Essex Property Trust (ESS) 30 Jan 202019 Q4 Earnings call transcript

Good day and welcome to the Essex Property Trust Fourth 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 on be Company's Further

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

You may begin.

fourth for joining and will Q&A. with everyone me call. Adam and Kleiman XXXX our you John quarter Thank Berry follow comments, for Burkart Angela is here

markets. our XXXX the will review XXXX investment and West an I our for results, Today, expectations on provide update Coast summarize

Beginning was core our Essex per assumed. job stronger XX% with XXXX NOI as in which we in we share than over grew growth for our successful year Same-property XXXX, contemplated was results. a representing original guidance, than generated FFO better had of at original reflecting guidance. X.X% end our the X.X% growth growth, high

are example, basis XX and again, tech averaged dominant QX markets estimate. X.X%, recent respectively. X.X% points and above California the growth XXXX Seattle Once For initial XXXX job growth the leading X.X%, in of way with job our Northern

economic California, United jobs added recently three-month of resembles a a generally rate Southern States, at X.X% basis. the on growth where trailing

apartments apartment about estimate in XXXX. resulted construction that continued in X% completed less in approximately competition addition, In less delays than XX,XXX were XXXX, We expected.

that color fundamentals on in We conditions will labor provide more deliveries. believe construction continue prevent to supply market a tight will significant acceleration John of moment.

asset a the significant significant outlook a back XXXX, in consensus stock of bought assume initial and did to In improvement our not discount equity early eagerly Our net we for XXXX debt cost capital. value. at

business opportunities. and improved, abated and began we the actively capital altered cost our As investment markets of volatility pursuing capital plan our in

that from pleased focused end effort investment our result, to the ranges and acquisition of we a high As team. the preferred equity guidance are exceeded we our of report

expect in in on supplemental. the Page profile. communities are for as S-XX eight located In the ownership $XXX submarkets mostly These to the portfolio’s Coast we be along XXXX, properties West million, the well added of we growth and interest to and tech added centers further detailed know

We also subordinated new committed better debt in to over million equity than preferred or our XXXX. investments, to production significantly $XXX

demonstrated throughout attempt add value summary, to XXXX cycle. economic the we how In

an words, Essex XX as our dividends with worth for since a reinvested. for would as be notable also IPO annual of return important some was of $XXX company the our a in XXXX with milestone celebrated today, XX% invested IPO end In years through we other public $X,XXX achievements, XXXX. the rate compounded over shareholders

thank cycles, rate very were every which an model partners, I'd the Company's economic business over to that dividend, share growth compounded pleased learn Aristocrat in the of cash S&P all has to quarter added recently generated our the century. has was X.X% Essex index. and per XXX our growth single year. achievements and team increased who’ve several the of X.X% shareholders like Through the Essex in longstanding a Dividend to FFO rate contributed to last We

outlook our to XXXX. for Turning

Coast West for to Recent page X.X% for on job exceed forecast healthy supplemental. rental the XXXX, continue our of for continues markets We housing. demand see to growth the S-XX

which However, a in labor a down decelerate year in likely Essex tight job market XX as we believe was given November, unemployment conditions growth basis of to ago. continue XXXX, low from the and the rate, will markets X.X% points

the strong has our We Coast, nation. rest from The theme that this S-XX.X of a Coast highlight the and Turning reaccelerated on right XXXX, of on growth West chart remained central slide job supplemental. in West the our to diverging in slide demonstrates focus. of the

challenging from activity chart, XX% we divergence has the peaked from that again, multifamily declined that to to a future. On and should in trends note compress most supply the outside our yields fewer in metros permit development environment in lead peak, continue construction the about and of a left our deliveries which our Rising costs in recent the side of regulatory markets, markets. XXXX

have on Tight the adjusted markets our estimated estimates XX% capita changes XXXX in Coast about supply Notable California. reduction higher than incomes XXXX, quarter. labor incomes estimates conditions in XX% personal from market not our Seattle increase U.S., in in continue original of delay XXXX Northern about the indicate year-over-year to X.X%. are in push changed West higher. have last supply Our apartment a for a significantly Per X% to average and increased

growth to this XX% XXXX, remains growth factor markets in moved XXXX, income out. rental reasons since for Personal in the fourth WeWork, outlook of outpaced XXXX. for increase, XXXX. with is jobs the out or affordability. of of leading X% of this improved markets the rent almost coverage last our than who outsized accounted the disappointing those financial less our and performance year's percentage In or favorable which moving trend, new economic failed quarter Despite rent has of of IPO was other the Consistent of most unicorns, for in a media growth in customers stock

average four than Silicon volatility to surprised respect closely are which venture see The by we're Having followed failures, with model Valley for offset many decades, the to more VC-backed assumes capital past not companies. healthy second capital investments. this of levels, dipped but remained venture the half of above hyper successful investments growth at of Bay the in cycle’s pace well investment. the Area most XXXX,

track the a The a XX,XXX largest need largest markets moment. commercial comment will our million XX% to by to job listed companies core rapid feet XX% in year XX tracking the ago. top tech construction a our tech a footage housing. continue add office market, more almost in continue are is openings and for in at pre-leased firms, XX which underlies over compared to increase pace, John square of square which Overall, over on we We

XX In A prospects. we minus while looking B XX markets. investment stable, locations environment, X% with rates traded communities to primarily height the in long-term points A low with minus properties for Bs and higher. the to trading to remain to are quality best Turning Cap quality in markets basis X% range, the this growth

consistent our partner this earlier strategy. with from are month communities we co-investment acquired Six this

increase We significant are from while creation from partners value $X.X our shareholders. pleased a earning our communities, in stake high-quality these and million to promote

The majority up in XXXX. pipeline leasing be development will our of

our We delays of share labor a have due to experienced development challenging construction market.

initial However, pace. at our we with current remain pleased development customer leasing the and response communities the

relationship preferred We risk continue see to structured within often better pursue development and a opportunities, but equity investments. other reward

now call I'll comments. prepared my John. concludes the over to turn That

you, Mike. Thank

E-Team basis work customer in year, growth to revenue experience delivering growth, X.X% top over their improving the same-store which of results. an For achieved rate. for year's while the outstanding full the increase we thank you XX our points prior year-over-year was Huge

was markets. exceeded by rent first Our in slower were year's continue of bolstered other improving growth, period in strong the by basis one-time We fantastic, with XX the expectations lease growth and and fourth points such from by X% the XXXX. shift which basis our year-over-year resulted in basis growth, growth and This for quarter market of growth affordability quarter X.X% expected demand points. driven continues of which our quarter our the in from by both XXXX in increased job revenue Overall, driven prior XX preparation to breaks. items elevated fourth seasonally quarter. Income results occupancy. supply show our fourth quarter This increase XX strategy in comparable income, the strength, the occupancy XXXX, of to markets additionally to points outpace some included had growth XXXX

to Turning XXXX.

in with growth consistent our long-term CAGRs Our contemplates market midpoint portfolio earnings of our our X.X% revenue X%, the is rent of S-XX guidance for growth and package. what at on the in outlined

factored the assembly occupancy basis is AB Additionally, headwind recently our negative passed California rollbacks California a of bill communities. have XXXX, we well reduction which to slight the in XX in as points, related rent of a impact basis-point XX for as

taxes we in controllable, Regarding pressure our to our of expenses year-over-year growth. midpoint XXXX, expense utilities, in wages offsets and see in for continue resulting X% with guidance operating on

apartment sub-markets In deliveries the urban compared that sub-markets, location. of XX% downtown is XXXX. the We with concentrated urban portfolio in to Essex’s about lower be sub-markets. in bulk in downtown the XX% be continues terms to new of deliveries suburban our Only project supply, XXXX will consistent of downtown

our continuing new to times, be each demand, assuming jobs demand absorb new to supply We in to X.X exceed two markets. markets, is across West supply the estimate it meaning takes home, Coast ratio our

our of our asset optimization to vision through tech portfolio’s investments, and optimizing drive Lastly, strategic initiatives, we platform performance analytics. science our through continue and various data

roll communities platform to to company. a management center, plan Recently, Also the this pipeline X.X units in to in technology our mobile plan and the new the rollout it and we home implemented smart our for upgrade out our system XX,XXX is call maintenance across lead year.

the job jobs, in now same our major increase strongest paying year-over-year. Seattle between quarter, from U.S. market. prior in growth, top growing Shifting led sub-markets X.X% with an X.X% a additional fourth fourth the Seattle were in four This XX% other our Seattle revenues was on CBD by In year-over-year and X.X% the store industries, XX,XXX quarter an due mainly Seattle, X%. remains On while grew jobs to update growth year. for market the the growth to

to in feet a Seattle. market while X recently tax Bellevue for committed of in up in XXX,XXX Amazon million recent square Regarding sublease feet in square has sizable activity major putting footprint years, the area nearly

footprints Apple, companies Google several Seattle. have and Although local in geographic expanded other such we Facebook movement, are recently seeing their some tech as major

on census significant a by call, a expand employees. prior its more workforce XXXX, Seattle from mentioned than its As increase of XXX would it X,XXX announced Apple employees by current

square XXX,XXX Amazon of expanding feet feet to Other activity America Airbnb square Bank XX,XXX in Seattle sublease. of by committing includes, and

Lake additional Bellevue, preleased while On XXX,XXX the by Alibaba Facebook their of XX,XXX of feet. other square expanded footprint square side Washington an in

X Multifamily of down XX% in is is about substantially the expect XXXX rental decline of in in of we feet million it and job as leading which quarter under construction, to supply with and growth from and as the Office market well strong supply Combination is tight market demand fourth preleased. XXXX. condition. supply over income square in declining to office Seattle space XX% strong was

and in by at X%, X.X% fourth Bay and achieving Northern the were Mateo for growth averaged X.X% San to San X.X% X.X%, Area followed quarter. at the same-store from Moving Oakland the respectively. by Francisco at quarter San growth, California. Alameda and San closely Job X.X% X.X% Santa year-over-year Year-over-year Jose Francisco, revenues fourth grew Clara led X%.

Bay of Francisco addition San acquiring to new town a adding and lease Google lease In the a in buildings square down expanded Sunnyvale, biotech of XXX,XXX South trio the by San robust Bay Zymergen’s The growth in remained about This maintain XXX,XXX to includes to in job in up expansion higher bottom in paying feet industries quarter. the Office made top activity, paying fourth continues industries. expansion Bay, Area Area feet Amgen’s over in lease the compared new Emeryville. square new Jose. Cisco

their South which construction Bay grew a There Area, by Airbnb signing space over XX% the lease of XX currently square in is square feet foot Clara. of million Santa is XXX,XXX under Bay footprint over preleased. office in

will in while of in And get in influx, Looking San concentrated in expected at into expected are than significant deliveries sale market for throughout the XXXX be continuing which to Oakland, delivered Fremont Area, which condo. deliveries in many multifamily as in downtown is remain of XXXX, elevated is Mateo. and the Bay San supply be deliveries most half XXXX than San with XXXX higher twice to slightly Francisco XXXX. Jose will in deliveries be to broader will downtown San see Francisco Oakland an supply

X.X%. County above south growth with to continues up X.X%, basis to in by further for Tri-City were Hills with X.X%, L.A. was Southern quarter submarket CBD U.S. L.A. Woodland the X.X%, submarket the same-store West L.A. L.A. with and with The Heading decline X.X%. led Year-over-year, average. fourth California. X.X%, down points job revenues fourth the revenues the quarter XX

the deliveries are estimate County. but X% XXXX submarket expected at high year-over-year. to in down On supply, L.A. remain we throughout in materially consistently of CBD stock, Deliveries high L.A.

see West and Woodland submarkets Hills Our will supply new more L.A. in XXXX.

Orange County Orange were submarket remain in submarket. X.X% and Total North the supply South Moving up down Orange and in X.X% San County. the Year-over-year Diego revenues quarter with XXXX. in consistent XXXX fourth to Orange

counties through decelerate to However, expected are year. both in deliveries the

footprint by San the was Chula were up XXX,XXX the in our up healthy Job X.X% a quarter pre-leasing professional by North the Apple market with growth on business Lastly, year-over-year, X.X%, the with year-over-year Oceanside X% made X.X%. led grow for Diego, and led square almost of submarket services, the in a X.X%, followed period growth. plans which progress fourth San quarter feet Vista City revenues by Diego with Sorrento made their Valley. the of office to in space by

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

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

you, balance XXXX update and supplemental. for X.X% by our this year. revenue our key start earnings XXXX markets an Thank capital color sheet. midpoint and to of followed same-property growth on John. providing release the on on assumptions The available guidance by are will I for guidance, guiding some our a page We're and the of S-XX of five NOI

earlier. outperform in largely in our market slight to assume modest fundamentals Seattle our West rent remain as to long-term average. and growth, U.S. expressing demand to markets and operating healthy, attributed the to we're Compared near averages we continue supply in commented continue for steady the acceleration Overall, to market Coast California, XXXX, deceleration and a trends a

core FFO to on Moving the guidance.

the midpoint XXXX. a expecting at in growth are X.X% rate of We

a in our which XX% approximately lost quarter investment mostly first discussed forecast. X.X% sequential generated FFO a in return explains accretive for mortgage-backed of repayment the the shareholders. headwind growth, between of of results core previous short-term have internal As fourth decline this a headwind accounts the FFO in and for The from income we our security, from call, highly $X.XX and Essex XXXX rate quarter XXXX of our or

Our XX% $X in billion interest a the also joint partner's XXXX acquisition includes venture a portfolio. of guidance recent

recognized $X.X We be promote which well both the FFO. of remeasurement are a $XX expect in million, gain in excluded promote as recognized and to $XXX this quarter. and recognize small fourth of transaction excess impairments quarter the This as of core first from will gain million incorporates a million XXXX from in

attractive investors. to return as committed remain We it source risk-adjusted an our provides co-investment an capital alternative platform for for and of

three have approximately we generated totaling past $XX for the Over million. our promote incremental earnings income from years, shareholders

fourth effective of several million quarter, activities. the an only unsecured issued bond $XXX million with X.X% $XXX XX-year we rate, refinance have to on interest Lastly, year. this capital XXXX Consequently, In markets at prepaid mortgages we maturities. maturities

We and discipline opportunistic. to thoughtful cost capital our maintain and continue optimize to of our remain will

sheet metrics with available balance million liquidity. strong Our remain of over $XXX

That turn comments. questions. the for now And prepared the back concludes will to operator my call I

proceed Wurschmidt, Please with [Operator from Instructions] is question question. Austin First KeyBanc. your

Hi. Good morning, everyone.

look occupancy us With the also you like strategy, XXXX? XXXX? the what lease the move blended high quarter what assuming for spreads are rate to then, a for of fourth tell guys you And for could spreads

Sure. This is John speaking.

it to market. keep much renewals customer we're looking as in have rent do really So, the consistent made the is on -- our run and critically -- push focused with it that's guidance other market, going say keeps not up above again forward, simple well on X% really that together. as the so And what sorry, our blend about We is We that. at pretty which it of income. When X.X%, or X% you it some them we growth S-XX, the blended, and as keeps would experience, they important. the

is was 'XX? it blended what number so, in that And what versus

Sure.

X% So, about that in in, and which items. the to the rent, the revenue about remaining all obviously X.X% was X.X% fourth blended at for be year. And really other relates the in scheduled for amount quarter, XXXX, number came income our would

it. Got really for see across and set six CPPIB opportunity that communities? then, curious do that. And what wanting those just venture dissolve Thanks -- what you led the to

here. Angela Hi. It's

timing XXXX. ventures, of with exit properties And were the most our relationship around to excellent individual These the an formed have really of them formed We JV relates as and the partners. back were investment. joint

near we're XX-year at that So, this point, term.

made exit. sense have the to a it so, And for discussion

capital. continued you by we active know, investment put or function conversations to come they asset And trying we up. the opportunities have driven venture, an forward, as optimize really future have about of in to decide But, it's as so, to joint going actually of a cost

So, it is trading, in, are where the et sales depends on cetera. the where asset coming stock

their to interest? you along outright, buy Did really or out selling consider guess, was all the plan I

one in fourth that venture well, Well, you the of see joint actually quarter assets and as was that Masso. we sold the in

that rate And a sub-X sale. cap was so, and attractive very

makes do for it this sense so, evaluate what's best shareholders. owned, to wholly or bring on really return we our it the whether And

question is Alexander Piper next Sandler. Goldfarb, from Our

just the that trade? there following on little an you the sort funding? CMO. So, up on Can you transacted it just is bit Obviously, XXXX? And CPPIB. anything then, on even are provide for color hard or backfill was Austin's Was question to of more two what Angela, a benefit working guys

in providing FFO XXXX? this So, played assist for much role a just how an curious

Alex, I'll Mike the strategy. will on talk chime and the in overall about funding then

is with the actually much we be but the equity use to credit intent unlevered, the to portfolio funding, And portion, leverage the need our closing, won't to line on refinance of finance raise equity since bridge to we debt. our neutral. as -- now long-term On is

allow So, we on market depending our to or in be us opportunistic assets this conditions. will equity issuance may sell

Yes. quickly. also release. in base at market. yield therefore, that And different just attractive I'll a noted that our the helps the higher. is Keep bit what real we which these we than Alex, transactions promote, the be have had base tax us. And a And And in is would press tax to add make little mind

you Did it. FFO? missed provide I an Maybe is benefit on what this Okay.

into guidance. our It's incorporated

at -- include you on have from so, the line we a does look external And among accretion others. our CPP activities. if transaction That

favorite And your second regulation and then, Mike, taxation. topic, question is,

shaking guys out of if Sacramento then, the they you taxation, XX address the X.X your XX as you Maybe point? think is how fun see XX in the increased the roll. split at Prop do just And can all X.X, on thoughts with So, Governor Prop roll? what Prop split you this far as

the up good. so a it's and question, think all it I call very today, Alex, in came good early Yes.

were were initiative. some last that last The bills as which or probably by statewide one a late biggest there -- So, signed housing. year, XXXX, actually control XX is dealing with recently I reported rent Governor, was

Following funding some $XXX there's up for pretty of to allocations housing, big been year of XXXX as ‘XX the and million that has on part that, billion discussed been last budget. $X.XX

political the X.X. is go And with and create XX Prop with see environment opposed box to here happens wait so, different I large XXXX that a and try whole think the to to to these to with as investments and try scenario ballot what

housing let the state the course. acted So, I the pretty for the are things run those substantial legislature think And a that politics extent. matter the funding, issue the is to and has shortage

So, what Obviously, Prop around we're December. happens. see the qualifies. I'd first X.X, We're early hope that to that's signatures the in if we XX to compared submitted they go still obviously, XXX,XXX ballot innings. waiting round, say

again, to that the given robust commit overwhelmingly go And as fact entity in again. the I a to back will I pass. I it essentially And be X.X. be Prop attention the polling will was ongoing investment will to community. think outcome difficult we that the that And end. or point it once discussion, Prop have that an that so, in pass. bit the to suspect was successful has obviously an opposition not that, in And in current the round, even And defeated deal XX, will last proposal would a early by received that of is the about noted though be I of And think time. to was will proposal owners, this palatable still it it would of little a great throughout expect support this and And, at go more it XX

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

for is So, my question first John.

of first how's points this in of more of year go deceleration you supply, it really that just terms as of second? going Is wanted the to occupancy is more anticipate out much into be versus do going get that on see and that that focusing of new going, basis or I to occupancy. to you sense cadence half to XX pretty half first equal first the of you're So, headwind, in play kind this with spread, how ‘XX? through the an it downtown

question. good Well,

quarter. history adjustment. bit fourth effort, lot in marketplace. and me know So, a why slows We step explain or understanding back quarter of little down supply occupancy seasonally of take we in a we lot and made demand the from the a the course, that first effort of in an let And

then, So, the this what Northern ended possible. we for demand lower long occupancy, made we of to where increase as to disruption during little getting most as we changes market was ready held the out the hit period. quarter, a we some up third in and supply saw rapidly market going as as And California certainly bit

-- did at but still strength, likely carry into in the expect ourselves why As of quarter most occupancy. we have through to. a position now, is good so occupancy, first reason to we that continue And the the we we we're don't to put in it

we if bit see pockets occupancy a little of a little we allow we bit. may So, to lower isolated some back of hold start down pricing, and go to

every of positioned impacts we beginning lock year ourselves entire remembering, lease the a we've in at months. time year, of XX the So, course, well, the it

really we're our our higher strong. said, back -- question? ourselves go in position -- and got that pick All QX will answer Does expect in that QX it'll up and positioned in occupancy your down have then QX, QX. I be So,

Yes. helpful. extremely That's

Angela. question, second my For

mention did you out which redemption, XQ. in played earlier previously So, the

works your to backfill pipeline deals so I And be from redeemed mostly curious, to was that far? early expectation those still So, those done just what's for there in in are kind is terms the of deals? more or of portfolio in

is carefully, Shirley, sometimes you get good in talked terrific. question. about tend XXXX. that may expect have a life and And a to Hey, think recall extended longer, we that’s investments that heavier do redemptions they which We three-year I have

lumpy. timing redemption can the so, And be

redemption you -- bit about the and in have And $XXX security second half. of somewhere it's of backed there's equity XXXish. between on mortgage second heavier the So, even -- pretty And it's investment, it's half half, the so little and first preferred course, XXXX, around the a million. the maybe the as probably for outside event, and

cadence. the that's So,

Adam As in on will chime far the that. pipeline, as

several Shirley, lead side. the have development inherently deals pursuing underwriting Yes. any this equity parallel and We're like deals Adam. at in just is point pref times, These this deal. on a long

So, pipeline. it a we have and quite when to an be pursuing unknown. come in are few they actually always can fruition, But, many the

million Shirley, $XXX midpoint. it’s And you recall, a so Yes. million, have to XX $XX may between we guidance

So too that's a the good then, purposes. is number they lag really I'll because modeling of one for a And thing bit. the the little funding timing add do

that And so, to want you consideration. layer

Nicholas Our next question from Citi. Please Joseph, proceed. is

the current highlighted permit the tight in decrease when delivery? pipeline You in your that and actual talked of benefit about, markets? you But you environment terms the decline the do the expect given from construction in

Yes. Mike Schall. Hey, Nick. It's

there I a look and looking years at permits, few a think you're lag there. out, we that natural when is

So, when connecting much still has over in extent couple the process. California, that in go permits getting you places a delivery actually the process nation, road of last moving drop the think Keep of that's in to think and the the of labor looking -- by I And around years, many down tight things finalized as permitting the construction markets in the terms some comes I out. we're in longer terms period of that mind unlike lack complicated and through ahead. or

really impact. So, say, looking to a we're see XXXX I'd beyond significant

there's equities your those, better length and the and about but from Obviously, think development risk prepared investments. on And can Shirley's structured Thanks. I in remarks get but pursue return continuing with a investments. adjusted difference up other following to talked then, preferred a seeing of you return in and duration you question, maybe better

and think So, of do the the cash about size how of both stickiness of the you those flows?

from I because would Yes. the on by do then, their development of equation. cities it better. there's cycle And I labor more mean, And the because we more costs. the of pressure construction that, trying they're less will are say work. construction keep at receptive reward a at The it's Generally take bottom I'll cycle, force risk development. to typically are start can Adam And picture. to speaking, big bottom there. direct to conditions And

projects And and deal, more [Ph] you cycle, And certificates difficulty phasing examples to or through public your more of go so, occupancy, I cetera. willing use et of artwork they're more part the are variety permit. that of impediments. the getting more in temporary a can for As that

become headwinds the substantial. more So,

looking within at let's the are the saying, reward equity, we at that deals we're I all direct we’re direct so, as And But, same do continuum. otherwise a opposed equal, developer. as preferred And and things preferred do acquisitions development. to more mean, risk being looking could we equity

are and said because active over having So, not it's it development that, at to I'll likes. pretty has deals. looking he's that at been he And Adam, a he that turn we -- actually found couple

play. certainly So, and just at We are cycle, try we to into and cost those. make we're looking aware good am increases again, come the construction decisions in be and all other factors related

add Adam, that? do you to to want

and prep the to necessary the equity majority this our we're really able we though, seeing the out given underwrite I throughout land been, the in aren't just construction seeing deals see continue yes. has we to premium pursue dramatic development program. there. our NOI -- real increases all Generally mean, deals where been to speaking, growth markets. track Briefly, we've that relative we Unfortunately to yield time of through costs

pencil mentioned, there most some part now. for As right are fit Mike to that adequate the parameter tough are return, but that deals and adjusted risk into provide the

Our Steve is Sakwa, next ISI. from question Evercore

Seattle two related. questions, kind of Just both

spoke you're guys about growth the there, pretty strength that seeing. out You positively job

bit just be going Seattle. would XXXX basis-point a about you've stronger got I'm a wondering, commentary only suggest at I When coming think, acceleration the at is to your maybe look was you growth XX mentioned market outlook, I down. the in midpoint the than supply that. in revenue

we trying do just that to more trying just figure here? be of Is you how or flattish, I'm are less a or keeps there little sort to cautious that? you out interpret So, something --

And is in same zone. It's fair unemployment terrific. a At up very Sure. time, in right, X% doing the Its the Seattle point is at roughly question. that year-over-year. you're are time, this low. That's X.X% really rents

slow to and it. rate we employment that's So, growth do down, expect partly driving the

slowing U.S. showing are portfolio, in And still board, Essex significantly low because down of the the the slowing Seattle lowest basis but over over employment XX the We the the of across all unemployment. pretty staying S-XX, points for down U.S. our has the areas. unemployment average

out employment scenario we'd in expectation, that's is have see time, obviously that that to the love At that So, and there. this point beating continue. we

sort I of there know of on expense then, I side in kind you Can clearly, guess other remind you were a headwind of maybe XXXX tax of very side that the in in XXXX? benefits low the the that Okay. aggregate benefits, the some And on from just as expenses, us growth had kind as estate kind of expense got. real tax you acts Seattle. benefit

Sure. good there. It's question a

Seattle it was in property an it bill bills. came lower our tax year On the than that actually assessment XXXX, in in driven was and interesting tax, XXXX, property all by

comp. means what perspective, definitely And challenges year-over-year a so, from that the we is on have

how those not In of just terms tax, as about because those are it’s [indiscernible]. one we things think of -- property not Seattle it's numbers --

XX%. were lower in assessment. XXXX prior to X% those the it years the that So, five between the But in than was from XX% increases year before

Seattle tax it needle base digits, and we into a and run kind like of the We're at X% of then low what for rate X% XXXX, do try in thread refunds. property add increase. X, single is looking So, kind you the at to the looking of

with Capital from One your question. question is Securities. proceed next Our Please Neil Malkin,

Thanks, guys. kind at that But renewals, Austin’s you for terms beginning just January and in you not the occupancy of today. and had renewals stands portfolio in XQ. I'm the new the and for of in what you're in curious as if seeing what Hey. answered question new sure

sure. Yes,

to make back may have sure that. I go missed I that. me let So, answer

fourth And X.X%. about about rents was were So, bigger where renewals the the in were in quarter, X.X%, difference the Northern market. the was coming new Cal into really, supply

factor And Going year-over-year. answer X.X%. I'll demand a they forward, in question are rents where about slow market the really up at period. a went the X% that's first to Today X% a on of quarter, renewals, out

wonky December So and again, a of is bit little it January. always in

S-XX. have of And Seattle. rents strongest I market out We course -- expect expect us market our the laid to as achieve is mentioned to we already in the we

occupancy? And what’s Right. then,

is XX.X. Occupancy

you investments allocation. great. in is terms obviously capital then, are do preferred guys one, And you've highlighted choosing Okay, to next of what

preferred on when permanent curious to essentially options for you're the to there financing? is are of or roll an your trying of current market get the just is financing book easy ones actually equity either sort to into ownership or too the get the take those underwriting, complete, deals or you developer Just option, they

there have it there equity. that deal a to hybrids, opportunity a are basis. where conversation we seeing where where given cycle. on is ways. in whether kind be this We potential the is at it And deal, every by after of paid deal the that is of I'd of however the pref it period the do basic deal to three down be Adam. fairway, we that look we're certain probably say with several of into middle a time, years. going off -- most convert potential now is little So, are two, And more We

SMBC. Our next question Please with question. Rich your proceed from is Anderson,

on that morning, a lining the of MAA a above So, rents silver in supply the place sort kind their the they this are of outlined in call XX% rents.

so, redevelopments for deploy And on. to them some opportunity an it's

a your good between today? where while also rents little new dynamic sort your a you and a type find of are for Do markets, supply, bit where some B, plus you incoming considering opportunities to so, B see situation. delivered Is bad of redevelop provides similar being of product? sort the a what's - your that middle in are and and problematic, you And ground market of

Yes, produce can't B. question. I'll guess, to John a and you that. start It's good And I perspective, a from lateral after our Rich.

the and supply all -- in is category. there A the therefore So,

impacted the A, are you you by environments and the to closer are delivery. more new So, the concession the the

So, to going, downtown in more tends supply urban the suburban. addition that, to to this as have be -- where's you which opposed

redevelop all in I into B suburban best opportunities markets. that of these the the things factored So, equation. to -- to are are And seeing think that redevelopment we

will And I John, I so, anything suspect would missed that that continue. there?

it I you picked No, Yes. think up.

at anyone. it for at if you look perhaps know and any at AIMCO look But, curious with interesting. question, soft second be comment years at looked Park kind a jumping I you hard in. on that then, took not not I’m it, this it, would all? And Merced? were color Great. any time ago know of Anything, gathering

broadly It was again. pretty Mike is This Rich. marketed. Yes,

we when we just acquired as It -- coming And before know are. our around. minute, so business, last at things. so the the was before we're costs preferred it wasn't just equity what start, in deals And the marketed start construction about if One that two really deal. think was where I think about is, development

take the you do cost also the then, was invested way. So, off stabilized those we go construction which - we Merced much to portfolio, deals. once are to, a Park lower will on table that in it value actually with at trying we the alluded round had equity we that when before had as in by we preferred And first risk

looking of deals at look. assess so, might neither because the this And it development to trying is transaction and how those, is they

really a will And time our to from we our lot think was But, didn't a little just appropriate basic that value. strategy, see time if fit applicable we deviate time. bit so, didn't from of this it we strategy. or And, really

Okay.

you. Sounds good. Thank

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

your on will performance where from how assets think it on you I be provide the months relative some CPP consolidated contribute a the could they And also, on wondering located? same-store will portfolio if the Do this basis portfolio, of be pool? to you Or are the was existing XX same-store to immediately do assets? color now?

mentioned, in Angela sold QX. we as Masso so John,

So in that Downtown was San Francisco.

And here? and you from so why take -- Angela, don't it

it's rest throughout all the the Northern And portfolio, California. of Yes.

one of in Bay, one in the and Jose, San we Pleasanton San Creek. East course, Dublin, one in Walnut Mateo, so So and have in

it's operated California. So know, them. all those built locations, are we as these the have but and And you Northern

So we results and in, same our have be to we same-store the portfolio. add we'll as them may know before them to and roll the in of one assets will consolidated next them you very have all the very much we because, certainly well and recall, They year comparable pool. into store like them glad year of

remind us you many XX% can accounted And venture? method the the why equity in Okay. generally you joint co-investments cases, of for or more own, under when are the just

of sheet Yes. because the control reasons. off-balance It's an

really partners and essentially budgets approval items Our and have basic comparable a technical on like it's so reason. authorities financing,

management in that you're So as these to under going take is different assets there anything do you asset your control?

Yes. This is management-wise, asset at we all John our in the of the speaking. operate not consistent way. -- assets all, consistent operationally, No,

the the we It's, way. we call the it's Essex all relationships, an have and have great other board. it, one operate I then and family, We integrated way partnerships, way. an don't Our across approach in

markets So -- a do in there. bit. like quite They're that. there But not and locations We excited party. about growing, we're won't happen buying third changes like the the an when we're assets that asset a change be are technology of the would from there's a

Hill, is Our your Rich Stanley. next question. from Please with question Morgan proceed

guys, with Hey, I'll Mike, you. maybe start

Just and assets sell age wanted your sort capital of age some decisions allocation the your influences to the others? within how to and And of about buy that your think your portfolio of assets maybe portfolio?

stock, most less other you to X% note, portfolio, would of is produce Sure, Rich. older and as Yes, we that portfolios, bit attribute than of fact I the that our our than little produced more as therefore, of our And your is per XX you year. XX than XX% less housing over you than of old. and imagine, XX% portfolio years, years can your stock stock, therefore, of a

that a we general. fact this in lot of very that and think don't a just thing we produce is a of housing So life, good

markets, I our the so a we that is are of nature our think markets. reflection it's of And just and --

In opportunity, B. I say, And therefore, terms see you build you again, less competition. would of can't a

say, outperform at the so there. part A, all early cycle, themes those on of outperform the the I'd the Bs, in Bs generally later out up the And so of broader As are maybe speaking, the synergy cycle, the

that that add then would I embedded yield luxury and in is and redevelopment can it we as becomes a the door higher than redevelopment cap benefit toward in programs very the the thoughtful from more product opens when the add the increase also the oriented, And And say you out. value it of where A growth the program value. both portfolio cap rate the

it's kind So all of things. those

Look, we there's quick Mike. for relative that sort picking enough for you. Got to demand, John, question definitely up agree of of, helpful, it. Mike said. supply That's not back what apartments

long I is And about the But think near-term term. have questions is driver always of the call big so to on long-term job obviously this a a we've a thought been and growth consideration. supply, which lot look, over demand medium

demand us maybe are could a what And step for what wondering the about accelerate take you think you to you West help could bit just you little Coast in where -- looking upside? makes more leave was maybe markets cautious? your if and I So a back would

combination supply the as mentioned, we the great and in right market What demand And rental have the demand Sure. great now Seattle in see terrific. bit, is, I up that's we the that area. a is tightening with decline quite

downtown locations. back the the supply around As disruptive located largely the to the just gets entering impact to market. And temporary the cautious, is again, it impact, of that, it relates

level Bay a Area. extent, to -- understand less you last better, have Oakland. some L.A. of supply is downtown bit a still L.A. problematic. fits little some broader There's year, is that getting the course, of certainly but into It bit in L.A., Oakland than little although is to Oakland

And so its there whereas market. sits own L.A., L.A., in downtown

really interrelated people is San across. BART Oakland because Francisco to take

demand answer Does So as in it's supply temporary you and that area have you to broader a some But the noted. question? concern, there. look the at causes it's your that

diverse. operate it are like tech remains the yes, tech demand States, United strong across remains the is what quite in and Yes, diversifying does. equation side economies that although, you're strong. very, Yes. is very It very saying the the of you sounds And

highest the tech, the true. U.S., That's going -- still would but -- paying the is with jobs are it I is it are it and does across here the And say still headquarters here.

of as thing as it's more they're taking other and office that the tech, top-notch taking creative of design, West located Coast. really still a business, far back then in out the natural the So the -- moving of the but components doing aspect and

here, You different the find the companies are companies. of each that in major that out

that growth, and is are drives which really beneficial. that, incomes to and income it's so tied And certainly that that the

Thank you.

John question question. your Please next Our with Stifel. proceed from is Guinee,

Great.

although building outsized you grow to with competitive places Any Denver, tax-driven it's you Just an alive higher-growth affordability and migration FFO. advantage that? current in at markets Portland, Phoenix, a on whether and would have the markets, really property discussion, ability chance good really the the your Austin, like great is look and ever well,

had supply in expanding, its list. urban our Portland and convinced growth Well, it they time the to reason before we been ourselves from an kept is definitely why Portland, it we and not we because exited was on we've constrained. they do at John, Mike. It's exited that look time. and Portland boundary essentially

housing guess how depends markets what these and on adjust. it I So

but what, rents that our it's the this essentially supply, single-family meant not to to experience, buy and people rent a in apartment relatively go I'll get house. don't anymore. I housing you just go, just know need certain as inexpensive a So soon pay as level,

by base how And diluted rent difficult is to so our we and of we comparable look charge for it at that dynamic the renter and what house homeownership. what be for

limited amount a if to overall from is homeowner renter from the growth somewhat could so transition and supply and good we both is markets find and And look that a satisfy the somewhat limited. job of appealing perspectives, those that

and We go current other year markets good a Practically speaking, this in we markets. and Board market. that through think process of with is our that, every possible terms

markets. that definitely So speaking, as list. are on are some supply the that is the Generally on they are constrained more markets well. other list there And Portland

next Our from Associates. is question Hardik your Please Zelman & question. with Goel, proceed

your your same-store the has are the market then in some And just at be you of happen around What there? happen look to for scenarios focusing give be range to X.X% [X.X%]. me has what I to Can to achieved? As achieved? California. to X.X% guidance, guidance, That for X.X% color revenue what Northern on

believe interaction. around is Well, the impact to the the in of disruptive impact, midpoint, of negatively hit going -- we're coming it probable new target. supply that homes could into revolves QX then and the we demand really and that obviously the impact market things. But The supply

locking point, for for rents a that of Again, possibly, longer in period you're the time lower at year. rents,

moves delayed gets and side, the other if that's it QX, supply QX, beneficial. season, into On the demand higher

enough they a going dynamics will But range supply\/demand So midpoint. little we move knew around We make adjust us, that. Does it's this. if that sense? that hit to into a on bit there's expect the

to I you it noticed follow-up, guys why you a planning No, net quick of capital. going on just with being and cost your discussed as are be acquirers And does.

looking going of Just the built the stuff type and of stuff? selling older be to more there buy, kind it recently buying you're targeting? is others of to value-added is product What that us that see you're niche

Okay.

the on is Adam. this So dispo side,

that target portfolio going in dispo the our to we're overall have growth. been side, order the within to maximize slower assets On growing the portfolio

million the side side, our target the between and On acquisition -- on disposition $XXX $XXX is million.

As we you net noted, expect to be this year. acquirers

And shareholder looking again, at return increasing overall. just we're

at to looking the as coming, over nearly as markets. few the our that well be looking And product the last be we're the to category, stuff, the A- to going call, probably higher earlier supply going we're as is has years, whereabout we've not in alluded Mike Bs. brand-new seen given as grown growth to that at So B

something is this to -- you Got Or for to renovate look when there that something something need it. already then you And are buy it? capital? that's like plans doesn't incremental any

just is This Yes, everything. do Yes. Mike. we about

it's will we as level, build we in a look So suggested. about B- if sort where Adam as plan, from, all I agnostic the to let's the pro to will that, good property that of needs again, it's into growth that as A shape, mean say, if the renovation is it forma. And really we're well. quality at

what growth with If we're the whole. to so return compared make from it. bit from the comes it market on and everyone that's decisions. those redevelopment, we portfolio -- that else, happy a a little comes And totally better the understanding how what we're versus than us we're if growth is Again, be that. focused rate And as of buying

proceed Pawlowski, next question Please Green question. with from Street Advisors. your Our is John

Thanks.

to mentioned due the larger John, me. other It's fourth a bps to income is largely for lift this the in than lot a last quarter, one Just question XX years several there quarter. you fees. lease break

driving lease right curious, just the fees break what's now? So outsized

component, But break QX. goes was I into what again, the to we as other was supply to and out. supply was And decision or the market, that Lease hitting back it's increased in our going coming occupancy. that yes, the the filled There Yes. items market and up breaks the component start saw we the that called one as well. driving lease relates was really biggest that was to

go lease the to some period. break concessions low to We did But and transfer. eight about happen. supply, at this get free new increase demand thing and The anticipate cases, type you to the start you people and their of in weeks will into

was So it. that's what driving

a I QX, recent can was lot the homes XX.X% higher in move the bit to than -- a at add little that Actually, past. purchased in John, and recovered it's out has been was

your Our next with Rob question question. is from Please Stevenson, proceed Janney.

any Mike, afternoon. chance Good any condo condo before environment the apartment projects legislative continued attractive in of leasing? And the does see and initiatives certain go more we in under-construction make ballot submarkets? California projects some

Yes. question. And that is good a

otherwise we've buildings we last and condos that we One to apartments. and failed years, back conundrums at bought condo sell cap sell cycle, rate the to several many a convert in experienced we could of the them the last had lower as than them hoped over

that all. not at the that's found case We have

much more for housing, rental ongoing the housing produced have other housing, fact, has we've rental dynamic. gone In we and more been if sale anything that's an than way,

that for had and purchasing which versus tha is spread course triggers So of haven't condo what value, we hoped an in a apartment we that seen

of past minus being of in the Jose the with our X% in And . condo to recent in locations. in the apartment home valuation. versus think single-family San the helped that best hasn't increases price about I It the X,

you And impact is XXXX in guys I XX points say that I think of then the basis negative Okay. heard XXXX.

Given issue where have year you'd raising commentary, by plus do this more you inflation X% that rents guys many be supply could? units really your if than you

Yes.

John. So rentals premium that. associated the with -- is It really comes, we this negative short-term are the that impact revenue. hits relates and Where to it

of the always from. that want will want. comes option, XX And restricts and we so they the short basis that's where if headwind give premium, XXXX options to lease, -- the at end on a and oftentimes, And the our so there's a they premium a shorter-term point customers related that,

for an stuff? REITs rent XXXX In a to are of on use other then to rents. lead does like restrict gross based essentially to XXXX effective offer the face through most concessions legislation you And get on basis, does and And Okay. rent effective game? net fees is a that parking apartment and operating level? rate words, or higher does it market the see Or other

a legislation, always like things as like. of would spelled all That's lot And as question. we out a aren't much great

and So But resolved legislation. I addressed other get the revenue sense the the get will that's the in of not focused contemplated rental it far really necessarily that somewhere on is But My in courts. think as it as it's future. in will that, not revenue. details

Okay.

applies the or whether net now or right no not there's rents it clarification effective? And face so

We interpret it as being rents. face applied to

Okay.

So have more same months, the was to unit by ability raise renting months if two $X,XXX could discounting place XX the X,XXX to rent guys you and for theoretically offer free, rent a was just less? economically if -- growth rent in plus be have that in and X% greater and inflation market

go Yes. I mean, step. a first, back let's

goes unit right? market rent. So a the it's renewals, When the vacant, XXXX really impacts

direction. lease There's at the And the we not in of typically end anticipating direct going renewal. concessions generally period, and are the residents to we So typically not there. that respond

Okay.

not your whether greater to year, it are into or keeps Just actually point and turnover, some at curious, a you where get turnover. given sub-XX% heading need going south you every situation

I we love fact I frankly, have No, Yes. mean, lower the turnover. that

the we how the reflective fair service fair. assets We're of beyond as terrific again, are I that quality of well think as the it's out price think We're to rents And the being We push doing meet I site a job. things. market. teams of trying in not market.

much go is that. I people there's for move. -- need not to reflective to think the natural I'm lower a sure that. going of lower It turnover than it's So

We Schall closing the will back call comments. the of end for turn session. I Mr. reached to the over And have Michael question-and-answer now

Thank want look Thank you, operator. everyone you. Citibank good call I the at Have thank joining to you seeing for of day. today a and to Conference. many upcoming forward the

today's concludes This conference.

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