Essex Property (ESS) Q2 FFO & Revenues Beat, '23 View Revised
Essex Property Trust Inc. ESS reported second-quarter 2023 core funds from operations (FFO) per share of $3.77, beating the Zacks Consensus Estimate by a penny. The figure also improved 2.4% from the year-ago quarter.
Results reflect favorable same-property revenues. Also, this residential REIT revised its 2023 core FFO guidance following the better-than-anticipated performance in the second quarter.
Total revenues of $416 million also beat the Zacks Consensus Estimate of $414.5 million. Revenues were up 4% year over year.
Quarter in Detail
In the second quarter, Essex Property’s same-property revenues increased 4% from the prior-year period, marginally beating our estimate of 3.9%. Operating expenses rose 5.3% year over year, down from our estimate of 7%.
Consequently, same-property NOI increased 3.6% year over year, beating our estimate of 2.7%. Financial occupancies of 96.6% in the second quarter expanded 70 basis points (bps) sequentially and 50 bps year over year. Our expectation for the same was 97%.
During the reported quarter, Essex Property acquired Hacienda at Camarillo Oaks, a 73-unit apartment complex in Camarillo, CA, for $23.1 million.
Balance Sheet
The company exited the second quarter of 2023 with cash and cash equivalents, including restricted cash, of $69.1 million, down from $76.2 million recorded at the end of the first quarter of 2023. ESS had $1.6 billion in liquidity through the undrawn capacity on its unsecured credit facilities, cash and marketable securities as of Jul 26, 2023.
In the second quarter, Essex Property did not repurchase any shares of common stock under its stock repurchase plan. As of Jul 26, 2023, the company had $302.7 million of purchase authority remaining under its stock repurchase plan.
Guidance
For the second quarter of 2023, Essex Property projects core FFO per share in the range of $3.69-$3.81, with the midpoint being $3.75. The Zacks Consensus Estimate for the same is pegged at $3.72.
For 2023, the company revised the core FFO per share guidance to the $14.88-$15.12 band, with a 22-cent per share increase at the midpoint, from the earlier range of $14.59-$14.97. The Zacks Consensus Estimate of $14.85 lies within this range.
ESS now projects the same property revenue growth to be in the range of 4-4.75%, revised from 3.25-4.75% projected earlier. It expects operating expenses to grow 3.75-4.25%, down from 4.50-5.50% projected earlier. Consequently, net operating income is projected to grow in the range of 3.90-5.10%, up from 2.30-4.90% projected earlier.
Essex Property currently carries a Zacks Rank #3 (Hold).
Essex Property Trust, Inc. Price, Consensus and EPS Surprise
Essex Property Trust, Inc. price-consensus-eps-surprise-chart | Essex Property Trust, Inc. Quote
Upcoming Earnings Releases
We are looking forward to the earnings releases of other REITs like SBA Communications SBAC and Host Hotels & Resorts HST, which are slated to report their results on Jul 31 and Aug 3, respectively.
The Zacks Consensus Estimate for SBA Communications’ second-quarter 2023 FFO per share is pegged at $3.14, suggesting year-over-year growth of 2.3%. SBAC currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Host Hotels & Resorts’ second-quarter 2023 FFO per share is pegged at 56 cents, implying a year-over-year decrease of 3.5%. HST currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
SBA Communications Corporation (SBAC) : Free Stock Analysis Report
Essex Property Trust, Inc. (ESS) : Free Stock Analysis Report
