Results for Essex Property Trust Inc. in the second quarter of 2019 exceeded expectations with core FFO per share growing 6.1% compared to the second quarter of 2018. So said the firm’s CEO, Michael Schall. “We are pleased to raise our full year core FFO guidance by $0.20 at the midpoint, which is attributable to strong operations and improving cost of capital and solid execution from the Essex team.”
2019 is playing out mostly as expected with market rents for the Essex metros remaining unchanged at 3.1% as detailed on F-16 of the supplemental, generally the tech markets continue to outperform led by San Francisco and Seattle, while Southern California has lagged expectations, he said on the firm’s Q2 earnings call.
One focus for the firm’s calls were around job growth and housing demand, all of which the firm expects to have positive growth. “Office development which continues to perform at a healthy pace and is required for job growth,” Schall said. “For the nation, under construction office properties represent 2.1% of existing office stock; within the Essex footprint all counties except Orange and Ventura are producing new office space at a greater pace than the national average.”
Turning to the investment markets, he explained that the company’s outlook has much improved relative to conditions experienced in 2018, significantly lower interest rates and strong equity markets have substantially improved our cost of capital. “In 2018 we were a net seller of apartments using the proceeds to reinvest in development, preferred equity and to fund stock repurchases. We are now mostly focused on acquisitions and preferred equity investments.”