Essex Property Trust (ESS) 27 Oct 232023 Q3 Earnings call transcript

Good day, and welcome to the Essex Property Trust Third Quarter 2023 Earnings Conference Call.

As a reminder, today's conference call is being recorded. Statements made in 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 is It my host, Ms. to introduce your Kleiman, Executive Angela Chief Essex and Trust. Property Officer for President Ms. you, Thank Kleiman, you may begin.

a to and for joining and morning, quarter update Barb how follow brief Burns and thank on prepared for is XXXX Q&A. performed Jessica Good today Essex's here will will Anderson investment focus date, for you the earnings outlook markets. third call. remarks, and our Rylan initial with Pak on My we comments

first in has unfolded growth year. with XXXX year increased delinquent environment Overall, X We of X% the our middle property generally despite months NOI line and of almost our operating challenging rent with revenue the expectations. a the same of in for

which be a to revenues, temporary now growth in normalization of as occupancy rate make trade-off approximately exposure delinquency court and rent, by nonpaying exacerbated made proven in Xx historical this during protections said, That This protracted average. is naturally subsequent strategy uncertainty as delinquency, October. between considerable eviction at recapture X.X% a has but progress towards timing and context, when an level progress improvement we in The has to enacted reducing optimal resulted our we unprecedented For could of percentage these COVID units. on to tenants in resulted delays we has maximize our markets. is

with for our full on Looking West ahead year to XXXX, conjunction call. publish quarter comprehensive plan we our earnings fourth the more to Coast in a outlook guidance

supply of housing markets on to remain XXXX initial which only our X.X% expected levels, a many we outlook to for This in low our is S-XX other supply forecasts U.S. stock. to job supply markets the landscape provided increasing total other Unlike relative do our and supplemental, the near-term total growth demand have growth risk markets, housing when our for we now, we at economy For a environment of of for the growth if supply not total housing encounter in minimizes will Essex also see accelerates. softer catalyst tailwind be markets, a especially Essex market. and supply

part could demand also thesis, supply for we housing. of drive our conditions that is see muted While

will year job layoff is near the meaningful hiring digits. to Implying major hiring tech a companies First, after a concentrated employment of in resumes return-to-office growth in percent industry low the be remote now largest highly appears the retrenchment, momentum once of tech at be and with centers. gaining in slowing tech job that way, single

be require know Second, Area of companies seen scale intelligence and industry it this remains to are will in how immense industry in success the will and resources, these We capital Seattle. the concentrated and artificial Bay types largely the grow.

particularly California. Area data, we in affordability, muted Third, that as Coast the the well will as affordable summary, rent positioned long this combination demand we confidence in for expect we've is Bay supply a Today, In outperform seen tracking since us provide this and the long outlook Northern backdrop West runway a this and growth. to the potential is run. gives began of

investment buyers recent remaining the interest many update silence. in third sharply quarter in activity increased resulting rates further and an Deal the market. on returns in Lastly, compressing slowed apartment as on prospective month,

less spread is wide. as now will the There bid-ask pick rate deals transact volatile year, await little environment. transaction We term this have seen a up near interest remains to activity suggest evidence as sellers in several marketed

any balance We environment. Essex to call many in turn have over Barb. and well finance I'll job our cycles, an that, the positions sheet, for navigated team With economic the through done excellent has which fortifying

slightly with our performance. with along I that quarter third sheet. I'm Starting to our core outperformance of higher in of the FFO timing discuss pleased the driven third ahead investments share by the beat The in was other Most the Partially Thanks, third lower midpoint. our came quarter by per will results, for revenues, higher income and is expenses. quarter expenses. operating related. quarter $X.XX Angela. balance G&A Today, report in offset

we the full are revenue, reiterating such, our and core midpoint FFO NOI share property expense and As of per year same growth.

This we expenses, increases our to operating elevated received given in X% to costs average repairs only and relates compared offset it been real and Seattle. increased by by estate in above due run the favorable taxes, rate, insurance. As outcome XXXX was historical partially maintenance which has to

to remain insurance as look driven by XXXX, will noncontrollable As operating we elevated, and utilities. such primarily expenses expect we items

tax addition in is XXXX. we to not received the repeat Washington share expected In benefit in

However, units increase we elevated X delinquent collections our done this This have good pressures led rollout Since XXXX, costs past outcome it that higher job the platform, noted despite over our should X our expenses. property Phase primarily a modest inflationary in by of increased a the operating improving our related have of X.XX% favorable expenses and annually which years, during driven efficiency is controllable of model. be to period. the around controllable the has to

As always, our within for structure. ways we improve are the optimize in to cost platform order looking continuously efficiencies to

Turning to investments.

we be million anticipate quarter. a in redemptions we expect $XX to fully investment million, $XX preferred being fourth the repaid on For year, as the around equity

to to look we book around expect million. we be redemptions within our XXXX, equity $XXX As preferred

new in there looking mismatch these could can actively a we we and be are to get While timing replace we of investments, when repaid when terms deals for reinvest.

this while to the reasonable return stack, projects time to with significant still capital same finding at harder expectations capital are becoming find. portion are eager We there in sources invest the of are

on disciplined our deep source risk environment, to network We meaning at will in the Coast returns. remain adjusted on West this attractive deals

our proactive volatile our rate used in early locking consolidated the capital to yields. loans secured refinancing will and repay XXXX at in million financing markets We balance fixed X.XX%. $XXX in today's to acceleration of we July were environment, In of favorable closed proceeds the debt ahead rate Turning recent The a in maturities. sheet. XX-year treasury be in

positioned the is with financing minimal months. next well company such, As over needs XX the

We net our to X.Xx the $X.X to ratio debt-to-EBITDA year liquidity, sheet compared lower a X.Xx source With at billion are X as in remains today continues strength. balance over stands pleased ago. trend and of that

over I'll now Jessica Anderson. turn it to

Thanks, Barb.

compared for strategy, moderated and points by season on comments delinquency recent including and growth were XXXX, my today typical August For seasonality. quarter, a which Operating update in property revenue on will December is subsequently XX in rents basis. Market the results regional consistent across markets. We of at has cover operating September, and results our normal our experienced by basis peak X.X% peaked followed solid all leasing same progress year-over-year growth a an year-to-date X% with to highlights.

we lease lease at similar took the units. vacated we which opportunities nonpaying strategy as blended October, X.X% QX third trade-out to were tempered quarter QX, This boosting to for reflecting a occupancy-focused of X.X%. in advantage to rates push an tenants. QX new was larger shifted healthy back muted X.X% recently while to midway rates in were in at shift our incentives at While new rents growth nonpaying blended volume and Renewal units trade-out rates X% through QX in our backfill of recapture to growth peak during season, began strategy we from

for of in allowing to Angeles improvement Several a October September, areas and these in increased rate. protections and Los returned in levels expired San even improvement X.X% to markets rent to the close of and in year. have Alameda is to in as Santa September delinquency elevated, run remain move-outs delinquency X.X%. long-term Diego earlier San Clara, being progress our the percentage but as made in significant also further counties Eviction-related such Mateo after

numbers, mentioned, progress our delinquency strategy necessary with will positive the a but can year, nimble in growth will temporary a our Consistent improvement we shift as all seen our and in the preliminary operating Angela occupancy, in environment. we As this view and with any to for approach in be remain result revenue as lease company. which new maximize trade-off October

Essex for we've want their efforts a thank quarter. the I the achieved. They've past to Finally, improvement diligent been team major of driver this

expected market with QX, solid am Market after the year. the this in as improving net I seasonal market from with rents averaged for in quarter, QX. year, of Moving a fundamentals this par growth the commentary. Blended normal X.X% moderation. on we typical first effective were and performed with and were a to Seattle, pleased start points in rent recovery basis Beginning to on demand regional XX a specific year. this July growth, the region to peak Despite anticipate has this slow trade-out nominal

an the in fourth Although pricing. higher levels of quarter impact have on supply may deliveries

August, peaked this Santa Page be quarterly XXXX. the our supplemental. and Oakland supply, by contributed of rent effective X.X% QX. net as average. quarter, have an to later outlined than portion with is San to impacted Blended Turning indicator small normal, corporate NOI, of market positive the market. a which rents was ongoing to results. Northern S-X performing late for with The in regional housing Market which these fundamentals California. quarter lagged into on return-to-office averaged for to Francisco continues activity for top the growth CBD, our consistent along in Oakland account continue expected the Clara solid of

since Los in reflecting performing in Los top to Southern by we resilient anticipate headwinds San and the year. were term. delinquency continues X.X% market rents a near and last in California and progress the to X.X%, despite expect more Market X.X% to October, Southern In delinquency. such, region at as making mid-September California Angeles effective continued the at impacted Angeles, the in Lastly, our blended delinquency improvement on in most Diego. area Los this rents by our be peak start was occupancy led of rates remained net be in in Angeles, volatile We

and improvement encouraged by continued year. expect the seeing front heading In summary, we next we on into progress delinquency are the are

on the and portfolio year, into we we conclude balance positioning of XXXX. As favorably heading the preserving occupancy remain focused the

the the will questions. I turn to for call now back operator

first Austin question Wurschmidt with KeyBanc. [Operator Our comes Instructions] from

nonpaying in new and you I assumed had that occupancy, half highlighted in that shifted recall, rate pushing the what improvement lease move-outs the you growth from guidance of in strategy the to part towards growth growing lease reacceleration your range but high back tenants of X% an from new in delinquency cash rate year. the both to elevated Jessica, due

that I'm curious perspective else shift I if operating of changed strategy? that just a from anything guess demand also contributed to So sort in

although Well, for the is we that X.X% had And on we expect the as planned, there emphasize, in occupancy new my delinquency and that so We lease are trade-out is elevated for rate. trade-out. prepared the reported trade-out essentially track year. above our than remarks, with experienced did just a we stay to mentioned we to lower had October,

So period, as the the well nonpaying far the as into into slow expected as encouraged by position as move are and we're demand markets we recapturing goes, us XXXX. head because performing will units we it all as seasonal

guys That's does of helpful. then reflection I gross is can know potential cash And capture more Or figure remind me, just you delinquency? Got a occupancy, that financial it. but you that report rent?

include Financial occupancy delinquency. not does

comes question next Citi. Eric Our with from Wolfe

forward? what you months think delinquencies the your of you ago improvement curious specifically going some started couple in and of think and is sustainable a do decline Just versus, or of And seeing it. -- that the months X October ago drove peers in even say, sort

by this that. October, are is are Eric, improvement in factors that Jessica. to several that definitely contributing encouraged Hi, there we're we've Well, and the seen

reporting first And for longer. we're year. last the taking XX evictions in The XX in that expired range all time, at areas outside our Alameda of Angeles and of some and protections of were July is to months we the Los

their And units year we're seeing those those through And the system. a so are areas, lot made move-outs that the we're into plus way now we of that experiencing. a have

earlier there Angeles As is those Alameda are the no are in that far There as more rental more Los protections. tenants emergency year. though realizing and protections assistance. no those And

sense greater urgency. sentiment So changed, a of tenant overall, and the has there's

move-outs tenants this. as So seeing we are are increased realizing

couple looking, we're make more to information And But and doesn't X by recent of in our certainly fourth have seen years. we'll earnings results, some worked call. monitoring closely, encouraged as be month that delinquency trend, as our last forward and on certainly and we've choppiness as far going quarter we're the we've through a it

would rates last second the lease. lease that talked have discussed my of dropping I -- And around And I think Or new to to should you expect take? leads to helpful. Because lease expect sort is through That's about guess, to sort come you to that X.X% new the it of sort call? process of the to guess, you rates nonpaying increase I how tending you down? question, renewals to go occupancy which follow up tenants, new would long you're back on renewals that a of also

just new also should So will you lease to follow how come renewals down expect rates trying to depress to if long we understand and them.

right. All

tackle renewals. and Let then me I'll that. new leases tackle

far as expect for we new to rates the So I through as lease what those can expect remain quarter, muted.

have mask into some a positive. easier to view incentives come of we And since that increased to these We progress. units, period but comps, a backfill as of that's we've going overall, that

are essentially, because in that have short year, term neutral look paying but it's the the occupying only think I months people over positive of as not units we XXXX with left to rent. a we couple a

vacant, that concessions at -- but to market in so as will unit becomes now occupying And possible. units a essentially, somebody the we're And backfill offering have refill you quickly term. that's And paying rent the full that vacancy, trade-out. point, it's that near be if unit as these neutral

for up it favorably XXXX. So us sets

day-to-day regards may to seeing incentives essentially are insulated where the October you're backfill concession them a Renewals what comps seeing conditions expect renewals, you're pricing our in units. consistent And from quarter, choppiness negotiate to through burn-off will these X%. X.X%. also We QX. little XX-XX the increased the expect some with But for fairly we'll be then up. around rent we've those show gross that and growth bit, those monitor in to of strategy is consistent. is I as renewals of We've closely. And but pretty sent be out renewals

comes with Scotiabank. Nick question next from Our Yulico

Dan It's Nick. Tricarico with

year. First is market question thoughts for on rent growth next

what growth supply With rent possible drive given sort curious demand outcomes. in the growth supply next environment sub, gave you year backdrop, just negative just that sensitize would X.X% of the to market looking

listen here. Angela a understand publishing of value good reasons outlook that's we the our question. publishing our feedback Yes, investors' to why macro off better the one we held It's We to because -- approach -- of on that growth. change provide that decided next outlook so view not early year. impacts we to market outlook I our have we our And -- to the because on rent to would mean, ultimately change is

of our better timing and with the aligns the So it release guidance.

couple And really economist ultimately, give are But which we to so, impacted be still And with is we factors. And to not but a third backdrop. robust at want of you too that going early it forecast, to the market start a seen anyone evolving. the predict. by we've with fundamentals outlook, looking macro party is

rent reduces relative supply potential demand. will low to that when Essex future in of other it mentioned is We you the risk markets to comes which, a that better some position due having to of course, say growth earlier, course, and, is upside

And at different evaluating time. those that so are all are we moving the this pieces

be would just next the your And good. question that's on regions. No, different

to converging puts your California remaining been there. strongest, thoughts or you Any next and Seattle but curious gap and could see that on if maybe takes Northern the has year? SoCal

has steady think And I -- market. U.S. but higher profile similar Northern level profile eddy Well, of California to a professional our that's is services. with employment it the

California, the demand In recovery will Northern we So constant. that do come. remains expect

outperform should nothing in ultimately, -- mode. it's is recovery timing in so Of right? still question, course, sake it of if should continue it the for if just the And the the not --

thinking And that's so the X we're how about regions.

comes question Sakwa Evercore. with Steve from next Our

an of First, earn-in a figure portfolio? a loss-to-lease the kind Jessica, could provide for and you

Sure.

average year And earning maybe X.X%, loss-to-lease using of us points at far we'll far past, we roughly and bit quarter. take that little be other blocks other is forecast initiatives next pre-COVID, looking that as early fourth earning as some do information the basis will as for evaluating it's of As gets well market in X periods We revenue end consistent which look some XX more pre-COVID. as more and our to goes, that the growth on and we'll providing next is the year. that, income as number, with years see to of September, goes far contribute for and as XX%, roughly we rent at whatever year typically, the at with roughly loss-to-lease at still and a look as which XXX building then or well XX% were our

then I or from developers the think perspective? And repayment maybe are of From might preferred just trouble the a the I might seeing either marketplace Great. be you just side, some of investment today? on other have in talked what investments. I guess about investors guess, some financing who in Barb

Rylan Steve, here.

see properties with couple We in a swap a context, stabilized roll just I few next years until in about a to of mix, majority are very opportunities interest I it's more leverage would environment. would few above XX-XX I deals been the that different year, several were We've low say, anticipate for seen year last between development little up years going capped opportunities. will This XX% the are interest seeking deals still And and of year, past a based. say recaps. the at next seeing historical that our we're stabilized rate or and development recaps. very rates

are with going seen work. limited NOI to in to put of capital we've growth markets, our think So be several we there to some opportunities

with next Bank comes question America. from Our Dennerlein of Joshua

kind of your far markets on of kind out those have see demand Francisco what just San seeing in in of do And acceleration goes supply across curious that see we of as as lower demand than need and that then But other appreciate country. to markets Seattle. there I markets? a to the lot an you're what

here. Angela It's

began that it do demand we the a year-over-year X acknowledge Northern on what retrenchment. I want this think stabilized. things we happening. still seeing that soft. do comp year from side perspective, But point, before remains because the for One is was And think that September got to was that sectors we're that, California, last I tech at has robust quite their is

And so that's indicator. definitely good a

look indications, at, we levels. remains other notices, as of far claims back As pre-COVID it's unemployment course, WARN to that and stable

should. all market So the that it functioning is that as to points

is through to terms what think the do In of that way. more tail robust needs retrenchment. the they're end It's is that looks we going hiring of forward, this -- -- sector, the technology return like in a the looking kind of it

we do light the during the of that decline piece quite of and we the COVID happen. from has is the we the so retrenchment. as now end at course, migration, the of XXX% course, that it remote continue course, and international or last the of to see been COVID muted various having that which job versus, which result then, which of And tunnel a to is need to last expect And X% And really year, was XX% course, perspective. hiring, remote and of

elements, And potential are so our with those X markets. upside those all for

that quick rest the new one goes? what missed then does maybe guide as the rate appreciate growth and the assume And if your color. one, of just apologies I I but this, lease as Okay. year far

Barb. it's Josh,

It's to variety we is there be a to So quarter fourth guidance. number a need hit going specific the factors. of that to achieve

we a lot trade-off to there's of As but back our had got occupancy a there. impact nonpaying units from tenants. It Jessica has an mentioned,

rent that will that and all play into quarter fourth not we other need a achieve of guidance growth factors variety So there's the to it. because there's specific there's number factors play the into a if

Feldman question Wells from comes Jamie next Fargo. Our with

potential occupancy sort a first first think you about do talk that initiative you you the of next in half, Can acceleration year? sets for up the

the clarify XXXX, is occupancy your first of this acceleration? Jamie, half you Can Are talking half you question? first Jessica.

could of first both also like did benefit thinking just the first be by where harder comps 'XX, be Like rent? the half into that on half you comps what next for of the push I'm and harder by 'XX you the Yes, have to year-over-year about year? get market the occupancy may might in

right there's Yes, now, we're year-to-date neutral a over I we term, occupancy, to trade-out, I what so about XXXX. positive potentially XX.X%, saying. as revenue we you're floated XX.X% but short down it's the again, and head understand but sitting Yes, into believe,

peg we'll it's heading we're now with end occupancy, where where So to the hard exactly year. right

It's remain As seasonally a I and occupancy units. slow on mentioned, we focused period. backfilling

much short over So the it's we'll term. be make progress occupancy uncertain how to able with

But into see year, be certainly outcome there's So could year, to last that my come components revenue we but add a stable as favorable is is that delinquency our we head the lower expectation as an from with said, what perspective. we will down. other than occupancy

on quite occupancy around Seattle and stable occupancy, market XX%. slowdown, is I front, area, County, and mean, a as that far be Los by and Does that particularly and again, answer our quite is would XX.X%, is your San around I impacted delinquency now last year seeing generally compared sitting Area Ventura, XX%. as occupancies particularly having speaking, expect but And Angeles well stronger in with lower the upside performing sitting Diego, to when we're Bay is Orange to also an the question? seasonal

helpful. would And mentioned that's I there switching I want opportunities for saw mean, more to investments mean have mean I you these or Oakland. expand some you better you to that supply. guess, the investment do then, submarkets of pricing? Yes, if here better gears I potential. just

next Northern out for several years. think for the for or Angela Oakland that given the good Rylan bullish that's At subject reiterated on went I'd next to X And on case. reasons to say talked the be relatively to the are about, it's investment any we've us. high we open we a are here. opportunity year California will several conditions that has presented the there. Jamie, prospect I are supply other challenged as level,

pretty our eagerly opportunities looking So and in markets. But are core investment it's a opportunity. be to have we of all it for -- compelling would open

from comes question next with Heffern Our RBC. Brad

with of on Meta those? noticeable leasing we some Can in the about you've there ground impact been talk activity from a like September has you return-to-office saw in the mandates watching, and been

sticking. so here. that Angela seen a that been return-to-office The far, it's it's sign mandate good we've It's Yes.

they it's policy. what tech by settled This they remote stopped. So make adjustments. the rates evictions seeing last And year of and and exactly to still middle has hiring course, then become to announced, is mean return-to-office the remotely. lease and -- when what year, been It's X X precedent. point through the that I some we're and the fact, days, they days is working that -- in back to the to employers -- that's gaining had the the move rehiring have we're were has the momentum. taking our because in of to And hiring difficult financial delinquency issue, and They

an there's number, a benefit. point. that's this noise we So not of lot as as been that, to to that, certainly, straightforward it's a But point possible just in expect exact at

come just then right on you're curious a if now? concessions have offering the that Understood. up and concessions call. times walk through average I'm give Okay. the you few And could markets the individual just

we're as adjust what portfolio come go in X the concessions they Yes, I we'll the And units and offering to nonpaying as go, week of Jessica. across an manage is average may velocity. monitor as far is our new that lease up needed free. as This anticipate

largest as we far in have concessions volume market, of concentrated by pockets. the As

this Angeles Southern point. then concessions Los seeing few days we're surprisingly just days Seattle, outside at the Angeles. Los And California Bay in Area. is a is still only a -- larger generally And few areas of

that ago, a slowdown very mentioned a market. stable been minutes few seasonal I it's As in

Morgan Adam comes question next Kramer with Our Stanley. from

of guys on questions touched of on couple different couple have a past. you a kind demand the in of Just drivers

I integration can of tech think workers, to one of markets, in-migration the some kind be kind factors. visas overseas just And other would your that of be right?

through there's that know of lot on Just want migration. the of a I to outward focus maybe walk kind because

kind on strike, other So have demand end is actor potential think of on that if maybe that in-migration impact And the could what kind business? then markets. of the kind driver about of of -- your just your writer the just question to strike, the

really -- that a And are to we is readily of the part And year, and the since tracking on data good I uptick relates as Angela think question mentioned, we've But as Those been on recovery. what Adam, here. then, move-ins. front last saw it's is Good that it's in-migration. steady. available. been a really I not the

data it. will of in-migration migration The And into outside not California immediate steady. hospitality it's that at Washington I point. and far the care generally look think health return attributed was the just of we still the mainly as international And from to education drivers that's quarter, the as actually markets telling and that piece that services. and very so is remained And And Hospitality the other that, our missing part this we're have the do when that, at job and third strike. partly leisure industry, in growth and of it's very muted. we think as

catalyst as And think so we demand well. potential do that, that a could be

from question comes Wes Golladay Baird. with Our next

Do the repaid that? is you on million have finance. think, entire is extend there -- extra structured at I to timing $XXX You looking you when a concentration? mentioned geographic structured then book, that? on Do chance And estimate any getting, there finance any

Barb. it's Wes,

is midyear now, I $XXX the assumption. you probably million a on assume think safe for could

portfolio year good year, the in our we is so think some your -- half in the actual of half maybe it first of in and there. geographic our the some back in terms have concentration, our of of mirrors portfolio I terms And investment. assumption actually the is then

it's XX% So portfolio where of Southern in geographically. about is in in Seattle Northern how the California aligns terms and XX% in located XX% California,

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

from On concession year achieved burn-off you renewal down a can ago? between that rate growth break rate the growth in X.X% that October, versus how was much of

roughly John, -- XX-XX. Jessica. it's Yes, that it's

or then burn-off. X.X% so about to X.X% seeing we're the So rest concession rate and is in growth

going compare that you it additive year forward? ago, you you're versus concessions when the is mentioned offering renewal growth to So rate a that earlier

now, sit we right it Where additive. is

now, X at monitor consistently But but roughly a that's concessions volume weeks pretty we're the we may earlier, increase right said last across as And right the a So and now, year, at that. of QX. were of sitting we amount, Like we'll positive. I week.

outlook Okay. on this Has the at half X.X%. year, the second less delinquency an of been gross was it update there for

think I that October. there, all? Has basically you're including changed at

changes the we're target if full Barb. a be our takes. any for We with it's trade-off on in occupancy. didn't We John, favorable, believe delinquency year. there come be guidance puts And does make to for and There may that. may

so our year full And in guidance. with we're net-net, line

Street. Our comes next from John Green with question Pawlowski

Barb, dollars -- delinquent of with I a maintenance amount flow like the get a these of in an the cost of the you associated costs CapEx think have magnitude sense, an total tenants. could through just the already -- us seeing you've worked a or of of order might needs spent on and be that portfolio innings question through of evictions potential of units? deferred Have most it? repair and the sense you that about today from order whether or get to over years I'm to trying coming early you give

it's John, here. Angela

just relative delinquent -- CapEx a answer the delinquent is is turnover Let we the that to me level not of it high-level to higher what relates as give have in frankly, not to when the tenants. has you material because, tenants we're seeing past

leave. to And some just decided have actually

pre-COVID. be time. bad turnover as at But to time so again, a there's once it's a turn. And And going rate the actors just comparable to from natural

And so number point that's why there to. that a can is Barb

it's as CapEx volume, of it's higher Our as more other a by because far like storm damage. And not concerned, evictions. at really is driven point but greater this eviction damage a activities is

the think cores right if few over joined private to of missed -- Jose. a are call red market, I'm what and I right and rates pretty the minutes the now cap this. of like kind late, Okay. to they're San Rylan, apologies imagine market curious But San so urban Fran clearing you I close and now. where I Maybe shifting line

So of do I'm San of what might urban you curious just and type San pricing on agree the in think kind high-rise environment pricing buyers Jose? sellers Fran,

I occur year-to-date, we've and hesitate is any still well pause are. seen I to as redlining also seeing the with the we've different some take I are what to aware, profile buyers idea seen. when specific difficult number we buyer -- would the you John. pinpoint city, you because whole appreciate transactions, transactions are where it's a not typically give some a of there's question. very than

basis you're you who transact and are buyers some the office looking to seeing think of at in replacement costs that that submarkets still the I coming some versus continuing mentioned. family are

those a over suspect fundamentally past or But X. back going obviously, challenged come the as in. you're So year market to see investors turn, people I

leave that at without it a hopefully, helpful. color is but that I'll specific so number, giving you And

is. it No, Maybe Yes. follow-up. definitely one

to go COVID? into been buyer becomes last these you've willing a urban that be more know healed would few What really to rates I years. pricing in range Like kind at? curious, Just not back you be talking suburban in of to have markets you what interesting the of cap

Thanks, John.

question. good Another

X on know, rent to you As and forecast growth our rank submarkets we force analysis. years for our forward-looking XX-plus based fundamental

And so based growth to accommodate a the rent rates those cap on IRR have estimates. for higher

a dollars next towards more performance I demonstrating. think we've portfolio our say, a will And will portfolio looking supply there is price similar few the would years looking years, given the willing these the I over for to see what is turning But suburbans incremental several -- have the submarkets. next opportunities, on few in the past in we optimistic and for rock would where going to that seen I'm average with at we're outperforming. there look currently we're years. over is every our invest and we're our So we strongly go at which investments and be mix price, to

question comes from Piper Sandler. with next Our Connor Mitchell

current to be much XX% whether some a compared of kind looking we're the weighting growth migration to international the the maybe an on of you return-to-office or give discussion. wanted amount that's think forward? you how compared that factors to Like Just could from of for? impact looking in-migration able the other the of have you're expecting follow-up Would of figures, versus historical impact demand that to

historically negative has here. good can in-migration. net a in point like Connor, Yes. Angela it's thing you a is That's California I The question. to one

So XX out we significant XX years, growth. last during have even years the of when

net international, in migration faster XQ positive. the so And becomes

and As And it's by influenced exact lot influenced macro course, the economy factors. a demand is. ratio. and the by, as of influenced percentage, affordability that's the course, supply by generally where far of the of It's

a line So I you number I don't think an straight from making percentage by of do to increase. justice could migration absolute

question. course. And of just then Yes, another

a little the secured financing about bit. talked You've

So the this after issued recently. earlier you debt year secured

on Just market update an wondering looking bit unsecured market any little now the then. is narrowing give versus since could if improved a you been unsecured The how the whether there's secured market the of has spreads.

Barb. Yes, this is

high bond secured did, if around like go be probably the us were offering. bond for I think in X% a to to mid-X%. in unsecured the XX-year And secured loan we'd a we the we're XX-year we today, loan, range do to market, a unsecured on So

yes, been we has secured hasn't of from in a bond there market a a July. when originally little our bit loan there lot narrowing did been But as unsecured back well. transactions So of

capital of it's next we don't where we so and needs next feel year. little capital year. a needs a this And unknown good We time, but executed at lot for about our have

St. Our next question comes from Haendel

Juste with Mizuho.

for of couple ones A quick me.

I'm in called First York for header. Barriers there's any day Francisco the curious guess was called -- on an is, the to other California San think, perspective I it Housing, slams I Times article 'Egregious' New

entry, curious there. low you certainly of barrier this, low on I'm thoughts if of the part idea key the supply So thesis thing key California any to the in -- have

and be if curious changes I'm real updated being there's perspective the could marketplace? that contemplated impact could on any reviews So are any barriers that if are there to perhaps the that building, how

It's here. a Haendel, Angela question. good it's

housing the just and moved on not that, more programming as by passed is passed of were homes There's even There part numerous as and And recently wages. is part few they barrier. the meaningful building housing there recall shortage campaigned legislation -- has in a think that needle spur enacted to million production, may legislation, in protections. despite multiple acute barrier to XXXX. And he we've you of I California cost legislations way. requiring a environmental a because Governor it continues all X.X Newsom's seen there that enact but efforts

is And so very challenging. just it

And million that so built about of debt be XXXX. X.X permits. by to homes original have they're track I go Currently, and back goal XXX,XXX issued on to

we're and built, units X away. years no So

do So it why it the and supply look will we we of remains still believe the gives as data, low that when well. view remain favorable. magnitude how you that permit very And we at

believe Got it. portfolio mentioned Francisco average bit one your week. down Peninsula. then further Francisco hoping that that proper versus could X I maybe in broadly Got it. you in earlier, And was more. concessions San you a I bifurcate in San

the me. as information I I Francisco is for X,XXX couple is said, such in This currently we're of But as offering, far a higher more what very of market week like would of outside with Southern supply Seattle, is Jose, free concessions Bay Angeles concessions, in X say pockets concessions. Oakland that San don't is mean and I large Jessica. front have Los roughly all impacted, we minimal California which I San us, bit small Area, a there. units little minimal like of a so of buildings. have

Our final Tsai is with from Linda Jefferies. question

might versus growth? how faster growth the highest your XX these Over across be which much the months, average? rent And would expect you in markets next portfolio markets

higher of for in California Northern a supply, come. so have about Seattle. it's that a strongest do been as And It's the growth benefit and California they particularly tech and we'll different supply. job expect when but to also Seattle, of of of market, region course, ultimately outpace our our Seattle from Northern the Xx level hiring Southern much percentage. reasons, a And has lower a Angela And We Northern California, here. region

So that, of I about said course, has a much these X.X%. versus And region Northern markets, X% rebounding. before, mentioned better of particularly metric. affordability stock both are as Northern California, Having in of

the do outperform And Southern Northern so for those region reasons, to we the expect regions.

expenses. And then just one quick follow-up on

insurance where higher others? you versus pronounced more costs there's see about commentary more do 'XX, in the utility Given markets

is Barb. This Yes.

the an broad 'XX. continue. been national a on expect Essex issue just front, On it's pressure -- an We're cost, to it's a specific actually insurance just that a or we issue. West seeing Coast insurance not of issue, It's in lot and

that be ESG of putting to pressures We on do above in the despite all up And about will expected place. utilities term issue X% inflationary the front, then and efforts continue near levels year-to-date, we're we're utility 'XX. expect into to we

be And expense elevated next so those X growth year. will cause to

today's concludes This conference.

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