Essex Property (ESS) Q3 FFO Beats Estimates, Revenues Up Y/Y
Essex Property Trust Inc. ESS reported third-quarter 2023 core funds from operations (FFO) per share of $3.78, beating the Zacks Consensus Estimate of $3.77. The figure also improved by 2.4% from the year-ago quarter.
Results reflect favorable growth in same-property revenues, though higher same-property operating expenses partly acted as a dampener. ESS reaffirmed the midpoint of the full-year 2023 guidance ranges for core FFO per share.
Total revenues of $419.2 million narrowly missed the Zacks Consensus Estimate of $419.3 million. However, revenues were up 2.3% year over year.
Quarter in Detail
In the third quarter, Essex Property’s same-property revenues increased 3.2% from the prior-year period, ahead of our estimate of 2.9%. However, same-property operating expenses rose 4.4% year over year versus our estimate of 1.7%.
Consequently, same-property NOI increased 2.7% year over year, below our estimate of 3.4%. Financial occupancies of 96.4% in the third quarter expanded 40 basis points (bps) year over year but fell 20 bps sequentially. The same came below our estimate of 96.8%.
Balance Sheet
Essex Property exited the third quarter of 2023 with cash and cash equivalents, including restricted cash, of $400.5 million, up from the $42.7 million recorded at the end of 2022. ESS had $1.6 billion in liquidity through the undrawn capacity on its unsecured credit facilities, cash and cash equivalents and marketable securities as of Oct 24, 2023.
During the third quarter, ESS neither issued any shares of common stock through its equity distribution program nor repurchased any shares through its stock repurchase plan. As of Oct 24, 2023, the company had $302.7 million of purchase authority remaining under its stock repurchase plan.
Guidance
For the fourth quarter of 2023, Essex Property projects core FFO per share in the range of $3.73-$3.85, with the midpoint being $3.79. The Zacks Consensus Estimate is pegged at $3.84.
For the full-year 2023, the company has reaffirmed the midpoint of the guidance range for core FFO per share. ESS expects core FFO per share in the band of $14.94-$15.06, with the midpoint being $15, compared to the prior range of $14.88-$15.12. The Zacks Consensus Estimate of $15.03 lies within this range.
For 2023 same-property revenues, operating expenses and NOI, ESS also reiterated the midpoint of the guidance ranges at 4.4%, 4% and 4.5%, respectively.
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
Performance of Other Residential REITs
AvalonBay Communities AVB reported a third-quarter 2023 core FFO per share of $2.66, beating the Zacks Consensus Estimate of $2.64. Moreover, the figure climbed 6.4% from the prior-year quarter’s tally. The quarterly results reflected a year-over-year increase in same-store residential rental revenues. AvalonBay currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mid-America Apartment Communities MAA reported a third-quarter 2023 core FFO per share of $2.29, which surpassed the Zacks Consensus Estimate by a penny. Moreover, the reported figure climbed 4.6% year over year. This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also revised its outlook for 2023. MAA currently carries a Zacks Rank #3 (Hold).
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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