Core FFO per share for the quarter for Essex Property Trust Inc. was $0.04 better than the midpoint of our guidance, which represents 6.3% growth compared to the third quarter of 2018. According to Mike Schall, president and CEO, the company raised its full year core FFO guidance by $0.05 at the midpoint, which is the third time this year the company increased its core FFO per share guidance.
According to Schall, this is “attributable to a solid summer leasing season, dramatically improved cost of capital compared to the start of the year and continued execution by the Essex team.”
Schall noted that apartment supply estimates are more important than ever. “Our delay adjusted supply estimates for 2019 have proven invaluable in targeting acquisitions and dispositions. Overall, we expect 2020 to look much like 2019, representing the continuation of rental growth near long-term averages. Overall, we expect market rents in the Essex targeted areas to grow an average of 3% compared to 3.1% in our S-16 forecast a year ago. Once again, we expect very tight labor market conditions, exemplified by a very low unemployment rate of 3.3% as of August 2019.”
Tight labor markets may constrained job growth, but they also push incomes higher, he added. “While higher wages will pressure operating expenses, they will also help relieve pressure on the housing affordability issue that has constrained growth rates for the past several years. We have added Slides S-16.1 to the supplemental this quarter to demonstrate the historical context for the West Coast superior income and job growth compared to the rest of the country. Income growth in Essex markets has outpaced the nation by 12 percentage points on a cumulative basis this decade and has accelerated in the past several years.”