. a in is we key I probably where consideration cycle the are

you you can more very being end constrained so by primarily through and aggressively demand a we You more than when get affordability rents growth and type tend and growth period, and supply imbalance with can housing rent jobs a income you growing recessionary for push go to up issue. little there's now, now start development,

growth XX% capped So we internally rent relates XX%, much again. for exactly would well, correct. more and you're had at the it We when we it as to do our years, renewals many robust

concerned thing about about think always on always number to the but regulators, also concerned the impact I etc. and right I local are one, we it's, do,

fact, and trying they very about cases, some Hall tell back officials mediate and these when the connection go immediately. example, push groups, And rent part in to phone rent residents local the often some rental we get and For these large with take in situations. we and of in almost increase, of calls increases a in CA some huge into city the get

So it's to just at good it's something XX% practice we I again. would and and think that cap renewal a do done rents we've

wondering as that where but some development I And office multifamily, office meets to then could on I'm earlier if I rubber is stupid comments it interesting be which there guys future development, great. the for usually Okay, demand really as in road track you pre-leasing also relates found there? development, the of on your do,

the, can office Rich, buildings but I Yeah, and think agree will sure completed. will, it those all be eventually, -- for we would change

the In In short property matters longer fact term, John, what the absorption is exists more. really right. you're yeah, the that matters. term probably the you comment? want So to

XX% add the all in, there Yeah, the Mike on this average on West and developments across market. the pre-leased Coast referencing overall that was about

going office our most So they a markets. these on that they have the development at of before days, typically least their big is of in huge pre-leasing and tenants or nature ground break portion

to me let California for find are me tech is, move concerned comment, and end to going one the Austin, people example. final and some we're that that let And always desirable of Rich, less jobs with

concerned indicator. we're that Can California, us being of to really made indicators by out decisions as the are give to tech that in of view are investments us. We Again, sort what made we everyone -- leading What of are our the leading companies to of some So of as about together sort companies. about of again, big number some is well. concerned being and markets cobble migration try the a it fact a important developers sense tech is doing? big

it's it. think Thanks a I I very much. good Yeah, appreciate practice.

of proceed the Advisors. question next Green comes Our with question. from Street with your line John Pawlowski Please

in a you Thanks. it's the fever breaking tax are and the expecting favorable for you're what could think finally growth Seattle remind rate Seattle? property reassessments, and Angela, property year us this you would taxes of trend, beginning in multi-year the be do

expecting tax say, we're full Well, in so somewhere in the there. X%, middle at the high ground. year Say, to around on come X.XX, the piece, the X.XX-ish,

has crystal I think In was say terms boy, that this for gone years, three up because of trend, tax our property between years decrease. years. the had interesting and three And XX% past It's a ball. those a in of wish tough I XX% that's the year one. I XX, it two was it Seattle one

certainly And a but we XX, so, I that decrease. it, and -- budget didn't the didn't actually budget

so what's And I'm not going next entirely sure to happen year.

some talk we're advice on I just consultants try means, take a that, by think solution, going to all and better call please best you me. but up to if have to estimate, get our

I benefits that persist guess there anything the won't Seattle? year is, question one-time in lumpy shorter this is

Nothing significant.

comp. but We not have enough to are those refunds there a -- year-over-year some numbers drive big

the in about on Washington? saying And, Washington, Okay. Mike, regulatory control gaining XXXX chatter rent in your steam again political session are contacts front, what legislative and

I don't on have any recent information that.

Washington at major any time. of haven't in I So movement point in I heard don't this --

Our comes Hardik next of question Goel with question. from Please line with proceed the your & Associates. Zelman

on on just you. had of questions the congrats strong guys, Hey quarter I for couple raise. the guidance a

has out lay there pipeline already has out across so The permits one and with that dribble early even environment I supply that yet getting delays still in are plateauing is your it's quarters there though supply or completed a pre-development be past that is the risk started been that supply and first you of John on but XXXX onwards. persisted, to but think, now made, that that markets, will declining even smoothed not in comment, think permanent stuck this consistent may continue year-over-year do XXXX, kind of is beyond

second easier. my And is one

it go I'll Sorry, afterwards. you ask ahead.

Yes.

that drive Okay, into process get sites. started are as they're drive that providing a what people and to information the upload at, take to a what the And then on, on we data we reconcile going a sites different and up cloud we have the from all clean from permits said, are so, our vendors we've we etc. down mobile we all as the street. what's again, perspective, literally to bit program that where we as information quite where see vendors We sites the multiple have obtained, and

better on So most. I have going well our we around really what's think hands probably than

leakage other day, permits permitted actual And for then hands what's in things But and at construction there end obviously to so, the than way, around we is built back actually that's the the And the have the permits, now. reasons. some our it right of things, typically built going the more I as we get pretty reconcile think get various good.

this or growing something in point see picture, it take has at I to increasing would we're time start plateaued. times, faster costs rents. supply rents as said tick like We'll change us many it down, something Mike the think and to had but than are else construction

peak. point like looks So we've it this hit it's, at the

helpful. pretty I second That's my guess. From be Thanks. should very one, straightforward,

or how of Seattle an probably kind was others and own market that favorable savings, and have there of saving? was that you try how much to you an appeals just mechanism appeal where will much tax push the On Essex that assets in something benefit a the process get where where was kind of or some who of

Yeah, It's driven. good market mostly question. that's a

Seattle assessed So millage so it's this across a is board. the rate and assessment,

we is As that's go at but key far the and year a all there, our not savings, refund process there some benefit driver. as through every

from me. Got it, all thanks. That's

Thank you.

of line St. the from Haendel comes question next Our

proceed Please Mizuho. your from question. Juste with

good morning guess, there. I Hey, out

Haendel. Welcome,

guess the in on be your your the parity I footprint? I'm is Portland, weather you all, Mike, peers how? keep What's if to been an senior Honolulu, I'll nice or in here changed taxes, your goodie. to view at regulations, there's on footprint if curious, not and going seems Denver, is on has California easier, and been Hey, Essex getting increasing, but current with evolved start once, it so, oldie cost, view --

and all -- into Well, and and we at around a good very we and start reviewing we kind many them the of means. important with to that, process year through down probably country Haendel, that and and most our with what of here distill Board the it question essential metros it's question demand supply a strategy and each of it's of the look try question and major them go

where here and From cycles going high of think an you to of markets and an virtuous we very there that difficulty and the And that's building is world technology question up something this keep in to housing places. premium the last on probably higher, year which going on and go few ongoing see wages a Essex. so, of which is it's resiliency of be for ongoing several nature along that rents at with constrained is here supply in process that ended we the higher these us cost is the with the allows housing of this cycle drives to

to concluded the we we continue conclude markets. are in West and Coast well-positioned so And

Prop back guess, know, Thank headwind. being you XX clear to, in guess, growth, hands, it's you the for that. I to very very And then, much I as buy hard well California. Not a trades

multifamily growth game in for So the building Golden State. for the guys the only really is

pipeline your to had that's penciling to penciling growth, if construction you anything mixed-use the development could I'm so, or talk doing mentioned. And getting rent as guess as potential costs shadow the maybe that, rising if guys you interest close an where? well. or I notwithstanding And future So curious there's given yet add-on about continued in

other fairly that's And a period Yeah, smaller quick to said be couple Green have And when to that I development current costs are on. of we our we some likely as There we land of there projects growing Park start pipeline rents, a question. Phase it's do than are X will we means for and the of we greatest continue are and see good challenge behind is have deals construction that between a the earlier, committed inventory. active is Station stated because there look earlier we're as exposure. the we faster financially when that period which construction a to

seen again, So not. whether on to it's some continue would them we with working remains and we forward deals say, I we we move pretty are be challenging. or looking have that

to we've we not when upfront during you that committed in do then in we eliminate the period where and of from very that risk the risk equity when when continue come been -- don't preferred until and the over construction. to We and will we're financially So equity that. period active because preferred have again start transitioning entitlement from at construction part and we starts

mentioned, the of As above we're of there. range Angela the top commitments end this year in terms

try trends it's mosaic because little So is deals unique scheme we it of it's every pieces kind this -- and unto broader is in to itself, put every together of larger sense and make we makes a decisions that unique. of is deal the a and kind bring the to And hard things. down the to bit

of out our shortage key good are component the look would and that at whether take think for that REITs that I at all mixed value they I same risk and other deals opportunities. we have of try there mixed-use a other having decisions obviously there interested use discussions will to deals sure to make because above relative more of compensated the that that we're make for the components. no multifamily is part land There sure and have are look we and other development that actually in So say we owners There many the are component. will other, a that are

I the like to closing Michael end gentlemen, to would of reached session. Ladies remarks. And Schall for question-and-answer we have the call the turn back and

thank joining day. you, summer, everyone to you the forward operator, call for to safe many Lynch the of seeing and We good look BofA enjoyable September. hope at the you Thank today. Have like a were and that Conference I'd having a and in we Merrill

today's concludes conference. This

you lines time. disconnect Thank may You your your this for at participation.