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Essex Portfolio (ESS)

Participants
Michael Schall President, CEO
Angela Kleiman COO
Barb Pak EVP, CFO
Alexander Goldfarb Piper Sandler
Jeff Spector Bank of America
Nick Joseph Citi
Rich Hill Morgan Stanley
Steve Sakwa Evercore
Austin Wurschmidt KeyBanc
John Kim BMO Capital Markets
Brad Heffern RBC Capital Markets
Rich Anderson SMBC
John Pawlowski Green Street
Neil Malkin Capital One Securities
Chandni Luthra Newton Goldman Sachs
Nick Yulico Scotiabank
Call transcript
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Operator

Good day, and welcome to the Essex Property Trust First Quarter 2022 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

supply our call. housing and Thank for our and earnings apartment will Barb trends prepared me joining I will today, remarks demand Berry on Angela you for welcome market. and Q&A. and transaction Kleiman overview Today, first Adam us brief first recent of to quarter follow and quarter with results Pak conference a is comment here the

fourth We quarter this are pleased midpoint by to announce and guidance growth our improving our share FFO with same-store $X.XX exceeding revenue consecutive per per core FFO core quarter's of share.

our an rents net trajectory rent to same-property XX% have now up XX.X% release, results improve. Barb above FFO year, and rents as As and increase XXXX, Essex year compared guidance core review of mentioned rent support one effective and for the markets levels will continued to pre-COVID are in And revenue the ago. which our growth in Overall, in shortly. earnings April

All of with improving California each growth by sequential our positive portfolio, in first the month have approximately X% the quarter. rent sequentially of leading Northern markets

to delays. We office to our Essex COVID-related mandates openings California prior the across the office industries. The in $X.X to View, job forward more recent the investor back venture made Other the additional over in epicenter top programs continue office including example significantly expect the A San Jose a is data to once look billion elsewhere Northern companies and in-person Mountain it hire California property companies in Google, Northern growth, continue with has and to and markets. will rapidly March several Downtown The increase further Washington, COVID-related been support easing tech than resumed, versus came which and of of deployment of for a we XXXX. improvement in-person been announced for centers on invest bring plan that again. regulation and return XX,XXX Bay remain have Area. employees technology on compared for from office travel, office. technology posted easier meetings, Business conferences XX% in return significant to California thesis mask progress tours relaxed as capital to our and making following indicators, meetings investment the to markets have large job quarters to also pivotal

Coast, April program remains As subside continue to the that the now with rent with in apply encouraged government The the reimbursements COVID-related rental than rental passed has relief sword apartment to rather on often as been paying to rent. California for in a tenants led double-edged West X. were rental owners regulations as government relief now has of for the to programs relief Government-sponsored see California's deadline approximately California providing trends of to owed the potential rental we in underlying payments upside far highest closed onset pursuing to now are company. million behind rental to delinquency the will program assistance relief since we California, the delinquency applications cautiously the of continue new $XX improve. optimistic respect Delays as pandemic,

to it could underway. was Given a full clear be portfolio achieve we during inflection that became that pandemic, confident the the before our government need points extraordinary X restrictions would recovery

was XXXX for largest reopening the occurred to was technology a the July the office first return in second which companies. and markets, The our of of

reopen the restaff and all Meta X we've Apple Over offices. Microsoft, past months, and seen to Google, their begin

the trailing economic and from job activities, employees. growth out-of-state mandates regular Return apparent with to more attendance office are similar specialists average, versus growth. reporting X.X% of office generating quarter Francisco On applicants job in leading reported the of for that the arrangements job with our a in on have leasing portfolio X.X% returning X-month growth second marking outpaced nation reports growth. as are Essex the markets Our basis markets hybrid which San require X.X% broader job consecutive is and X-month Essex the trailing U.S. average

outperformance Essex XX%. We to will the expect this XX% has levels continue recovery jobs recovered still only the of versus pre-covid compared as of U.S.

services trajectory for from service by all expect to hospitality-related and demand housing markets of favorable Essex growth We X.X% of generally workforce in The unemployment a a strong the job increasing travel West confluence tailwinds. to on housing rental expensive and sale supported rate Coast. the the jobs continue and well-paid growth, lower increased for contribute

more to housing as is challenging Turning Coast processes, along of burdensome long labor ability inflating production shortages a housing ramp the construction and West to result regulations up cost. supply. entitlement The

levels a at remain permits long-term As result, housing consistent Essex roughly markets in with averages. our

of rest Northern also bottoms-up we includes supply in supply Our indicates are XXXX new new analysis decline will California. XX% a XX% XXXX, moderate in and deliveries which supply in expecting expected a for apartment in and the reduction that

markets the spectrum metros. U.S. of of on end other remain lower our versus All growth the supply

a apartment of events, to headwind high for the markets. and investment turbulent Geopolitical financial levels inflation create Turning which may transactions. uncertainty, conditions market become

mostly quickly property. function However, and investor cap move for a of rates generally don't demand are

apartment significant market the and of interest cost expectations recovering higher strong apartments inflationary pursuing conditions, have at to rates capital growth keeping higher cap unchanged West the As offset mostly evidence point. of this impact appear Coast specifically, to

deviation properties for and class for rates markets the with cap mid-X% apartment indicate Essex little across of most transactions trading building assets location. review institutional markets, quality range Our the across recent stabilized in

allocation like continue ESG We financial on growth best our have selective and and accretion focusing generate I'd of capital the the impact to briefly to on the potential strategy, company. In its with our deals benchmarks. closing, be highlight will importance that to

way with step Essex Consistent of our released TCFD company with that Last the Impact week, toward alignment conscious reporting Fund RET Ventures. requirements. SEC announced by West environmentally ESG we we co-anchor has that an Coast, recently managed report, which housing is the will leading a that thesis, proposed in first a provider operate we As to housing an know responsibility along our

Finally, fourth available announce May. Kleiman. call to early be that, Angela in report the turn of upcoming over we With to are our CSR the publication pleased I'll which also should

Angela Kleiman

Thanks, Mike.

would like my to our support First, appreciation for I express operations and teams.

with model. our an and conclude collections update work on our As these including the major outlook exceptional today's on operational optimize rent XXXX our I'll In and we comments, new begin continues and with rollout and our key property taken have company's in operating highlights implemented to growth our dedication operations, structures regions, success. for of on systems stride team to our demonstrate has ethic to challenges

We basis. a press are in by operating pleased is growth revenue with of a scheduled year-over-year Page results, quarter in delivering X increases rents our driven on improvements our primarily on This same-property in release. and detailed first especially concessions X.X%

our same-store April quarter of effective first minimal year. portfolio renewals our XX% period expectations up in XX.X% compared remain to history, for reported and the the leasing same with to spreads for included the at with leases performance to net and loss lease portfolio exceeded strongest The new X.X%. up some the continues Average concessions company's last

the into summer well positioned are heading leasing We season.

year, Washington Rents Beginning Here with December. are improving the a each highlights to our Pacific operational in since north south. the sequentially portfolio. key to had strong Northwest from month the start

concession successfully the decreased we In downtown in Seattle quarter. throughout addition,

modest job reflects deliveries average with rate XXXX, forecast market X.X%. rate strong in supply trailing a growth remained and Our March throughout the X-month Seattle of

On of loss forward, X.X%. lease with region steady to Northern performance a from we in to Moving anticipate April our California. Seattle

office of As Francisco Mike quarter, slowdown in mentioned San a being net rents earlier, the the San solid tech return large effective quarter, a companies declined and this and throughout rebound Jose job region After in typical are seasonal construction in improvement first a in leading lifted steady growth. to the fourth usage to in by rents.

of to picture on supply year X.X%. rate accelerating steady and the job remain X side, the trailing rest expect of average we growth ahead, with is for demand growth March the months the Looking

is at in April, X.X% expect continue growth to early lease, to As its we recovery, in increase to seeing and are this stages which rent Northern market our of loss in stands a California lead steady region we to XXXX.

California, been not quarter. in about the the improve Southern at market demonstrating region. each and did the remains fourth stability as experience first to decline rest year. we a one Southern continued quarter this month have the and to pandemic, lowest which rents our been be best-performing California has California strength Concessions seasonal our week confident to of almost typical continue of to the in relative throughout markets, for Turning continued have in Southern below the level Turnover

areas lease-ups. may near modest increase in supply we and have elevate a XXXX, temporarily anticipate development those in For forecasted concessions delivery

make on of through to to today. loss specialization XXXX. includes property on-demand of employee efficiency year-end. of is as XX% closely completed March more associates this XX:X. successfully with a operating of of in experiencing and region by Furthermore, year last our in are career company-wide The collections Orange generating the the on side, operating advanced customer end job XX% the staffing demand a earnings experience, our are operated County of At and model. we at is we needs April and to X-month implementation that Essex XXXX top-performing Southern opportunities target virtual advancing Diego It tailwind discussed creating point, California the Southern the located lease in mitigating natural San unit improved have to previous an with growth this We by a by attrition, backdrop benefits enhancing also inflationary which through will operating our our service through XX% our for progress into administrative revenues is X.X%. reduction model was XX:X. California Historically, expect how Essex business. ultimately we fundamental XX:X, calls ratio properties we has Today, single and provide continues strong trailing unified On average with to pressures Wola

have we the next digital few improvements rolling addition, ongoing In out platform years. over

our turn yet With Pak. benefits As XXXX and Barb business, in to the over I'll call thereafter. anticipate optimize we have such, to we further and fully that,

Barb Pak

due sheet. expectations. I'll was comments strong first core by Angela. first start outcome a FFO discuss guidance the to for report our operating followed our to an and the balance Thanks, changes favorable on on quarter full results pleased co-investment higher I'm few exceeded our year results, activity The quarter co-investment income. to and update with

on we raising share of $X.XX by growth the raising driven year. revenue cash the in basis full This increase first points driven by core same-property our FFO For First, an are we to quarter The expectations factors: to and our is operating basis. XX for solid improvement X our the $XX.XX. a results X.X% the midpoint delinquency by by is per of year, net are midpoint

X.X% of compared to the X.X% delinquency scheduled midpoint. net Our at revised assumes guidance of guidance rent of now our original as

As April over deadline Mike for X rental residents in our time, led mentioned, have applying to the at on the we in same assistance months. increase has while an X. We for improvement also paying current, the this passed tenant relief past seen federal emergency an believe

April XX our net rent historical of is basis average which such, were of As delinquencies our below points basis points. scheduled XX

we range While investments $XXX were to X gross make million. delinquencies relates that preferred in The encouraging, compared core about to initial XXXX. expecting COVID-related approximately now we now are improved being to still need reduction anticipate we before as our is our $XXX factor progress redemptions FFO paid underlying this of of in we in us. equity relates guidance redemptions A thus, confidently put delinquencies midpoint behind second off X% April investment in to can and million

investors a are for expected income income, an back ownership first Turning of $X the This XX% platform the promote of our the to an IRR. on achieved and was which income, X venture increase important million to into platform. to cash. of recently annual Essex Subsequent X remains our our shareholders. We alternative WESCO private to for source and venture earning FFO equity basis. XX%. core venture, shareholders. quarter, create within monetized unlocking which IRR venture was paid over our WESCO reinvest venture value create $XX co-investment to generated we in The our to million our additional value joint in continues X transactions million These In embedded end, we amended elected ventures Overall, joint realizing capital. for promote a quarter amended promote our XX% $XX

of a billion concludes with XXXX, limited sheet. the will to operating I call balance financial near-term position. ratio the quarter, we driven our to X.Xx available sources And $X to prepared questions. improved throughout first net turn depth my stronger for now results. by of funding turning the continue liquidity, we to strong multiple Finally, In ratio in of over compared remarks. That at X.Xx capital will the improve the the us, to needs expect remain debt-to-EBITDA operator to pandemic. back and this

Operator

Our first Morgan with come Hill of Rich Instructions] line [Operator questions from Stanley. the

Rich Hill

Hopefully, can really now? renewal it's the for the XXXX disclose given impressive a what you relatively new straightforward right earn-in you're is one. putting growth But that hoping now. us right I'm up for and

Angela Kleiman

it's Rich, be would too it's And but you earning Angela. give I barbelkilme. to the early. XXXX, to love just able two, one it's for

think our we're and fundamentals that you see can doing solid, I well. are quite

Rich Hill

figure try. Okay. I'd that

don't follow-up know, about question one just of it. maybe I So talk some peers your

ESS but not it's I'd the go. know way, it I figured I give So a

wondering you your a bit was leasing pushing intentional season just that noticed think rates can in that into that I'm if and you if trend that through April, occupancy might given dipped the feels turnover So we how low? peak pretty little us walk did

Angela Kleiman

a you've seen more when we when Rich. question, we especially pushing That's when would strength strength, is coming Sure. -- us to us. rents, anticipating change see ahead favoring good our market this, are from occupancy market we strategy And we of do see which

quarter, it you'll to fourth So is the during leasing past usually in see much when change back and that quarter, occupancy that are third very would strategy intentional. we pushing the season, And instead. especially we

Rich Hill

table ask that I Mike, payables, you NAREIT. another great. maybe for can if don't, had but That's we question, Okay. solar about I I'd which

Michael Schall

About I that. missed what

Rich Hill

about solar Just panels.

Michael Schall

panels. Solar

Okay. hold effort CSR I mean the They

Rich Hill

Yes.

Michael Schall

and I'll comments, just we'll move then make there. a of on quick couple from

over We XX for our actually, been call what have years had group. we now resource own, management

things. pretty we of that values long got good doing history things our and ways were of efficient we've for thought more pursuing create properties, for So good

a all they're but know, of focused new, mandates, about that. especially, our other So to And California and past. been are say, -- our part XXXX. have CSR nothing by would there's been you efforts think on There they here they've remove cars gas we us and I -- keep as as mandate

intersection a mandate cetera, portfolio which of to the but value them, you solar part stations, goes of I these think beyond electronic well add panels, one and ESG is that. there well. that it vehicle many is efforts, between to opportunity et as the mentioned strong of charging

ventures. of announce the about that to So that sponsored it. it's I we're think excited excited We think And were with ESG. new fund our path co consistent RET by about anchoring our and way we

Operator

with Our next Joseph has Citi. come of from the line Nick

Nick Joseph

You talked the and in about demand growth California. Northern rent strong

of those As coming of areas kind the trends they to you survey other Are MSA? areas are seeing are Northern incoming you moving coming California? within from? specific from what Are they residents California other country, of they maybe migration from where

Michael Schall

a number opening And we replaced as workers take into for recessionary tech some that. then period, the younger that that's -- higher-paying expensive Nick, The runs with leading make I way, normal has California it's really, workers up migration opportunities of pattern And Mike, will and But the into and make California moving that retiring a comment. to typically you it's homes out FeraBar California jobs those maybe coming saw think, by are retirees by different of the certainly want are higher Angela normally, to company. a of comment. things. I enter

the company younger largely workers the tech put were up. told stay to until opened So has

starting And now are see so return. them we to

pickup demand there their housing housing. to corporate tech demand in big definitely onboarding training we're that There's In picked house companies corporate as and starting units in addition terms also, see more has for to foreign from activities. a of for some that, are corporate up migration and these

and across of seeing of number So it's normalization different really from We're areas. our board. more the activities, coming they're a

Nick Joseph

there's I then but here? rates. trending higher different. recognize maybe leverage growth, high are Obviously, with experience, on based But your environment asset just And from the thinking and past interest on rent pricing environment transaction is how you every just negative of

basis? that the you've those of the some market inputs, in past, as a what on done lag So transaction seen to has

Adam Berry

is this Adam. Nick,

don't see values we -- lot. we forward, going So a changing don't see transaction whole

think opening in you comments. I mentioned Mike his

now. extra that interest that seen but the to some have and but we're in market markets that's chasing the somewhat second We're the after the deals. than throughout best kind in growth rate seeing final pressures, right moved seeing X seeing seeing X with not the really froth on dramatic and less are a market obviously, last, call for groups that our we've round move X% today. with not it, capital months. the what amount pricing the You we're seeing of over that We're deals are that a of

it pricing like dramatic said, I really moving in seeing forward. -- a So shift we're not

Operator

Our next the Steve questions of Evercore. come line Sakwa with from

Steve Sakwa

things wanted on and of are bad to confused. there Barb, a I just numbers clarify I little I'm try some debt. delinquencies know a and lot

showed X.X heard I April. April. your incorporates guidance F-XX, -- you delinquencies So that X.X%. you in But in X.X% It gross you dropped I -- X% that say the first think then quarter. now And had in delinquencies were

just sort figure delinquency trying kind see? can together front, conservative, burned I'm really rental is maybe if put and on to the there aggressive of better off, and kind net what of you out So we what and of the to which the upside assistance of gross sort upside program, how how are the lead have collections,

Barb Pak

that's a yes, great question. Steve,

basis. that's our X.X% on guidance, and we've I net what scheduled a assumed So delinquency to was alluding rent, in

quarter first the delinquencies. So the X% delinquencies a implies underlying And that a in That's We're in to have year, on over have couple we And would rental the net those. gross on year. the number the the we would X% And other full working high the positive change then of months. in was basis. gross half I that through which terms because do back of assistance. be after for the of emergency last provided still cash seen compare

at For in That of work to we've lot of only example, February, part and that January, of that X.X%, month a that function the in is there, data. we've change we And of seen have we're come do X the believe to in occurred said, still we April. X%. down a law and

place. So remain our especially from here, where guidance Avicion Alameda assume materially that and in LA changes doesn't County that, with protections

gross the the So and year. X.X% rental our of full us for assistance combination net emergency to gets kind delinquencies of

Steve Sakwa

were XXXX the gross before sort X% delinquencies issues, say, like XXXX just X% put gross of you frame if perspective, to the these look in And to help all pre-pandemic are number? in or what the just

Barb Pak

our It remember, would Because delinquencies be historically. were less than points XX basis net X%.

So delinquencies on our less were average. gross And than X%.

So high. definitely the very X% is

Michael Schall

me let Steve, of $XX million. set one numbers. owed that throw And is we're other out

or I accounts think in we as that billion that my believe, script, receivable. was $X I revenue which of booked, of

we of how to impossible a We a predict there. way lot the relief So is when for comes it in. know come out when and most long just have go, from much, collections potential the of us given program, state don't it -- to collections, rental going or to that's

Steve Sakwa

all? your starting inflation coming opportunities, if kind I how there’s fair are prices development any picture? the seen, to Mike, And could side, at also But when in upside. seeing given the there changes you lead Right. it. know guess, rent you’ll okay out way? on of new a growth opportunities do pencil but so just you No, And return improve amount of I to big but how understand big further conservatism sort figure the it’s or not I of to more you’re development hard get we’ve about that are thinking land

Michael Schall

here And a past, a say Yes, doesn’t Seattle that Adam California. Steve. speak in of turn mean, I recent and couple to Northern in the one I’m over second, that one released we press deals, our to to but in I pipeline. will going development in that

it over development. Adam to to So about with that, talk turn I’ll

A –Adam Berry

really per the seeing a are price ore out the we’re Area Steve, has low on gone Those trade generally solving the not deals side. X development in seeing Bay to seen seen spread that we’ve to development huge not our They the we’re definitely a their justify up. increase for that coming cap, in to tertiary We need which deals. markets, new we provide does development increase in And probably deals. that much associated order hasn’t been more that risk have focus as with either. potential

Mike generally, released the press in as mentioned, last a have we – we Bay deal year Area. So

and We have disciplined a deals. kind that working what to through. for But these necessary we’re couple we in selective pipeline spread of the are staying as

A –Michael Schall

X note, One Adam cap. for that’s he’s today, a additional saying what about cap, talks untrended

acquisition yield today an compare against today. yield we a So development

So it’s just not trended a flat.

Operator

with next the Spector from Our questions come Bank of of Jeff America. line

Jeff Spector

on is Mike, that I down. you supply supply your said question, comments. believe will 'XX, first My be for

was I correct changed the on I'm 'XX changed? -- XX. the it and you expectation that think I'm say, curious in you something And has has at months? lower And said maybe if in wrong always please Has last how few point just been I'm the has sorry, months Or XX%. saying me. couple are ago? percent, I -- a confident similarly, been of this let's

Michael Schall

lot in numbers actually, Bay was Area. XX%, Jeff, in didn't made and overall of minus quarter. XXXX reduction change from up minus And that XX% last these a the

bit Seattle. in in a and a little Southern up So California flat pretty

that So I back people on is development. phases here early the in pulled what's think happened of COVID,

see of And we're so impact to the starting that.

later. years of couple Now

cycle. And the I the in for noted deliveries in the QX we'll actually that starts think the peak we've along and there I my will a prepared 'XX. low But then further period in in happens development remarks, be so deliveries, had what QX, that see

next then again, bit moderate for of the toward rest XX%. -- the year, last they the the X of months end the little year, -- next down So and

And So this. we do own analysis fundamental our trajectory. on the

have deals see we stand. and actually look people So they at where

coming But the I data with their out of spot these our not us. at change what's accurate can't are see respect that we're happen. some that that than of numbers so think you to on there, other delays, And cetera, construction some et

Jeff Spector

of the for work San other And It a is and feels on Like that? work? Francisco I to has follow-up, been that interesting. why that? guess work. worry. term? guess, end you Great. about a demand. It's at I of is guess And more come of the where one of that? forcing longer of the Mike, the me positive? companies, the without how return to demand because that a seems bit you're to a people But be to , return really people it markets why let's negative, some the that only I a apartment your strong know just thoughts to work. a it's problem lot Is a the or seen have guess seeing like are comments I'm to most say, would then cities on counter A I return what back that positive catalyst on in I

Michael Schall

all restaurants, Well, the pretty they back leisure, down all shut initial basically shut the first goes all are down. jobs COVID, hotels, much my shut to eliminated. the thought They chapter which city is down service of the the

And going so basically getting if everything You city. generally one and don't lost have another you're high earner, are is you a not is the one just any down of shut people you to who in do? certainty your about what because job wage those

So those people all left.

reengage really didn't demand what in those bring to workers businesses. for is now all see the those much, you're got but order back so And you services to change all in that to starting those

think what's And happening. I that's so

pursue people livelihood, stay not forced they and So cities to this their in were a the choice, was out. had voluntary effectively

recover cities and for good upside. et So again, we et about real to for think hotels, as the for cetera, defund it's for is that but And travel, cetera. the some recover, we due there's the have services, demand concerns entirely -- movements, homelessness. restaurants, police as cities And the given

natural So the we a at now, don't artificial largely view view just as all. it hole, policy deep caused place. choice we're that it recovering and a as We to

Operator

come Our the of Goldfarb Sandler. next Alexander Piper questions with from line

Alexander Goldfarb

burbs of seeing back back, Francisco, Or So coming of are the back see with the city San sort more more Northern X jobs region? the the the extra questions. market demand trying Just Or more people reopening of space? dynamic? in want you you California flood what's the to as are and renters you're the to to the back the Mike, seeing to because to city? come seeing they come where

Michael Schall

more do in maybe add throughout. et don't Angela I is Well, Angeles, mentioned supply that both, basis think anything exactly the a me have has the in because granular virtually I that better the think And cities, Suburbia happening. cases. cities I will of on supply all same concern and the greatest hoses, for kind CBD, what's before, tells done to I like, in the also that there's same example, cities San all in almost but more in Angeles supply sort Los Los cetera, in is of the with the percentage Diego increase

in the there don't delayed maybe markets. the cities. that is the the more cities of and suburban the a demand are little the extent of nearly confluence bit problems and have both the the from supplies really it's generally suburban in So markets

doing So well. they are recovering very faster and

Angela Kleiman

said. Alex, Angela the Santa best performing looking It's top ones. Clara. on just When we're leases, at leases. Mike few the new here. it just a helps, data San net met Those sequential new what are points The Mateo if are and effective X

So suburban Northern of evidence California. the strength of that is the

Alexander Goldfarb

Okay.

I agency their But to credit how guys reports. and turning credit stocking second starts previous aggressive over residents your on delinquencies. to get start The analyst can you the one appreciate tenants Barb, of the questions. soon color And is question the

soon hazard know mean that state a next these sounds rent. all time rents, tougher can I they quicker is a guys Just pay people hand how the like people's where paying that quicker have to hand? is you or if the the take And two, don't then big -- moral

it's there just for sort to is Is seems So a this to to Or the are to the for for ourselves it's any be And of X-parter. seems One, when background? that? another up we credit this. up two, against guess can repeat you pay going just if setting state agencies? up report setting like it of all guard it I set another that?

Angela Kleiman

Angela the It's Maybe here. about more want I first it's and start like hazard. behavior I'll with favorite talk topic. a tenant's me, Alex, to

In for on protection there have we push that are of how we aggressively factors. in front, of county. that LA Alameda can terms One still a place is couple and eviction

As need protection XXXX. forward, to work that And before delinquency goes protection in collect to the so out, remain right? our keep any will delinquency mind September the and to as period legislative the for that going ability -- itself -- that's during that issues, that far occurred

about talking April delinquency. really we're So

on delinquency, take action of we So L.A., the April in outside can Alameda. new of course,

And involves putting going of manage process our period and on a this with whole so payment how through to it's evaluation people tenants time. of plans, win that through

-- about this ability credit point, at everywhere, most really we the agency able the to And so collections want to sense to it's the to how be report will it go have do, to effort. we maximize our that make

Alexander Goldfarb

to want you did add? Mike, Okay.

Michael Schall

effectively June relief again to you where County. the an have It's the not which in application back statewide, other Alameda if which And state Maybe is law hear XX. outstanding, is a says delinquency. will through then eviction case part, rental County the LA and courts

where then pretty think, the so a things this I to why And do appear have are of programs the idea end, is, time. point to and we do we at close good ordinarily reasons all we'll stand. their of soon be good we news there in But getting still can't would that these

Operator

KeyBanc. of questions Wurschmidt the next with line Our from come Austin

Austin Wurschmidt

or which heard Barb, balance increase revenue I parts, X the of to projections occupancy year. seemed correctly, market guidance really to was the for you same-store change your include any neither the of through rents if

across rent was rent relative think you -- year? this growth I year-to-date assumed X.X% market it -- portfolio for was where the projection market to the I So where is curious

Barb Pak

I'll I'll take part. take the first Angela and the part, and then Mike let second

of to the due raise, points and terms another effective and net XX we in of in delinquency, balance terms rent. So the in are higher same-store guidance then rubs. to of where points basis was XX then market of raise due to concessions higher terms due so lower the rents basis And was was

Angela Kleiman

Angela cover that. here. to Yes, I'm happy It's

be in Northern in we anticipated much and line we California recovery Northern quite brands, that Seattle. had market California strong. keep would the pretty On And tracking in are mind,

with And so our that expectation. is consistent

Southern California we in first when have half update. so and at -- looking and keep said we'll mind spreads, we provide at of we're in spreads. is negative our -- middle the still leasing year midst leasing strongest of are modeling and spreads, the the The midyear because the year-over-year leasing a in in tracking that it assumptions, will ahead. that, we outperforming relooking the this time, be around had will last it Having is --

weren’t fact, spreads quarter, negative turn until didn't In second through July. leasing continued that the we

the And so for with magnitude year-over-year what we evaluate comparable, those means. that reasons, need to the of

Michael Schall

looking rent And 'XX at is we're is -- maybe piece, we do it be that forecast F we'll net-net we'll and the and biannually, on don't every our ahead. our that for And looking be and next X so do at quarter. final forecast, quarter, economic generally that we

Austin Wurschmidt

basis driven of quarter performance. XX the items clarify, mainly just but And by to on there, remarks was say the I All Yes. prepared heard Barb, mentioned first couple I helpful. a points, in you that thought you very

not necessarily correct? growth your it's year, back be the will was decelerating assumed so what projection. in but that half even that the -- higher And that than assumed the original of you've Is that though in

Barb Pak

first and collection. I said results delinquency then by, better driven was quarter it net yes, strong

on for are bulk points I delinquency. like guidance higher Those XX same-store -- and factored basis we in points year and improvement the rates. we full guidance concessions So of our basis then net effective the in said, rents XX

Austin Wurschmidt

it. Got

you've Okay. sort set the to and have how Coast supply historically these up of But demand West for obviously, an That's on concerns ratio helpful. upturn. And we're in points horizon. today lot outperformed recovery and the on the recession markets amidst crosscurrents of a data provided a on then, the about Mike, and some

on So impacts trajectory how of the just the view that West your the about Coast. curious recovery

Michael Schall

conditions we I'll and already fearful I where stand. Well, noted, -- good will citing Barb but start the about of by we that comment we feel

just the like mass been of during pandemic of we in are better mandates So now state. the the that, shut that and all recovering them removed, again, it have were a we're things most down feels

we’re stand where a feel we're late up to we of that's about to process, obviously at it that dance have but good lot we and continue expect feels that end do. most of well. think and like catching of front to I the we And And to the perform -- it.

Operator

with Capital come from questions Markets. next Our John of Kim the BMO line

John Kim

new for ask to growth wanted at your may renewals rates what's for lease Just sitting an ability renewal achieve XX%? that update where June? on rate of you're approach May and to the And

Barb Pak

asking renewals you're on the clarify. just right? the I about want we're out the to setting that second -- So quarter, for

John Kim

Correct.

Barb Pak

I Okay. yes. assume,

Okay.

slightly So renewals, we're huge about actually on And at distribution XX%. is variance. company-wide, the a not the above -- setting

XX.X%, XX% about SoCal at Seattle close California, close and and to Northern XX%. to

averages. are those the So

of given are we're the we seeing confident are quite these and demand, where achievable terms confidence rates. our activities that In level, the

John Kim

So to know, that for of same that quarter, Angela, are of second lease there time, year? the mentioned the you're that in approaching. second guidance your half same-store But the you up went continues tougher X.X%. in revenue implied comps if the the I what's X.X% loss at

the forecast -- You third expect do you happen have to market X.X%. the fourth quarter? you in What do what rent and of

Barb Pak

Right. No, that's a question. good

there's grants. So first to that perspective X.X%. is was a same-store and that because gradually revenues do right, expect -- revenue from quarter, between lag a We economic our essentially effect, increase

So but rents increase. falling, off, is taper as revenues continued market it's to the

that catch-up So there's effect.

John Kim

And so half for of what's the the your currently implied back in year? guidance

Barb Pak

rent though outlook market asking our year growth, after. don't changed haven't for. It's lease front me. consistent I'm up front or I of full don't -- in terms of you're of what effective follow in that growth in we on understand rent with to I of trying growth. that terms 'XX you have I F have to In have

assumption a right We're there So been that. to hasn't as revisiting change of now. that

Michael Schall

John, -- in mean necessarily keep get. we're we're get we what 'XX, sooner, we're it to going get that to to maybe addition, if F got what doesn't John as get sooner. going we to it relates we thought And And going in that it mind

just it could there -- So be happened faster than we thought.

that That's makes wait start that sense. sure of mind. in so before kind it full And a that want to we why of apart, if we kicking we review F-XX make keep for

John Kim

It does.

Operator

of the come questions Yulico next Our Nick from Scotiabank. with line

Nick Yulico

the to number the see that I And I The number. to which in million, in the an still terms already update back cumulative think, but didn't Is this, $XX was, Did delinquency is number? change? million. number. that reimbursement I received that go I wanted haven't $XX back the you've that know and on of March just previously, applied for

Barb Pak

Barb. it's Nick,

million more -- which to which one is last relates of that behalf how that of our to So collect And resident former able the of is the has resident $XX the of current number initiated relates landlord that engage, residents. residents be and is latter half half uncertain week we'll on obviously to that. as applications to past the group

Nick Yulico

Okay. Helpful. money? think should any into about then, And that million. $XX full collecting that factored of then how guidance year in guidance we terms Is of the that

Barb Pak

Yes. What's first applications. resident the resident, implied effectively group, is current the the

We get have of the high confidence majority that. vast we'll

think will year. in that, programs of come terms the this applying in ended that Given we applications, new now for

Nick Yulico

Okay.

it… of half about So

Barb Pak

our all won't portfolio, same be total that's It properties. joint Yes. because though for venture including store,

of so a that same-store. will And be portion

Nick Yulico

the think I we number then share. But over of per is of because And about. Okay. should know FFO $X like it about half

of So flow full is in year on maybe and we maybe year think that half could still depending about the next guidance or pace? half should in year this that

Barb Pak

Right.

the on recoup we're half is ways that timing alternative seeking and other is that. but to The very uncertain, uncertain money,

Operator

line Markets. question Capital from Heffern the Brad coming Next RBC of is with

BradHeffern

Yes.

to opportunities mentioned headwinds some overall paid be in that does that abating? macro expected overall lately we've of that's you in reinvestment X Or now 'XX the XXXX? that redemptions prepared XXXX environment better and So off versus the headwind a are to moving seen that to are co-investments previously. lead just fewer comments, the the Is and

Barb Pak

is Barb. Brad, this

were rate the that X and these mind, properties before investments get service fully anymore. environment environment, And the today in a up. were to coverage of takeout XXXX function lease are interest in it's be were pushed, interest the given see going developers environment to and where happening we the in higher debt they interest So financing that don't able ratios, rate low leased really Keep rate up. given

what that's on behind so caused function be in really occurred schedule environment And of that's It's the or pushed. that. a an change Nothing from properties rate to interest just aren't like a the those perspective. anything --

Brad Heffern

just additional more was things are few of seeing And than imagine I Okay. is reinvestment given difficult the now any ago? opportunities, you side a it financing months

Michael Schall

lot think Again, that will equity turned and downward, COVID have come I construction demand those I more. create deals starts see will we of more food program. lag will when a that back the -- we we see that this suspect after Brad, and we for

that in the think So will itself I as process of that's rightsizing right -- well.

Operator

from line next Our Anderson come of questions SMBC. the Rich with

RichAnderson

a you conversation? remember, long talked time I don't mood ago, I remember Mike, ring. if know you that to about Do a you

Michael Schall

as do, I a matter fact. of

Rich Anderson

ask -- a bit Area a want your in for in about mood to different or I little little Francisco Bay format. San near-term ring

store rent half wise, -- to the the quarters thinking California point. laggard in where the regions. growth this market you of am ad Northern know is revenue other leader. California gone through thinking shouldn't nauseam just Should We've the this But regions? same-store you're now, become extrapolate I in it, growth what was Northern in your X sort reported in growth. you're right of flip really going portfolio, S-XX, the to quarter, in the also back of of rent rent into revenue we XXXX leader California coming of that it's Given about Northern update leader the the that to but Or terms I the in market composition terms wrong? relative should

Michael Schall

thing. comments. But Well, Angela mood will your ring to some maybe have

what -- a have of different colors actually ring is that mind of know I Rich. have I in I my you, So and mood because because you

we the energized, for that have color I cetera. good, be I And et forget. mean, think to right Red feel would I never So us. --

Rich Anderson

Red the color. is wrong No

think black -- blue, would You

Michael Schall

and thing, ring mood red. my is to Parting excited and red adventurous energize are

ring So have all guess. the I you mood that app, -- feel I wrong

So -- feeling long market. but think term California no, our things. we we're And about good #X -- I Northern is

America. #X market I the think it's in

move in there. tethered still on And income this level world important we it's seeing that rents case. the well the behind in income always we're rent And In at it's fallen long-term curve -- because this really levels, recovery are together. some they growth, terms happening side, some of CAGRs to

especially group makes us think just Southern are was our don't rents grow in our forever better feel told about unless number California. is you income could that by which incomes good. like I that I and -- the pretty And is charging, up we're It something So that our XX%, rapidly. here darn are very X growing move-ins the

it up the So California things as look good. guess. long -- will our become it term, and I is what to here, it #X would market for again, expect I pick has Northern once really

Angela Kleiman

for the Angela rent Rich, half, do which for Thanks is then And outperform Northern Southern it's rent We making see me, second my California California point here. that that do growth. growth flip. we in see will

Rich Anderson

located, would Francisco. are hybrid a days buildings because also not reemployment tech. outside Okay. you And true or that in rather and restaurants Is a of talk me San model better all where it X then we -- than with only back question guys the hotels of is be primarily second that, but office office lot a for week services you about coming and for reuse

that dig into kind work more there of really of right detail office put day. too of not So to office return in every that up would commute they to any able X-day week going think relatively Is don't variety beyond or it? of and have a the for of you're people with model the type a reasons you is go because be for single a just the good area, but maybe because of X- way to be longer kind to your for much a portfolio into speaking might that? to Or

Michael Schall

the about Yes. No, think it thinking you're right way. I

are most a that, I to hybrid And company, workforce. office. no kind I and requires think think them of actually because model that hybrid including pursuing different tethering a the tech obviously. an workers we're that as actually some of from the some of And Essex everyone,

planned And office that probably is talked downtowns, little less that desirable. have we've think all makes adds the is, I of which so the this what about the And drawn it buildings, and effect have say, it a our pattern let's -- ring, portfolio miles out job another because another line where to a those job we before, around nodes. commute the our from is and nodes XX key would

is -- a that true example will And the now been San farther well. Seattle expand buying be a but some areas and good job County, Northern in nodes. of from will And bit. So that that as are major Diego we've we the of California

therefore, and it push think the expands space does it I geography So commutable out our accordingly.

Operator

next line Green Our the of questions come Street. from with Pawlowski John

John Pawlowski

Can else returns, either of you compare are estate question, you real The $XXX the back expected are and alternatives, number. jump And on. or somebody how do let I'll stock? actually then buy million what revenue-enhancing you is kind big a spend remind one versus just just CapEx buying this IRRs drivers? spending on? What us year, money And

Angela Kleiman

spend talk CapEx spend. and the far and also CapEx I'll as Sure. the program as forward about redevelopment just the first --

support redevelopment On program. side, to we're to consistent and demand this yield, with the X% cash and because in rent we on seeing primarily market the our is pre-COVID XX% targeting And cash this levels. it's growth are the

is the X you catch-up. really the cost by is, be to other material to but CapEx it what the door, comes driven referring Now that the to elevated level may factors. referring One course, a itself, you're per that's it's when think increase, I X of

And perspective, to careful from achieve around CapEx X,XXX dropped per normal line. that, we, what much in of were leaner down to a we trying to our so And of COVID being both contact CapEx $X,XXX. the terms and on and can during very because minimize door top sensitive ran just also almost of course, somewhere the of below period,

a And to normally. so that catch-up that -- happen needs just there's

Barb Pak

Bob. this And is John, then,

cash obviously, mid-Xs are stock. capital, terms redevelopment buying an today the In back of returns in to of buying put where XX% X% obviously best to the asset to even our relative of use or proceeds the

lot an of So work. work. put put only it's you've you and money can dollars you're hard a occupied just to building got to to Remember, so many

but the of discussed there, source a much alternative best is in past. on work how can outside we preferred to already capital we've which So we capital of that put there's the constraint think equity,

Operator

line Our Malkin of next with come questions Securities. the from Neil One Capital

Neil Malkin

Now it's quick. gone be over I'll a narrow, so little

change the First the funds. fund, RET one one, the the on climate

biggest you board the are that when in the trying that by curious you're investment achieve India about Just and talking you guys how you given about internally or with China of far world? in carbon what are polluters guess either and emitters guys I committees, to

Michael Schall

some those that be And to see own good fund earlier, I existing we couple in SEC comment, see I a comments so in China make good solve as that, their as of good I the investments makes or is say their a would made opportunities lowering are a And think get a our and, we return cetera, can all ESG. it, being about It's fact, saw not One have electricity, mean, water fund makes requirements. make us. any cost and better, produce was et of -- we it had we of trash of by number I super investment as better. going out it thinking main we for of issues But of part of them sense. -- important mentioned by a we et of that removal, them in initially, sense. to I'm longer-term on portfolio bills, our about thdn India. and again, payback issues Ventures had RET invest And know and if cetera, And issues And we

new of our are was coming helps organize us the the RET So fund. one measurable SEC a down And ready getting it called road. that for investments the company requirements before and this data

reasons a this, it's money, are just investment. your opportunity there So return lot a should of and on And when see getting doing not it's be a out of we there. investing lot important we actually

Neil Malkin

assets, acquisition on your and Maybe Last pretty quick, you sell maybe price typical much stock know just think talk price this some real or commentary in on just stock up, obviously, high. for of is West costs? pipeline anyone I your the is price the JV the up around of I shake all-time potentially maybe the at? I in recently, market, And of stuff, the about out Any some debt Adam, touched maybe Coast. the equity Appreciate stock -- cetera. on year the Has suburban things to issue in maybe right X going picked that looking think or potentially acquisition stuff. you're kind locations, before, higher that, down, the it how buy rest face Mike. you side, really, but that around et model is

Adam Berry

Adam. is this Neil, Sure.

come to going in to what's hard to later year, the say. it's As

Over generally market in market a early a on pretty bit volume significant transaction pretty and was is of decline on quarter-over-quarter. volume the the There low. QX, end overall There's the the today. QX quite

where final we see and growth constantly to before, and didn't we more X noted forward. assessing over always We're happening X months, I that As last the frenzy those on really going was the market in partake in best what's the best rounds.

we're so be those not And to at looking deals. going Xs. low in We're the

on then we if and windows. there's if any in an see closed few this up, a so see quarter, jump early or we opportunity and adjustment of sort comes early did of into And we that that those those will QX we

Neil Malkin

Okay.

So have tougher that in capital. overall was do a it you're to types just you cap your a past Is years be price rates did the acquisitive. harder maybe it's maybe when seems bit heavily that's little stock fair? It kind like like going just little hurdle seems of and now to and up, things of given cost of

Michael Schall

climbed that something fair. company, we mean and the stock cap to that I that's issuing rates take shouldn't talking Yes, really Adam do. if was the the find it company, you you've will you you compare about is to

that of obviously, it cap comes i.e., And leverage, so try over to debt making. cost a positive was helps deal we to done not And to have rates a -- platform co-investment fund the and it most lot use deals. when our having

we're no longer in world. so that And

deal the impediment caused again. once by And a side leverage of negative so there's an on bit

Operator

line Goldman Sachs. of questions Our with come Newton Chandni next Luthra the from

Chandni Luthra

If rolled to you perhaps you connections portfolio platform out know some And give by insight be across model, of the digital you lined it then improvement next I think have have I the XXXX. into could end year. up the the fully more operating

standpoint? together how benefits? a think in cost there And do you of to then all of that is culminating way a So quantify timing from margin or sort

Angela Kleiman

It's Angela here.

I look about property collections success think you're model. we how the we of evaluate asking how at our or operating

Chandni Luthra

Xfrom does the I a that ratio very you But From given of sort could translate about standpoint, line? the you as helpful. down which to benefit Exactly. you've data XX, models? of how XX think What that number is P&L into running know our

Angela Kleiman

Sure, sure.

we ways. in key about the X So think benefit

is we the First the the talked one key third And at in customer our for improved means that I interactions. can look of that we that And impact, is now terms XX:X that second the retention to is employ. that's And about the units XX:X by that and ultimately, operating financial efficiency, what and rate. to ratio metric.

that and to when of basis Diego through to I and XXX X/X our implemented to we savings of then. refer about when were back that have to million implementation so we realized $XX only margin the points translated And improvement, NOI, San XXX about Orange benefit when we County, way

is expect of additional keep expectation cost and embedded savings. several have this here points going But things, also improvement. today. a that the is rollout that's inflationary would or we upon out, -- we such XXX trick in dollar it's not the once $XX the all extreme not challenge digital we complete for an to dollar million talked trying of when under now The figure rollout pressure because XXX platform out, we about in mind, So were completion, when years is is a forward, basis -- -- we the margin to I the

so controllable And us to manage there our offsets, will expenses. go be towards will which helping

Operator

come from Goldfarb Alexander line with Sandler. the Our Piper next of questions

Alexander Goldfarb

delinquencies. on the to wanted Just back follow

the the you that that You said for understand residents making that? half you all those by of the the think former The is something. I or making $XX payments that, the want it's is state just initiate, have correct that half existing residents -- state of whole it the to on million, residents the mentioned did may that paid -- former understanding? is of rent sounds I Or only do sounds get by paid I that state. own. million like to the residents back. to that Is $XX their It the have Otherwise, not get it like misunderstand?

Barb Pak

it's Alex, Barb.

cumulative million that as Mike delinquency $XX is for is total million. that of today, we've the alluded to So $XX the applied

So there. is a is delta then half residents. existing of million which past in of and it's And there then up the our residents, $XX made X applications, components:

past the Now on they Those our process we've money. residents. don't have to If those applied residents behalf get for the engage us of application in past doesn't engage then to engage saying the little terms a bit that's And I'm the we'll forward. collect in of whether that and it's assistance. whether portion why will uncertain emergency past move resident of rental

Alexander Goldfarb

And what's the incentive for them to engage?

Michael Schall

a COVID-related to is hardship. in -- Keep we tenant program, And Alex, rent this -- landlord have program. They it's get a landlord paid. they have a mind, the their not can't

So basically. they hardship the have to to as certify

by we so ourselves. it And can't do

really So if off paying going owe their don't -- process money application. and their but the they us they're it's some to incentive reimbursement ends,

Angela Kleiman

through that Alex, report impact Angela means the for and there actually other them, small it's are court. to to their includes There residents. to Yes. are means. past we on can reported which go other connect here. is credit And we can, us with But we try our have claims also,

it benefit the with so this get to is actually to and their assistance from state. engage And us

Operator

I further time. management closing you. would comments. for Thank turn at to the now There back over call this to no questions are any like

Michael Schall

And for you. our call Thank today. joining Okay. everyone, thanks,

Have we will you. Thank hopefully, of great NAREIT, forward many looking are to We and you day. a see there.

Operator

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

at of You day. this Enjoy time. lines may disconnect your the your rest