Yahoo Finance Essex Property (ESS) Beats Q1 FFO Estimates, Raises '23 View
Essex Property Trust Inc. ESS reported first-quarter 2023 core funds from operations (FFO) per share of $3.65, beating the Zacks Consensus Estimate of $3.62. The figure also improved by 8.3% from the year-ago quarter.
Results reflect favorable same-property revenues. Also, this residential REIT raised its 2023 core FFO guidance midpoint following the better-than-anticipated performance in the first quarter.
Shares of ESS were up 2.15% in the after-hours trading on the NYSE yesterday.
Total revenues of $412.4 million narrowly missed the Zacks Consensus Estimate of $412.7 million. However, revenues were up 8% year over year.
Quarter in Detail
In the first quarter, Essex Property’s same-property revenues increased 7.6% from the prior-year period, ahead of our estimate of 5.6%. Operating expenses rose 4.0% year over year, slightly down from our estimate of 4.5%.
Consequently, same-property NOI increased 9.2% year over year, ahead of our estimate of 6.0%. Financial occupancies of 96.7% in the first quarter expanded 70 basis points (bps) sequentially and 40 bps year over year. The same also came ahead of our estimate of 95.8%.
During the reported quarter, Essex Property sold a student housing community comprising 239 apartment homes in the non-core market of Santa Barbara County for $91.7 million. ESS recognized a $54.5 million gain on the sale during the quarter.
Balance Sheet
Essex Property exited the first quarter of 2023 with cash and cash equivalents, including restricted cash, of $77.16 million, up from the $42.7 million recorded at the end of 2022. ESS had $1.5 billion in liquidity through the undrawn capacity on its unsecured credit facilities, cash and marketable securities as of Apr 26, 2023.
In the first quarter, Essex Property repurchased 437,026 shares of its common stock, aggregating $95.7 million, including commissions. The average price was $218.88 per share. As of Apr 26, 2023, ESS had $302.7 million of purchase authority remaining under its stock repurchase plan.
Guidance
For the second quarter of 2023, Essex Property projects core FFO per share in the range of $3.63-$3.75, with the midpoint being $3.69. The Zacks Consensus Estimate for the same is pegged at $3.75.
For the full-year 2023, the company revised the core FFO per share guidance to the $14.59-$14.97 band, with a 3 cent per share increase at the midpoint, from the earlier range of $14.53-$14.97. The Zacks Consensus Estimate of $14.86 lies within this range.
ESS has reaffirmed full-year guidance ranges for same-property revenues, expenses and NOI growth. The company expects full-year same-property revenue growth of 3.25-4.75%, an operating expense increase of 4.50-5.50% and an NOI expansion of 2.30-4.90%.
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-eps-surprise-chart | Essex Property Trust, Inc. Quote
Performance of Other Residential REITs
AvalonBay Communities, Inc. AVB reported a first-quarter 2023 core FFO per share of $2.57, beating the Zacks Consensus Estimate of $2.54. Moreover, the figure climbed 13.7% from the prior-year quarter’s tally.
The quarterly results reflected a year-over-year increase in same-store residential rental revenues, driven by solid lease rate growth. AVB also raised its core FFO per share outlook for 2023.
Equity Residential’s EQR first-quarter 2023 normalized FFO per share of 87 cents increased 13% year over year but narrowly missed the Zacks Consensus Estimate of 88 cents. Results reflected continued healthy demand and lower-than-anticipated bad debt. EQR also noted that it experienced better payment and move-out activity related to delinquent residents than assumed in its February 2023 guidance.
However, higher expenses due to repair and maintenance work resulting from severe California rain storms, coupled with increased property-related legal and administrative expenditures, acted as a dampener. Also, there was a contraction in physical occupancy.
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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