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Essex Property Trust Inc ESS

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Economic Moat

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Regional Strengths and Weaknesses in Apartment Fundamentals Lead to Mixed Q3 for Essex

Kevin Brown, CFA Equity Analyst

Analyst Note

| Kevin Brown, CFA |

Third-quarter results for no-moat Essex Property Trust were mixed compared with our estimates, so we don't anticipate materially changing our $293 fair value estimate. Same-store occupancy sequentially fell 20 basis points to 96.4%, which is below our estimate of occupancy remaining flat in the third quarter. Same-store rental rates also fell 1.1%, below our estimate of rates improving 0.7%. However, rent delinquencies declined, and Essex had to use far fewer rent concessions in the third quarter compared with the same quarter last year, leading to same-store revenue improving 2.7%, which beat our 1.5% estimate. Same-store expenses were up 3.9%, driven largely by maintenance costs increasing 7.0% and utilities costs increasing 7.9%. As a result, same-store net operating income grew 2.2%, ahead of our 0.7% estimate. Essex reported core funds from operations of $3.12, which is $0.08 better than management's guidance for the third quarter and in line with our estimate once we account for the lower marketable securities income Essex reported in the third quarter.

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Company Profile

Business Description

Essex Property Trust owns a portfolio of 250 apartment communities with over 60,000 units and is developing three additional properties with 571 units. The company focuses on owning large, high-quality properties on the West Coast in the urban and suburban submarkets of Southern California, Northern California, and Seattle.

Contact
1100 Park Place, Suite 200
San Mateo, CA, 94403
T +1 650 655-7800
Sector Real Estate
Industry REIT - Residential
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 1,799