Essex Property Trust Earnings: Fewer Delinquencies Lead to Higher Revenue Growth

Essex Property Trust reported second-quarter results that were relatively in line with our expectations, leading us to reaffirm our $306 fair value estimate for the no-moat company. Same-store occupancy declined 10 basis points sequentially to 96.2% while average rental rates for the same-store portfolio were only up 1.8% year over year. However, Essex saw considerably fewer delinquencies and higher other property revenue in the quarter, leading to same-store revenue growth of 3.4% that was slightly ahead of our 3.0% estimate. Same-store operating expenses were up 4.5%, matching our estimate, and the company reported same-store net operating income growth of 3.0% for the second quarter that was better than our estimate of 2.4% growth. Essex reported core funds from operations of $3.94 per share in the second quarter, a penny better than our $3.93 estimate and 4.5% higher than the $3.77 figure the company reported in the second quarter of 2023.