Q3 2023 Earnings Summary
Reported on Jan 4, 2025 (After Market Close)
Pre-Earnings Price$206.58Last close (Oct 27, 2023)
Post-Earnings Price$206.58Last close (Oct 27, 2023)
Price Change
$0.00(0.00%)
- Improvement in tenant delinquencies is expected to positively impact revenues in 2024. The company has made significant progress in reducing delinquency rates, and anticipates continued progress, which should contribute to favorable revenue outcomes next year.
- Return-to-office mandates among tech employers are gaining momentum, potentially boosting apartment demand in key markets. The decrease in remote hiring and the enforcement of in-office policies are expected to benefit leasing activity, particularly in Northern California and Seattle.
- The company anticipates attractive investment opportunities due to market dislocations caused by higher interest rates. ESS is positioned to deploy capital into stabilized properties seeking recapitalization, which could enhance returns in their core markets.
- Elevated operating expenses expected in 2024, driven by higher insurance and utility costs, will pressure earnings. The company anticipates insurance costs to continue rising nationally, and utility costs are up about 6% year-to-date, with expectations of above-inflation increases near term. These factors "will cause expense growth to be elevated next year."
- Delinquency levels remain elevated in certain markets, leading to challenges in occupancy and revenue growth. In Los Angeles, delinquency was at 4.6% in October, reflecting a 2.1% improvement since the start of the year but still significantly higher than historical levels. The company expects rents and occupancy in this area to be more volatile in the near term. ,
- Increased supply in markets like Seattle and Oakland could pressure rent growth and occupancy. Seattle has a higher level of supply, about 2x that of California as a percentage, and Oakland will be "challenged for the next year or two given the supply that's went out there." This increased competition may impact rent growth in these markets. ,