Essex Property Trust (ESS) reported $469.83 million in revenue for the quarter ended June 2025, representing a year-over-year increase of 6.2%. EPS of $4.03 for the same period compares to $1.45 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $469.19 million, representing a surprise of +0.14%. The company delivered an EPS surprise of +1%, with the consensus EPS estimate being $3.99. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings ...

Company Performance - Essex Property Trust (ESS) reported quarterly funds from operations (FFO) of $4.03 per share, exceeding the Zacks Consensus Estimate of $3.99 per share, and up from $3.94 per share a year ago, representing an FFO surprise of +1.00% [1] - The company posted revenues of $469.83 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.14%, compared to year-ago revenues of $442.36 million [2] - Over the last four quarters, Essex Property Trust has consistently surpassed consensus FFO estimates [2] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future FFO expectations [3] - The current consensus FFO estimate for the coming quarter is $3.98 on revenues of $474.24 million, and for the current fiscal year, it is $15.94 on revenues of $1.88 billion [7] - The estimate revisions trend for Essex Property Trust was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The REIT and Equity Trust - Residential industry is currently in the top 33% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in estimate revisions, which can be tracked by investors [5]

[Earnings Press Release](index=3&type=section&id=Earnings%20Press%20Release) [Second Quarter 2025 Results and Full-Year Guidance Update](index=3&type=section&id=Second%20Quarter%202025%20Results%20and%20Full-Year%20Guidance%20Update) Essex Property Trust announced strong second quarter 2025 results, with a significant increase in Net Income per share to $3.44, driven by a gain on the sale of real estate, leading to a raised full-year 2025 guidance for Core FFO, same-property revenues, and Net Operating Income (NOI) Q2 & H1 2025 Financial Performance (Per Diluted Share) | | Three Months Ended | % Change | Six Months Ended | % Change | | :--- | :--- | :--- | :--- | :--- | | | **June 30, 2025** | **YoY** | **June 30, 2025** | **YoY** | | **Net Income** | $3.44 | 137.2% | $6.59 | 15.8% | | **Total FFO** | $4.03 | 3.6% | $8.00 | -5.8% | | **Core FFO** | $4.03 | 2.3% | $8.00 | 3.0% | Revised Full-Year 2025 Guidance | Guidance Metric | Revised Range | Revised Midpoint | Change at Midpoint | | :--- | :--- | :--- | :--- | | **Net Income per diluted share** | $10.05 - $10.29 | $10.17 | +$0.73 | | **Core FFO per diluted share** | $15.80 - $16.02 | $15.91 | +$0.10 | | **Same-Property Revenues** | 2.90% to 3.40% | 3.15% | +0.15% | | **Same-Property Operating Expenses** | 3.00% to 3.50% | 3.25% | (0.50%) | | **Same-Property NOI** | 2.70% to 3.50% | 3.10% | +0.40% | - Core FFO per diluted share exceeded the midpoint of the Company's guidance by **$0.07**, primarily due to higher same-property revenue growth and favorable property taxes in Washington[11](index=11&type=chunk) - The company acquired two apartment communities in Northern California for **$240.5 million** and disposed of one in Southern California for **$239.6 million**[11](index=11&type=chunk) [Same-Property Operations](index=4&type=section&id=Same-Property%20Operations) For Q2 2025, the same-property portfolio demonstrated solid growth, with revenues increasing by 3.2% and Net Operating Income (NOI) by 3.3% year-over-year, led by Northern California's 3.4% revenue growth and a significant sequential NOI increase in Seattle Metro Same-Property Revenue Growth by Region (Q2 2025) | Region | YoY (vs. Q2 2024) | YTD (vs. YTD 2024) | QoQ (vs. Q1 2025) | | :--- | :--- | :--- | :--- | | **Southern California** | 3.1% | 3.5% | 0.5% | | **Northern California** | 3.4% | 3.5% | 1.2% | | **Seattle Metro** | 2.8% | 2.5% | 1.5% | | **Same-Property Portfolio** | **3.2%** | **3.3%** | **1.0%** | Same-Property NOI Growth by Region (Q2 2025) | Region | YoY (vs. Q2 2024) | YTD (vs. YTD 2024) | QoQ (vs. Q1 2025) | | :--- | :--- | :--- | :--- | | **Southern California** | 2.1% | 2.9% | 0.5% | | **Northern California** | 2.5% | 3.4% | 2.0% | | **Seattle Metro** | 7.8% | 3.9% | 8.5% | | **Same-Property Portfolio** | **3.3%** | **3.3%** | **2.5%** | - The **3.2%** YoY revenue growth was primarily driven by a **2.3%** increase in scheduled rents and a **0.5%** positive impact from lower delinquency[13](index=13&type=chunk) - Overall portfolio financial occupancy was **96.2%** at the end of Q2 2025, unchanged from Q2 2024[16](index=16&type=chunk) [Investment Activity](index=5&type=section&id=Investment%20Activity) The company engaged in strategic capital recycling during the quarter, acquiring two communities in Santa Clara County for $240.5 million and selling a property in Santa Ana for $239.6 million, which generated a gain of $126.2 million, followed by a post-quarter sale in Oakland and a new joint venture formation - **Acquisitions:** Acquired two apartment communities (420 homes) in Santa Clara County for a total of **$240.5 million** in May[18](index=18&type=chunk) - **Dispositions:** Sold a 350-unit community in Santa Ana, CA for **$239.6 million** in April, recording a **$126.2 million** gain. Subsequent to quarter end, sold a 243-unit community in Oakland, CA for **$97.5 million**[19](index=19&type=chunk)[20](index=20&type=chunk) - **Other Investments:** Formed a new joint venture, Wesco VII, with a **$50.0 million** commitment from each partner. The venture originated a **$42.6 million** preferred equity investment with an initial preferred return of **13.5%**[21](index=21&type=chunk) [Balance Sheet and Liquidity](index=6&type=section&id=Balance%20Sheet%20and%20Liquidity) Essex significantly enhanced its financial flexibility and liquidity by securing a new $300.0 million term loan, establishing a $750.0 million commercial paper program, and upsizing its unsecured credit facility to $1.5 billion, resulting in approximately $1.5 billion in total liquidity as of late July 2025 - Obtained a new **$300.0 million** unsecured term loan maturing in May 2028, with **$150.0 million** drawn as of June 30, 2025[23](index=23&type=chunk) - Established a **$750.0 million** commercial paper program, with **$365.0 million** outstanding as of June 30, 2025[24](index=24&type=chunk) - Subsequent to quarter end, increased its unsecured credit facility from **$1.2 billion** to **$1.5 billion** and extended the maturity to January 2030[25](index=25&type=chunk) - As of July 25, 2025, the Company had approximately **$1.5 billion** in liquidity from its credit facilities, cash, and marketable securities[27](index=27&type=chunk) [Guidance](index=7&type=section&id=Guidance) The company has raised its full-year 2025 guidance following a strong second quarter performance that exceeded expectations, with the revised midpoint for Core FFO per diluted share now at $15.91, an increase of $0.10, and third quarter Core FFO projected between $3.89 to $3.99 per diluted share Full-Year 2025 Guidance Revision | Per Diluted Share | Previous Midpoint | Revised Midpoint | Change | | :--- | :--- | :--- | :--- | | **Net Income** | $9.44 | $10.17 | +$0.73 | | **Total FFO** | $15.81 | $15.89 | +$0.08 | | **Core FFO** | $15.81 | $15.91 | +$0.10 | | **Same-Property Revenues** | 3.00% | 3.15% | +0.15% | | **Same-Property NOI** | 2.70% | 3.10% | +0.40% | - The company provided third quarter 2025 Core FFO guidance with a range of **$3.89 - $3.99** per diluted share and a midpoint of **$3.94**[33](index=33&type=chunk) Q3 2025 Core FFO Guidance Midpoint Reconciliation | | Per Diluted Share | | :--- | :--- | | **Core FFO per diluted share for Q2 2025 reported** | **$4.03** | | Consolidated Revenues | $0.05 | | Consolidated Operating Expenses | ($0.11) | | Structured Finance Investments | ($0.02) | | G&A and Other | ($0.01) | | **Guidance midpoint of Core FFO per diluted share for Q3 2025** | **$3.94** | [FFO Reconciliation](index=8&type=section&id=FFO%20Reconciliation) This section provides a detailed reconciliation from Net Income to Funds from Operations (FFO) and Core FFO, showing that for Q2 2025, Net Income of $221.4 million was adjusted for items like depreciation ($151.5 million) and gains on sale (-$126.2 million) to arrive at FFO of $268.8 million, with further minor adjustments resulting in a Core FFO of $268.6 million FFO and Core FFO Reconciliation (Q2 2025 vs Q2 2024) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net income available to common stockholders** | $221,362 | $92,914 | | Depreciation and amortization | $151,501 | $145,613 | | Gains not included in FFO | ($126,174) | - | | Other adjustments | $22,175 | $20,260 | | **FFO attributable to common stockholders** | **$268,838** | **$258,787** | | Non-core adjustments | ($284) | $3,178 | | **Core FFO attributable to common stockholders** | **$268,554** | **$261,965** | FFO and Core FFO Per Share (Diluted) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **FFO per share** | $4.03 | $3.89 | | **Core FFO per share** | $4.03 | $3.94 | [NOI Reconciliation](index=10&type=section&id=NOI%20Reconciliation) This section reconciles Earnings from Operations to Net Operating Income (NOI) and Same-Property NOI, showing that for Q2 2025, Earnings from Operations of $279.7 million was adjusted for corporate expenses, depreciation, and gains on sale to arrive at a total NOI of $332.2 million, with Same-Property NOI for the quarter at $290.9 million NOI Reconciliation (Q2 2025 vs Q2 2024) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Earnings from operations** | $279,700 | $137,450 | | Adjustments (Depreciation, G&A, etc.) | $52,481 | $175,798 | | **NOI** | **$332,181** | **$313,248** | | Less: Non-same property NOI | ($41,325) | ($31,667) | | **Same-Property NOI** | **$290,856** | **$281,581** | [Supplemental Data](index=12&type=section&id=Supplemental%20Data) [Consolidated Operating Results](index=12&type=section&id=Consolidated%20Operating%20Results) The consolidated operating results show a year-over-year increase in total revenues to $469.8 million for Q2 2025 from $442.4 million in Q2 2024, with net income available to common stockholders rising substantially to $221.4 million, largely due to a $126.2 million gain on the sale of real estate Consolidated Operating Results Highlights (in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Total Revenues** | $469,833 | $442,355 | | **Earnings from operations** | $279,700 | $137,450 | | **Net income available to common stockholders** | $221,362 | $92,914 | - Property operating expenses increased to **$135.4 million** in Q2 2025 from **$126.5 million** in Q2 2024, with notable increases in real estate taxes, personnel costs, and utilities[59](index=59&type=chunk) [Consolidated Funds from Operations](index=14&type=section&id=Consolidated%20Funds%20from%20Operations) This schedule details the calculation of FFO and Core FFO, showing that for Q2 2025, FFO per diluted share increased by 3.6% to $4.03, while Core FFO per diluted share grew by 2.3% to $4.03, and for the six months ended June 30, 2025, Core FFO per share increased by 3.0% to $8.00 FFO and Core FFO Per Share Performance | Per Share - Diluted | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **FFO** | $4.03 | $3.89 | 3.6% | | **Core FFO** | $4.03 | $3.94 | 2.3% | | | **YTD 2025** | **YTD 2024** | **% Change** | | **FFO** | $8.00 | $8.49 | -5.8% | | **Core FFO** | $8.00 | $7.77 | 3.0% | [Consolidated Balance Sheets](index=15&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet as of June 30, 2025, shows total assets of $13.18 billion, a slight increase from $12.93 billion at year-end 2024, with total liabilities increasing to $7.34 billion from $7.18 billion, primarily due to an increase in lines of credit and commercial paper outstanding Balance Sheet Summary (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $13,181,490 | $12,927,359 | | **Total Liabilities** | $7,342,654 | $7,176,120 | | **Total Equity** | $5,805,914 | $5,720,390 | [Debt Summary](index=16&type=section&id=Debt%20Summary) As of June 30, 2025, the company's total debt stood at $6.76 billion with a weighted average interest rate of 3.7% and a weighted average maturity of 6.6 years, primarily composed of unsecured bonds and term loans with a maturity profile extending beyond 2035 Total Debt Profile as of June 30, 2025 | Metric | Value | | :--- | :--- | | **Total Debt, net** | $6,759,454 thousand | | **Weighted Average Interest Rate** | 3.7% | | **Weighted Average Maturity** | 6.6 years | - The company's debt is primarily unsecured (**$5.52 billion**) compared to secured mortgage notes (**$0.87 billion**)[67](index=67&type=chunk) [Capitalization and Credit Ratios](index=17&type=section&id=Capitalization%20and%20Credit%20Ratios) As of June 30, 2025, Essex's total market capitalization was $25.66 billion, with a debt-to-total market capitalization ratio of 26.3%, maintaining investment-grade credit ratings of Baa1 from Moody's and BBB+ from Standard & Poor's, and remaining in compliance with all public bond covenants - Total market capitalization was **$25.66 billion**, with a debt-to-market cap ratio of **26.3%**[69](index=69&type=chunk) - Credit ratings are stable at **Baa1** (Moody's) and **BBB+** (Standard & Poor's)[69](index=69&type=chunk) Key Credit Metrics | Metric | Actual | Requirement | | :--- | :--- | :--- | | **Debt to Total Assets** | 35% | < 65% | | **Secured Debt to Total Assets** | 4% | < 40% | | **Interest Coverage** | 524% | > 150% | | **Net Indebtedness / Adjusted EBITDAre** | 5.5x | N/A | [Portfolio Summary](index=18&type=section&id=Portfolio%20Summary) As of June 30, 2025, the company's portfolio consisted of interests in 63,385 apartment homes across Southern California, Northern California, and the Seattle Metro area, with Southern and Northern California contributing 40.8% and 41.1% of total NOI, respectively, and an average monthly rental rate of $2,707 Portfolio Breakdown by Region (at Company's pro rata share) | Region | Total Apartment Homes | Average Monthly Rent | % of Total NOI | | :--- | :--- | :--- | :--- | | **Southern California** | 25,889 | $2,670 | 40.8% | | **Northern California** | 24,627 | $2,987 | 41.1% | | **Seattle Metro** | 12,869 | $2,251 | 18.1% | | **Total** | **63,385** | **$2,707** | **100.0%** | [Operating Income by Quarter](index=19&type=section&id=Operating%20Income%20by%20Quarter) This schedule shows a consistent trend of rising same-property revenues and NOI over the past five quarters, with same-property NOI increasing from $281.6 million in Q2 2024 to $290.9 million in Q2 2025, and blended net effective rate growth for leases at 3.0% in Q2 2025 Quarterly Same-Property NOI (in thousands) | Quarter | Same-Property NOI | | :--- | :--- | | Q2 2024 | $281,581 | | Q3 2024 | $279,921 | | Q4 2024 | $281,075 | | Q1 2025 | $283,663 | | Q2 2025 | $290,856 | Same-Property Net Effective Rate Growth (Q2 2025) | Lease Type | Rate Growth | | :--- | :--- | | **New Lease** | 0.7% | | **Renewal** | 4.2% | | **Blended** | 3.0% | [Same-Property Results by County](index=20&type=section&id=Same-Property%20Results%20by%20County) This section provides a granular breakdown of same-property revenue growth by county, with San Francisco showing the highest year-over-year revenue growth at 6.5% in Q2 2025, and San Mateo (4.7%) and San Francisco (6.6%) being the top performers year-to-date Top 3 Same-Property Revenue Growth by County (Q2 2025 vs Q2 2024) | County | Revenue Growth | | :--- | :--- | | San Francisco | 6.5% | | San Mateo County | 4.2% | | Orange County | 3.5% | Top 3 Same-Property Revenue Growth by County (YTD 2025 vs YTD 2024) | County | Revenue Growth | | :--- | :--- | | San Francisco | 6.6% | | San Mateo County | 4.7% | | Ventura County | 4.2% | [Same-Property Operating Expenses](index=22&type=section&id=Same-Property%20Operating%20Expenses) Total same-property operating expenses increased by 2.9% year-over-year in Q2 2025, driven primarily by a 13.7% rise in maintenance and repairs and a 9.9% increase in utilities, while real estate taxes decreased by 3.7% for the quarter, with year-to-date total expenses up 3.3% Same-Property Operating Expense Growth (Q2 2025 vs Q2 2024) | Expense Category | % Change YoY | | :--- | :--- | | Maintenance and repairs | 13.7% | | Utilities | 9.9% | | Personnel costs | 6.1% | | Real estate taxes | -3.7% | | **Total** | **2.9%** | [Development Pipeline](index=23&type=section&id=Development%20Pipeline) As of June 30, 2025, the company's development pipeline includes one consolidated project, 7 South Linden in South San Francisco, a 543-unit project with an estimated total cost of $311 million, expected to start construction in Q1 2025 and stabilize in Q1 2030, alongside land held for future development Consolidated Development Project: 7 South Linden | Metric | Value | | :--- | :--- | | **Location** | South San Francisco, CA | | **Apartment Homes** | 543 | | **Estimated Total Cost** | $311 million | | **Construction Start** | Q1 2025 | | **Stabilized Operations** | Q1 2030 | [Capital Expenditures](index=24&type=section&id=Capital%20Expenditures) In Q2 2025, the company incurred $20.0 million in revenue-generating capital expenditures and $35.8 million in non-revenue-generating capital expenditures, with total capital expenditures amounting to $199.6 million over the trailing four quarters Capital Expenditures (in thousands) | Category | Q2 2025 | Trailing 4 Quarters | | :--- | :--- | :--- | | **Revenue Generating** | $20,017 | $80,959 | | **Non-Revenue Generating** | $35,822 | $118,674 | [Co-investments and Preferred Equity Investments](index=25&type=section&id=Co-investments%20and%20Preferred%20Equity%20Investments) As of June 30, 2025, the company held investments in operating joint ventures totaling 7,694 apartment homes, which generated $22.8 million in NOI at Essex's share for Q2, and $445.5 million in preferred equity investments with a weighted average return of 9.2%, generating $9.3 million in income for the quarter Investment Summary (Q2 2025) | Investment Type | Essex Book Value | Income Generated | | :--- | :--- | :--- | | **Operating JVs** | $360,921 thousand | $22,831 thousand (NOI) | | **Preferred Equity** | $445,511 thousand | $9,317 thousand | [Acquisitions and Dispositions](index=26&type=section&id=Acquisitions%20and%20Dispositions) Year-to-date as of June 30, 2025, Essex acquired 1,039 apartment homes for a total of $585.9 million, primarily in Northern California, and disposed of 605 homes for $366.6 million, mainly in Southern California YTD 2025 Transaction Summary | Activity | Apartment Homes | Total Contract Price | | :--- | :--- | :--- | | **Acquisitions** | 1,039 | $585,875 thousand | | **Dispositions** | 605 | $366,580 thousand | [2025 FFO Guidance Assumptions](index=27&type=section&id=2025%20FFO%20Guidance%20Assumptions) This schedule provides the detailed build-up for the full-year 2025 FFO guidance, assuming total NOI between $1.31 billion and $1.32 billion and net interest expense around $253 million, leading to a projected Core FFO per diluted share range of $15.80 to $16.02 Key Full-Year 2025 Guidance Assumptions (Midpoint) | Item | 2025 Guidance Midpoint (in thousands) | | :--- | :--- | | **Total NOI from Consolidated Communities** | $1,316,900 | | **Net interest expense** | ($253,000) | | **FFO from co-investments** | $91,700 | | **Core Funds from Operations** | $1,061,100 | [Reconciliation of Projected EPS, FFO and Core FFO](index=28&type=section&id=Reconciliation%20of%20Projected%20EPS%2C%20FFO%20and%20Core%20FFO) This table reconciles the company's projected Net Income (EPS) to its FFO and Core FFO guidance for Q3 and the full year 2025, showing that for the full year, a projected EPS midpoint of $10.17 is reconciled to a Core FFO per share midpoint of $15.91, with the primary adjustment being for depreciation Full-Year 2025 Guidance Reconciliation (Per Share Midpoints) | | Full-Year 2025 Midpoint | | :--- | :--- | | **EPS - diluted** | $10.17 | | Depreciation and amortization & other adjustments | $5.74 | | **Core FFO per share - diluted** | $15.91 | [MSA Level Supply Forecast](index=29&type=section&id=MSA%20Level%20Supply%20Forecast) The company forecasts total new residential supply (multifamily and single-family) to be 0.5% of existing stock in 2025, decreasing to 0.4% in 2026, with the Seattle market expected to see the highest relative supply at 1.0% in 2025, while Northern California markets are projected to have very low supply levels Total Residential Supply as a % of Stock | Market | 2025E | 2026E | | :--- | :--- | :--- | | Southern California | 0.4% | 0.4% | | Northern California | 0.4% | 0.3% | | Seattle | 1.0% | 0.6% | | **Total** | **0.5%** | **0.4%** | [Reconciliations of Non-GAAP Financial Measures and Other Terms](index=30&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures%20and%20Other%20Terms) This section provides detailed definitions and reconciliations for non-GAAP financial measures used throughout the report, including Adjusted EBITDAre, FFO, Core FFO, and NOI, clarifying calculation methodologies to ensure comparability and transparency for investors - Provides definitions for key terms such as FFO, Core FFO, NOI, Adjusted EBITDAre, Financial Occupancy, and others to clarify the metrics used in the report[104](index=104&type=chunk)[112](index=112&type=chunk)[117](index=117&type=chunk)[123](index=123&type=chunk) - Includes detailed table reconciliations for key non-GAAP measures, such as Net Income to Adjusted EBITDAre and Earnings from Operations to Same-Property NOI, aligning with SEC best practices[109](index=109&type=chunk)[124](index=124&type=chunk)

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates involves significant risk and volatility [1] Group 1: Company Overview - Essex Property Trust (ESS) is highlighted as a recommended growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 5.6%, with a projected EPS growth of 2.2% this year, surpassing the industry average of 1.9% [5] Group 2: Financial Metrics - Cash flow growth for Essex Property Trust stands at 38.3% year-over-year, significantly higher than the industry average of 4% [6] - The historical annualized cash flow growth rate for the company is 8.1% over the past 3-5 years, compared to the industry average of 5.9% [7] Group 3: Earnings Estimates - There has been a positive trend in earnings estimate revisions for Essex Property Trust, with the Zacks Consensus Estimate for the current year increasing by 0.1% over the past month [9] - The combination of earnings estimate revisions and a Growth Score of B positions Essex Property Trust favorably for potential outperformance [11]

Core Insights - Essex Property Trust, Inc. (ESS) is expected to report second-quarter 2025 results on July 29, with anticipated year-over-year growth in revenues and core funds from operations (FFO) per share [1][9] Company Performance - In the last reported quarter, Essex Property achieved a core FFO per share surprise of 1.28%, driven by growth in same-property revenues and net operating income [2] - Over the past four quarters, Essex Property consistently surpassed the Zacks Consensus Estimate, with an average surprise of 1.29% [2] - The Zacks Consensus Estimate for second-quarter revenues is $469.19 million, reflecting a 6.07% year-over-year increase [8] - Projected core FFO per share for the second quarter is in the range of $3.90-$4.02, indicating a year-over-year increase of 1.27% [10][11] Market Overview - The U.S. apartment market showed resilience in Q2 2025, absorbing over 227,000 units, surpassing previous peak leasing surges [3] - National occupancy rates rose to 95.6%, up 140 basis points year-over-year, despite muted rent growth of only 0.19% in June [4] - More than 535,000 units were completed in the past year, with 108,000 delivered in Q2, indicating strong market absorption capabilities [5] Regional Insights - Tech-driven markets like San Francisco, San Jose, Boston, and New York are gaining momentum, supported by easing supply and return-to-office trends [6] - Sun Belt markets such as Dallas, Atlanta, and Jacksonville are also showing recovery, while tourism-dependent cities like Las Vegas and Orlando are experiencing slight declines [6] Factors Influencing ESS - Essex Property is expected to benefit from its strong presence on the West Coast, where tech-driven job creation supports rental demand [7] - The company's portfolio reallocation in Northern California is likely to enhance occupancy and revenue growth [7] - Financial occupancy is projected at 96.6%, up 30 basis points sequentially [8] Financial Challenges - High debt burden remains a challenge, with interest expenses expected to increase by 7.7% year-over-year in Q2 [8][9]

Core Viewpoint - The S&P 500 is experiencing a rally, leading to a decline in its dividend yield, which is currently around 1.2%, nearing a record low. Despite this, there are still attractive dividend-paying stocks available for yield-seeking investors [1]. Group 1: ExxonMobil - ExxonMobil has a strong track record of increasing its dividend for 42 consecutive years, outperforming its peers in the oil sector [4]. - The company benefits from an integrated business model with low-cost, high-margin assets, allowing for resilient cash flows and a fortress balance sheet with the lowest leverage ratio among its peers [5]. - ExxonMobil's 2030 plan aims to boost earnings by $20 billion and cash flow by $30 billion, supporting future dividend increases [6]. Group 2: Johnson & Johnson - Johnson & Johnson has a AAA credit rating and a net debt of $13.5 billion, which is manageable given its $380 billion market cap and $20 billion in free cash flow last year, easily covering its $11.8 billion dividend [7]. - The company has raised its dividend for 63 consecutive years, qualifying it as a Dividend King [8]. - Johnson & Johnson invests heavily in growth, spending $17 billion on R&D and securing over $30 billion in M&A deals last year, positioning it to continue increasing its 3.3% dividend yield [9]. Group 3: Essex Property Trust - Essex Property Trust is a major apartment owner focused on West Coast markets, benefiting from strong demand for rental housing [10]. - The REIT has increased its dividend for 31 consecutive years, with a cumulative increase of 516% since its IPO in 1994, currently yielding 3.6% [11]. - The company maintains a strong investment-grade balance sheet, allowing for continued expansion through acquisitions and development projects, enhancing its ability to increase dividends [12]. Group 4: High-Quality Dividend Stocks - ExxonMobil, Johnson & Johnson, and Essex Property Trust are highlighted as high-quality, high-yielding dividend stocks with yields above 3% and potential for further growth, making them attractive options for investors [13].

Industry Overview - The U.S. apartment market demonstrated resilience in Q2 2025, absorbing over 227,000 units, surpassing previous peak leasing periods in 2021 and early 2022 despite economic uncertainties [1][11] - National occupancy rates increased to 95.6%, a rise of 140 basis points year-over-year, indicating strong demand for professionally managed apartments [3][11] - Rent growth remained subdued at 0.19% in June, with operators prioritizing occupancy over rent increases, suggesting a "heads-in-beds" strategy to maintain stability amid high new supply [3][4] Supply and Demand Dynamics - Over 535,000 units were completed in the past year, with approximately 108,000 delivered in Q2 2025, reflecting the market's capacity to absorb new supply [4] - Regional markets such as San Francisco, San Jose, Boston, and New York showed momentum, aided by easing supply and return-to-office trends, while Sun Belt markets like Dallas and Atlanta also exhibited recovery [5] Company Performance AvalonBay Communities, Inc. (AVB) - AvalonBay reported a 3% year-over-year increase in same-store residential revenues for the two months ending May 31, 2025, with occupancy at 96.3% [7][11] - The company is expected to announce Q2 2025 earnings on July 30, with a revenue estimate of $761.75 million, indicating a 4.92% year-over-year increase [8] Equity Residential (EQR) - EQR maintained strong occupancy levels and reported same-store revenue growth in Q1 2025, supported by improving demand and limited resident turnover [9][11] - The company is set to release Q2 2025 earnings on August 4, with a revenue estimate of $769.26 million, suggesting a 4.78% year-over-year increase [12] Essex Property Trust, Inc. (ESS) - Essex benefits from substantial exposure to the West Coast market, which has favorable demographics and high median household incomes, supporting its revenue growth [13][14] - The company is expected to announce Q2 2025 earnings on July 29, with a revenue estimate of $469.19 million, indicating a 6.07% year-over-year rise [15] UDR, Inc. (UDR) - UDR's diversified portfolio and strong demand for rental units position it well for growth, with occupancy nearly at 97% [16][17] - The company is set to announce Q2 2025 earnings on July 30, with a revenue estimate of $422.24 million, reflecting a 2.15% year-over-year increase [18]

Core Viewpoint - Essex Property Trust (ESS) has experienced a stock price increase of 12.6% over the past three months, outperforming the industry average of 8.6% [1][9] Group 1: Company Performance and Market Position - The company is well-positioned to benefit from a strong West Coast property base, supported by various demand drivers such as job creation and income growth from technology companies [4] - The slowing layoffs in the tech industry and the return to office trends are expected to boost renter demand in West Coast markets, leading to healthy demand and revenue growth for ESS [4] - The company has made significant efforts to enhance its operational efficiency through technology and scale, which is anticipated to drive margin expansion and contribute to both top-line and bottom-line growth [5] Group 2: Financial Health - As of March 31, 2025, Essex Property maintains a robust balance sheet with $1.4 billion in liquidity, derived from undrawn credit facilities, cash, and marketable securities [6][9] - The company has achieved a 92% adjusted total net operating income (NOI) and holds investment-grade ratings of Baa1/Stable and BBB+/Stable from Moody's and S&P, respectively [7] Group 3: Dividend Growth - Essex Property has consistently increased its dividend payouts, raising them five times in the last five years, with a five-year annualized growth rate of 4.95%, indicating a sustainable dividend payout in the long run [10]

Core Insights - The article compares NexPoint Residential Trust Inc. (NXRT) and Essex Property Trust (ESS) to determine which stock is undervalued for investors in the REIT and Equity Trust - Residential sector [1] Valuation Metrics - NXRT has a forward P/E ratio of 10.23, significantly lower than ESS's forward P/E of 18.06 [5] - NXRT's PEG ratio is 1.71, while ESS's PEG ratio is much higher at 6.00, indicating NXRT may be undervalued relative to its expected earnings growth [5] - NXRT's P/B ratio stands at 2.23 compared to ESS's P/B of 3.22, further suggesting NXRT's stock may be more attractively priced [6] Zacks Rank and Value Grades - NXRT holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while ESS has a Zacks Rank of 3 (Hold) [3] - NXRT has a Value grade of B, whereas ESS has a Value grade of D, highlighting NXRT's stronger valuation metrics [6][7]

Company Performance & Financials - Essex has achieved a +14.4% CAGR since its IPO, demonstrating best-in-class total returns[6] - Essex has increased its cash dividend for 30 consecutive years, with 487% cumulative dividend growth since its IPO in 1994[11] - The company's controllable operating expense margin has outperformed its peer group by 290 bps on average since 2020[27] - The company expects structured finance redemptions of approximately $125 - $175 million[93] - The company's total market capitalization is $24.4 billion[6, 95] Portfolio & Market Overview - The company's portfolio consists of 255 apartment communities with over 62,000 apartment homes[32] - Southern California accounts for 43% of the company's portfolio NOI at pro rata share, Northern California 40%, and Seattle 17%[35] - It is 2.6x more expensive to own versus rent in Essex markets[60] - Total housing supply growth in the Essex markets is forecasted to remain constant at only 0.5% of housing stock in 2024[81] ESG Initiatives - The company has collected over $10 million in rebates since 2009 through its environmental initiatives[100] - The company has invested approximately $10 million in energy efficiency, $20 million in renewable energy, and $2 million in water conservancy[103]