ESSEX PROPERTY TRUST, INC. Q1 FY2025 earnings call

• First quarter results trended ahead of plan with 2.8% blended net effective rent growth. - Delinquency improved, especially in Los Angeles, moving to 1.3% from 3.9% the prior year. - Operated with a low turnover rate of 35% while achieving positive new lease rate growth and stable occupancy. - Regionally, new lease rates were positive in all major regions, led by Northern California. - Full year outlook reaffirmed same property growth and core FFO per share guidance ranges, with attention to macroeconomic uncertainty. - Refinanced majority of 2025 debt maturities and balance sheet remains strong with over $1 billion in liquidity.

In the first quarter, Essex Property Trust's results trended slightly ahead of plan with a 2.8% blended net effective rent growth. Delinquency improved significantly, with Los Angeles delinquency dropping to 1.3% of scheduled rent from 3.9% the prior year. The turnover rate was a notably low 35%. Regionally, new lease rates turned positive in all major regions: Northern California led at 1.5%, Seattle at 1.3%, and Southern California at 20 basis points. San Mateo saw 4.8% new rate growth, while Oakland lagged due to elevated supply, though it started showing incremental improvement as supply abated.

• Reaffirmed same property growth and core FFO per share guidance ranges despite macroeconomic uncertainty. - Low housing supply in West Coast markets (50 basis points supply delivery in 2025) supports rent growth even in low job growth environments. - Transaction activity in first quarter was balance sheet neutral, with allocation to higher rent growth markets. - Acknowledged potential to revise guidance upward absent macroeconomic uncertainty, particularly on core FFO.

• Macroeconomic uncertainty from US and global trade policy impacting business investment and job growth. - Potential tariff impact on cost side rather than top line revenue. - Continued challenges in Los Angeles market related to delinquency and labor market softness. - Rent control proposals in Washington State similar to California's, though Essex's self-imposed rent cap has not materially impacted performance.

Q: On guidance, confidence in achieving acceleration in blended rate growth?

A: Angela Kleiman stated original guidance remains intact as first quarter outperformed, and the relationship of growth between quarters should remain consistent.

Q: Impact of tech sector on portfolio?

A: Angela Kleiman noted steady job openings in top 20 tech companies, with no softness seen.

Q: Occupancy strategy in second quarter?

A: Angela Kleiman discussed region-specific strategies, such as pushing rent in Northern California and focusing on occupancy in Southern California.

Q: Thoughts on LA market pricing power?

A: Angela Kleiman said LA needs delinquency to return to historical average and labor market improvement for pricing power.

Q: Transaction activity outlook?

A: Rylan Burns indicated pleasure with first quarter transactions and intent to replicate the strategy of trading from Southern California to Northern California.