Essex Property Trust, Inc. (NYSE: ESS) (the “Company”) announced
today its second quarter 2024 earnings results and related business
activities.
Net Income, Funds from Operations (“FFO”), and Core FFO per
diluted share for the quarter ended June 30, 2024 are detailed
below.
Three Months Ended June 30,
Six Months Ended June 30,
%
%
2024
2023
Change
2024
2023
Change
Per Diluted
Share
Net Income
$1.45
$1.55
-6.5%
$5.69
$3.94
44.4%
Total FFO
$3.89
$3.87
0.5%
$8.49
$7.68
10.5%
Core FFO
$3.94
$3.77
4.5%
$7.77
$7.42
4.7%
Second Quarter 2024
Highlights:
- Reported Net Income per diluted share for the second quarter of
2024 of $1.45, compared to $1.55 in the second quarter of
2023.
- Grew Core FFO per diluted share by 4.5% compared to the second
quarter of 2023, exceeding the midpoint of the Company’s guidance
range by $0.11. The outperformance was primarily driven by
favorable consolidated NOI growth.
- Achieved same-property revenue and net operating income (“NOI”)
growth of 3.4% and 3.0%, respectively, compared to the second
quarter of 2023. On a sequential basis, same-property revenues and
NOI improved 1.2% and 2.5%, respectively.
- Achieved year-over-year blended rate growth of 3.4% for the
second quarter of 2024 as compared to 2.2% year-over-year blended
rate growth achieved in the first quarter of 2024.
- Acquired two apartment home communities in Northern California
at a combined valuation of $147.7 million.
- Raised full-year 2024 guidance range as detailed in the table
below:
Full-Year 2024 Revised Guidance
Revised
Range
Revised
Midpoint
Change at
Midpoint
Net Income per diluted share
$8.23 - $8.47
$8.35
+$0.11
Core FFO per diluted share
$15.38 - $15.62
$15.50
+$0.27
Same-Property Revenues
2.70% to 3.30%
3.00%
+0.75%
Same-Property Operating Expenses
4.50% to 5.00%
4.75%
+0.50%
Same-Property NOI
1.80% to 2.80%
2.30%
+0.90%
SAME-PROPERTY OPERATIONS
Same-property operating results exclude any properties that are
not comparable for the periods presented. The table below
illustrates the percentage change in same-property gross revenues
for the quarter ended June 30, 2024 compared to the quarter ended
June 30, 2023, and the sequential percentage change for the quarter
ended June 30, 2024 compared to the quarter ended March 31, 2024,
by submarket for the Company:
Q2 2024 vs. Q2 2023
Q2 2024 vs. Q1 2024
% of Total
Revenue Change
Revenue Change
Q2 2024 Revenues
Southern California
Los Angeles County
2.2%
1.3%
18.3%
Orange County
4.9%
0.8%
10.5%
San Diego County
6.3%
1.1%
9.0%
Ventura County
5.4%
1.3%
4.1%
Total Southern California
4.1%
1.1%
41.9%
Northern California
Santa Clara County
2.9%
1.4%
19.2%
Alameda County
1.5%
0.7%
7.6%
San Mateo County
4.6%
3.0%
6.0%
Contra Costa County
3.2%
1.1%
5.3%
San Francisco
2.1%
0.7%
2.5%
Total Northern California
2.9%
1.4%
40.6%
Seattle Metro
3.3%
1.0%
17.5%
Same-Property Portfolio
3.4%
1.2%
100.0%
The table below illustrates the components that drove the change
in same-property revenue on a year-over-year basis for the three-
and six-month periods ended June 30, 2024 and on a sequential basis
for the quarter ended June 30, 2024.
Same-Property Revenue
Components
Q2 2024 vs. Q2 2023
YTD 2024 vs. YTD
2023
Q2 2024 vs. Q1
2024
Scheduled Rents
1.8%
2.0%
0.6%
Delinquencies
1.1%
0.9%
0.4%
Cash Concessions
0.1%
0.2%
0.1%
Vacancy
-0.5%
-0.5%
-0.1%
Other Income
0.9%
0.9%
0.2%
2024 Same-Property Revenue
Growth
3.4%
3.5%
1.2%
Year-Over-Year Change
Year-Over-Year Change
Q2 2024 compared to Q2
2023
YTD 2024 compared to YTD
2023
Revenues
Operating
Expenses
NOI
Revenues
Operating
Expenses
NOI
Southern California
4.1%
5.8%
3.4%
4.3%
3.9%
4.5%
Northern California
2.9%
1.9%
3.3%
3.0%
5.1%
2.1%
Seattle Metro
3.3%
7.8%
1.5%
2.9%
5.9%
1.7%
Same-Property Portfolio
3.4%
4.5%
3.0%
3.5%
4.8%
3.0%
Sequential Change
Q2 2024 compared to Q1
2024
Revenues
Operating
Expenses
NOI
Southern California
1.1%
-1.0%
2.0%
Northern California
1.4%
-3.7%
3.8%
Seattle Metro
1.0%
2.0%
0.6%
Same-Property Portfolio
1.2%
-1.7%
2.5%
Financial Occupancies
Quarter Ended
6/30/2024
3/31/2024
6/30/2023
Southern California
95.7%
96.0%
96.4%
Northern California
96.3%
96.2%
96.6%
Seattle Metro
97.1%
97.0%
96.9%
Same-Property Portfolio
96.2%
96.3%
96.6%
INVESTMENT ACTIVITY
Real Estate
In April, the Company elected to accept the third-party
sponsor’s common equity interest affiliated with its $14.7 million
preferred equity investment in a stabilized community comprising 75
apartment homes located in Sunnyvale, CA. Concurrent with the
closing, the Company unencumbered the property and consolidated the
community on the Company’s financial statements at a $46.6 million
valuation.
In May, the Company acquired ARLO Mountain View, a 164-unit
apartment home community located in Mountain View, CA for a total
contract price of $101.1 million. The property was built in 2018
and includes 10,725 square feet of fully leased retail space.
Subsequent to quarter end, the Company acquired its joint
venture partner’s 49.9% common equity interest in Patina at
Midtown, a 269-unit apartment home community built in 2021 and
located in San Jose, CA, for a total purchase price of $117.0
million on a gross basis. Concurrent with the closing, the Company
unencumbered the property and was fully redeemed on a preferred
equity investment affiliated with the partnership.
Other Investments
Subsequent to quarter end, the Company received cash proceeds of
$40.1 million from a full redemption of a subordinated loan
investment yielding an 11.5% rate of return. Year-to-date through
July, the Company has received cash proceeds of $50.4 million from
redemptions of structured finance investments yielding an 11.2%
weighted average rate of return.
LIQUIDITY AND BALANCE SHEET
Common Stock
Year-to-date through July 26, 2024, the Company has not issued
any shares of common stock through its equity distribution program
or repurchased any shares through its stock repurchase plan. As of
July 26, 2024, the Company had $302.7 million of purchase authority
remaining under its stock repurchase plan.
Balance Sheet
In May, the Company repaid its $400.0 million unsecured notes at
maturity with proceeds from the $298.0 million 10-year secured
loans financed in July 2023 and a portion of the $350.0 million
unsecured bond issued in March 2024.
As of July 26, 2024, the Company had approximately $1.1 billion
in liquidity via undrawn capacity on its unsecured credit
facilities, cash and cash equivalents, and marketable
securities.
GUIDANCE
For the second quarter of 2024, the Company exceeded the
midpoint of the guidance range provided in its first quarter 2024
earnings release for Core FFO by $0.11 per diluted share. The
outperformance primarily relates to $0.09 per share of favorable
consolidated NOI, of which $0.04 per share is timing related or
one-time in nature.
The following table provides a reconciliation of second quarter
2024 Core FFO per diluted share to the midpoint of the guidance
provided in the Company’s first quarter 2024 earnings release.
Per Diluted
Share
Guidance midpoint of Core FFO per diluted
share for Q2 2024
$
3.83
Same-Property Revenues
0.05
Non-Same-Property Revenues (One-Time)
0.02
Consolidated Operating Expenses (Timing
Related)
0.02
FFO from Co-Investments
0.02
Core FFO per diluted share for Q2 2024
reported
$
3.94
The table below provides key updates to the Company’s 2024
full-year assumptions for Net Income, Total FFO, Core FFO per
diluted share, and same-property growth. For additional details
regarding the Company’s 2024 Core FFO guidance range, please see
page S-13 of the accompanying supplemental financial
information.
2024 FULL-YEAR AND THIRD
QUARTER GUIDANCE
Previous Range
Previous Midpoint
Revised Range
Revised Midpoint
Change at the Midpoint
Per Diluted Share
Net Income
$8.04 - $8.44
$8.24
$8.23 - $8.47
$8.35
+$0.11
Total FFO
$15.53 - $15.93
$15.73
$15.93 - $16.17
$16.05
+$0.32
Core FFO
$15.03 - $15.43
$15.23
$15.38 - $15.62
$15.50
+$0.27
Q3 2024 Core FFO
-
-
$3.81 - $3.93
$3.87
-
Same-Property Growth on a Cash-Basis
(1)
Revenues
1.50% to 3.00%
2.25%
2.70% to 3.30%
3.00%
+0.75%
Operating Expenses
3.50% to 5.00%
4.25%
4.50% to 5.00%
4.75%
+0.50%
NOI
0.00% to 2.80%
1.40%
1.80% to 2.80%
2.30%
+0.90%
(1)
The midpoint of the Company’s
same-property revenues and NOI on a GAAP basis are 3.20% and 2.50%,
respectively, representing a 0.80% and 0.90% increase to the
Company’s previous guidance midpoints.
CONFERENCE CALL WITH MANAGEMENT
The Company will host an earnings conference call with
management to discuss its quarterly results on Wednesday, July 31,
2024 at 10:00 a.m. PT (1:00 p.m. ET), which will be broadcast live
via the Internet at www.essex.com, and accessible via phone by
dialing toll-free, (877) 407-0784, or toll/international, (201)
689-8560. No passcode is necessary.
A rebroadcast of the live call will be available online for 30
days and digitally for 7 days. To access the replay online, go to
www.essex.com and select the second quarter 2024 earnings link. To
access the replay, dial (844) 512-2921 using the replay pin number
13747560. If you are unable to access the information via the
Company’s website, please contact the Investor Relations Department
at investors@essex.com or by calling (650) 655-7800.
CORPORATE PROFILE
Essex Property Trust, Inc., an S&P 500 company, is a fully
integrated real estate investment trust (REIT) that acquires,
develops, redevelops, and manages multifamily residential
properties in selected West Coast markets. Essex currently has
ownership interests in 255 apartment communities comprising over
62,000 apartment homes. Additional information about the Company
can be found on the Company’s website at www.essex.com.
This press release and accompanying supplemental financial
information has been furnished to the Securities and Exchange
Commission electronically on Form 8-K and can be accessed from the
Company’s website at www.essex.com. If you are unable to obtain the
information via the Web, please contact the Investor Relations
Department at (650) 655-7800.
FFO RECONCILIATION
FFO, as defined by the National Association of Real Estate
Investment Trusts (“NAREIT”), is generally considered by industry
analysts as an appropriate measure of performance of an equity
REIT. Generally, FFO adjusts the net income of equity REITs for
non-cash charges such as depreciation and amortization of rental
properties, impairment charges, gains on sales of real estate and
extraordinary items. Management considers FFO and FFO which
excludes non-core items, which is referred to as “Core FFO,” to be
useful supplemental operating performance measures of an equity
REIT because, together with net income and cash flows, FFO and Core
FFO provide investors with additional bases to evaluate the
operating performance and ability of a REIT to incur and service
debt and to fund acquisitions and other capital expenditures and to
pay dividends. By excluding gains or losses related to sales of
depreciated operating properties and land and excluding real estate
depreciation (which can vary among owners of identical assets in
similar condition based on historical cost accounting and useful
life estimates), FFO can help investors compare the operating
performance of a real estate company between periods or as compared
to different companies. By further adjusting for items that are not
considered part of the Company’s core business operations, Core FFO
allows investors to compare the core operating performance of the
Company to its performance in prior reporting periods and to the
operating performance of other real estate companies without the
effect of items that by their nature are not comparable from period
to period and tend to obscure the Company’s actual operating
results. FFO and Core FFO do not represent net income or cash flows
from operations as defined by U.S. generally accepted accounting
principles (“GAAP”) and are not intended to indicate whether cash
flows will be sufficient to fund cash needs. These measures should
not be considered as alternatives to net income as an indicator of
the REIT's operating performance or to cash flows as a measure of
liquidity. FFO and Core FFO do not measure whether cash flow is
sufficient to fund all cash needs including principal amortization,
capital improvements and distributions to stockholders. FFO and
Core FFO also do not represent cash flows generated from operating,
investing or financing activities as defined under GAAP. Management
has consistently applied the NAREIT definition of FFO to all
periods presented. However, there is judgment involved and other
REITs’ calculation of FFO may vary from the NAREIT definition for
this measure, and thus their disclosures of FFO may not be
comparable to the Company’s calculation.
The following table sets forth the Company’s calculation of
diluted FFO and Core FFO for the three and six months ended June
30, 2024 and 2023 (in thousands, except for share and per share
amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
Funds from Operations attributable to
common stockholders and unitholders
2024
2023
2024
2023
Net income available to common
stockholders
$
92,914
$
99,620
$
365,645
$
253,152
Adjustments:
Depreciation and amortization
145,613
136,718
285,346
273,065
Gains not included in FFO
-
-
(138,326
)
(59,238
)
Casualty loss
-
-
-
433
Impairment loss from unconsolidated
co-investments
-
-
3,726
-
Depreciation and amortization from
unconsolidated co-investments
17,380
17,848
35,850
35,457
Noncontrolling interest related to
Operating Partnership units
3,270
3,506
12,869
8,910
Depreciation attributable to third party
ownership and other
(390
)
(365
)
(779
)
(724
)
Funds from Operations attributable to
common stockholders and unitholders
$
258,787
$
257,327
$
564,331
$
511,055
FFO per share – diluted
$
3.89
$
3.87
$
8.49
$
7.68
Expensed acquisition and investment
related costs
$
-
$
5
$
68
$
344
Tax (benefit) expense on unconsolidated
co-investments (1)
(807
)
1,733
(758
)
833
Realized and unrealized gains on
marketable securities, net
(1,597
)
(7,591
)
(4,948
)
(8,871
)
Provision for credit losses
19
16
66
34
Equity loss (income) from non-core
co-investments (2)
143
(978
)
(5,727
)
(884
)
Co-investment promote income
-
-
(1,531
)
-
Income from early redemption of preferred
equity investments and notes receivable
-
(285
)
-
(285
)
General and administrative and other,
net
5,906
561
8,447
827
Insurance reimbursements, legal
settlements, and other, net (3)
(486
)
(295
)
(43,300
)
(8,799
)
Core Funds from Operations attributable
to common stockholders and unitholders
$
261,965
$
250,493
$
516,648
$
494,254
Core FFO per share – diluted
$
3.94
$
3.77
$
7.77
$
7.42
Weighted average number of shares
outstanding diluted (4)
66,486,464
66,444,114
66,477,724
66,584,049
(1)
Represents tax related to net unrealized
gains or losses on technology co-investments.
(2)
Represents the Company's share of
co-investment income or loss from technology co-investments.
(3)
Includes legal settlement gains of $42.5
million and $7.7 million for the six months ended June 30, 2024 and
2023, respectively.
(4)
Assumes conversion of all outstanding
limited partnership units in Essex Portfolio, L.P. (the “Operating
Partnership”) into shares of the Company’s common stock and
excludes DownREIT limited partnership units.
NET OPERATING INCOME (“NOI”) AND
SAME-PROPERTY NOI RECONCILIATIONS
NOI and Same-Property NOI are considered by management to be
important supplemental performance measures to earnings from
operations included in the Company’s consolidated statements of
income. The presentation of same-property NOI assists with the
presentation of the Company’s operations prior to the allocation of
depreciation and any corporate-level or financing-related costs.
NOI reflects the operating performance of a community and allows
for an easy comparison of the operating performance of individual
communities or groups of communities. In addition, because
prospective buyers of real estate have different financing and
overhead structures, with varying marginal impacts to overhead by
acquiring real estate, NOI is considered by many in the real estate
industry to be a useful measure for determining the value of a real
estate asset or group of assets. The Company defines same-property
NOI as same-property revenues less same-property operating
expenses, including property taxes. Please see the reconciliation
of earnings from operations to NOI and same-property NOI, which in
the table below is the NOI for stabilized properties consolidated
by the Company for the periods presented (dollars in
thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Earnings from operations
$
137,450
$
134,832
$
269,809
$
322,217
Adjustments:
Corporate-level property management
expenses
12,123
11,451
23,854
22,883
Depreciation and amortization
145,613
136,718
285,346
273,065
Management and other fees from
affiliates
(2,573
)
(2,778
)
(5,286
)
(5,543
)
General and administrative
21,136
13,813
38,307
29,124
Expensed acquisition and investment
related costs
-
5
68
344
Casualty loss
-
-
-
433
Gain on sale of real estate and land
-
-
-
(59,238
)
NOI
313,749
294,041
612,098
583,285
Less: Non-same property NOI
(20,325
)
(9,170
)
(32,315
)
(20,436
)
Same-Property NOI
$
293,424
$
284,871
$
579,783
$
562,849
SAFE HARBOR STATEMENT UNDER THE PRIVATE
LITIGATION REFORM ACT OF 1995:
This press release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements are statements which are not
historical facts, including statements regarding the Company's
expectations, estimates, assumptions, hopes, intentions, beliefs
and strategies regarding the future. Words such as “expects,”
“assumes,” “anticipates,” “may,” “will,” “intends,” “plans,”
“projects,” “believes,” “seeks,” “future,” “estimates,” and
variations of such words and similar expressions are intended to
identify such forward-looking statements. Such forward-looking
statements include, among other things, statements regarding the
Company’s third quarter and full-year 2024 guidance (including net
income, Total FFO and Core FFO, same-property growth and related
assumptions) and anticipated yield on certain investments. While
the Company's management believes the assumptions underlying its
forward-looking statements are reasonable, such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, many of which are beyond the Company’s control, which
could cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. The Company cannot assure the future
results or outcome of the matters described in these statements;
rather, these statements merely reflect the Company’s current
expectations of the approximate outcomes of the matters
discussed.
Factors that might cause the Company’s actual results,
performance or achievements to differ materially from those
expressed or implied by these forward-looking statements include,
but are not limited to, the following: assumptions related to our
third quarter and full-year 2024 guidance; occupancy rates and
rental demand may be adversely affected by competition and local
economic and market conditions; there may be increased interest
rates, inflation, escalated operating costs and possible
recessionary impacts; geopolitical tensions and regional conflicts,
and the related impacts on macroeconomic conditions, including,
among other things, interest rates and inflation; the terms of any
refinancing may not be as favorable as the terms of existing
indebtedness; the Company’s inability to maintain our investment
grade credit rating with the rating agencies; the Company may be
unsuccessful in the management of its relationships with its
co-investment partners; the Company may fail to achieve its
business objectives; time of actual completion and/or stabilization
of development and redevelopment projects; estimates of future
income from an acquired property may prove to be inaccurate; future
cash flows may be inadequate to meet operating requirements and/or
may be insufficient to provide for dividend payments in accordance
with REIT requirements; changes in laws or regulations; unexpected
difficulties in leasing of future development projects; volatility
in financial and securities markets; the Company’s failure to
successfully operate acquired properties; unforeseen consequences
from cyber-intrusion; government approvals, actions and
initiatives, including the need for compliance with environmental
requirements; and those further risks, special considerations, and
other factors referred to in the Company’s annual report on Form
10-K for the year ended December 31, 2023, quarterly reports on
Form 10-Q, and those risk factors and special considerations set
forth in the Company's other filings with the SEC which may cause
the actual results, performance or achievements of the Company to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. All forward-looking statements are made as of the date
hereof, the Company assumes no obligation to update or supplement
this information for any reason, and therefore, they may not
represent the Company’s estimates and assumptions after the date of
this press release.
DEFINITIONS AND RECONCILIATIONS
Non-GAAP financial measures and certain other capitalized terms,
as used in this earnings release, are defined and further explained
on pages S-17.1 through S-17.4, "Reconciliations of Non-GAAP
Financial Measures and Other Terms," of the accompanying
supplemental financial information. The supplemental financial
information is available on the Company's website at
www.essex.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240730145822/en/
Loren Rainey Director, Investor Relations (650) 655-7800
lrainey@essex.com
Essex Property (NYSE:ESS)
過去 株価チャート
から 7 2024 まで 7 2024
Essex Property (NYSE:ESS)
過去 株価チャート
から 7 2023 まで 7 2024
