Essex Property Trust (ESS) 26 Oct 192019 Q3 Earnings call transcript

Good day, and welcome to Essex Property Trust Third Quarter 2019 Earnings Conference Call.

As a reminder, today's 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. 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 President Thank It my Mr. and Mike host, you, Chief Schall, Mr. Executive Officer Schall. Essex Trust. to Property introduce your

You may begin.

for to open welcome, call. and Q&A. by will the expectations. will that which was the call operator, our to Kleiman quarter with share me quarter highlighting Burkart third of FFO begin everyone, to third you, midpoint represents earnings guidance, quarter XXXX. our compared quarter Thank our better our comments Angela Core follow and conference the John exceeded before growth than we I the $X.XX third per results of X.X%

of guidance compared provide the time improved at the summer share more dramatically will a guidance the are start the the This is continued details Angela leasing year midpoint. this guidance, by execution increase of to and $X.XX about core year remarks. We full raise which core quarter capital team. and to pleased FFO third the in year solid season, our increased our by and we've our cost full attributable Essex John to per is to FFO year their the

expectations XXXX Turning to our the markets. in for rent West Coast growth

throughout that impact In of resulting years, California's the scenario high based of our more urban job from third-party level of periods macro is our and S-XX is areas, metros. submarket we continued apartment supplemental. sources. obtained rental concentrated the key research recent U.S. a become on ground-up apartment Page this providing concessions as practice power. substantially on This scenario Key have to supply in budgeting that We our baseline forecasts, assumptions on and growth pricing GDP often intended to such supply in be has Essex

the grow targeting year very market Essex invaluable to a XXXX supply important adjusted by again, estimates acquisitions rents than in average long-term we ago. more forecast for and proven near X.X% August our look estimates growth areas unemployment Overall, of expect much we labor XXXX compared of we Overall, apartment of have expect and Once XXXX, supply rental in to our a delay in an market conditions, S-XX continuation XXXX. representing Therefore, averages. dispositions. are rate ever, expect targeted X.X% X% low tight very of exemplified as the to like

The for XX X.X% from is and ago to compared is XXXX. nation basis should in expected continue with to to outpace significantly XXXX points year a tech and job reduce California expected job This Northern market growth down slightly Seattle. growth X% in the

Essex deliveries Our markets, apartments supply indicators XXXX supply certain County our and forecast. with and the outlook factors are and Orange higher in XXXX positive lower including around to XXXX metros, apartment compared contemplates in in in that of XX,XXX San There total confirming Jose. a several for Oakland supply impact and variations meaningful apartment for similar Seattle supply in

higher. constrained may but growth, markets they incomes push labor Tight job also

pressure issue will expenses, housing pressure the constrained also on that they help operating affordability years. for wages higher rates will While several past growth the has relieve

several the the Coast in the historical this of demonstrate outpaced Essex the percentage growth quarter Slides for past accelerated the XX to context and supplemental rest to added cumulative a this nation have decade country. to markets the and West in points job growth on by has We S-XX.X years. the has income basis compared superior Income

continues Office healthy to a at development pace. expand

feet average markets San have the our rent had and ago, of of the with nearly just existing and compares of compared which year million Seattle All national X%, as of development third growth X% well office very square positive are X absorption out Bay Each pre-leasing under Jose XX% strong quarter XX our space demand. to strong growth of in office as Area solid X%. space up and markets to respectively. currently office office or inventory, accommodate and rents building to new offers, Seattle office

it's the And at Facebook headquartered in the openings has as to that top very Lake continues job over of openings South and Amazon's now X,XXX up tech market, Hiring have These to an are in XX% market, X compared firms, also year Washington Essex which expanding XX Seattle in while be in California are quarter with of XXXX. also third the in Washington, and all compared currently job strong. companies rapidly up are Union. Apple XX% ago. employees notable Google XX,XXX

We the the transaction our in activity. XXXX of acquisition transitioned throughout market property to a in being seller net dramatic net year. and XXXX buyer in from cost capital to a given a of improvement Turning

this a acquisition As closed for acquisition a deals force our XX, and result, is through the expect for become has remain to million exceeded to market $XXX guidance we acquisition range year, competitive powerful of active with remainder of leverage The the housing. year. positive we pleased have increasingly multifamily high are of the September end as

early down trend The higher slight rates upward rates, XX with basis for quickly cap to has XXXX XX points. on to We reacting has that by value more about this apartments reversed XXXX, and cap market by being there property was conditions. we added marketed. accompanied changing In pressure believe demand been and late a

trading in properties cap XX terms between indicates B rate A rates, X.X% cap wider. XX basis A a locations activity of In to B and X.X% trade that typically points locations recent in with properties

significant we including with in relationships sheet robust and track advantages, and research, strong liquidity. and balance have selective record and remain a this we great ample will, environment, We

headwind continue equity to significant because a yields rental As noted NOI the that to and several for years growth development. increases cost we are direct over have construction previous on calls, development direct primarily compressing investments preferred past rates represent given favor exceeded

Most the to laws Assembly AB Bill to this to I new like CPI comment call intended before measure. XXXX, Governor turn on month. of XX by build California's housing, of X into signed were over will bills Lastly, remove that the Newsom and and anti-gouging to housing-related barriers passage John, I'd affordable housing earlier expected these housing plus as incentivize to an XXXX increases are X% of rent generally is production. cap fund more law

policies. With to have country, we've legislation of a legislatures and our Essex, had advocate continue At regulation we impact not theme to amongst expect a housing rent on for a across longstanding limiting will California rents to renewal this practice and the XX% results. committed recurring to remain do material smart

over our Burkart. John to COO, With that, call I'll turn the

was than Overall, Essex. with follow August, markets historical Mike. QX a good peaking little Thank later the the rents for quarter early a normal. you, market in our pattern seasonal

dip portfolio result, September, higher a favor same-store higher below X.X% allowing to basis quarter continue achieving our the lock rents As of XX the rents compared to to increase to the market taking or we over third conditions into period. occupancy, strong in September XX.X% scheduled year's to strategy occupancy rent prior This advantage XXXX. by points to enabled for year-over-year us market

scheduled better third point increase in was in year-over-year basis This position rent us a the XXXX comparison, sets up quarter XXX of forward. For growth going X.X%.

X.X% lower year-over-year than year's trailing XX third the which Our over with were the September. basis, points occupancy the is in On X.X% up from period. year's was quarter point total XX.X% turnover portfolio is XX-month for rate XX%, basis prior Revenues a same-store period. basis year's a This XXX through financial prior decrease prior market period. period the the rents of grew same

guidance. be to continue on same-store revenue we Finally, achieve full pace our X.X% the midpoint of year XXXX to

supply at XXX Concentrated percent submarkets a urban the XX On supply, basis versus points. urban basis higher downtown theme this growth supply of stock Coast multifamily is markets projected during to is markets. in as West a consistent suburban in X% at cycle points downtown in XXXX be

we excited about including we working as our platform other as designing various on, Looking that the our CRM smart are many vendor, that units forward, X.X third-party be well maintenance initiatives. continue with collaboratively platform new we're a and our mobile initiatives to

and/or various from at or to or impact over well be to the experience to labor. and in felt X years. improving next over the are process all customer pilot stages technology tracking are initiatives design their leveraging X XX reduce We proof-of-concept initiatives will The as rollout, separate to at directed our employee workflows, as

Along year. top South. third from quarter, strongest Turning and XX,XXX East around X up market. decrease at grew is jobs, job X from were supply now tech rents multifamily while XX,XXX Facebook revenues with Submarket Seattle in growing to average in growth healthy forecasted North year-over-year the an remained this X.X% market in market the paying the same-store in period the update the for the markets. market continues these X.X% major the and the of to expansion Seattle job major With remaining Seattle slowdown. to year-over-year, In the increase on Seattle, the the about delivery prior over was company a our half Amazon benefiting quarters, in quarter. the same second year, in third consecutive with MD X.X% the lines, XX% openings of XX% our X.X% for for side adding CBD, in an industries expand X.X% U.S.

Contra Clara achieving Costa to for by San third X.X% X.X% in at led the achieving same-store Francisco Revenues were X.X%. up the California, period at X.X%; Northern Alameda followed were and at Mateo Moving quarter. X.X%; same market Santa X.X%; rents year-over-year by San growth;

to We started X Phase XX.X% concessions. offering now Area. X Station of continued to weeks XX.X% is concessions. X our lease-up And X X XX.X% XXX Park to leased, we now weeks offering X Folsom, offering X weeks now is concessions. Bay leased, Mylo Green leased, lease-ups

is Mylo, very Regarding market Clara the strong. Santa

We mid-August available. XX.X% to have units becoming in prior asset pre-leased the

was delays, construction X.X% Area year-over-year However, averaged all gains the additional X%, feet in Francisco, we result X.X% XX X.X%, million and Bay of at as activity X Oakland the office space submarket. business San markets properties near to leases. San square Tech grew several a Google's in quarter. expansion mainly land an Diridon acres the Sunnyvale, with largest growth XX third the San in Jose professional lost and seeing including attributed in of for Station respectively, of in activity, and the South robust Job acquisitions Jose's services. X.X space,

online California. of to of in first heavily at toward are coming supply compared this year the the The this half double with of number year. units second deliveries Looking half multifam weighted Northern the

in at San in rents County at Orange the and were up same our in at X.X%, X.X% third in As region in for demand market during next the choppy a result of of to the buckets Heading isolated with weakness quarters the the down Bay expect supplies. averaged increase X L.A. growth same-store markets south, period, Area SoCal X.X%. X.X% low Job the further the seasonally market quarter. X.X% year-over-year supply be period, the we from Diego

were X.X%, L.A. quarter revenues by West Woodland with X.X% X.X%. with L.A. for and County Hills the submarket third with X.X% up Tri-City led the

the As were In X the as third new X.X% expected, CBD continues offering supply quarter feel urban Orange Orange L.A. in South submarket. downtown up concessions revenues submarket leases. the declined Orange X.X% year-over-year submarket the concentrated in of the North impact area to with by and stabilized comps on County, to in weeks up X.X%

X.X% Lastly, up by by City were Vista in with X.X% and Diego, San X.X%, North followed with Oceanside our with year-over-year X.X%. the submarket quarter Chula revenues third led

enters As the of approach our quarters usually have seasonally first which year, the the period, occupancy. is and we demand a favor market to adjusted slower fourth

our at out have XX.X% our about X.X%. currently XX is renewals days availability at QX out been with Our X.X% sent physical at occupancy and portfolio

our Thank Angela turn now you, and to call CFO, the over I will Kleiman.

on I year by will finance and of overview investments our structured our brief our Beginning quarter and our guidance sheet and results quarter to John. full a you, activities. provide start the increase update an with with to third report Thank balance third was that share core capitalized including from This favorable I'm interest refinancing activities guidance per the expense, development exceeded of driven and by midpoint low interest higher investment performance. pleased delays. FFO and $X.XX. our we primarily

by our midpoint, core guidance $X.XX X% $XX.XX per growth. a full these year FFO we Following at share are results, the year-over-year to representing raising

low us a sell range million. co-investment our at in low California we to fourth share. is urban of sale the the The owned in in property this revised Northern quarter, The of year which guidance in end guidance disposition XX% pro assumes our asset large take range the will full $XXX rata a platform

or sell in Turning a to enabled to transaction projects. decline strong market The interest recent structured activities. developers rates refinance development our investment have in either finance their

increase early there preferred a As of our loan redemptions investments. and result, has equity been in subordinated an

million currently additional During of redemptions $XXX fourth redemptions, the of third have an in quarter, the $XX we quarter. million and early we anticipate

plan reinvested we a there pipeline, active core to are an fully achieve to impact maintain reinvest temporary be will FFO comparable we the But proceeds early the As these an funded, and redemptions yields. proceeds until basis. from on

quarter, XXXX In addition, obligation, which fourth mature. in the for originated mortgage investment million, during $XX a was collateralized our will back in

expect of our a result, a XXX% approximately of opportunistic whole another investing. been a period. million. to our $XX good profitable for As This highly has earning to we It a receive around is return approach payment example over investment shareholders,

subject investment today's replicating environment, be rate lead to estimated in low timing. However, yield low reinvestment will and FFO of to and $X.XX environment per an will headwind this to in XXXX, share challenging $X.XX

used The interest the being issue of million XXXX. Lastly, decline on third repay the capital we unsecured a debt of in debt fourth also with X%. markets this rates to in and quarter to is took maturing activity, advantage in bonds secured of majority $XXX of coupon

continue optimize our alternatives our of will be we to as capital. to opportunistic refinancing cost We consider

my over Q&A. concludes turn now the the This operator and to you. Thank I will remarks, call for

[Operator Austin from question first Capital Instructions] Wurschmidt Our Markets. is KeyBanc with

than First XXXX is since changed else guess, just could getting initial in view. was X.X. passed, mind Prop. XXXX, vote the swing curious other really in AB in that has question your around vote Prop. what XXXX the potentially And I XX your in I XX,

not we Mike. XX it's are. we but be certainly that would here Yes, up Prop. Austin, on Okay, this hope we following quickly,

contrary, So be given to bills hoping actually, work. passed to are the time would the that we

signature signatures. what's probably They're the et order duplicates ongoing cetera. the need to XXX,XXX get gathering anyway, They for proposition. XXX,XXX around is And and around in so somewhere rid of signatures unregistered happening currently voters, is

So they still have a ways to go.

know, but on legislature the Prop. remember would you victory. before work Hawkins But as again, have little in ballot And in decisive county say, and to defeated Responsible would overwhelmingly existing XXXX, bit battle, our was in kept XX Housing going Costa all I was time think bills place proposal. lost the part the X used a Prop. time this focus we've the we're in for to As for Californian think entity XX box. to in different just of a and a that California. are that I was I the, It that Governor like the the politics some starting

focused as happen, ready to it's I early still we And are think on organized So what's it. to too but to we're exactly tell and definitely it needed. going fight

that say But just we because changes either XXXX? would significantly voted view the taking something from pretty to anything in bill a was that sentiment-wise that or the I voters all proposed you amongst, it guess, they're voters obviously in know different down general

Yes.

again, that palatable think voters, make sense. have that to I another been more some it there So but less changes palatable in

being I the exempts there vacancy as that undesirable. provisions. for again, homes viewed individuals element, So own it then less, But X example, is from or a which will control be think

this Democrat recall, time with respect it. think very different Prop. the offsetting the think are I party as And So because, endorsed XX, I there to that again, pieces are politics there. you'll

very that's this think unlikely I time.

think come But that a bit again, it will be supported early that guess. conclusion, little it's down. to still doesn't I we and So to get voted

being have Appreciate that. been growth that the I there's material AB finer XXXX XXXX. Okay. of put you were said impact revenue wondering point that just you a would then impact implemented what this on at same-store X if not know we And to a looking Was and year. could from if Jan

rent try relatively from market we market. to we renewals John. we bring we caps, things. this below two consistent which or done always couple number Essex's have And Yes, slightly One, with perspective, the for is The, on at and years, focus typically, the are is a we of XXXX. again, self-imposed

ahead So we're really our with the not market renewals. of

said that the you're the of as issues is a it have it effect with on pushing relates So material fact and growing on a if term. are of ahead not will roughly market X% types and there of 'XX into would year, the so The 'XX. nor bit that had is friction or, a you rents run it probably can little to that

but leases price shorter-term we of few relatively some get Sometimes, have those. premiums,

having I obviously we'll that don't see in on a our issue impact be business, that next quarter. our will So material it really whatever guidance when but include we

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

I do with wondering rent was what results? cap, you and CPI X% as on the on that will your have think renewal as same-store impacts rates far your

leases, add Yes. renewals will pretty rates to year-over-year. our run John, this. at and think probably lease I similar September want for new to numbers John the new 'XX We

overall the was for New X% and company. X.X% renewals

a don't again, to huge to we our impact So you see that? do having portfolio. said, add want because of it that, John as on John,

Yes. No, marketplace. Again, how with renewals with look we've answers caps, operate, the consistent years that look at that. it's, and the with with we it's the we I we self-imposed for market again, our mean to respect operated way how how at

So how a material impacts again, really but I working not all may and we relates minor as yes, through to material be not and adjust, right impact. just it impact. terms There do it's see now, a we're that

Okay. my capital that question as investments acquisitions, the you're attractive, and on then of versus you're you, taking development? on doing underwriting see now that there far the where that update with return us any getting And preferred differently cost second acquirer is can assumptions that before? time being this as And more are major now you you best

Sure, John. This is Mike.

the look past. like things in at In we much underwriting, terms we have of

on look divided department ranks submarkets. the growth by XX submarkets again, our We And research submarket X-year transaction our into rent based at will every growth. rent

growth time. rent a over performing the perspective trying of so we're from period And to in invest top submarkets that

respect best And terms of overall acquisitions, it call at look And that think do relative the to on portfolio. So that we performance, in bottom that's the of the we'll I part how portfolio to with that. we hierarchy.

markets are returns and So sources returns balance those metrics versus are what to program. we are understand share are in the course, and FFO how use words, money per Both key that share core acquisition an NAV the create versus what what whether in implied available then, how of the our private create how other, at other what value, sheet co-investment per the of can try we in and we on growth. to look we, of we stock

we we how underwrite go how no from factors different these really all into a it before. and transaction and So approach

with question is from Trujilio Trent Our Scotiabank. next

guess, do XXXX, to space California growth a I the continuation to growth, has other to job forecast? or say the looks higher that preliminary into And Southern deep what outlook requirements, a you your job On seen Southern that you for a be and seem as surprise there, basically think year-to-date. you you about upside now funding tech we've forecast than would likelihood your California in downside and markets at dive office VC look factors, growth put what of

It's the wish answer. our a we At this of perspective, question. from it tech remains the if part might tend answer, a point it but that did markets. growth good North gravitate. influence that and what at have would, still what to you look I top if is, it decision-making our And I we, I have the in time, portfolio

is from some Although definitely, to Southern benefiting California. tech of the companies moving betting, operations Southern California

definitely advantage. some Southern of that is the more California but out Bay Seattle will Area, from benefiting think get trend I

several As years. in been low range it's California, Southern X% for this in

it's huge, part jobs. amount of our to bet move is It's lot going and largest of people a a to huge guess. so It's portfolio. the, would probably the unlikely, that I it's a And

that reflective a hard to more States. economy, United work. diversified of And the so It's it's make more

think that And a job vary the so to by whole going not practically I lot. forecast is speaking,

a we this If the past originally, year, forecast. California going 'XX said, to you look ago, at Southern a year year,

we California California Southern at and would X.X%, had X%. be at Northern

better. So It's Seattle quite done Northern X.X%, we've done and California. a a about better bit has at lot in currently

markets. been it's the by driven really tech So

California is think think view Northern And do are that Seattle so and our way to I best And tech wave. ride the we that.

view III versus maybe why development yet schedule, looks, unit then on And little a million about about Can $XX,XXX more a affecting that Park of at that that's construction some nearly cost color and last I the to and Station looking Appreciate up complete provide quarter. bit that your perhaps or your how is and future starts? went noticed context you development Green it's that. talk $XX Phase

the growing We, us Well, that as times much about compressing the many rents, than commented see And it's go development yields. you before up in X go construction that's it construction longer in it's pretty actually I've of this and X, that relates and and significantly. building III, are see development from Phase labor shortages yes. direct difficulty script type and to faster costs specifically, Again, the Phase as periods of by to cost you similar caused Phase problems. under

make And from so of like that this comments we're say is, to part the but development, again, different direct about we that I'd world. that we are

And seeing outcome. you're so the

is of Shirley Wu question with from next Bank America. Our

So seen 'XX. my supply first that in do the question has with to you've

forecast, you 'XX. 'XX forecasted around in in XX,XXX coming units online your So guys

was slippage be 'XX those I do you anticipate into probably are in. to that the what going going about and So were, submarkets curious

there This are Yes, Shirley. is Yes, some nuances here. Mike.

original very close back As for If number. still go were that XXXX, expectations very to 'XX, we're close. to actually to we we our

but the 'XX research good bit give great I our supply job have building was, has change something the up So sort and the forecast, There pipeline been some between supply lot being that pretty than is the What really it's greater such delays accurate. will cadence our delivery. there been of what implied doing a a of is on a and added value. department that credit of 'XX the, little for were

we the in delivered QX out will XXXX, XX,XXX roughly units XX,XXX and about XX,XXX. of that In total. So to in had XXXX, QX, go

on XXXX that projecting basis So we're supply. quarterly to is QX a peak the actually

again, and same and This deliveries the we've we in overall, which, supply impact quarter, but building in BAML impactful it it's hit the throughout peaking first XXXX we on a more will now as will will the number X or have on decline our in that So more And, an it's reality presentation like in a are to guidance. though ago. permits even couple, year-over-year, pricing meeting, looks on, the have obviously, noted at our peak XXXX. year that second is the

so And number. that about we're from XX% now down

we permits. supply think the peak think XXXX. XXXX, we'd as get that the QX like to peak We of deliveries we goes So year in as that on get it hit we to and looks in better the as

Great.

So on then guess, that. follow-up to I just

Your strategy going into the rates early 'XX would be a to keep occupancy bit little and to pull on back then.

you're Our XX.X% Yes, held mentioned from strategy a as going in right portfolio that now stronger forward, at purposeful. was our out, and remarks the I my saying. is upfront, benefiting very occupancy, We the peak the peak and this another rapidly good thing we us. year, which supply that's coming rents, But leasing from. was at the repositioned then that again, benefited we recognizing later portfolio, season in

When a pricing us and our lease more enable week we choppy, So too let if some hold then say avoid have hold we that, what units good which our clear start and up positioned back, mean are position occasionally, higher hold the yes, but supply, is, lows. right in will I'm people in we sorry, occupancy, will out than portfolio, ability aggressively. but, the I to of higher I wait now, things a down we'll like to units. back we're and And

sure. generally we'll do next occupancy the come quarters, XX.X%, favor I our for of some couple So expect occupancy for the down but from to

Got it.

question is expenses. So on next my

but you expenses to expenses at maintained X%., are year-to-date, up your X.X%. So X%

expenses bit we well? just with think So about the I the admin guess, and quarter in of how higher for as the R&M rest was and buckets the different should a little year

Angela it's Shirley, Yes. here.

and don't do on to to assume throughout when them we year, items. second year, expense And we with certain means in it's very a if this tough half, particularly do good then run bit more it's that what we ran expenses in it quarter, is sense the side, look year. what expenses to the that to It's a when at see don't focus the for rate nature, the expense fourth On the so. going so because set our lumpy. expenses by makes window And higher little they're try whenever really do team, are, there's quarterly you'll whereas planning and to execute our last

to so at you'll continue. see we our expecting we come in, as and as expenses lumpiness are to and that of And far the end guidance said it's day, the on range, Having going are in that, are the plan probably concerned.

And our is from question with next Joseph Citigroup. Nick

I strategy. color the on appreciate the operating

if loss entire what's sorry, And but time I this the missed the lease last versus portfolio for year? current to it,

Sure.

of The a to rent start. lease me rent. obviously loss Let is function the market scheduled versus

And so a as increasing year, had rent I phenomenal scheduled year mentioned, our this we X.X%.

the rent a lot was marketplace, we available So took the in that of X.X%. the

September is meant, actually that our XX we equal. out So our a we a they lot which up both versus that 'XX. held look of for really points come said, rent also September recognizing we longer at these for are for of numbers XXX adjustments, the adjusting August if and took of basis together the portfolio, for September basis in of it was 'XX years, available points way marketplace. better And again, then to the, because But that average

it. we're last in of same spot that because So Does we about year, played as more the question? the line your we how conditions to answer were the bottom market we but and money drove down

very just maybe It then does. helpful. That's the on Mike, market. transaction And

impact assets could rate what forward? cap going you XXXX, that think the are impacted For be do broadly by

Nick. good question, a It's

rent it's long underwriting to don't going X% plus I impact X%., X% have huge as market not growth. sure. because is a For CPI as think the is somewhere around

example, parameters. you so But a may rents. recession, of have underwriting where is by current constrained the coming marketplace be for I years think out And some you're you longer-term that might the looks of view. take know call anywhere near much in I longer And the get things CPI markets don't growth. term, plus terms X% on the you everyone rent at those shorter long-term

So will relatively it on small transaction values. I impact think have

question Stanley. Hill Morgan with Rich is next Our from

questions. X come comments back supply to a ask moment I for really wanted just to the and

just still get the peak about First, has XH. out I But ripple like that and through that, once correctly, it supply. bit thinking be and just so correctly? effects past about if past foremost, is been a XQ. should that 'XX into will we sounds we Am little and supply pushed XQ XQ some I'm the clear, this I'm finally thinking have

This to see a what the our bit, have you're agree been definitely for had don't is deliveries. it with so permits, numbers blind Mike, the on think suggesting. yet, respect XXXX with I and We have and flying that to but starting peaks we we're little

so plenty will at but a be level And will in I interest of XX,XXX, it a level off the development. bit below think still there's that quite

So a suggesting going into nominal it just XXXX. not We're think I trend continues it's down. saying we're amount. to And will it

I want Helpful. comment Yes. Mike, interest for to And development. I of come to just second. a plenty here in And devil's to about your back want play advocate

tremendous basis, yield, Francisco? Is You've interest of where have development compelling rates acquisition $XX income, look amount scenario helped because reaccelerate noted or really and negative in that our a volumes, do development there's really particularly suddenly your San around count, any to actually markets relative globally, on like development a by trillion. fixed there yielding, begins debt yields

economic that, large. now be could happen. pull I phenomena, against top-of-the-market construction cycle think cause bottom not very have of that Yes. phenomena. increases that tends generally mean, happen is It the in that shortages cost market And you Labor later to on I because the a to definitely, you. things

rents For levels. high your are at pretty and assets

affordability. the revenue, the cycle not period XXXX income to average of where the given it So likely constraint top growing same-property to and of rent compare we year, XXXX X% happen an per to at the to that's of were

piece. to is well deals this couple triangulate ownership equity coming a one is The take we've way at Towers, the in late because an construction that cetera. both thought the the stuff in said And prepared We're The that would a costs what process. And we position is, Century a are pretty we're place, preferred bank where et development in deal, in And the known. as of remarks, so I as begins. of try equity we years a similar as the in to better coming did point financing preferred approach to we carefully. ago, in

where that. doing are late and, to cities better agreeable development get come the the work. is better. make growth scenario in to is consider more want helping the point And would whole just we generally that's we So cycle But because you and in

is from Janney Montgomery next Our question Scott. Rob Stevenson with

X co-invest I asset? deals much JV Mike, owned. the owned JV of your and like XX% wholly How JVs allow bid points? bear? you the X you're a for can basis XX does think how to the bidding looks acquisitions lower, that comfortable structure bid to wholly more to mean, promotes and quarter, bring this with about you basis when gap be it program in for aggressive do than various fees guys meaningful a XX% XX you points you'd able is How X

it's for venture per mode. upon transactions a format impacts over a in to back forth on JV be in to a we capital depending share. the and sheet. of an to if in the us it's scenarios. good share time, essentially, of, Yes, FFO will sort a more benchmark working sensitivity going Actually, of and have And beneficial larger internal We be on generally And analysis terms the, side. a core them other joint and something, these We're the question. or the on go cost generally per have we're on we as with whether partner pursue balance NAV which

to because not the trying but guess we're if mix. start constantly start future deals. So the affecting we're we pushing the pricing changing And, would pricing, say, what, push I we

want and from core works, that adds value so that an an a NAV well suited, share the it think not basis yield located we both buy And properties at a to per attractive are FFO well and yield, influence we market.

that's we I more. that. cringe a program. our should really of, bid avoid oh about more bid because So gee, And to hasn't We basic changed little bit try we the a thought It lot. can really

entity there, gap this mean you, and more scarcely is, capital because, But right? sheet, it in the all has do opportunities of $XX-some-billion them are there whatever on some be your I otherwise, point at balance right? cycle, given to for you sort

actually. really, not no, Well,

venture I need balance to certain our joint transaction. sensitivity about, in was in order a opposed So premium NAV a the talking to as utilize analysis sheet to we that

through working math just the things. So these on

joint now, And so to ventures. right is our preference, preference strong use

on of it relatively it, do that by the did that You and driven a rather sheet, overall but balance one township, more size will its deal small notice we than was deal was the deal impact.

cap push So down. market rates as We interest, not cap it. don't want possible. rates I our try to high the it's Again, best remain that's how we think, as at look to in to

the around. So, way and really then other it's

that find Our we transaction then and fund markets the deals capital to are best people grow to find in to try to going try that high-quality deal.

So comes decision transaction capital The the comes first. second.

charge monthly you How same-store are Okay. same-store how is in not growth reached maxed pets, of charging when portfolio, trash, then you're expansion of fee you X.X%. an rent? parking, out et seeing for you're already the portfolio portfolio, the Year-to-date, but rental fees, sort $X,XXX second month in average only your the on growth we sort the it can cetera, much question. point, the a industry in residents that in And was and

level is This at in of said, running items. base line that revenue it there's fee rental different slightly a The the John. of going is time. of front on in change But point Sure. the part that's within this just

that line you time, example, flat. then items For that's and And other going there's the is have down. parking same going cable few is cable cutting, moving, fairly you so At pets the where have are up.

mentioned ago, space longer think be nonresidents. to our had while we I term, were I some working amenity renting of a So some there'll with, opportunities.

that that vendors. the commented our with immediately, I picked time, X same peers up, same our call the off at of And and

we details have rents. least. I though And going So is there opportunity that some The we're be quiet think of going level forward thing on do pretty at will but, the big But about with that. always been to enhance always important returns number of wherever our try assets, the always we locations, do research, our aspect and our be our But on has will X Essex. most that focused Essex on on possible.

are fees revenue out days? overall the how these And of you're calling or whatever the fees meaningful standpoint

few a You're talking percent.

is next Alexander Sandler O'Neill. Goldfarb Our with question from

XX the part local X.X, Prop. that to wanted XXXX, I towns XXXX regulation, on and do. of got thought rent AB then you whatever Mike, superseded on

of would Costa-Hawkins overturning what what maybe but given would not overturning, XXXX? So and that's implementation the correct, do

Yes, current control regulations what in XXXX place. Alex. rent does Actually, not that affect are

separately from that. it So sits

remain So place. those regulations in

Right. I the didn't not mean that overrule the current regulations. I going Is case? thought it governs stuff forward.

Costa-Hawkins that's statewide Well, you a law. have out there,

maybe You them separate have each But make not each overrule sense? the law. Does a to They, And not that's have comply regulations. as and question. understanding that entity, one does you supersede of you sit they, next. then local XXXX, the statewide with them. your I'm And or have of

headwind. absolutely to does. you No, you of That Angela, in then the that that Yes. does. early thing second $X.XX in that heard the I correctly, mentioned I third if think, expecting got And Q you're absolutely $X.XX is, repayments the XQ. Mike, was that And and from

may versus that in income business. about to just deal So you But the that underwrite Maybe a And competition think about equity. guys end. do quickly the the Mike, your a asset spoke actually your you going a at you preference for peers that bit are to into want little question on for can put maybe own view you clearly, or talk a the you of how how you deal others, getting work. developer can then, what's

clarify. Alex, finance make the and, on just structural I sure comments, let me

QX does year backfill because that's coming those headwind for relate expect $XXX we to the investments. to toward in the So prefer redemption early of not equity to of, do next on $X.XX million, that $X.XX us

these the don't They So headwind some because is X will really they to fund. as take question up immediately. backfilled, to get to fund there be tend deals months

this But the investment, in $X.XX that's to at we don't originated mean, I XX, a in specific a XXXX. $X.XX relates highlighted time. and because one And and so have I that to meaningful that the that's I XX item, to from number point more single for back CMO that

from separate instrument. item it's that's So onetime preferred a that for the equity. And

And second to then, Alex, the your try question. hit I'll of part

good have back have second realized the more we feel formed, when come our relationships that's that definitely relationships So for of definitely a and competition preferred there statement. for that number a true a equity, about is pretty transaction. we We

have so And We're feel quantity. others. an advantage a good, relative time. in long known feel we We've been pretty the there business to like and we we a

the investments cetera. this relationships equity, We with And have always either And than at construction buy great don't it's developer to construction more an et the the end. call, to those we lot do buy commented option we by get our types that worth trying period. tried, too, we've option because the other an we on preferred primarily at leverage into get of equity on the I've thinks to of generally to marry a can preferred lending relationships, and end

a So that's been headwind.

transaction not you a and the up, to much yield attractive have lower That's So you average end end. would take then an at us.

development, interest at transactions construction the We that converted shortly longer-term, have Again, said lower do end have that direct marrying completion are of structure. capital would a this do preferred opportunities I them, either my couple these purchased a there the of interest ownership as seat we've where in process. the, purchased we're to a on of the table. preferred our and at several the in a or to been after one keeps be equity in deal, of with comments, There later is again, one and/or in, direct in the some coming which us

types and to continue and/or couple not, Angela But to for whole into them. of a just went a the those at we equity comments, we this we transactions. whatever property of for leverage So deals, we referred reason, to refinances, series look looked want preferred ways And number sold of I deals. those sales the on other we of in at didn't looked the some and of did them, refinances think

perspectives, us think the keeps in and I it's that preferred and equity from worthwhile also variety great it's a of So again, hunt financially.

with Our is from Steve Evercore next ISI. Sakwa question

Mike. question, one just Really

about the some sort think altered you're As potential impacting types strategy to what and has you it sell investment of and legislative about portfolio submarkets, forward? age your sort you to of XXXX it you assets, think AB of other of as changes, might conversely, want to is buildings how And going relates that buy? willing of it the

from I beginning have Costa-Hawkins of fixed years looking It was of cities Yes. of prohibited when It essentially rent to extent, does, ago rent at guess, down to our by the the, new increasing, your forms property control that really control to couple Costa-Hawkins basically horrible that pernicious in that effect. a risk perspective hear was Steve, in good at control, the rent development. this shuts portfolio voice. some older

So I'd more say those cautious cities. we have with respect to been

housing et did not Monica, one that oppose, has but protecting and at But become California and important, there's Santa don't Berkeley, Francisco, in balanced the why California that the California, million of estimated change X.X or time, worse. that, bill Apartment just the developing obviously ability by is more in XXXX cetera. renter, not enormous Association beyond discussion it's pretty the because study same an homes probably the the at it's a about a that attractiveness San getting shortage much was basically which be in They'd I think discussion

jobs probably than worse this in Essex produced looking Xx about markets. homes we of in the XXXX. gotten That I cycle, at think, another was then. created since as It's maybe of way is, it And more

So XXX,XXX homes. jobs XX,XXX to

housing the to last the we not shortage down thing And worse, is is shut better. getting the development need pipeline. So

of amendment I the very Costa-Hawkins So view as unbalanced guess XXXX a we anti-growth, view proposal. essentially proposal. an We as balanced

it. that's at how so we And look

own the a it areas impact guess had a but change terms company. on where we to it property, want of very of would in hasn't specific overall I couple So in it huge

Goel Our next Hardik is Associates. from question Zelman & with

X today. you I've got for

acknowledge the permits one, pipeline on those XX been all delivered, XX% pipeline, I whenever that been I I have that months if down it's just completed be Xx what's the But to add up your started, started, slated look just that's over of have thinking here. our in the first last XX if understand The over at supply, to are markets. months. that units last

you lot if about even high pressure I it's XXXX. multiyear think with thing either of in assume How So supply rate consistent you're that? really is assume maybe a Is that like seems like would it kind or what I a a of it that's late delayed, seeing? abandonment

to here's very have by X Yes. by name, time No, with the we're location, doesn't really through seeing. understand of sort different mean need and and times: XX projects data work it's data apartment metros to not a permit really go where are you that vendors take in a what a it I at and the and/or out process. I the there weed shown an have all out difficult U.S. building. you problem. mean are just the trying which consistent you that can in It start is lot can a here. by, know I and you months out

the the And be development so involved assets, order going driving you where look to level, fundamental produced. what's process estimate get they more a really in have are good to what like, in understanding be they a in to

going under in if not XXXX, construction XXXX. not for because deliver So, it's right now, it's to

we thing. to past. Supply scattered is It's better result, throughout have a much what we think because supply our in become more as be around, and again, than used units more marketplaces. view as And much critical we and a to concentrated. drive understand have our the the it I more out they do, buildings we XX but we people we So know, being send

why that's so getting And a lot we it, spend that right. on of time

about numbers. follow. that's tough the sorry very feel in to data we yes, So XXXX And comfortable basic our there. It's out

takes at it California. you that now, in longer well, just just outlook. hard up It's like what to agree And XXXX on in that to if so build higher for can XXXX completely see to No, visibility you to just as pipeline what look you mean that's really you helpful. That must I said, is does right And the right? construction kind under follow XXXX. much number through terms through mean what's to look I of, said of see

you Yes, are haven't XXXX right. yet. you're Yes, on just right. focused We

And have go next I as suspect that, I year. exists now. don't it So get information you be XXXX right I'm a have it drop-off. XXXX, Essex. you within there. now. through don't we'll We'll I have about just sure right that again, talking pretty significant

QX. QX somewhere XX,XXX in and You X,XXX, you units X,XXX around have in units start with

steps front of want drop-off I make have it up. and don't is I that in But the next just me, So don't definitely to there.

new lastly, Sure. And share could just if those the and for renewal spreads. you just the quarter,

Sure. John. is This

So the X.X% the quarter renewals and average. quarter, the, were, we average, was actual the in out on for leases going X.X%. The on X.X% new quarter, our the fourth for sorry, go, here third achieved

Our next Street question Green is Pawlowski from Advisors. with John

of the focused we your expect have Northern Northern continue in stays if next the Mike, bias Can this advantageous? California cost acquisitions to been year California. year capital

in John. XXX%. to this to Northern bit question, at good The pipeline we little now a of weighted right a for, that, color is rent-to-income about add pretty see and It's ratio California maybe heavily

not so really So incomes Northern to done and kept California, we that in Seattle. becomes can less well we that And But hope up constraint. that a really have Southern number. also in California buy has of

markets or X be our asset we would focus. X Southern those So But California an buy in might as well.

revenue choppiness John, a to if expect referring if bit more that instance, quarters be time growth printing just average, you Northern of this few specific? trajectory next for Okay. could like X.X% quantify the help you're hits, you year? today, look a choppiness over on California and is us revenue growth, so does California the Northern what that in If, bit next

Sure.

why portfolio going part, difference, point to market at revenue. we a necessarily forward. with what's So That, a in not was are time, in the going in on to choppiness really XX.X% strategically filled up good and the relates position rents any There's obviously.

was expecting supply second at 'XX, this of half. I year, So is the a lower. California And the the, I'm unfortunately, as time slower half or in first seasonally the coming twice as demand mentioned, in much specifically, in is as what that's Northern when it

and that where So market delivered. largely being will the it is around impact emanate supply rents, will

that. it guidance. ourselves giving this well year's a out it us And Oakland, having can not little year's really, we there's But next there So imagine, bit obviously an supply, we're places a reaffirming downtown of impact in impact. guidance, but revenues, be you where see in sense positioned I the more can, we're like you don't will avoid to on huge because

not headlines use word because going down But rents be choppy again, long term. there'll they're some being think that to the it's of I down. be I

Big is got back very market, it. You second very and strong X%. supply Area Bay into that's to a is step job for strong a under There's picture has coming growth. the realize

spot. a of some the next headlines good So of I'm going what we're really referring for It's and that's to. lower quarter in probably to the create rents quarter year, into just first and

Okay. Understood.

that broader this of Just a within stood that quarter was demand out follow-up seeing hitting? sequential there. supply specific there Mateo backdrop you're and submarket One in healthy that San on the trends. outside lumpy just side of the Anything terms

one market. that actually, a team a market a got I are over there market the mean San of think Yes. results result And really Skis ops on And for by being the a quarter that bit. strong. strong really No, the Mateo is that, it's little own for very there. I that our what

that which is what drove market, in obviously had that's that But vacancy number. a we XXX so of over And basis resolved. decline points

So think, it particular was really the so a market the overconfident strong. bit function got, I being little of that with They market.

Anderson Our next Rich is from question with SMBC.

in. the this what I XX is get. and minutes starts, An XX minutes before hour call

the Is perhaps when gone So changed other return perspective. on as of concentration so kind want national internal this at a supply sticking think better least provider type that it that average this today. a are growth all kind your the issue? Or of dynamics, But thanks couple standard, growth growth a of have of, the perhaps do for you're there ask entirely more Essex premium of kind to a of from such old, while? same-store by around. hundred you're I I Essex of than of pedestrian And side, are of a couple more, basis for perhaps points demand being of always

recovery is every question, Rich. period It's bit a a say Appreciate different. good I'd it. every little economy,

agree, is business so fits and be when of over that close pretty think, people there to long is grow significantly have rents And periods time. size times no another one, outperform. think pretty all. And this reasonable incomes there would And one I we, to will one I

is XXXX, XXXX And so, rents different. but this to earlier, cycle, think, And from I said somewhat grew. I

affordability revenue year. same-property therefore, we it Our that an incomes. mending. X% are And than getting faster now better. issue, grew which And created we is was a And much

has So changed. anything see, we I don't think

forgotten. certainly, the periods a in are over We seems the CAGRs of long better got time. cycle be rent think strong. a I highest lot And and what, that growth period this we're more, time, of affordability up I think to rent progress, lot through of we generate it's we've markets And growth pretty this know a lot has progress. long working which a issue, But made for everyone set you that. of

XXXX from, from mentioned as before, to about So by XXXX, rents I XXX%. incomes outgrew

look at outgrew number you XXXX, rents that to XXXX If XX%. about income from by

tighter. do And there road we will solving So a will the point down that where it's be and affordability getting are better. problem, rents

to concentrated the very you've observation? Okay. perspective. able how I'm using has supply to that early great And growth counterparts is And really track not. Essex been are relative urban on an Is that done your doing urban well curious in color. That's supply how on you to a call, if internal quantify mentioned number that, you see in the you're areas, purely generally then from there how which you

again. Mike Yes. This is

bottom I FFO for share NAV core share the I which that same-property basis. the think it value just up key line extent in et that not that it and And It disconnect actually is capital differences property, and property tied metrics And fundamental quarter-to-quarter, will growth, push is is on disconnect? differences are that focus investments you per think competitive but are it dollars. cetera. of you growth growth. or use Well, does the your that to example, us one And add the same-property we, to per make matter? in why it between would our there really Why set. would yes, a doesn't overinvest revenue

relatively look less investments at excited we're you large have short investments, when capital that. So duration income, capital that about

long-term looking renovation we with in for for that We focus. look investing there's example. proposals better. things can a those of That's when shorter-term, consistent interested revenue-generating And We're type do that done, are can not lots make return numbers property, our personal estate. projects, real be

CAGR. long periods company think chart, XX we a focus been XX long-term, FFO of of is per income detail. is proof CAGR Our core done public We've over the growing sums flow it There, at one is shareholder There's which go I think, lot that up, And cash for return in look I there's think, I that, years. chart The in of XX-year back think our and on over years. that time. on Rich. share, the our, produced the XX%. a I have a presentation is don't companies actually

from One is Capital Malkin question next Securities. Neil Our with

I just and have questions. X for those of follow-ups X questions each

that that about Some one helpful on else? a by notes pretty saw that's $XXX a in something about classification of The be think you talking amount. color because is quarter. is that I large that your change increased would million receivable I remix were first that Is this that selling? Or

we line the really acquisitions income our because venture. loans The to associated receivable we have with increase the joint notes on is X that bridge provided

those do permanent we until generate quarters secure And once but couple a financing. for nature, they income temporary are, their of so again, some of in outstanding

know would existing products It of I the data. than if expected largest double that phenomenon like your And up about, almost by Bay, are you counting the double a that markets, a Okay. more X should double. trying as that talking supply assume stock, even like percentage looks this you're to about lot all is imply counted. into Jose, to, I'm have questions but some, of asked of been the supply, East dig San go

there, setting any, vendor, is had me, the error cycle? a up precipitously to a not Or to the understand of it we is help guess, early for clusters of rents like due Area gross that I like for the impact? job just Bay situation a ago overstating because So was seems massively couple the to like that when in of supply were Axiometrics, growth you're relative to again, example, years it trying any that fell

when the if a issue. affordability referring preface issue. incomes, of probably XXXX, slowed back you're get prior might And again, dramatically. history still with 'XX, the my to comment But I rents I Bay very It's like think make Yes. ahead which Area positive. up, that creates pretty out people an far it issue, But too It doubling is constraint. isn't decisions different constraint like a tripling up, a supply-demand to whatever.

back And so to at California, makes income currently becomes long-term XXX% the Cal that than average, historical this affordable XXX%. of a at in more rent factor. Again, which Southern it to it's Northern

is Cal And so than faster else. essentially that we think affordability that fixing Northern issue everyone

vendor. we to to data as the to and data can't I get realize comment that, with challenging Our on numbers, again, respect it's And supply. accurate

and people that, are lot putting about XX,XXX in XXXX. for as producing we at jobs said the just big work look I together. this give I accurate credit were picture really units. housing we of XXXX, our about doing I California Northern a previously, hard XX,XXX total in But of if Having said expect we

and homes. relationship X:X. single-family XX,XXX X,XXX That is So apartments

XX,XXX to supply-demand need doesn't demand apartments, you homes, respect jobs candidly, it that to XX,XXX. about it about so and homes, looks there's translate Northern we mean think not we would, And more XX,XXX So total. California, should about, a so that. with in appear total for I good. issue housing I produce

concerned. to seems as So we're that still as far work

lot of I some providers, data they you of addresses, I I that. have details. a hear on I like the just, said, mean, names,

I it's be it seems that mean So odd they'd off just large like a amount. by such

I can So maybe that's into look something more.

Well, look were the to back, that's at think and back do maybe what I projections look what and are go probably best way a the now. just at I year mean it. they go then

I bit maybe or transient becoming kind talked are you're looking of that more in? portfolio? you markets, right. to Short-term of given something for, just just you your more that about. much, how that Are interest do you, seeing any, little into that one. your are the, demand All if And last if And wondered, playing a put see so, in Is rentals a what demographic. portfolio? more especially then higher your types migration-related role

Well, John. this is

out course, maximize can looking value how We the always assets. of figure the are, we of to

market, At offices coming and we do of evaluate if stuff imagine leasing meeting the What our market our other explore or for quality the the end we day, space. has and we through of Having, ultimately impact. opportunities life rents. impact see rentals, you the their different hurts hurts on all customers it so issues that, having like overnight negative type our you're amenity creates that and in the And overnight customers can people there. the into oftentimes see the overall with on, a

mind, that have a as it's home. short-term of live they opposed different to mind very of tenants there, frame And and frame a their the

for continue to spaces. there are So a some issues taking a that's where segregating But that amenities it where crossing opportunities. And different define and working, way over. the basically floor we still building look to with situations people or there then are are

unless not but a So this think opportunity something we'll at constantly I in time it's changes. that, huge at look point

over turn And closing the this does would conclude our question-and-answer remarks. call management session. like to I for back to

Thanks. Thank you, few for And to on a hope a everyone, thank participating today. NAREIT you weeks. operator. Have day. you, many the great of at in We see call

you. does conclude This Thank conference. today's

thank lines for You may at participation. and time, disconnect your this your you