Essex Property Trust, Inc. Q4 FY2025 earnings call

• 2025 performance: Full year same-store revenue growth at the high end and FFO per share growth above the midpoint of guidance range. Northern California outperformed due to tech sector expansion, migration trends, and limited housing supply; rent growth across most markets outperformed US average. • Fourth quarter property operations: Blended lease rate growth 1.9%, occupancy 96.3%, concessions typical for period. • 2026 outlook: Base case assumes current demand continues; supply forecasted to decline 20% year-over-year, expecting steady West Coast fundamentals with Northern California leading rent growth. • Investment market: 2025 had $12.6 billion of non-portfolio institutional multifamily transactions, up 43% from 2024; cap rates compressed, especially in Northern California and Seattle; Essex was largest investor in Northern California over past two years with NAV appreciation.

In the fourth quarter, the results were generally consistent with expectations. There was a 1.9% blended lease rate growth. Occupancy increased by 20 basis points sequentially to 96.3%, and concessions averaged approximately one week. Regionally, Northern California was the best region followed by Seattle then Southern California. Los Angeles delivered the best occupancy improvement, increasing 70 basis points sequentially.

• 2026 base case: Assumes current demand continues; supply to decline 20% year-over-year, expecting West Coast fundamentals to deliver solid blended rent growth above US average, led by Northern California. • Scenarios: Local uncertainty could lead to low end of guidance range; improvement in hiring trends could push to high end. • Expenses: Forecast 3% same property expense growth at midpoint, with controllable expenses up ~2%, insurance costs down ~5%, offset by utilities and property taxes increases; same-property NOI growth forecasted to increase 2.1% at midpoint; core FFO per share expected flat year-over-year due to structured finance redemptions headwind.

• Local uncertainty weighing on economy and job growth, impacting low end of guidance range. • Measured hiring environment tempering near-term demand acceleration. • Uncertainty in job growth influenced by public policy affecting hiring.

Q: Thoughts on demand for assets in Northern California and Seattle given tech market movement?

A: Northern California has job openings of top 20 tech companies ticked up above pre-COVID levels, VC funding in Q4 at highest in over 4 years; Seattle had soft Q4 but supply down 30% and positive office absorption.

Q: New and renewal blends for the year?

A: Assuming blends similar to 2025 at ~2.5%; new leases around flat to 2%, renewals around 3% to 4%.

Q: L.A. occupancy and performance outlook?

A: L.A. economic occupancy at 94.7% in Q4, steadily improving, supply to decline 20% in 2026, potential upside from jobs environment.

Q: Capital allocation and development?

A: Capital allocation focuses on FFO per share accretion, looking for best growth profile; no development starts in 2026 as land deals not economic yet, need land price reduction or 10%+ rent growth for development to pencil.

Q: Impact of immigration on demand?

A: No direct impact seen, international migration returned to pre-COVID norm.

Q: Legislative impact on real estate in L.A.?

A: California moving away from extreme liberal policies, proposals not successful, watching election outcomes.

Q: Structured finance book modeling?

A: Book value $330 million, 2026 guidance has $175 million income from 3-year maturity, stable book going forward.

Q: Blends and market rate growth by regions?

A: Northern California mid 3s to 4%, Seattle mid-2s, Southern California mid-1s; blends assumed consistent with low growth environment.

Q: Return to office impact in Seattle?

A: Return to office plans from Amazon and Microsoft offset layoffs, Seattle has 30% supply decline, layoffs due to business pivots not distress, market still vibrant.

Q: Delinquencies and other income contribution?

A: Delinquencies near pre-COVID trend, not baking meaningful benefit in 2026 from delinquency; other income contribution in guidance is 30 basis points, lumpy from technology initiatives.