Essex Property Trust, Inc. (ESS) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 28, 2023 1:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Essex Property Trust Second Quarter 2023 Earnings Conference Call. As a reminder, today's conference is being recorded. Statements made on this conference call regarding expected operating results and other future events are forward-looking statements that involve risks and uncertainties. Forward-looking statements are made based on current expectations, assumptions and beliefs as well as information available to the company at this time.

A number of factors could cause actual results to differ materially from those anticipated. Further information about these risks can be found on the company's filings with the SEC. It is now my pleasure to introduce your host, Ms. Angela Kleiman, President and Chief Executive Officer for Essex Property Trust. Thank you, Ms. Kleiman, you may begin.

Angela Kleiman

Good morning. Thank you for joining Essex's second quarter earnings call. Barb Pak and Jessica Anderson will follow me with prepared remarks, and Adam Berry is here for Q&A. We delivered a solid second quarter with core FFO per share exceeding the high end of our guidance range. In addition, we are pleased to announce a meaningful increase to our 2023 guidance for same property revenues, NOI and core FFO per share growth.

Barb will discuss this further in a moment. Our performance to date demonstrates the underlying strength of the West Coast economy along with continued refinement to our operating strategy. My remarks today will focus on our 2023 revised outlook for the West Coast and conclude with an update on the transaction market.

Starting with expectations for the balance of the year, as shown on Page S17 of the supplemental. Our improved outlook reflects the year-to-date resilience of the economy and labor markets both surpassing our initial forecast. This dynamic, coupled with slowing apartment deliveries have contributed to a healthy demand for rental housing in our markets. As a result, we raised our average market rent growth expectations for the West Coast by 50 basis points to 2.5%, with notable increases to San Diego and San Jose.

Demand associated with job growth is a key driver to the revision. We now expect our markets to generate 1.7% job growth for the full year. This is mostly attributable to the growth achieved in the first half of the year, with our markets posting 2.6% job growth on a trailing 3-month average through June.