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Essex Portfolio (ESS)

Participants
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
Haendel St. Juste Mizuho
John Kim BMO Capital Markets
Rich Hill Morgan Stanley
Austin Wurschmidt KeyBanc
Rich Hightower Evercore
Brad Heffern RBC Capital Markets
Neil Malkin Capital One Securities
John Pawlowski Green Street
Amanda Sweitzer Baird
Chandni Luthra Goldman Sachs
Daniel Santos Piper Sandler
Alex Kalmus Zelman & Associates
Joshua Dennerlein Bank of America
Call transcript
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Operator

Good day and welcome to the Essex Property Trust Third Quarter 2021 Earnings Conference Call.

As a reminder, today's 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

conditions, our Barb XXXX, Third and day Conference then Kleiman Third me and is Adam welcome our comments our here apartment I results, Pak Good an Quarter for overview follow will the of initial Q&A. to with Call. for regulatory Earnings Angela and market operational Berry outlook with and conclude will Quarter provide environment.

market expectations, quarter results effective about only substantial third above Coast pre pandemic. And Our the rent West of now that XX% COVID economic is and exceeded pre loss despite net reflecting demand, having notable during improvement levels. the COVID exceeded it's housing recovered in job’s - X.X% conditions we've market -

market last improving per our reported of in provided guidance share, result is quarterly core likely sequential FFO. per improvements mini core $X.XX sequential share $X.XX a conditions, above both the first quarter. FFO and of of we As This results quarterly

deliver continues the growth, effective rents with to up pre-COVID. XX.X% California Southern net compared to strongest

While Return delays many growth, recovery the average markets for to U.S. of companies September growth down still Overall, at job were job Northern was West in the compared Essex and the office slower Coast X%. other pace above of is tech to X.X%, areas California in X.X%. factors Northern substantially California.

initial of rent supplemental our Turning to for published on estimates package. our outlook FXX Page we market XXXX, our

West the a Northern outlook to the XXXX Supporting our our markets of long-term California out U.S. key next growth XXXX, market laggard effective assumption year. predominantly rent occurring averages. portfolio will rent return versus A half growth performance growth expectation We average their to outlook forecasted driving average hybrid that are at XXXX the in Coast on resume the job net notable XXXX our expecting with in environment in for first the year. over to office is lead X.X%

Area rental year, Bay the in by recovery confidence partially driven is next Our affordability.

growth, XX% exceptional home of Following almost up home California, and transition income sale to in housing often Seattle, and sale homeowner. housing the to costly for prices. a XX% making prices relative solid from effective in year in growth is rents, Median single-family more lower for renter rental impeding and

begin was campus its week. very expansion, planned believe city the to we total compared the thousand tech our and recent culver positions just office hybrid in for San expectation acquisition increases XXX large single-family of Apple's for sale housing their for environment the Essex the X.X% the a Jose. XX-acre slow and campus in tech a other recent And many large buildings a of quarter leading large centric only square primary supplemental will office XXX our foot San of in previously despite X.X received companies square markets, by recent as of Company thousand Northern our needed tech West companies Downtown that that stock. open markets recent FXX.X office the announcements of housing which foot is fall, result have Finally, approvals in remains campus, belief our Google regarding re-openings have last pandemic the their Delta And Essex construction noted include throughout office the five that recovery prices, highlight’s muted in fully investment in to - sale housing expansion on tech square-foot in the North continued of of square California Page for committed thousand new delayed commitments last variant Jose. feet near production new YouTube's in factor Coast. with Cupertino. at which XXXX, San support soon to Nevertheless, We by city. a XXX Bruno all employers approved million office markets. remain this in space, the

We the terms Giving job that alongside in large of grow hiring U.S. continue the the dynamic locations. track companies open continue to and most in tech sector to we confidence positions us economy.

the quarter markets survey XX the XXXX XX% new compared XX,XXX of Strong jobs, to in positions economic billion, which Essex which directed the is or capital achieved of up Coast recent organizations indicates further most investments, openings growth Our was open in supported tech to for the companies of job largest by the XX% 'XX in West XX markets. on highs first as XXXX. Essex of Ventura QX

growth, to accelerating on in building and term is favorable which U.S. basis, rapid pace deliveries well XX-month we to saw a of new where our housing many our permits increased rate modest below the housing trailing a for year. supply manageable growth West will supply our barrier X.X% growth to year, growth including across expecting have low stock, remain one compared markets the for Longer Coast in next Overall, of of which are multifamily national full especially the X.X% Essex year residential XXXX, markets for compared is to XX.X% permits the expectation job markets the ago. supply outlook housing Turning X.X% compared to for increase XXXX. relative X.X%

remain temporarily supply supporting West the Coast data often markets under-performed including allocation, in to permitting our the approach national deliveries thesis. averages of cadence capital our during While disciplined our with housing recessions, we

tenant. along valuations. cap rates to opportunity, to begin average a range. the in to to that The to that for Apartment across a values increasing more Turning commercial apartment institutional see quarter. properties are we another San X% to transaction expect earning become COVID multi-family high-quality the we One approximately X an in volume up yield strong apartment the markets South invest development transaction apartments we will Pre we in continued development evidenced our And to in Coast. entitle were recently and seen in Company Seattle on able in opportunities. purchase the while - by market, capital as third attractive sector near-term located West Francisco mid-X percent going XX% the and from has demand compared with

We release, closed program also moment, a the not issue given acquisition is press discuss and recently our in co-investment common market in price. acquisitions is strong. important noted strategically as to the new stock pipeline apartment current X our preference Barb, will a at which

the Finally, Statewide September ended XXth. Moratorium Eviction California

have prohibitions. will of slow subject scheduled eviction rent portfolio pace our The regulations to a meaningful local However, a portion and other in their the growth that few significant eviction extended of remains jurisdictions that separate is XXXX. result net moratoria

Fortunately, the program, many of aid federal our has relief the tenant come residents. to of

coordination turn a over require I Angela Although the to Kleiman. continues I the Essex am process to this extensive for that, team. and slow the from be call With support reimbursement will team grateful and significant effort.

Angela Kleiman

Mike. Thanks,

strategy Onto for regional First, provide complex I'll our an to team customers overview start our expressing thank and relative operations been want working for of harder market markets. than their team. busier expectations the in delinquency some also by portfolio for to strong legislation's. I commentary are our recovery, by ever. reimbursement my especially as rent our department we midst has our the appreciation diligence followed comments, a the support will current conditions, today's and to team, our help I navigate of collections

operating began of shutdowns. Washington, reflect in healthy from early a pandemic net a that reopened the as effective quarter third pandemic, combination recovery and Our implemented the second and results the finally quarter strategy in the rents in California

second to the halted in recall, quarter the when concessions. of pandemic quickly use may and strategy on ramps you high pivoted occupancy a focus to the mandated maintaining significant shutdowns coupon As of Essex economy. XXXX with our

By attributable the of period. benefit increased financial as starting results. last quarter, this strategy our rent concessions third coming The to compared to later, to grew recover, X.X% X.X% a to in the utilizing in by able reduction the same sequential quarter. limit strategy year, this see X.X%, year is primarily revenue property the a In benefits our flow in-place markets the quarter. over this is through previous from only Now, of which we which growth, decline the revenues third quarter we're to our were concessions second through primarily also

the volatility year, the this strong rent portfolio and the compared a to forward. past ago over growth From Company by we effective XX.X% conditions is the position well a an experienced year extraordinary quarter. demonstrated in result going With as wide remained market perspective, the net blended market

delay pre-COVID In to addition, to the improve, enhanced rents have markets. all slowdown a by seasonal our typical in to relative further levels continued

X.X% in market’s pre up and jobs Rents South. to had Seattle X.X% recovery levels with commentary the Turning some to strong to growth region from in job year-over-year of North -COVID have net effective rents specific a compared September. and

continues of into is is Essex impactful XX% Seattle our supply less which to largely be New outside concentrated located to portfolio because of CBD. CBD

outlined our And in announced recently to anticipate tech XXXX in SXX to to supply Amazon, over to which total plans job XX,XXX Looking corporate continue, by XXXX. forward supplemental is deliveries region compared recovery for Seattle. and the we to decline led expected as housing hire employees

As such, in we X.X% of are forecasting XXXX. market rent growth

below only Moving Northern effective since effective net rents onset rents caused supply the apartment in region Greater is job which pandemic. where to Northern pre-COVID California down deliveries California, and fall remain loss the further our of to net levels.

more other regions. a particularly mandates are over properties, California activities. the is by concessions addition, portfolio than for challenges presenting CBD, business Jose these only of X.X% With compared Northern partly a year-over-year has In at driven slower job in leading San as to the supply, believe recovery X.X% onerous week pace September. Apartment our for been Oakland We properties stabilized and improvement delaying financial than September. to entire the Essex in markets in a for this for normal also in nearby in

hand, growth of we with SXX. California performing Northern our XXXX anticipate market in be best rent on the On X.X% region other our will that forecast

supply and hybrid Mike will to drive reopening With job which as in XXXX continue, we growth this office expected year. As healthy of similar expect discussed, for demand level apartment units. delivery additional

of in We California optimistic that Northern are is its early its stages recovery.

the growth to rents in improve rent net September levels. in California, Southern on XX.X% Lastly, and are continued effective pre-COVID Quarter Third above has

past, pre-COVID have were June, tale the As mentioned September, in more below X.X% communities, Southern the levels. have areas downtown are outperformed. generally the The LA above. versus of as in we still In urban is a two rents LA But they of California which now sub-urban markets.

between above pre-pre-COVID While X.X% continues as in Southern up Ventura the have recover. reopen County, XX% and to in well progress San and continues economy to growth California Job to achieved Orange Diego, region's rents levels. XX% September,

rest area, concessions no with California recognized Southern With the the exception of where the week September. one solid Markets in downtown concessions in fundamentals demonstrated averaged our of LA September, has

to a begun recover the We expect jobs Southern present to the increase led of XXXX, region continue California forecasted into lost this strong year rent Los during the supply to softness, just continued Apartment and is counterbalanced supply in compared which by ratio to growth recession. interim across could job Angeles, year region. favorable by COVID to pockets next has

of market call our California you to this our growth. as As growth continued see, comparable X.X%, on now amidst With S at favorable over I for Southern of we relationship, well-positioned rent a occupancy Barb level anticipated turn can stable Seattle. demand this portfolio Pak. for is to XX the the perform a will backdrop supply region

Barbara Pak

to for with the by properties. was changes investments due and our full-year our pleased expense. by results, share. lower few third quarter to at favorable discuss and exceeded outcome The the followed a operating commercial our comments the Thanks, both start on I quarter FFO Angela. midpoint per consolidated guidance, third report G&A on co-investment Balance update our am Sheet. an results core to stronger I'll Higher income, range guidance $X.XX and of

delinquency in we the the second the received declined the from quarter, X.X% attributable on third to the During to various of decline increase that relief quarter. relief in quarter. rents. was federal of for our million XX.X million an landlords established which we tenant X.X programs scheduled a rate, from cash Year-to-date repay is have tenant improvement The to September, X.X% to received basis, an saw programs compared rent which income in were through past due in

to pace of conservative reduce began increased reimbursements, delinquencies to accounts the Given order our we to our in and balance net approach maintain receivable collections.

of midpoint I the result to factors prior revenues for X.X%. minus quarter a There results, the are are want end to highlight this we our third same-property be raising noted was basis quarter should to XX It full-year fourth of As guidance. points range. the high relates it as by our strong X

market. our are growth in First, as seeing Angela strong discussed, rent we

the to quarter, won't majority to vast While small higher felt the be opportunity until there when the growth have from the XXXX turn more will rent we benefit a fourth leases. of benefit be

receive reimbursements cash assumes delinquencies, and accounts delinquencies contemplates rents net for continue fourth-quarter with a past reduction our scheduled results. receivable quarter our Thus, the additional in to guidance our our reported a we percent rents we which of Second, expect to consistent above due reported is as third government continued be balance.

As raising X.X% results, midpoint $XX.XX. year at our share it by by per FFO FFO, third and raised relates the we full reflects to we midpoint. changes outlook. year-to-date, full-year the have or $X.XX quarter our This to to are core better-than-expected $X.XX core

value. portion acquisitions, The most Turning be A quarter, we will million investment to attractive invested year-end. markets, which the to this to expected of institutional venture buying today venture XXX we raised by of the is new of source capital joint have fund approximately new the during is power. shareholder a as maximize believe to

As redemptions preferred level call, to demand to investments we I due is elevated financing, which West and sales inexpensive of our are for strong apartments an leading of and debt last recapitalizations. on seeing our discussed equity early Coast

redemptions to expect of redemptions around million. XX% fourth the quarter. to these occur the in XXX expected be are year, For we Roughly

levels Given in continued current we environment, elevated the could see early of redemptions XXXX.

of commitments, at our to XXXX track we closed finance of million -- year. preferred terms on we approximately we on XXX new and have new commitments. have are achieve objectives structured outlined the a the as of approximately start Year-to-date, In equity

post-closing takes to typically to be to X they tied it our fund given commitments months X projects. to reminder, tend a development As

sheet. the to balance Moving

ratio my near-term quarter, With we we're X.X operating ample continue financial to That ratio to We to metrics net over our financial starting limited an the our quarters. position. in in X.X EBITDA the quarter, for As remain now our I expected, see last third will debt through prepared recovery to maturities questions. this times. debt the EBITDA from declined to a In growth and we by back improvement in decline concludes believe driven the results. next strong turn and will liquidity, call remarks several a in operator times

Operator

Thank you.

now Nic be question conducting your a of Instructions] comes the question-and-answer proceed first Our Citi, [Operator with will with questions. session. from Joseph We please line

Nic Joseph

Thanks.

that X.X% MSA the do a you discussed regulatory to As market perspective. look think how XXXX, on we to roll rent you growth of about from or lease ability Essex's that capture there standpoint

expectations Just trying the to provided. same-store to tie that rate the you market data initial

Michael Schall

Hi, with follow Nick. It's Mike and Angela might me comments.

Again, very lease, I think a we're have feeling very good and everything about are conditions throughout noted high loss to markets like our and been recovering. around we And looks strong us. that's occupancy before.

from going all for as of outperform companies, catalyst that make California probably We the to the California long portfolio. be the continue in the see far of periods we're show and of And CAGR expect to you big the job strong Northern hopefully a growth, The Historically, that return itself the make open relative piece markets, we in we've various very forward last under of to we respect time. still so the sense. reasons number over the highest expect being Northern a grows And companies us, investments tech will thus with etc. California of part we performance the heard our within positions at that certainly of peer lot Northern embedded the comments rent produces group. had to that of why view and tech the dominance that relative the to being U.S. office to that as

How forward, do our into up really you I very think in carry that good California, the very that, next high I back maybe few months, feel throughout into California, the employees occupancy of we could key feel any market great growth on return piece as get rents. Northern jobs officer -- think, following have impact too. we seasonality But so given the impact Maybe Northern feel time, we positive hybrid. specifically? about on period bodes footprint. should as incremental Thanks. well, I move that it think that going a this over we the on or

probably so again, markets. expectation greater would be a most I say to -- down I most was level but X, say, had strongest and Maybe LA would recovery, shut is the job our the other than muted And Northern it most California number yet, has it has would base. dynamic

of the would again, hoping -- all But Delta would think has number office and all to these for So it again, hybrid forward the expect commitments We're open the to that. office space, to be major seem in Companies. we companies. variant I postponed We campuses looking probably return for for see a commitments feel earlier. But from conditions etc, we're sense a positions things lease that on that. strong. we think all to these happen to program, focused

in that's not So, the I think distant before future. us

Nic Joseph

you. Thank

Michael Schall

Thank you.

Operator

Thank you.

questions next the of come Haendel Our St. line from

proceed Juste please Mizuho, with questions. your with

Haendel St. Juste

taking question. for thanks Hey, my

guess the I are perhaps of some those could offsets your on year? inflation you the So, are about maybe what offset technology topic, all How impact that utilities? broader platform, does thinking that as you of could into business. well. be the Thanks. you on then some pull to healthier first -- that in where what can that regards impacting costs terms in comments a and is And and the next rollout question how you payroll, to your And R&M, levers it's ways of

Michael Schall

Angela I'll it. the was the technology of of first Okay. me. What question, it's Haendel. for piece help -- Thanks your lost one. good I handle a question? let part

Angela Kleiman

Inflation.

Michael Schall

Yes.

time the positions, finding cost on we a side are compensation a going early thing, inflation for into historical mean, quite the long XX's of certainly as sure. positions going feeling and and especially I doubt the on-site studied bit as challenging pressure precedent up is the So, actually no we've back

their do is and limits On piece inflationary in world, therefore, that thing it's equation. back type increase? rents. And the gross growth this think Company, California, up. And margin High so, are obviously Rents well. go an property because obviously, to [Indiscernible] XX in big of the one I the really we're taxes Prop good in I'd very rent matters

not this than were rents would And increases a net so, think period, saying, of we if expect more terms I in for have. I our performance think would a want be asset positive -- I the Obviously, in cost that it think would it I Company. in And but growth up, stronger whatever I'm inflation decline I would that the all compensate to happen, inflationary values we value. of be financial goes if

So would well. maybe change well. one happen be Because rates that cap as other sticking as some probably things point and

Adam Berry

Ed, to on? you want do comment

Angela Kleiman

think I but will. Sure. Barb

Angela Kleiman

I just follow wanted that to one up on plan.

year take from so in well. our other locked rate of over advantage time. year, maturing interest we last we following done thing perceptible perspective. environment we've long effectively. that next several rising low The that in We've little And little and and we're is expense our interest rates to rate And very the limited variable debt as the years rates lock the for have of interest exposure have periods very

the good feel balance we inflationary from perspective. an where sheets about advanced So,

Barbara Pak

site allows the on And and we allows to also team. technology which contact doing interactions, on more our Great. Haendel, really flexibility ramping for efficiency for have up focus front, us been the what list is

I that continue going as our hopefully continue to it you're is technology and relief the benefit but that and specialize immediate payroll should further don't and the be allow staff over to more to platform. path help. in be it that And so, think and probably it far enhance will means time, will refine that we're that what looking as business for, efficient an will more expenses said, those

Haendel St. Juste

book mid-single-digit type worse the that's So, to not outlook necessarily year. bit the getting in a the but there's outlook the you. building of business, near-term sounds -- like perhaps for if growth it maybe inflation for Perhaps of pressure degree put to little expense next doesn't

Michael Schall

for next driven. not guiding not year. We're we're that Well,

Barbara Pak

Still working the budget. through

Michael Schall

much call. Please point don't still you [Indiscernible]. are And Barb in expense a guess working you would guidance some margin any get into the that to is, if even give drilled still top-line make prior businesses, the the more important. we is -- so pressure, I I the high-gross

former So, environment, scenario. rents incomes? I look and able the we're that incomes always if probably an that do And that through view, to rents. think on are we happens, inflationary well so, very between pass most going the And we rent. in at my in will if of What's up, relationship in

Haendel St. Juste

I -- office Got the the enough. ask comments math, quarter. process. Fair around about some the the here if two it could acquisitions thought question, And it. in second the Got Maybe

reflective these the could of And do perhaps think portfolio of the maybe of taking more more which Thanks. some in bit pricing? so, making your acquisitions rates markets, calling advantage thoughts that's cap we case, some of of one-offs be difficult or of as the more in conventional some the a opportunistic and low or more if the them on

Adam Berry

is Adam. This Hi, Haendel.

So, the why in opening I'll that both They're which cover separately. on separate, I'll is -- acquisitions remarks. on Mike both X touch on ops I'm the them of touched

South what the tied zoning city time, we and The we years, with that work San to in one which first over Francisco, determine so could up for we've during had is that get. X

by to that units. able basically During we XXX the increase over are time, density

development when take penciled So that that any you cap more that market, last sense the coupled we've made seen we've deal coupled rate in of than compression really, with years. the in -- couple deal the The

expect nine is in rate year in so. or existing to than use, three which [Indiscernible] a range, we will fine. to the months entitlements that through And it is which get there So, high the us call on cap would place which income

for still the somewhat X a an single-tenant deal outlier. location. guarantee lease on another one, years we in There's It's and good really term. other office a partial of The Seattle, for that have that

the for underwriting, years in X, actually GAAP land from covered revisit zoned that on what now X It makes a and our but X very pencil on it current solid north multi-family, to So, today's X, But perspectives. a multi-family see it's from income. most we'll of now, sense. for that's is does play

Haendel St. Juste

Thank color. the you. appreciate I Great.

Michael Schall

Haendel. Thanks, Sure.

Operator

Thank you.

next from Kim of the Markets, your Capital please Our questions come with BMO questions. proceed line with John

John Kim

Kim. risks market calling taking Hi, are regulatory I we've [Indiscernible] about on your of the John for into that? risks here bit a question. valuation? in peers in for and reduced being this as Thanks reciting wondering there, and just these a is was was touched wondering that my guys Some little increased your priced that I just how California you recent and were other but exposure about are thinking

Michael Schall

I'll market start apartments rent Adam, will here. of portion let been I'll to are obviously it based XX-years today. chime speaking, on roll let's impact and pricing delayed years bigger valued loss or all and for many a over Not issues loss of start dealt here. with in the on leases higher well, But of with is Adam the the the that buyers circumstances. facts lease in sellers I've determination And and rents. want really, to because given based cap say, Well, the we've gets the generally more many, again, rents historically, regulatory to rates a

plenty like don't that. compensation is all buyers X, on do And most that if for you're moving itself plus lots in that, with of that XX% significant annual that California X that? move plus rates A or that, law your that of part rents will that think call valuation cause let's because you CPI think I CPI the want by key don't of and statewide I the cap that And I here of comment a think differential. think to control So Adam, maxes of much something rent at will that's transaction. increase.

Adam Berry

one San additional comment. little California, very The that most Santa rent there's you take Berkeley, trades controls Monica, there. within Just onerous or Francisco, or

one, and factor larger you California goes, the more. lease, as from models in-place XXXX pricing really economic between to where far AV doesn't see fluctuate Statewide in what would the gap bigger can to to So I that's But really that where that's tell. the as it and anyone loss

John Kim

color. the for you Thank Okay.

the how how briefly Going really back your good thinking relative multi-family, and about it to to forward about? in something talked the trades. the acquisitions is you is and But still that two, that inflation moving in pipeline, development are affecting developments peak commercial plans, that other you those are

Adam Berry

I the like something It's decisions. in though, determining consider focused where invest to two not be factors market. the We're in. we to those our want fairly strategic opportunities are all what we at that clear But in we office one-offs. of very on had all and of look

Michael Schall

sellers makes value And value I more X% deal lot San deals? of example, We on that created transaction, we until there's development in what really between -- XX/X But don't process. a for estimated The It drives and price. But cap start build would a you of sense. cost Adam that of built-in when rates construction, about Adam think know. we South land their be The course, do go adjust from down estimated so. today high? Francisco an to escalation. or the about that all talked those earlier, in X.X could we ton these

Adam Berry

everything between escalation that rates spread cap into assume on months it's referred out, whether or Mike X months to, and follow-up X -entitled, where the factors final different acquisitions years stabilized trading spread Whether out, are, And deal our between We're are assets so at we stabilized development for always or that we're then one a in-place entitled is denominator. X what there. yield. look looking the just going out. Yeah, or versus to that un

this are And those couple deals in are potentially pipeline these seen increased. And of cap compression, so, -- we've aggressively. the the where others pursuing on two that with especially are spread a rate deals, there and that has we

Operator

you. Thank

from Stanley. Our next Hill Please the questions. of line your come proceed with with questions Rich Morgan

Rich Hill

to Could the across loss guys, your question. so that [Indiscernible] them macro Hey, lease the quick markets maybe we your different you details can to compare a for on various just forecasts? rates you some rental disclosed

Angela Kleiman

Southern California September, and a X.X%, Sure, it's in single Angela lease XX%. from California to the here. widespread, the portfolio digits, too, loss was around low Northern it's force happy to At into

we and that next this to model -- look to so lease, of typically year. analysts And loss understand

make a context And of we I little sure to want just couple a to more so, want consider factors. on I that, provides because that

speaking First, this huge the year was curve. very Orange is revenue trajectory Because be This positive. growth our some rent repeat not to a the year a They It this peak. that, next San the an steep are out negative likely County, cap. we control And counties. markets, San has above rent unprecedented on a secondly, year Ventura for and It's Ventura, has year. seasonal because year. of it and created those is the XX% with turned will Diego, in delay which drag and and XX%, broadly small next Diego started over

so will well. a as that be And factor

Rich Hill

Got actually looking that was for. what Angela, I was exactly it.

maybe leasing leasing other there question. lead a than the Some think to listing of versus that at rates, higher look is When the Just a the one spread rates, lot lag about we data there? sign list we spread. seem is be

the how the just wondering if rate listing So, you think indicator on that? leading is I'm about

Barbara Pak

am I following question. if sure your not I'm

Rich Hill

Yes.

So, am I what suggesting is --

Angela Kleiman

Is about that versus what talking Are you asking achieved? mean? you

Rich Hill

you've are you're suggesting, been than And asking citing? November, higher December Yes. where I'm in -- October,

Angela Kleiman

has level going whenever Normally, it is is What months been two we what let's mean. we what is send do that's typical. Yes, I well, out this -- one forecast It be now. but renewal. the to put to way for you higher, to or see try rent pretty

so, it's sometimes it's higher, And is lower. means sometimes that what

it to back say, that greener a market we're be we're or depends May January, for sending ascending without, we So, it whole March timing and in now for now June, it's renewals, the if out really the to in, not then higher. December, likely higher, lot tends so But on in think be for renewals conditions.

Operator

Thank you.

from of come questions questions. next KeyBanc, Our with Wurschmidt Austin the please proceed with line your

Austin Wurschmidt

Yes. Thanks, rent I forecast. curious, growth to back everybody. just the was going market

trying back just conservative to the you're If scenario look hybrid detail to additional a additional with office that on include you top understand type office versus could like. so We that how you growth thought guys to layered what some doesn't tend how playing know that be out. just maybe to some would going upside about the give back you would baseline take what baseline about scenario of approach of determining and

Michael Schall

that great I'm sure And it way. we Yes. a not approach question. It's

like looks Paul Not fortunately, oversupply XX% a data. he he by of occupied any scenario. part all and many looking not to the we before growth, supply we how the Our some a and how interesting simple And the job one do it do, of included of datasets which is, situation at units of creating and they hole they're variety then thing. what are before base-case in I research But represented have growth it to markets we're We're these job group, demand takes things -- pretty The at so expect much at -- Morgan, fill have? use again, demand think that already is some we so some in hold. there. looking

to them the and example, quarter. For be fourth is Seattle recovered he a the end that at in the lost pandemic by XX% they expecting has of jobs XXX% the of

So, actually below are level. pre-COVID by be still pre-COVID their of markets the almost they the employment all Whereas end other XXXX. level above will

things way So, growth, is because great has affordability, California rents affordability moderate rate California is do in it's year. I'll affordability look Northern and it the not by on what given to the that Southern at And we Northern bit He better we pretty considers has not look property-by-property of California, And growth way a of incredible we're highest trying rent rents incomes and key is overall for at basis, and the the are here. which they in has been leads there growth basis, marketplace. which next happened to because market just such what's comparison. a Southern we do, a part and now simple. dynamic because expensive, little give a that That's the what such a California, background, quick screen in you screening

a rent, market in is in Angeles, and portfolio XX it's income and the $X,XXX in median But rent, Essex Seattle, not about in thousand. LA, cases. about XXX the both rents household median Seattle So, thousand is Los the

the So, with to income It run to in more the equation at sense? lot do. makes rent, say, positive to Seattle. same terms that Paul has That what would has and into of and a market room factor respect rents relationship expect a would that that's for about look we

Austin Wurschmidt

No, very Yes. helpful that's color.

growth jobs that were from in about a so, the kind exceed And job of demand talked if do piece. scenario, you just perspective, versus supply

So, as also it's is upside but could some see old to a from perspective, says that drive increment you cars back-office to benefit conceivable well. demand occupancy beyond above and pricing It that. think

Michael Schall

have really has a have are little X. bit accept are thesis, a pushing little but a really occupancies your a and out push jobs little is and we're bit element But next do aggressively year, you level. basic lower how has Well, rents, willing we declined to going the to we're XXX and relationship that's rents, occupancy you our bit so job back a X and rents. some between occupancy When with noted created a to hold pushing that bit, typical household actually to different because and you if longer thousand little

to we of a units by California. affordability great for demand, key scenario. And we supply what's think is supply total in exactly see. Northern California wait affordability looking is basic somewhere don't that But in Southern produce and well on We XX,XXX relatively X.X% XXX,XXX darn just around relatively Again, should of number, homes. year. So, pretty inexpensive And and be different the should becomes next a we'll We issue. market demand expensive apartments. we happen. but We going screen, know than big do at shape have

Operator

Thank you.

the with Evercore, proceed questions. from Rich questions next your please Hightower line come of with Our

Rich Hightower

confines you renewal everybody. self-limiting of the or rents, Thanks outside I to here. the restrictions, guys are sub-markets in Hi AV any that taking kind within respect XXXX for guess with in of California, markets of question just good sort to that of forward? -a sort vis go that is your lease in loss from past, guys being the - things have the corporate tenants employed guy vis exacerbating of growth and thereby you spirit, in a

Angela Kleiman

That's have cap behind social the responsibilities, XX% We a governance, And for really good that really returns has for not and our anti-gauging, worked years. a that corporate is question. And years, this right? self-imposed of it viewed the well many materially of goes our us has as for many and the strategy to part approach of negatively impacted avoid being shareholders. the many, toward

Rich Hightower

And Okay. strategy this are you at markets that employing Angela, moment, which if mind? you don't

Angela Kleiman

it's it's so have broadly Well, loss of and portfolio, the hitting the wherever of up across lease XX%. we that

And to with XXXX. coincide so, it happens

because San Ventura, and loss County, Orange it's lease. of XX% So, are above they're Diego,

Rich Hightower

Then Seattle, perhaps?

Angela Kleiman

as well. Seattle Yes,

Rich Hightower

Thank you. Okay. All Great. right.

Michael Schall

XXXX. Not it's in XXXX. Yeah,

Rich Hightower

mean you. I separate Thank That's from meant. XXXX. That's I Yes. what correct. yes.

Michael Schall

Thanks, Rich.

Operator

Thank you.

Our with please the Capital next from your RBC questions. line questions come Markets, Heffern of Brad proceed with

Brad Heffern

outside coming if curious maybe in I Area any just are more Bay stats, was you've on change from metro recently? seen if more you've what versus the Hi, everyone. move-in the in seen people the

Michael Schall

It's that to is follow. a good data question, and difficult the of granularity

We so, exceeding And hard job it's say the happening to is growth what's have the exactly job recently. growth, average. and national do

that happened. we from think feel that confirmed that. But Area from the shift the that, back and etc Bay to movements has some So, like statistic don't We occupancy, were alone. there positive clearly has major

accelerate either -- next need we currently it we'll what have -- hopefully And way. fine job expect But do that's XXXX into up the months XXXX. we again, But couple don't We premise. we the as we is say we need to more I'd here approach SX. to year-end and than achieve the forecast growth of pick in on

Brad Heffern

sort then related there's but what you trend And underlying come out? sort delinquency, playing has underlying how know the the can noise down on Okay. obviously and payments, through has rental Got relief level that to been? do the see of you of it. walk I

Barbara Pak

Barb. is this Hi,

cash mind, and So, we X.X%. last report July a in did can delinquencies report on quarter that our see at in at for basis. we we you was quarter X.X% the were And keep

implies August, down. and million October the That I X%. -- think we quarter. stable about was And then terms pretty been at. last as in August a cash and September third hit really commensurate we've during X.X that by net come And that October mentioned X% of month. got I being a call, that's X is on driven in the around had So been we've reimbursements, basis. in in our amount, We've Most the of we've September, that's been stable delinquencies. would so It's seen where the seen

Operator

you. Thank

Our next Securities, of Malkin with the Capital Neil come questions line One with your proceed questions. please from

Neil Malkin

there for you. Still you. morning thank Hey, out

from Is is from X%, other you and jurisdictions. on last delinquencies, of the California correct? question, net Just when that amount you that that reimbursements the say delinquency that collected the

Angela Kleiman

Correct. Correct.

Neil Malkin

two in would Is around still like that, where be that without it plus be? would that So, range? it

Angela Kleiman

are number those reimbursements lower the driving not reimbursements Yes. that but -- is Exactly. infact. that what

Neil Malkin

has and You debt trying anything you get recognize I in baked was bad debt it and you. what's if how how Sure. changed looks, -- Yeah. know. to in understand I bad

you Thank Okay. that. for

I in And the Francisco, people of just Okay. one. focus moving terms that into on San guess,

the changing are San are rents You the come a retain are levels, impact to the kind your rents that from a people general I from come ability in on of back -- once given the are still mentioned in that or down portfolio deal who Francisco wonder, people who just people comment little that demographics can more are those income, market potentially outskirts from pre-COVID they terms seeing in some would your same you Are is the in and in? in coming looking for moving Jobs, bit moving back? of

Angela Kleiman

here, question. This that's good is Angela a

We posed was concessions. seen have not when change question demographic any I when were think And in the meaningful giving or we profile. this on rents out declined, early also significant

stay. the being sense? we don't see the not jobs city -- all and our it's then going people more think now are end moving I slightly affordable, just at so of make able people Does randomly that to while it's into and

Neil Malkin

Yeah, I appreciate that. yeah.

other the talk just Just Maybe mezzo about development and follow-up, one of outlook. sort

potentially supply there's given lot developments disruptions, of touched chain the labor, driving the then that and understands, a elucidate you You You earlier, you're opportunities be costs, opportunities. etc. Can get, that mass you a that and size? a everyone of talk you're maybe bit? now little comment in evaluating to in and a kind right environment, commensurate can increase hard tougher you on this but seeing that, what, kind increase made with input it what about would inflation of but think But what's

Michael Schall

demand several need XXXX, think because bit X% delivery And a question more by is there pretty the especially overall, up that's implied footprint. when not clarify numbers the COVID. that you the Notably side, part that. have again, I really enough catch think will caused on we one is into XXX,XXX the things, of roughly have the XXXX, I substantially the go there maybe, we that we scheme to think XX%. market and about down of and parts meaningful Actually, supply across may they from be And will are than to jobs were XXXX, delays through to our But but supply in Seattle here. new the eventually job

So the Goldstar, Adam. market that's there. Barbara say, for got Seattle let's for, -- another a

Adam Berry

that the account, on well the The steady made would competing But mid-summer. on well existing down a of But to penciling. are cap or the there side. started between. in products, I happening. they're Neil that's from perhaps flow it's on peak but development now, direct we're of the echoing a the were seems one thing street side fewer being I how diminishing with, today, on on as into deals yields. I kind as just as are some that factors further actually seeing is but it are again, And made your earlier lumber about rates flow X that cost point development There point also with say deals -- and at that are that like being both seeing, where the those as risen compressing as penciling, of MSA all far having opportunities taking we're with that of fewer our deals, said, costs we deals,

Barbara Pak

that year. the and current to environment, this to seeing just We did Coast I could us in if make of as variety expect of I you've comments, developers of reasons. able a I this given still in XXXX, rates environment, that had for interest given sure to out there. XXX prepared And sure heard we a valuations assets, amount preferred could want comparable just that gets redemption make And of then headwinds want we're my redemptions would we high a that low well. Neil, take imagine. I West it continue early face lot to say early for million

Operator

you. Thank

Green from come with John line please the questions Pawlowski of next your proceed with Street, questions. Our

John Pawlowski

Thanks. Firs for Adam. question

levels. Mike in the relative think Curious markets are covid remarks, pre is to values permanent the to referred hardest - the you I Bay pre-COVID value versus prepared being in to levels. current up hit where XX% think Area

Adam Berry

Jonathan, Thanks, as average. an in Yes. Mike pointed opening out the that's remarks,

As little very Area, substance. it relates little the of very trade, been there's to to specifically Bay

and have just I X think that X% deals maybe is and deals there between and But number has traded. Class anywhere going in the be Area C been to of again, really some upwards Bay B then traded, XX%. that that A have

limited dataset. So, very about we're talking

John Pawlowski

to And that's X% down or to up? XX% clarify

Adam Berry

Up.

John Pawlowski

Up.

Okay.

Michael Schall

kidding. I'm And just John. Yeah know nothing. you

John Pawlowski

that Yes. it. trades Nothing means

let's few the tell Okay. and One Obviously, me when does final corner? sequentially just drill growth up. Mateo. jump keep last revenues every in over migrations going behavior, But out. -- of job quarter, on me from each quarters? Can the The San then of down improving I'll question rents declining in And the San the what's durability Mateo. just it the on demand turn gains you terms and

Angela Kleiman

matters. that set the context question interesting in that want to data because an little I itself, think a that's Yes, just give I

four the has Mateo properties same San Our market store. only Ashley's in

there these fundamentally be There is see been good It's more addition, competition we're going a anything you talking period add concerned area. to at and a job about slower It's small volatile. is more And good the in market competition going And relative lease where markets. a about interim growth just our a -- market. with still that, been pace with that so, growth this that have while dataset. We're has because to their that not then And you job volatility. us. you in lot other to there's an from for a up has it's are lot of a

Operator

Thank you.

your with Our Sweitzer the come Baird, next line Amanda of from questions please questions. proceed with

Amanda Sweitzer

institutional capital changed agreements? at you the those that attractiveness Or to in of increase this the about today, economics LTVs driven can the the co-investment I from that missed in higher with cost use you all? deals by market but, been you and has those interest debt on if talked your the platform, really Apologies Thanks. partner is lower

Barbara Pak

We've equity, stock it we Hi, our of platform we the Amanda. like alternative co-investment capital is and many, don't you Thank for source price. because it. when for used many years it like our an

change of rates Essex. a used come terms the rates us. to a to were year, economics, in the And terms XX time-to-time. basis economics have past so, to we able from XXX the of capital able source points And it's and We good of for down do improve were for Cap we reduce over we've accordingly. and it think hurdle

joint going the capital materially will on we've change what done of we from this of the So, but forward continue past, in venture economics the depending to didn't use source market conditions.

Amanda Sweitzer

helpful. it That's That's for me.

Operator

Thank you.

from Chandni Goldman your come Luthra please questions with next question. of proceed Our the with line Sachs,

Chandni Luthra

I it in I thinking could on so started start Last were XXXX. say you think at where about color. believe you afternoon, I'll you it's are Quarter perhaps give will known everyone. some good program. I with you that and redevelopment how sufficiently West Coast, the if your

Angela Kleiman

strength to of and the And of next goal at the to this does levels. market, market under returns. compared right it capital meeting we our improvements Because to year. have these condition the and then we're ultimately, our ensure to expectations ramp And especially year. continue sure really course, very of of light we're don't - the make market for optimizing growth number activities improve, Last that destruction, and We double and that so, more And little COVID recovery and the our time do next I'm to, ramping up it's and and pre make as Angela also to happy year, that, back Quarter. up a we is we renovations going here. get started this I mentioned take to rent in point the for recovery, sure

just we it. about diligent be much not the want just a to it's we're switch -- on, And more so, turn

Chandni Luthra

pre to on those consistent trying Angela there? looking Is you then how's that just And redevelopments? understand think with and that. that, there at as ROI I'm to to is a -COVID big follow-up levels range about

you could throw as some please? If on well, that color

Angela Kleiman

keep levels. driven it's ROI Sure. at I'm our by target happy pre-COVID -- market in mind to rents. we But

what And the with proceed we're you're achieving opportunity, concerned there that we ROI our a -- means compression therefore, been ROI. we won't that if way target is it and has not so, the has if that that is reinvestment been. not duration unlike any approach there or

Chandni Luthra

peers your my about office. of earlier about Got leasing you. your return impact And today, -- on question would from velocity shift one Amazon then policy second peers to on sort some talked be of

Just What Thank standpoint? check you you. deal. wanted the guys seeing are to from your

Angela Kleiman

about you understand me asking make you your of our velocity? I are changed leasing Are Let -- has question. because sure it Whether talk Amazon.

Chandni Luthra

The age ago. return couple to I policy announcement mean, of Amazon shifts on a office.

Angela Kleiman

I Yes. you see mean. what

occupancy, turnover, our all But we mind have shift. an keep and yes, not course that in Because Amazon from have impact our of we speaking, rents. workers lot So, a impact the throughout we an certainly our the the impact businesses that but they so in not seen impact Then of they mandate, are not practically seen while support the on have on also not Amazon. the to region. seen that's corporate have ability an raise

Operator

Thank you.

please the questions next from with of Santos your Our line proceed with Daniel Piper questions. come Sandler,

Daniel Santos

for Hey, taking questions. good thank my And afternoon. you

your is on price. one first my So, stock

equity based to of a third yet Instead issue estimate at Street's and didn't issuing on on route. You trading position the quarter in the going you're [Indiscernible] are our premium. estimate this and equity of NAV,

more you forward. -- and give using was commentary going So, stock your more equity if views price I just maybe on on wondering could your

Angela Kleiman

good relates a remain it what always capital question. use. that's Yes, we disciplined We to as source of

venture Company variety joint at puts bit where look quite we and one where up pre a XX% we levels keep is one values And think we that in from pandemic. equity, the with different of the is, the the at start Covid NAV one value the mind, disposition. of being from a were So, our up of sources; Equity, -

so equity not. that to And today a want or at we whether when look factor issue that's we

equity venture The fees in the other you back using for lot promote potential coming think at new we're is preferred at factor the do it of fund material to that lot mind prices we're the to really making We along redemptions, value creates a stock our we NAV our given premium we're where shareholders the from joint believe using investments and to we this platform. stream. keep money have and more a given point. a to with hurdle don't

Daniel Santos

And how more rents That's Okay. expecting smart then much from are helpful. you’re on lastly, and you timing benefit that? what's

Angela Kleiman

question. are quarter a great And Yes. -- XX The lag RATV, value one them are held financials our effect of that's there's a lockout. shares million arrears investment still until because report about rent smart out And us. there the of our come And third for we our quarter in their today. is financials, within we

million. And It That up as have substantial our also fourth be unrealized reflected FFO. full-year a quarter. those Both to total fairly not XX then numbers to provision to million. guidance up XX tax be are And expect we could would would could we of so, deferred an well. recognize in for the gain in

given related itself. and numbers smart we predict the is that loss. in that lot moving a the or gain Just are to don't within there to rent parts other try But of of those uncertainty, [Indiscernible]

Operator

Thank you.

next Our your Zelman come please Alex from questions proceed with the & of Associates, questions. with Kalmus line

Alex Kalmus

on taking what XX, on seeing you you're and plus impact the I be SB wanted what California expect All on you for to yet? if long-term right. touch Thank the anything housing to X ground their question. the and supply

Michael Schall

the override and X, we're the ADU to And would of laws and question. development state have the what local waiting because happen as SBX is SBX, that impactful might Mike more the it still good This one XX. If relates zoning guessing that's as units. effectively is to of and with

ADU suburbs. to built more allowing potentially in so the be And units

year, backyard, So, to earlier versus known there NYMBY's, my ADU whole battle. was a previously the quite that's I with be yes, to want passed active to the this been backyard that groups. law this an my the YIMBY's, respect in was politically that going and has note ongoing And situation the

that from, know There sake Newsom short indicated likely this this estimate homes of -- is was sources personally, think article was state continue single-family estimates, it that mention transparency. and to ADU I homes, out came given So, LA impact, change use that, before that and I'll that be will recently to it a but that written I be had going it Law will It of have the relatively where the think it little don't said I was an there there just case. for Times very that and that's was the other that But mentioned and SBXX estimated high. of and is millions that likelihood X.X% the to of I backdrop the unlikely. Governor are various is SBX SBX. suspect

Alex Kalmus

on span you market terms future sure given you're that the being between just quicker Would forward rent there. make of in renewals CPI to the you much the get similarly that the move-ins few how you some trajectory renewals regulation. in years, pushing playing lever in that Thank over wanted potential consider has the see of touch of very Alright. going And negotiations or to able out to and just a difference do past spreads? on new

Angela Kleiman

Well, XX. but kept it's X, It's CPI the plus set

push that it's been AV in we've flexibility market a XXXX. have before at to So, operating we even And this metric discretion. not. our

and had operated rates have control. period Over We circumstances. front time, hat long a comparable assets these we've of its as under well growth it

ability this return just targets. our our change to we going don't to we is think So, achieve fundamentally --

Operator

Thank you.

with Bank your line please the Joshua from America, come Dennerlein of questions questions. next proceed Our with of

Joshua Dennerlein

just the Hey, thinking I that winter your And a some rate looks markets how as an discuss maybe different kind to well. occupancy strategy across the of of about pushing you're was thanks little dip. like question. a for in curious be fall, guys, you of bit would markets, saw great it's

Angela Kleiman

is around then July. this so -- we're normally unusual What to. we year, an and happy peak Yeah,

on months. And start had that year a an big like We in so which and California as think, from six we markets, deceleration a for -- negative this XX% QX but we in California paid And This starting and is end huge Northern of depends now, we just Southern around Seattle ramp August. of is speak. market rent to negative, have we went It growth peaking unusual I peaked around up. July,

occupancy. strength to I fall -- we're of into noted So, I to some quarter, wherever November, allow but it's natural continues. and is people very to going on and as because and going that, you're continued December, to market, we're emphasize friends a we that different occupancy was rents, third want now to to bit, on the continue focusing focus place that the more do And going a occupancy What issue. now does of from preserve think we head deceleration really the -- that if perspective, so seasonality those the that that in out see focus on magnitude having is question said likely push point we can to we but this us what

Joshua Dennerlein

to SoCal feel it is peak? little maybe a now. Or on That's pull when peaking like comment, bit October Just been that Is starting is? where back? And that that leveling curious of it a a off? just Has great. we late just follow-up

Angela Kleiman

mid-October and now. It's between

week. in say past the So,

Joshua Dennerlein

Okay.

Okay, great. Appreciate it.

Operator

the Michael I any back closing questions over this call you. Thank like would further There remarks. to at turn time. Schall are to for no

Michael Schall

stay for to look joining you you call. at thank And seeing virtually Operator. our joining of many the for forward and the everyone We today. you, rate. thanks again, speaking Thank Until then well, call May upcoming

Operator

your Thank you conclude This does participation. teleconference. for today's

disconnect Have You at point. day. line may a great your this