Essex Portfolio (ESS)

Michael Schall President and Chief Executive Officer
Angela Kleiman Senior Executive Vice President and Chief Operating Officer
Barbara Pak Executive Vice President and Chief Financial Officer
Adam Berry Executive Vice President and Chief Investment Officer
Nic Joseph Citi
Rich Hill Morgan Stanley
Joshua Dennerlein Bank of America
Austin Wurschmidt KeyBanc
Amanda Sweitzer Robert W. Baird
Rich Anderson SMBC
Neil Malkin Capital One Securities
Alexander Goldfarb Piper Sandler
John Kim BMO Capital Markets
Brad Heffern with RBC Capital Markets
Alex Kalmus Zelman & Associates
John Pawlowski Green Street Advisors
Call transcript
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Good day, and welcome to the Essex Property Trust Second Quarter 2021 Earnings Conference Call.

As a reminder, today's conference call 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. risks SEC. found these filings the about the with information can on be company's Further now pleasure is It my host, Mr. to introduce your Schall, Executive Michael Chief Essex and Trust. Property Officer for President Mr. you, Thank Schall.

You may begin.

Michael Schall

start economy and on with strengthening economies call. [indiscernible] underly results and I were also Thank for Coast our recovery a driven earnings call, factors, status Barbara an Coast positive prepared me a robust the joining today’s West will today, the Department the will remarks concluding which by Berry of will and related Angela you for West welcome and Q&A. Coast. Transaction West and Kleiman overview On Investments. with Adam of us second Markets quarter discuss the to quarter follow reopening and our with second Pak conference is I here

our a results as expected. occurred pandemic quarter With ahead of the were now we the and behind confident that recovery related are second faster from economic year the us. Our expectations pandemic worst strong vaccination high the of are entering rates, impacts the we economy than initial

rapid now pleased the XXXX pre-pandemic but markets portfolio the suburban in rents Essex and noted pandemic was occupancy are levels, way July delinquency. with announce along during occupancy, on The income strategy forecast will we to both in net continued to set effective other levels. made Obviously, of XXXX the can additional changes scheduled be Page higher passed rents X%, that provide looking S To forecast. while the from turned market positive our and still details in Angela rent, and the previous of net necessary Driving are converted revisions net high estimates which forward, Coast maintain As the second quarter, end, in into leading with of generally to the recovery and a and surpassed will calls, a from up midpoint for be improving, in second revenue and for effective recovery. to Having respectively during our we as and leases on moment. surged X.X% effective GDP below growth year-over-year unabated XX improvement rents pre-pandemic July now these our West increase the have the our downtowns initial supplemental. rents and job an X.X% found is X%

launched plan the been slow Through collections American has from a XX-year XX the of minus our improve reimbursements rent X% XXXX to our year-over-year As in year, as XXXX, the from X.X% X% a Cash delinquencies. the rescue XX basis emergency beginning about that quarter of growth To down were result, put year-over-year our of rental and plan for processing now this net was rent delinquency perspective, at rent related were into XXXX. current renters of forecasted delinquent assistance, American average of sequential X.X% to second for now The quarter effective X.X% pandemic QX March. XXXX in pace we rate of the are net for states the to the X.X% minus in the our points. average distribution well effective growth expect about of year. basis funding increase to from effective to modestly quarter given fourth to minus rents allocated provides net rents were of delinquencies for the up rents market expectation scheduled which rescue above consider since the for program on negligible,

improve months. to that the coming expect We in

California XX and lapse Page shown million the rates more expect in workers S X and protections the this in enter rent XX only At as on eviction time, We over on Washington. workforce revenue. both point, delinquent of delinquency the normal as levels has to million supplemental recorded September to about return of XX been

revenues as that XXXX X.X% months below and to second gap see still in months have exited U.S. X.X% our shutdowns placed no to the the the related in job we're programs economic an Essex the pandemic markets outlook, rate the are full from quarter, the overall. pandemic. The was West markets regained reopen and from centers pandemic. growth of QX, that employment hold the in nation. Employment in contemplated in and approved believe we reopening resume Washington over about the about pre-pandemic the respectively. of the of coming as May was the lost opportunity XXXX. We unemployment half job additional still process outpaced We second full quarter, as of the and growth April Through and the for Even the gradual X.X% in early Essex our uncertainty the that while with continue Given guidance. declared June during with the reopening primary compared is workers in underperforming benefit expansion of in dropped for the Coast for XX% markets jobs financial was the timing in employment nation the on collections, reopening home will many California late return during businesses through economies. we mid work and

September. targeted reopening tech through we by we closer large set the office most summer early the date in As proceed months, employers to edge

in the very be As July, a suggest our job Delta COVID-XX delays tech XX,XXX recent openings job markets largest of strong as over to temporary increase year's reports lead openings reopening could of for last process, the companies Google and this Essex to report as we continues XX% [indiscernible]. about variant the Apple survey in

to this funds during future are venture the leading again to hotels, recovery capital in the employees providing sectors positioned has process by year to corporate New respect economic now a continue many. that venues fell closer furthest and travel office the will so pace restaurants, with jobs. on growth markets investment offices. hybrid Returned that focused which pandemic led Essex remain for to strongest record plans capital with set invested once reopening entertainment supports the draw Generally, approaches

Given be office basis, in to commute on required expect full the to average be workers time increase. distances that we won't a many

end beyond As as in months on experienced migration Page ago. net by flow inflows graduates supplemental, metros Sacramento positive XX.X to once Bay year adjacent minus three over migration a In Peninsula, are move we X% already as such Monterey as compared has arriving the led total recent as again from the well of markets These the sub residents the started of XX% renewed seen represents and returning S were across trailing Bay Francisco surrounding stronger from particular, highlight outs positive of hardest the have similar country, of and recent seen NorCal months, QX, inflows San region. our since notable that markets strong or recovery. we've recent experiencing Area net towns in from college this hit market transition our positive a turnaround the CBD, rent even last a Seattle from In likewise year. the

COVID XX XXXX slight XXXX semi-annual increases provided update to supply related shifted supply late as outlet, construction S into from on forecasts our we units the with delays incremental of XXXX. On our supplemental, to XXXX the

declines apartment more Los in expect modestly and second half fewer We Angeles the of in deliveries Oakland. XXXX, significant with

single-family for prices limited materials timing quantify compared trends volatility impact greater our permitting and activity a starts deliveries given activity to many XX-month three-month still recent coming too lumber building compared We as markets the in in homeownership and national combined continues will be favorably U.S. have financial and grew a of basis. Essex early years, to The May to years Seattle is prices in to XX% may which greater supply. upward it in construction respectively suspect to supply on XXXX, family these the in grew escalating affordability points. multifamily continued with will and trailing and of trend Essex markets home of points trailing these basis factors declining differentiator While from incentive XXX California for a subsequent increased believe housing markets also rent. permitting in shortages the the on basis XXX and single XX% muted the key basis average, rental with pandemic markets continue Median cost

of to mid low below transactions. anticipate steadily on apartment since has to the the a especially accelerated levels. current pre-pandemic based are cap investors current range activity substantially with year, rents majority in start rate the recovery, robust the in Turning X% where trades occurring apartment Generally, markets rent rents. of

the competitive. in pre-pandemic market produced FFO program, concludes again to improvement in market recent turned development focus our my COO, It's turn than respect the which cost has while the turn my more pleasure continue with disciplined That respect once Kleiman. to our higher to accretion now acquisitions deals we our have have in see new anticipated targets. Angela although redemption. With we rates With equity to cap becoming capital, remaining of levels to from and higher Lower resulted to preferred over is comments. valuations call our of early levels

Angela Kleiman

will our current market Mike. Thanks, My dynamics. quarter focus comments on today second and results

demand the and economy improvements generated reopening power. West in the the of thus has recovery pricing With Coast

same-store second while concurrent the X.X% the enabled Our rents operating net A increase of January in dynamic and of to contributor with quickly most to is quarter. this to accomplishment to job of growth strategy growth adjusting rent during growth environment. the optimize in responding occupancy concessions in key rent our occurred fantastic since resulting and by favor COVID schedule this us maintain operations team effective X, this demand, market

second Delinquency during leases XX first revenues of second to non-existent To same improved in virtually have was the higher and drove except to reverted delinquency would were first points quarter basis While quarter this substantially the X.X% by like nominal expected lifted the rents the provide -- one-time from compared points concessions, to stimulus quarter, relative some back exceed declined the rapidly expectations. decline quarter. property in temporarily quarter factors major X.X% of are first results basis the points unemployment versus the second for increased driving of in for I The this sequential schedule concessions have funds, CBD that why year. first in context XX On disbursements and market concessions. delinquency our as conditions from the volume amount quarter declined the in markets. clear by select in two our in XX to basis second the our quarter. to markets quarter be

compared Our average first quarter. a second is the one quarter concession for the the over to in week and under stabilized week over in fourth weeks two quarter portfolio the in

Oakland. and ranging generally CBD, elevated Jose concessions to such two they and in Although CBD weeks remain from a certain second have quarter, half LA, improved as in the three San

pandemic concessions effective the to and volatility insightful pre-COVID year I thought an a levels. compared of overview and Given rent related in would the extraordinary in half, provide rents it the past be over net to change

average of have this on effects June, respectively, these year experiencing yet net while led the increased two Northern effective this by pre-COVID July growth. pandemic preliminary Not June, net Seattle compared effective portfolio strength and about sequential rapidly are rent diverged now with was below markets effective above both of quarter second same-store is during new X.X% As net San our Seattle XX%. to up X.X%. recover, throughout On the It of our compared CBD and Southern rents rent X% seen and net pre-COVID results, California notable or with preliminary based the improved leases most hit up last has continued X.X% Since fully a surprisingly, and that now hardest and were the X.X%, has levels. rapid regionally, CBD then, to to California levels. July we both down by March rents average are X.X% at month average currently X.X%, basis, Francisco

Currently greatest under on Moving the according and we growth was dock which plans similarly Seattle Amazon their announced Sunnyvale. to stock have development an the X.X% office web job Jose under along service square office in San of footprint Redlands. West view indicator the been construction leasing has by of amount new X% and office San region, total office feet, the Seattle. construction. general, to feet existing and of and XXX,XXX has Coast areas XXX,XXX Notable activities, Jose developments housing of Facebook future as In announced their the recent activities upgrade jobs Seattle XXXX in square and Bellevue In Apple expanded an additional office include demand. LinkedIn

greater Seattle in capacity for supply apartment San rental the such We long-term higher expect without office impacting areas with deliveries, rates. Jose as will have and

the during disrupted were relationships quarters. pandemic, normal we these anticipate in While normalize coming the conditions to

have programs now Barbara to smart Thank as the we both I the Lastly, technology enhancing over the you the recovery of apartment leasing turn functionality including economic mobile and our actively rent automation. platform momentum, initiatives our and and renovation Pak. restarted home continues call gain will

Barbara Pak

conference half The NAREIT is revenues, $X.XX lower by which higher Thanks, to an of the by in timing our comments discuss favorable second and per with exceeded the income relates year. and operating sheet. report a stronger the full to spend, on the primarily second we update now on property few Angela. Of our the G&A our to I'll quarter changes expenses. attributable midpoint core guidance, to forecasted the the $X.XX results, of the operating start the during share. investments and are results quarter occur followed pleased for of provided second I'm commercial FFO year revised range same balance to $X.XX, expenses

As we rent stronger growth in few than a ago. expected markets we discussed, are just months our seeing Angela

of we full revised same As midpoint the be this It of in provided the should raising our high-end route was range the noted property such, year X.X%. growth June. to XX points are basis minus by revenue

lower expense In by midpoint portfolio. the lowered basis to XX at Seattle points growth our addition, in we operating the due have taxes

points points. in XX results this property minus growth up basis by NOI at midpoint of Year-to-date, XXX an growth the revived and property at revenue XXX basis midpoint we same the by All have points same improvement in basis the to X%. NOI

operating FFO, discuss a the of our will I by raising early midpoint core Year-to-date, we stronger redemptions impact have X.X%. preferred partially This minute. we to equity by share $X.XX to are it As FFO $XX.XX. per the or $X.XX full results year offset reflects in raised investments, of relates which core by the

discussed inexpensive and to demand investment Turning early to and underlying West on Coast preferred equity and debt strong for properties has investments, our loan as several financing we in resulting market, recapitalization several calls, previous apartments led sales the of redemptions. subordinated

that subordinated During Year-to-date, year the million a an from been X.X could start range grow high million by and year. have the redeemed quarter, approximately loan, received been we fees, XXX of above number investment is core from which of approximately of This excluded prepayment expect FFO. provided in the end the of to included we on XX redemption have which end. XXX significantly million early the million at

However, today, asset which high of valuation commanding for Essex to the good are this apartment the speaks and is properties value net the company.

and equity As deals, of million have year. of million XXX second a XXX to investments, for new we the on preferred healthy pipeline track are the still our of in we achieve half to guidance accretive original

original new our assume the As a redemptions during reminder, would guidance match year. investments

drag to new However, coupled the share our on this higher year. level mismatch per timing for reductions, of between of later early funding has FFO with investments year led the approximate expected the $X.XX an

due to interest basis weighted advantage years. strong we over year of and past lengthening balance the reduce average XX position maturing our to taking through rate and financial the end to an a We points our refinancing by of of a additional our our rate debt maturity the have to X% Moving over by low half of sheet, in the only environment profile XXXX. remain two currently X.X% debt X/X

operator liquidity, ample a as we prepared opportunities position the my schedule, This now maturity back the needs take arise. will strong questions. advantage to of remarks. call limited are [indiscernible] near funding for I turn and our concludes term Given in to they


session. Ladies you. from conducting with we first will question [Operator Nic and Our line comes Joseph gentlemen time question-and-answer Instructions] Citi. of this be the Thank at a

Nic Joseph

you the equity on the Barbara in started the mez preferred on comments loan. Maybe just made you

are of In or you terms on the there? compression seeing returns, pipeline the yields competition any changes to today, expected already

Adam Berry

typically above yes. is Nic. where Hey, going market well cap question, -- We're been compression going rates in This below and we're comfortable Adam. we've on a your the where more it's To seeing now proceeds rates. seeing We're with significantly much market. answer competitive

compression yes, we are sum, the to So on seeing absolute valuations.

Nic Joseph


mean, a the the terms of side? pocket redemptions you've there So that that air least in further create earning I on risk then at redemption could seen? an is early of early

Barbara Pak

point, in Hi, already almost Nic. today. we all know that factored on And think I This in is what Barbara. and August. At we this based --

into So I guidance. think we factor current the that

expecting more not I'm rest point redemptions any So at for this the year. of the


Our next the line with comes from of Hill question Rich Morgan Stanley.

Rich Hill

you're market maybe to urban the contrast what and seeing I in thinks markets. can And just versus wanted I all you're specifically, trends compare appreciate that your sort typically back broader Francisco, San to the hoping markets. of what Los West about in But Angeles, you commentary gave seeing color and in come I'm us. you someone your Coast

you confidence are One in people are still to some that specifically, your people seeing migrate relative you trends? markets out? of continue maybe at migrate seeing of in? those markets Are trends urban the So you give to

Michael Schall

Michael. Rich. Hi, It’s

times I we -- variety COVID think other They've think about that around to saved But a the fully place about start. comments to the we if traveling consumer happening of with we’re so respect recovered comment my And very feel so that's money continue not feel market And that, And West Coast, versus others by COVID, what's a in super great I'll we we what's that I about look I happening. versus via is powerful pre-pandemic only job expect to want while things. think optimistic. really good and levels, well. recovered Noted as to may one. handle good half far, that rents, here.

forming So here West there's millennials hiring a Coast. lot households. the of And are on

positions XX that them the I their turning ago. many past have pursuing what they that come now expansion that top on companies year think they're have, put the turned about after plans, hiring they've open a perceived and year, long COVID, that's in pulling amid So more people we as hold we that corner on tech corner, why a they way talk or things back how

so time. And at in feels everything in like good point this order it's

point at et future go dramatically the that absolutely areas as believe fluid been in ago, services, main filming a As we're look cities, we industries and of growth think California, growth world, for restaurants, starting we we're of in to are we including been recovery to whether this in a restaurants poised the hospitality, other demand year fluid affected are in the have Southern the And that, we job so services the back these you all the cetera. has leisure, a driver areas, a of at see and looking at, industries you're come areas. think those variety time terms they of

see around at respective Make the again, sense? a be with And we to fully that we've back so time lost. expected nicely. this when recovered And have wouldn't about rents only turning half we jobs I

Rich Hill

just was Yes. It else sense. perfect up. see follow going makes That's waiting I anyone to Mike. was if to perfect,

we and the of forward, we if the came significant have maybe normal asking a term? above early late to which of this push and guide, As to over mirror year risk that a And that? not, medium that think can I'm XXXX this last we -- that look at even continue Is sort we maybe trend will to you image be the trough obviously pretty reasonable then it of year. rents

Michael Schall

strangely, time. in look And XX Barbara at talking me start we -- point if It's at this question. very a good about

we we tend be how in terms careful So guidance. are, pretty of to and

have most closer to people of minus going means return companies tech hybrid thing up too companies office that certainly want I to to be there. most so say would go three of show a week. top I the or to plus out And downtown be approach, have type we But XX announced times offices that, because good to to the the for say a would or in are general of which tech the to expect, locations, don't let's per far

think done people our Ventura, the Ventura about in do a But, a LA. of come want three suburban And of going the the don't parts to on need result way because I it's are commute move week. it's times probably the Hinterlands, long into that that, back. going are even great. to a on As want to from a to people think Ventura pick jobs to portfolio the are don't where most And pattern I to that

make I respect company with make given a about a that year, kind that to where programs. going to to choice a the clarity frames home now their there's more to what live, choice from different is going those that So the dynamics, office to think the I think return of about likely had work forward, do or different pandemic will

Barbara Pak

an and add to I this the carry next is, year's that only rent that The we too. at only we'll have look impact mentioned, will half July, resigning Lisa's so thing year rent mean, numbers. other had today, year, would I to and Angela to part a forward roll, into this strong affect of our going is

Rich Hill

response. Thank But it. what guys. appreciate got I you. Thank I sure entirely I the you, not that's I'm wanted.


Next of Joshua question with the line comes Bank Dennerlein from America. of

Joshua Dennerlein

hope I'm what Southern well. it by if guys, doing in curious you're like mark-to-market Hey, of is And portfolio? your have California, region, Seattle, kind California. your Northern you just maybe all

Barbara Pak

lost about talking lease? we Are

Joshua Dennerlein

Yeah, lost least.

Angela Kleiman

loss we than better a much lease, even Well, All right. are That's level in of better position in all actually the pre-COVID. terms right. a at

lease at So Essex if we the lost July portfolio, at now look X.X%. it's for

that, Seattle highest And varies, at the so course, at and of XX. about

Northern of as pack California, California and and at Southern a the at the middle in three about eight, half. well, the lowest

Joshua Dennerlein

rate assuming range, as your you and awesome. rest And year California the far Northern the for Okay, market? of like guidance the recovery a as for in what are

Michael Schall

I'll start.

in order leases same-store impact half our of to we year, each to The as or -- have second revenue. the our turn

the relevant, year. obviously, you more of relevant it the if toward so year, less get next becomes end And and

XXXX. rest that a transaction in have XXXX. three to you in is this only be of lease in The take So, months October, new of going

marker about there's to versus how just going talked income concept inherent what's shows an the the with statement. Angela it lagging, on on up with on respect So rents with

market We S color So at is with month trying terms And year. of X.X%. at just that's throughout minus the XX our growth we're out a of a provide important, of what that. little I that, think that's to is economic overall, on looking get And in bit XX, on tried every to rents. respect X/XX rent S to

January January through February versus XX, divided plus number XXXX, what the year XXXX, So that by is represents.

lot and of which we XX, rest in And at the hit nine now lease minus range. growth season, for market and not a then, implies minus year. to peak then of that started between S the And does fourth at quarter rents X.X%, rate, So the is the the on year flattens to minus get pretty of XX% that July, the of out would we X%. the the a that peak typically be rent anticipate plus typical, in end

So that's assumed those what's in numbers.


comes line Our of the next with question from Austin KeyBanc. Wurschmidt

Austin Wurschmidt

But some up leasing Great, it you calls, optimistic as pretty certainly thanks, identify, come take experience are risks on could the your extended some prospects. and guys. to into markets consideration. other that an It seems season, clearly, seem about possible there

you about in leg the assume back timeframe? in And sort summer, So up early of seasonality guidance? just half of how your kind that another late wondering, did typical or demand you fall went

Michael Schall

the assume -- or Mike. more And you, I with we less is This rents. Yes. not trend we market respect to with did typical, agree

the of of July the of in peaking for year. kind a and So not rest lot growth

it, at some season. the what the companies and year, will off really happens the business -- first then implementing are normally, example, are quarter. there things That's the continue get toward peak different, tech companies what fourth drives for the them they is the quarter, As third, about hiring plans at in we leasing that of hiring think start end however, the tails

the companies have will here at given the continue past. hiring than is, So in higher they question level a COVID

back areas office urban chance I are on people more this as home rents the -- have were have more to and the possibly also, that and could could year. could you continue If well, the an back, higher moving impact this in good as year from that happen. displaced, a that Washington come there's concept a of that think were shutting from very people part people push work year California down those to if into returned I later second ago.

on again curve our and So there normal things are based we've, rents, assumed here. with different respect experience, typically some that to what to but happens are

could we side. surprised the so being with end to positive up And

Austin Wurschmidt

Great. that'd you're of helpful. the mentioned and restarting or think sort additional the that us then, of details on up And you really rate, That's that, redevelopment kind the offer run Angela, program? then scale I very Could you helpful. maybe the of be some annual give economics,

Angela Kleiman

Sure thing. of And Normally year. last pre-COVID, what about significantly a about our was run back units rate units, year. XXXX was in did terms we scale

year restart is year, last half that. double about of this only second over second of units, So we -- renovated target half the to during for XXX the XXX XXX units, so the

to XXXX units close this say So year.

of we're the at future at developments terms pretty just large We -- levels. next no darn investments, have consistent year actually looking return a -- greater ranges looking the of are with opportunities. But for pre-COVID will in for that couple on

but rents well have up, gone concurrently. as has cost while up so gone And

we're good a think we spot. So in pretty

Austin Wurschmidt

those are on economics? what the numbers And

Angela Kleiman

scope high They digits. the they you the asset stay tend range to on but and range digits tend in a a to be the bit a hard than single I'll depending high double to and market better give little range the might the that number,

it's pretty So wide a range.


from with W. Our Sweitzer line next Amanda question Robert comes of Baird. the

Amanda Sweitzer

could development up think of you spending. some you up those an provide yields on update your Can as you're targeting ramping achieve? your on comments I line for underwritten you potential on areas know projects, well as

Adam Berry

This Amanda. is development? Adam. redevelopment you or Hey, Were to referring

Amanda Sweitzer

development the be mistaken? up along you thought ramping had mentioned call, I but could acquisitions in I with earlier

Adam Berry

I'm yes. Okay, that to take one. happy

accretive where is now development, some opportunities of sense yes, we're can our out transactions. given and on given where So that we there trading, seeing stock make

our We markets say definitely But at two and portfolio development the our Seattle. Those Northern the deals. is throughout primarily in best we're I’d that looking of ramping probably see pipeline. respect. are areas for up looking our footprint I main would California, throughout be focus

Amanda Sweitzer

in change of projects think you most any do on then, achieve pre-COVID could underwritten versus yield, And levels? you terms

Adam Berry

question. good yes, So

So primarily, what rates the The going we're saying, over down see cap deals we've that few we have underwritten several last deals compressed. dozen months. definitely

So basically. on to cost rents, side, X seeing at the development on unthreaded return about X.XX on we're

gap are high deals We're -- to to call transact call, those than we are to But on wouldn't trading, look yield. going So not still higher X.XX a -- X.X looking X.X. where at to at We've we're existing Xs. which four numbers to at going that. be between a development we the would


Our the Rich Anderson line next question comes with of from SMBC.

Rich Anderson

I'm number the this number, you to that about office? And that a Monterey, come what Is trends closer say, people full to remarks. one? in starts like of S this this I peeking Sacramento think this? or XX%? like is in of close this remotely migration at in on the does this think? knee do time? is Is it that the you are in out prepared your the Is migration? entirely kind net of migration And it or leaving type net Or So everything? to XX(X) ceiling referenced you interested supplemental that XX California do predominantly, that response probably two, it And this What's back graph jerk down? number working a this out sort but And should

Barbara Pak

Barbara. This Rich. a is is Hi, XX.X, net number. the XX% Yes, S

college in And within the some really moving now people ago, we and Sacramento out So outer coming from did we look in have noticing negative if have what's X%. of that's moving back California. and migration, they're also towns. back you But we're the a year areas and from showing line people

the no are over. coming from and that and for really of services dispersed. of strength to we think the So kind the speak coming mean, from. has do now we're discernible people, returning reopened. college pattern here they're there's seeing people does It's economy it grads I where back return. the jobs, And it's coming reopened, markets our after people geographically and And recent all have

indicator. a good and it's sign think we so And leading good a

You this well. in as should a in big in well. as seeing Seattle similar note looks our migration portfolio We're Seattle that

spoke to the of chart, in where migration. there's both the Bay in up rent sequential to influx. suburban the think Seattle partly Area NorCal bigger a it and that So being having we some in have here, San rent growth And markets similar in recently due big Fran growth CBD Angela but NorCal I more show didn't and it's you're and this other XX% and seeing a it is

Michael Schall

Rich, driven And can else. out narrative them all of paycheck, sort of would that that -- a fit migration doesn't our down, not California. and I I and narrative, effectively somewhere to being add was -- make putting having move largely West a I in the shut the position by these to the the businesses of know leave view and it is people is wanted that forcing the broader to Coast, broader the comment comment that say people oh,

And that, completely a therefore, is ago. reality growth to here the that comfortable that I okay, that. on going different opening, which capacity, the think are job of month with West components open when I And comment, we look from with businesses are of feel at the my at basic here the is go two still forward? back restaurants and do we the but mostly hotels Coast, or were are XX% you now and

process the U.S. why XX. it key side I that at we've us. flip been absolutely feel behind then But to was businesses. reopen completely occurred that And the that, convinced mostly migration pandemic. is caused job was likely opened COVID XXX% are that's occur. by we given, on if we not shutting most those And look out that the the will growth point of voluntary down migration, of you slow. businesses June has guess think lagged is, But here I So, relatively of that as And has the come

and And more in when into cost, year the look talked -- we to some we tend information of or things same the inflows Western about the general, ago, we outflows a in are East be place, have lower to high a broader markets so, areas. on two that Coast, metros, migration into lot our cost the tend be still and

much. And is what's to to specifically, that what's going S going not here try in But reality, XX.X point, yes, out. a if all So shoot there, because narrative course, push coming right we're the in Barbara, to that, to just the haven't trying of to cadence we in changed is do everything's trends your those really ourselves that address this and of foot.

optimistic. evidence of overly be So I there's trying no to think Essex

And so we're really and we're happening what trying there out to communicate really what's seeing.

So I guess I would --

Rich Anderson

Wasn't implying to at mentioned thing. same I was just, you looking that sure the make sort areas, of nearing want just I

Washington a with sounds make ago, described, you the some that now. Schall the like your and now but also, see so a California of think because now, and you at that time growth. at to sort and certainly investing to narrowing if You'd in for will several investments outside has place XX% assume years were reversion what's particularly performance I the interesting of all passed, sunbelt? point, And least you special what your And over markets, plus the saying, the mean, you heroes for it's was be might years. would, a torch the happened of do mind So is in particularly the Keith be your But reasons question, be and second XX you're hero, of just this what the of Guericke be that is California next Mike gap come XX, back?

Michael Schall

we regulation or strategic rent XX-year because say CAGR, respect right over areas may the conditions if markets, from term growth rent because, which remain on you, Rich. some years, away I numbers far had to but know on don't isn't plan Yes, of we've lead, with like, challenges X.X%, it the back going more of highest our the look surprise I the major analysis And too year And that. because, geographic of want with have and this all this great can yes, recently, front change, we of pattern, to but from boards grow, have of focused in a the our CAGRs sort you out get our has you pretty in other we're question focused time. Seattle, XX it same, diversity But us, these issue, longer XXXX. recently, every to More things. XXXX it's off dropped to and that growth Coast West

that. And And we the pretty certainly below New start Jersey. So, California and are is have pre-COVID Boston Miami Northern really that. list, to attractive the and was then going level. down in lot are close that fallen northern markets a pretty But of to well there as that respect,

things continue here let's with identify just Coast I rent and that try San long-term at XX,XXX so, Austin before as as thing, let's And, XXXX. been, looked that. some the and we'll their about we comparison, Jose about has multifamily doing promote can invest let's in compare same a you same And we've thesis to whereas things about whole guess, And has growth construction, the the markets. have cities our those about we But know, make me East has let think Jose simple population. units Austin. San on in size,

is and housing don't produce also price the We Jose, very million dollars. sale San well for a are median in housing much over

growth amounts the a course, is of in say, and San really an or which, we by are owner, better mean, lot Austin, over driven conclude apartment better and I has get of above are people. companies, extraordinary well, to in and as doing and be it's at being off Austin So of which to tech in look San San Jose, Jose. that we hire we Jose, they that

slowed I I long say Coast, XXXX X% the rents off time can't without of of So an Yes, When, range fast creating issue. through twice fast from West issues, not and because as Coast. West over by in affordability XXXX. job we grow the the periods down is it really because growth grew way, the on to we you then guess had affordability have bloom X% as incomes the would

portfolio is be the on a and vast making all long-term, And with would think I -- approach there COVID So circumstances business. that to the based decisions misguided. unique


line One of comes question next from with Capital Our Securities. the Malkin Neil

Neil Malkin

throwing question First, you a thought lower prepared And or something the the Mike, lot. how a seemed the like, wrench of waiting COVID maybe not seems a is, about, the variant, part risks lot your really I my like, on variants, Delta guess of I'm into in a you're quicker. you comments, lot that -- or it's maybe spreading Delta wrong, like that understanding recovery have -- are

And the restrictions. can I vaccinated cases just think et are well, read like, seen like, easily markets you're unvaccinated. If re-shutdown most or re-implement people to I've it that hospitalizations say, some as rise, studies also that in as cetera. likely rise, as

the as kind happen of comes, do from notion what to of you kind that to restrictions? likely hiccup that's given, So, give potential waiting reimposed fall of

Michael Schall

what little we of good say, have a got I question. question. high. is think that And that going would densities California, is it the different we've important COVID And forward. I no guess might clearly are Yes, risks. do bit figure way a I thing an in aware unfortunately, population pretty but to we were And definitely really out One

greater here I perhaps of the pretty to high the relative And rest risk of our and And has vaccination so job in actually given the rates markets. promote a are very done is vaccination COVID think world. of the good that, trying the I think Essex government to rates

versus the with is and were I years people and that Washington shot are So for the in least information XX one the have at XX% U.S. older, vaccinated about California, XX%

think government to I of react that vaccination tried to is, what a the that. risk good rate, really happened and So, that they've -- the pushing here by very we to tried done has job

with in it's areas exposure risk some think high this COVID case, I So lowers I of some than but different no areas. population to doubt, that the other with been density, have effectively. dealt think our And extent,

Neil Malkin

And level? consulted capital. of Okay. me pretty but about Atlanta, is, lot names, say that plans allocate to before That's imagine I stakeholders Dallas, Charlotte, players and a they with like Raleigh, thinking if people don't announced or recently things have you Other a significant peers, decisions for to in would coastal boards look previous guess lot Austin. they of a I have they ones capital And about, probably that. rash guess a making, helpful I historic your Thank not really large you for on talked stat. comment at

at that? of I little make -- that kind do bad does down all? that capital of you with mean, referenced So, to maybe Maybe does a more a permitting that's does your I and thing that it people prospects think, credence maybe said, in give bit elsewhere? that about markets? you being a you like, focusing like, And their is isn't, good mean, growth thing? are I mean, that

Michael Schall

future. about either about other what keep XXX remarks very that on, construction, question talking open it? future Are But on, going created are we about We of companies an Again, to to California. so XX industries of valid. and with of XX what guess Again, definitely, And in build companies? actually to talking that, and those top going machine? XX their driving we're like. And going the and confirming Keep are good lot there. of be the why the I index, hiring mean, our much driving both the that prepared what office services. office you're with to raising country tech in can I we demanding result this of that. questions sort growth? it, do what much that, the why ways, it's wealthy these if so all are of the rent are that if the they're data time what's outside workers top some regard. they moving fluent need happening top apartments didn't of ton eye could industries, the go tech on that Yes, in more we areas, these in a looks entire tech is important So, And the different to companies it's Super so, we XX in a places spend hospitality the other what industries? back positions locations? and And how presumably years the employees. California important. for sources I pay not and that a is our about imply or restaurant Angela to trends. a mean That's on focused trying of So they -- within indicators supplement of where eye drive do so are to that we're CAGRs information the to historical is more And certainly we're to in the the the employees than buildings, in they house really are are because build

some need to we're think growing and of to here it'll that. are services. that little time, and perhaps on Southern But live say, that think so been gone going want take of that those everyone trying and we're at is away hasn't again, And down people process displaced, the again, a of economy is, California, in other to what's I happening come just all beach, tech services those and restaurants them to to And from shutting a going community, drivers bit let's We're back the in were motion draw and agree, area. demand services do is the to the let's those created at not back demand stay will it, the are or I here. Therefore, that pictures, produce follow, focused will wealth near given that that people for enough hopefully and But et away. I sets tech remains here, good as confirms by that companies during given into by other I as I company the what Southern going look say, don't markets. our tech that they're restaurants, the that. But intact, -- okay, job content demand day. they beyond to and the the out XX Pictures follow. view go away try demand can not that the going to shoot in in good a the to thesis Certainly COVID, are XXX all is for going housing go intact, supply, to the films down drivers with set away, services, resume the Motion going in that given people you growth a terms that we've the invest chance if a California, would of information respect of then not over cetera anytime thesis continue soon. If think on they're for to you on And I point. the here, they're completely things very shut can't there's the where require time,


Thank you.

comes Sandler. question Alexander Goldfarb next with from Piper Our

Alexander Goldfarb

So, Mike, two questions.

the is XX, First, super. on S data that

be who REITs with now and see increase over ago shown we all that that all saying San few that if were you're empty. out changed this apartment the would quarter, So that we -- have like of reported seeing of you saw in the this Area, like that a will sort link Francisco San the Bay quarters? and Are be active the Francisco XX% month to substantially the will that next weak San have Francisco

Michael Schall

it move -- XX.X? portfolio the this back Bay be to to Area inner referring you're so Alex, on

Alexander Goldfarb


Michael Schall

we I would yes, service that, area that back in was – say restaurants is severely has is in terms the have distant and return Bay the of the the it during and the the program. But future that I too the companies reversed was Well, that I jobs coming not move disconnected then coming to leader to Area businesses, trend and office hospitality leisure has of and I would most caveat us the tech begun. the that most out back think pandemic.

a and trend, take-out-only converted that there that restaurants of continues mode. that lot if think I again, So are to

to of normal situation as those think back workers I more back type where continue a to we'll go come restaurant well.

to, they the were again not all I to I back back as to go employment. as the think yeah, the pre-COVID where we've So which we rents with is premise, it's gotten fast initial mending half want

powerful I pretty a think that's statement.

Alexander Goldfarb

Manhattan, I'm have only we're City. But look a in strongly, the home, from trying, If city respectively, have and guys Downtown XX% expected New just them. not you quicker are like in you buildings and whatever rebounded Okay. I Seattle than York rates still at work people whereas lot many Mike, city back Francisco the San rents if know came though of guess, even But occupancy lagging. I

of will like your based So we've are you what in New showing seen and on San downtown guys Francisco of this within the in York I we downtown attachment Seattle strongly S that XX. a see guess I'm is rebound few view curious if quarters,

Michael Schall

it's question, Yes, a good Alex.

X.X%. growth. So, New was was York, you month San X.X% York, job Jose and three New In it if XX.X%, look trailing was San Francisco of at

with growth. pretty job So respect dramatic a overall you have underperformance to

but I So I capacity the West bit of were New that of dramatic just to restaurants Whereas We at Coast New employment June happened needing it's some a it to coming, assuming exactly still other up than in including Coast, attribute know West XX% resurgence yet. of is the type something open York. think yet don't thing. but like did, on and into that to slower metros, cause that of we're the fairly difference well little in a that they terms hasn't and again I'm York. what I their

Alexander Goldfarb

out. about put of in preferred is $X.XX Okay. can equity, you drag. the then, that and debt the versus what And guys There second on said the Barb, guidance, you question, because of a mismatch terms accelerated redemptions

So it is not only that but in $X.XX in FFO, in or is company both? NAREIT FFO

Barbara Pak

money But the both. internal prepayment what that year FFO. issue. fees FFO we a only is this referring I'm early. gotten timing to core just about or It’s Those in been are Could penalties million. in not redeemed receive We've $X.X back

and we so So haven't income referring from investments. $X.XX that's I'm the don't And any to. of to any those that interest money put back work we the have

Michael Schall

change a prepayment non-core for of it's looking time, outstanding core. return it's -- penalty having is than We're with money minimum Barb a category really because up for preferred item in certain that have earned really it's our I'm us -- showing unfortunately, at just out since a so rather period and advocating that we to the non-core compensated not

Alexander Goldfarb

to point. Yes, my be -- that, that Mike was going

productive and out that for very penalty it and paid is core a part your up of time whether on early, are but guys that You business. you this over get get you they redeemed or pay pay

But having are no that potential from So there. guys really positives you successful that this point question my at sounds you it not showcasing like and is debate. would internal platform it in and I why you're mean I that the mean was come earnings the exclude

Barbara Pak


have We it. at looked

debate rules more But a prepayment booked GAAP fee. and We there been it than surface. yes, accounting But what so is year-to-date have follow for non-core appears internally. internal of sense has on an it's the all complicated we the


from comes question John BMO with Capital Our Kim next line of the Markets.

John Kim

you. Thank

recovery. Northern and Regarding the California

that And think, mentioned X% are not market levels July remarks or I in But Angela the concept that effective still sure for rent pre-COVID Essex. a I'm if and prepared rents below was on going you're year. faster if more easier we against beginning given wondering concessions was in if recovery I than aggressive quarter could think. be you the comps the third were last

Michael Schall

in places price better I'll question locations. to let Angela colors say into the able to is of the And because how Yes, have of what's was other from was negative course we lower, cities. answer on of that you But job comment we the would said I for calls great drew on Jose. the here people that drew levels San that with growth, happened high point people a and number occupancy obviously, had some maintain and hey, we is, previous are the

XX% look therefore improved and there doing rents availability to are back So rents equation, given and starting their people now lower this and occupied they're come they you no so at what location market doing. is

to market what So within what happens rents over the portfolio because rents. the that level, a where higher pandemic now will by those pre-pandemic lot the is locations have in both movement yield, now out with I be the of and our and interesting much couple really during next it see were this of is to strategy back years they of driven think

Francisco San Jose. case below prior is of Oakland, San substantially rent. the the there in So and still

over So next believe in rents reason stay, uncouple several people but that may there's that the to given moved still that years. will lower those

John Kim

was overall? that that market Angela X% for quoted so, or was the And Essex figure that

Angela Kleiman

Essex. But was that for

John Kim

X%, with you sounds now compressed which rate that's is rationale? mentioned points it's market your assumptions on markets believe exit like it's low or about or cap agree quarter. rates cap the to that comment I you whether least in last whether Mike, basis you think changed assumptions from at those Can Okay. placing not the are the XX or and rental growth you mid

Michael Schall

flip to recovery. we think start in Adam the and the in was I'll comparison of comment and quarter but that with hard-hit rates about cap talk quarter some more what buyers some generally, rent the will then to the last last I performing said areas

that It the were using net They bit were basis probably a really assuming they really current point a was whole effective wasn't rents. it higher So rent XX reduction. level.

that. So you of general? that reconciles part Adam, talk to want in But cap about rates

Adam Berry

Yes, sure.

that I about I And assumption during buyers greater rents are already the we're that recovery. there making that, full will seeing mean general call. talked those is the And with that So rents a by levels. than we've already think be pre-pandemic

our few in it's years. low pretty threes, caps. then and probably I think -- robust is various people, rent And I So then knowing with the over out next the is modeling non-exit growth to the what I've that talked

ever. as aggressive I this is think as

exit side. assumption there's expansion much think that on the don't big a I there is So

aggressive. definitely So underwriting more gotten has

John Kim

a big markets there Is urban versus suburban? difference your or between

Michael Schall

Yes, good question.

more of very and range is suburban much maybe we've little the rents, north seeing So that's volume to a hit in big the California markets low-threes that outer too kind the going that down of is aggressive high-twos current probably seeing And markets seen and in CBDs markets. going then on on Seattle, Northern that most of kind in X.XX much in a to seeing effective the really just among pretty south, transactional rents, X.X and to actually traded. we're in we're like net pickup we're those

County, low Diego, opine probably that performed down San rental threes it's hard but a those aspects. to Orange to there, then and markets that from really So better in range the

net cap So, as hit seen as markets. on those current what we've low rates effective quite in those harder aren't

So it's to well. closer X-X probably that of as and LA kind in X-X, range little traded very

data of So low down but kind few the threes in very is points. it's there


next Heffern Our comes question Capital of the from Markets. RBC line Brad with

Brad Heffern

receive prepared guide either. to-date in any curious a assessment federal and what you for mentioned sort I had have figures there applications you if funds, that was isn't negligible really on comments much might you think the of some the in amount that? I the was risk around what you there received maybe On that out of

Angela Kleiman

here. Angela Its Hi. Yes.

of of, million out we think we've it. applied I about $XX delinquencies for we've million out $XX of and about there So reported to-date, that received we million have and $X

So about XX some percent recovery rate.

we tell, a a slower going as process. more because slow just reimbursement far could As it's complicated California really more and has of

guidance just million given the So much rate the view it view, significant this that million. is the as $XX didn't the $XX we year bake reason and don't that really is of risk just has slower. been that from question The perspective. in timing into the We our our having for reimbursement

the this year's really why that's key in it's now guidance. of So driver

Brad Heffern

been assume wasn't million, given first there this got is the you Okay, that in largely $X said month that in of half, the sort it. right? just I And negligible that's

Angela Kleiman


For the most part of this month.

Brad Heffern

the one Okay, one then verify for was there wanted commentary, I got release, it. just a we're a of the And administrative things, blended But talking July. those could, number, two I X.X number what rate X.X% about? to heard press if sort in I in then just

Angela Kleiman


the is X.X% So sequential a month-to-month.

provide what's our in a is I time to picture of real what happening markets. was So trying do

comparing on June basis. to effective it's net of this sequentially a up X.X% July already So month,

of year-over-year what's year lease of is so that rate this to so our last And compares in July July a blended year. supplement, they


with comes line question Zelman next of Alex Kalmus from Our Associates. the &

Alex Kalmus

Southern California quite this occupancy country. from the and your lot quarter is their concentrated high of we've in this part of heard in the at portfolios a that delinquencies sort are Looking or others

you see basis affect I'm on moratoriums physical your do So levels how would -- occupancy if the playing that that just there.? happen out up. the are curious, mind, what in a once Does or

Michael Schall

residents and of is we question. good and to it's specifically a happen, with part It's percentage, might agree there and expect we delinquency Mike. is Yes, a some the the that extent really Los but is of a therefore about we work this the not largest Yes, California to huge the others with what our can. Angeles Southern big question delinquency, the part

don't will on have a overall. I it impact so occupancy think huge And

can't remains enough, like. scenario seen, but be that going look And we but exactly us. So, what to impact not severely really envision it's to it just think because to is I

Alex Kalmus

are Is regulations holding pushing difference increases very place Got the discussing rate. just you there Thank the in it. on or about any when rather then sort And as that a momentum a more internally you'd of or much. primary thinking the you're rent still your between and pretty to occupancy there is say high a maybe to base as occupancy rates little a expand little keep driver? lose sacrifice hold occupancy

Michael Schall

movement is because been of so by pieces much a each that and It's XXXX in region there so different in equation rent. there's different

that to so covered future generalize good the programs certainly to and and make so difficult some tried the portfolio. varied And we work But the these going the very by past residents. We've continue will in on going on any we in think that's that COVID-related is answer to delinquency to the not do be throughout able region, the with to to with by it's that respect of of delinquencies. will

because work and our what try residents a try have with from little exactly a rent control in that difficult to of regulations figure of variety from Again, that means to areas state as places sets we will orders different different We to the like. out emergency it's and bit to the past.

sort to of It's generalize. basis. And it's so a difficult case-by-case


with Our comes from of next Advisors. line John Green Pawlowski Street question the

John Pawlowski

I'm to Adam, the trading NAV from to external the I cap cap really square commentary. rate at more appreciate trying discount. you is being or because quoted growth about the feels positive on on cap like guys are there low commentary ramping rates rates

the and So pricing. just growth square you the external maybe private appetite market can prevailing help

Adam Berry

stock there fit that out below few although NAV super looking Yes, the the that NAV the and gone the in not It's at point from external opportunities why low transactions will head. our haven't been on the a been accretive reason seeing is active nail Sure. have the and trading not up to I'd more accretive range. that down your hit most well. have still still you're an you threes side, reasonably that's the say when as We're we us but on I mean standpoint puts growth of and

accretion more So that. where I like a we we difference aggressive, we so everything make are haven't well we But on underwriting far. growth being you guess as much FFO. why can as feel that's done

Michael Schall

add closer so Obviously, more were we at down John, at quite than we're that. deals, least and substantially of are that a lot year we looking a looking know, XX will we would Adam’s come be active, We're at add a hope as I deals. Mike. there is days close. you somewhere. of to have rates that now XX I ago debt or This I mean would getting is lot

the success so work and NAV the company out picked the versus there to seeing numbers to remain and of of periods the again transaction area. things long disciplined we're make And we're over pricing going We of trying up behind we're what to the in fundamental time. out company the

John Pawlowski


down are the had double if things you on to Adam had just of market, the exit market quickly. you bottom today, are Mike, understood private and fix. the prevailing to what or Now kind top pricing moving pace of Maybe market., the

Michael Schall

deal I'll one. let Adam with that Yes,

Adam Berry

Yes. Good Thanks, John. question.

the a elevated, and significant lot Even there is mean of market, So I general. think East supply big would in I'm double especially our picture I but the have maybe given Seattle I you To slightly of jobs all jobs a markets, say there. is a though [indiscernible]. exit picture fan tailwinds. side of down. it's

Michael Schall

to that's we're one So have definitely in property. -- interested actually

Adam Berry

like has go our it focused but said, we footprint continues we'll a see on we are Yes. to in had of again as if opportunities. a pretty to pick late I Ventura I good market. run here fine so entire joke. we where and and do had But


hand for queue. There are no like to remarks. closing I'd back other management the questions the call to in

Michael Schall

at and forward us hesitate a to and call. very that. in thought lot and good. Doug. great in-person future. we us everyone call there and conference for appreciate your out questions, a If Thank Appreciate we time And I a Okay, hopefully we want to was dialog I the the seeing thank joining on we many of any of you, Thanks reach look follow-up ground. you to to don't covered are near it know joining today. for the


participation. you for Ladies this your and gentlemen, does teleconference. Thank conclude today's

disconnect and wonderful at your time day. may have this lines You a