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Essex Property Trust, Inc. ESS has issued an operating update for the third quarter. Moreover, the residential REIT reaffirmed its third-quarter and full-year 2021 guidance ranges.
The company’s preliminary August 2021 update reveals that same-property cash delinquencies stood at 0.8% for the month compared with July’s 2.2% and the second quarter’s 2.6%, while financial occupancy was 96.4% in August compared with July’s 96.5%.
For the preliminary July-to-August period, total same-property revenues increased 2.6% year on year, as against the 3% decrease seen in the second quarter. Moreover, according to the company’s preliminary August results, for the total same-property portfolio, the percentage change of new lease rates on a net effective basis, including the impact of leasing incentives, is 17% compared to December 2020 and 4.7% compared to March 2020 (pre-COVID-19).
This comprised a 26% increase in new lease rates on a net effective basis, including the impact of leasing incentives, from December 2020 for the Seattle same-property portfolio, 12.7% for the Northern California portfolio and 17.1% for the Southern California portfolio.
During its second-quarter earnings release, the company projected the third-quarter core FFO per share at $2.98-$3.10. The Zacks Consensus Estimate for the same is currently pegged at $3.09. For full-year 2021, the company estimated core FFO per share in the range of $12.21-$12.45. The Zacks Consensus Estimate for the same currently stands at $12.37.
With relaxation in the Covid-19 restrictions, Essex Property’s markets are witnessing decent recovery in fundamentals. The company has a sturdy property base in the West Coast market and enjoys healthy balance-sheet strength. It is also banking on technology and scale to drive growth. The reopening of the economy is further boosting optimism.
Nevertheless, the outmigration trend of population and business has emerged as a concern. A flexible working environment has hurt demand in the urban markets. Oversupply in its urban markets adds to the company’s woes.
Shares of this Zacks Rank #3 (Hold) company have gained 38.3% compared with the industry's growth of 37.2% so far in the year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Stocks to Consider
The Zacks Consensus Estimate for Equity Residential’s EQR current-year funds from operations (FFO) per share has moved up marginally over the past month. The company currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for American Homes 4 Rent’s AMH 2021 FFO per share has moved 3.9% north to $1.33 over the past month. The company carries a Zacks Rank of 2, currently.
Preferred Apartment Communities, Inc. APTS carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 17.6% upward to $1.00 over the past month.
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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