Essex Property Trust Inc. ESS reported fourth-quarter 2024 core funds from operations (FFO) per share of $3.92, beating the Zacks Consensus Estimate of $3.90. The figure also improved 2.3% from the year-ago quarter.

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Results reflect favorable growth in same-property revenues and net operating income (NOI). ESS issued first-quarter and full-year 2025 guidance for core FFO per share.

Total revenues of $454.5 million outpaced the Zacks Consensus Estimate of $453.1 million. Revenues were up 7.8% year over year.

For full-year 2024, core FFO per share came in at $15.60, improving by 3.8% year over year. The reported figure beat the Zacks Consensus Estimate by two cents. This was backed by 6.3% growth in revenues to $1.77 billion.

Essex’s Fourth Quarter in Detail

In the fourth quarter, Essex Property’s same-property revenues increased 2.6% from the prior-year period, below our estimate of 5.6%. The same-property operating expenses rose 4.7% year over year versus our estimate of 7.5%.

The same-property NOI increased 1.7% year over year, below our estimate of 4.8%. Financial occupancies of 95.9% in the fourth quarter fell 20 basis points (bps) year over year and 30 bps sequentially. The metric came below our estimate of 96.1%.

Essex’s Portfolio Activity

In October, ESS acquired a 49.9% joint venture partner’s interest in the BEX II portfolio, with four communities consisting of 871 apartment units, for $337.5 million on a gross basis ($168.4 million at pro rata). In November, it acquired another community, Beaumont, with 344 apartment units in Woodinville, WA, for $136.1 million.

In October, the company disposed of its 81.5% interest in an apartment community in San Mateo, CA, for $252.4 million on a gross basis ($205.7 million at pro rata).

Balance Sheet Position of ESS

ESS had $1.3 billion in liquidity through the undrawn capacity on its unsecured credit facilities, cash and cash equivalents and marketable securities as of Dec. 31, 2024. Essex Property exited the fourth quarter of 2024 with cash and cash equivalents, including restricted cash, of $75.8 million, down from the $80.3 million recorded at the end of the prior quarter.

During the fourth quarter, ESS neither issued any shares of common stock through its equity distribution program nor repurchased any shares through its stock repurchase plan.

2025 Guidance by ESS

For the first quarter of 2025, Essex Property projects core FFO per share in the range of $3.86-$3.98, with the midpoint being $3.92. The Zacks Consensus Estimate is pegged at $3.93.

For full-year 2024, the company projects the core FFO per share in the range of $15.56-$16.06, with the midpoint being $15.81. The Zacks Consensus Estimate of $15.99 stands within this range.

The full-year guidance is based on projections for the same-property revenue growth of 2.25-3.75%, an operating expense increase of 3.25-4.25% and an NOI expansion of 1.4-4.0%.

Essex’s Zacks Rank

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

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like Cousins Properties CUZ and Highwoods Properties HIW, slated to report on Feb. 6 and Feb. 11, respectively.

The Zacks Consensus Estimate for Cousins Properties’ fourth-quarter 2024 FFO per share stands at 68 cents, which indicates 4.6% growth year over year. CUZ currently has a Zacks Rank #3.

The Zacks Consensus Estimate for Highwoods Properties’ fourth-quarter 2024 FFO per share is pegged at 85 cents, which implies a 14.1% year-over-year decrease. HIW currently carries a Zacks Rank #3.

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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