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Essex Property Trust Inc. (ESS - Free Report) reported third-quarter 2018 core funds from operations (FFO) per share of $3.15, beating the Zacks Consensus Estimate by a penny. Core FFO per share improved 5.7% from the year-ago quarter figure of $2.98.
Results of this residential real estate investment trust (REIT) reflect growth in same-property net operating income (NOI). Improving economic environment and job growth helped in driving housing demand. Specifically, apartment fundamentals were healthy in the coastal metros of California and Washington. Moreover, Essex Property raised its guidance for 2018.
Total revenues of $350.9 million in the reported quarter grew 1.9% year over year. However, the figure marginally missed the Zacks Consensus Estimate of $351.6 million.
Quarter in Detail
During the reported quarter, Essex Property’s same-property gross revenues grew 2.2% from the prior-year quarter while same-property NOI improved 2.4% year over year. However, financial occupancies of 96.4% contracted 30 basis points (bps) year over year.
Essex Property exited third-quarter 2018 with cash and cash equivalents, including restricted cash, of $174.6 million, up from $61.1 million recorded at the end of 2017. As of Oct 22, 2018, the company had $1.2 billion in undrawn capacity on its unsecured credit facilities.
Notably, the company did not issue any shares of common stock under its equity distribution program in the third quarter. Moreover, it did not repurchase any shares of common stock in the quarter under review.
Outlook
For 2018, the company now projects core FFO per share of $12.51-$12.61, denoting 3 cents per share increase at the mid-point. The Zacks Consensus Estimate for the same is currently pegged at $12.58.
The current-year projection is backed by expectations for same-property revenue growth of 2.7-2.9% and same-property NOI growth of 2.7- 3.0%.
For fourth-quarter 2018, the company projects core FFO per share of $3.13-$3.23. The Zacks Consensus Estimate for the same is currently pegged at $3.18.
Conclusion
With a strong property base in the West Coast market and solid balance sheet strength, Essex Property is likely to leverage on favorable demographic trends, household formation, recovering economy and job growth in its markets. The company’s substantial exposure to the West Coast market, which is home to several innovation and technology companies, offers ample scope to boost its top line over the long term. The region is witnessing increased percentage of renters than owners, and favorable migration trends with the influx of workers to its markets, mainly from major East Coast markets.
However, apartment deliveries are expected to remain elevated in a number of its markets in the near term. Moreover, aggressive rental concessions and moderate pricing power amid high supply remain headwinds.
We now look forward to the earnings releases of other REITs like Extra Space Storage Inc. (EXR - Free Report) , Public Storage (PSA - Free Report) and Boston Properties, Inc. (BXP - Free Report) , all of which are slated to report their quarterly numbers on Oct 30.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Essex Property (ESS) Beats Q3 FFO Estimates, Raises View
Essex Property Trust Inc. (ESS - Free Report) reported third-quarter 2018 core funds from operations (FFO) per share of $3.15, beating the Zacks Consensus Estimate by a penny. Core FFO per share improved 5.7% from the year-ago quarter figure of $2.98.
Results of this residential real estate investment trust (REIT) reflect growth in same-property net operating income (NOI). Improving economic environment and job growth helped in driving housing demand. Specifically, apartment fundamentals were healthy in the coastal metros of California and Washington. Moreover, Essex Property raised its guidance for 2018.
Total revenues of $350.9 million in the reported quarter grew 1.9% year over year. However, the figure marginally missed the Zacks Consensus Estimate of $351.6 million.
Quarter in Detail
During the reported quarter, Essex Property’s same-property gross revenues grew 2.2% from the prior-year quarter while same-property NOI improved 2.4% year over year. However, financial occupancies of 96.4% contracted 30 basis points (bps) year over year.
Essex Property exited third-quarter 2018 with cash and cash equivalents, including restricted cash, of $174.6 million, up from $61.1 million recorded at the end of 2017. As of Oct 22, 2018, the company had $1.2 billion in undrawn capacity on its unsecured credit facilities.
Notably, the company did not issue any shares of common stock under its equity distribution program in the third quarter. Moreover, it did not repurchase any shares of common stock in the quarter under review.
Outlook
For 2018, the company now projects core FFO per share of $12.51-$12.61, denoting 3 cents per share increase at the mid-point. The Zacks Consensus Estimate for the same is currently pegged at $12.58.
The current-year projection is backed by expectations for same-property revenue growth of 2.7-2.9% and same-property NOI growth of 2.7- 3.0%.
For fourth-quarter 2018, the company projects core FFO per share of $3.13-$3.23. The Zacks Consensus Estimate for the same is currently pegged at $3.18.
Conclusion
With a strong property base in the West Coast market and solid balance sheet strength, Essex Property is likely to leverage on favorable demographic trends, household formation, recovering economy and job growth in its markets. The company’s substantial exposure to the West Coast market, which is home to several innovation and technology companies, offers ample scope to boost its top line over the long term. The region is witnessing increased percentage of renters than owners, and favorable migration trends with the influx of workers to its markets, mainly from major East Coast markets.
However, apartment deliveries are expected to remain elevated in a number of its markets in the near term. Moreover, aggressive rental concessions and moderate pricing power amid high supply remain headwinds.
Essex Property currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Essex Property Trust, Inc. Price, Consensus and EPS Surprise
Essex Property Trust, Inc. Price, Consensus and EPS Surprise | Essex Property Trust, Inc. Quote
We now look forward to the earnings releases of other REITs like Extra Space Storage Inc. (EXR - Free Report) , Public Storage (PSA - Free Report) and Boston Properties, Inc. (BXP - Free Report) , all of which are slated to report their quarterly numbers on Oct 30.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>