Executive Summary

Q4 delivered resilient operations: Core FFO per diluted share rose to $3.92 (+2.3% YoY) on same‑property revenue growth of 2.6%, while GAAP EPS jumped to $4.00 on sizable non-core gains; consolidated rental revenues increased to $452.1M (+7.9% YoY) .
Management issued FY2025 guidance with Core FFO of $15.56–$16.06 (midpoint $15.81; +1.3% vs. FY2024), same‑property revenue growth of 2.25%–3.75% (midpoint 3.0%), and OpEx growth moderating to 3.25%–4.25% (midpoint 3.75%), reflecting headwinds from refinancing and structured finance redemptions offset by improving fundamentals .
Signs of demand normalization: blended lease rate growth was 1.6% in Q4, concessions averaged ~1 week, and January occupancy improved to 96.3%; cash delinquencies improved to 0.6% of scheduled rent as Essex eliminated remaining AR balances (non‑cash) in Q4 .
Capital allocation remains a catalyst: Essex consolidated/added 13 communities in 2024 and targets $0.5–$1.5B of 2025 acquisitions (midpoint $1.0B), with cap rates mid‑to‑high 4s and a focus on accretion and NAV growth .
Street estimates context: S&P Global consensus data could not be retrieved at this time due to API limits; comparisons to sell‑side estimates are unavailable. Results were slightly ahead of internal expectations primarily on higher JV income .

What Went Well and What Went Wrong

What Went Well
- Core operating outperformance vs company plan: “fourth quarter results…were slightly ahead of our expectations primarily driven by higher income from our joint venture entities” .
- Same‑property fundamentals improved: revenue +2.6% YoY (ex‑AR elimination +3.2%); cash delinquencies fell to 0.6% of rent; occupancy held at 95.9% in Q4 .
- Execution on external growth: 2024 acquisitions/ownership increases in 13 communities ($1.4B gross) including JV buyouts; 2025 plan to be net acquirers with creativity around cost of capital .
What Went Wrong
- Seasonal softness: same‑property revenues fell 0.5% QoQ; blended rate growth was 1.6% in Q4 as supply cadence and seasonality limited pricing power .
- Expense pressure persisted YoY: same‑property OpEx +4.7% YoY in Q4 (utilities, personnel, insurance), diluting NOI growth to +1.7% despite revenue gains .
- 2025 Core FFO growth modest: midpoint +1.3% as ~$500M bond refinancing (higher rate) and ~$150M structured finance redemptions drive ~2% headwind, partly offset by OpEx moderation and non‑same‑property NOI from acquisitions .

Financial Results

Recent quarters – key metrics (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Rental & Other Property Revenues ($USD Millions)	$439.8	$448.1	$452.1
Net Income per Diluted Share ($)	$1.45	$1.84	$4.00
FFO per Diluted Share ($)	$3.89	$3.81	$3.69
Core FFO per Diluted Share ($)	$3.94	$3.91	$3.92
Same-Property Revenue Growth YoY (%)	3.4%	3.5%	2.6%
Same-Property NOI Growth YoY (%)	3.0%	2.6%	1.7%
Same-Property Occupancy (%)	96.2%	96.2%	95.9%
Same-Property Operating Margin (%)	71%	70%	70%

YoY comparison – Q4 2023 vs Q4 2024

Metric	Q4 2023	Q4 2024
Rental & Other Property Revenues ($USD Millions)	$418.9	$452.1
Net Income per Diluted Share ($)	$1.02	$4.00
FFO per Diluted Share ($)	$3.87	$3.69
Core FFO per Diluted Share ($)	$3.83	$3.92
Same-Property Revenues YoY (%)	—	2.6%
Same-Property Operating Expenses YoY (%)	—	4.7%
Same-Property NOI YoY (%)	—	1.7%
Cash Delinquencies (% of Scheduled Rent)	1.4%	0.6%

Regional same‑property snapshot – Q4 2024 (YoY vs Q4 2023)

Region	Rev Growth YoY (%)	Financial Occupancy (Q4 2024)
Southern California	3.3%	95.6%
Northern California	2.0%	96.2%
Seattle Metro	2.1%	96.2%
Portfolio	2.6%	95.9%

Operational KPIs

KPI	Q4 2023	Q4 2024
Blended Lease Rate Growth (YoY)	—	1.6%
Average Monthly Rent – Same-Property ($)	$2,625	$2,676
Annualized Turnover (%)	39%	37%
Average Concessions (Weeks)	—	~1 week
Cash Delinquencies (% of Rent)	1.4%	0.6%

Notes: Q4 GAAP EPS includes gains on sale ($175.6M) and remeasurement of co‑investments ($40.6M) excluded from FFO/Core FFO; management recorded a non‑cash AR elimination charge and fully reset residential AR balances to zero at year‑end .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Core FFO per Diluted Share ($)	FY2025	N/A	$15.56 – $16.06 (mid $15.81)	New (initial)
Total FFO per Diluted Share ($)	FY2025	N/A	$15.56 – $16.06 (mid $15.81)	New (initial)
Net Income per Diluted Share ($)	FY2025	N/A	$5.79 – $6.29 (mid $6.04)	New (initial)
Core FFO per Diluted Share ($)	Q1 2025	N/A	$3.86 – $3.98	New (initial)
Same-Property Revenues (%)	FY2025	N/A	2.25% – 3.75% (mid 3.0%)	New (initial)
Same-Property Operating Expenses (%)	FY2025	N/A	3.25% – 4.25% (mid 3.75%)	New (initial)
Same-Property NOI (%)	FY2025	N/A	1.40% – 4.00% (mid 2.70%)	New (initial)
Blended Rate Growth (%)	Q1 2025	N/A	2.00% – 3.00%	New (initial)
Acquisitions ($)	FY2025	N/A	$0.5B – $1.5B (mid $1.0B)	New (initial)
Dispositions ($)	FY2025	N/A	$0.25B – $0.75B (mid $0.5B)	New (initial)
Structured Finance Redemptions ($)	FY2025	N/A	$100M – $200M (mid $150M)	New (initial)
Quarterly Dividend ($/sh)	Declared 12/6/24 (pays 1/15/25)	—	$2.45	Declared

Management’s FY2025 framework highlights: moderating OpEx (insurance down ~2% on December renewal), refinance of $500M unsecured bonds at higher rates, structured finance book ~4% of Core FFO, and non‑same‑property NOI uplift from 2024 acquisitions/JV consolidations .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Demand cadence, supply, concessions	Q2/Q3 same‑property revenue +3.4%/+3.5% YoY; sequential improvement; raised FY2024 guide	Q4 blended +1.6%; concessions ~1 week; Jan occupancy 96.3%; ~60% of 2025 supply delivers 1H, easing 2H pricing pressure	Normalizing seasonality; better 2H setup
Delinquency & AR	Delinquencies boosted growth in Q2/Q3 (+1.1–1.3% YoY component)	Cash delinquencies 0.6%; non‑cash AR fully eliminated; FY2025 guides +50 bps (30 bps cash, 20 bps accounting) improvement	Improving; mostly behind by 2H25
Tech hiring/West Coast macro	—	Expect tech job postings to translate into hires in 2H25; West Coast to outperform U.S.	Positive building into 2H25
Regulatory (Los Angeles)	—	Downside risk at low end of guide from potential eviction moratorium/rent freeze; base case excludes	Risk to watch
OpEx & insurance	FY2024 OpEx midpoint 4.75% (raised mid‑year)	FY2025 OpEx midpoint 3.75%; insurance premium down ~2% on December renewal	Improving OpEx trajectory
Investment market & acquisitions	Q2/Q3: NorCal acquisitions; $200M 10‑yr notes issued at 5.1% eff. yield	2025 acquisitions $1B midpoint; cap rates mid‑to‑high 4s; expect to be net acquirers	Active, disciplined growth
Structured finance strategy	Redemptions increased in 2H24	~$150M redemptions planned 2025; book ~4% of Core FFO; redeploy to hard assets	Gradual downsizing
Development	—	First start in ~5–6 years near Oyster Point; untrended mid‑high 5% cap; GMP/contingency in place	Selective, high hurdle

Management Commentary

“We are pleased to achieve…same‑property revenue growth of 3.3% and core FFO growth of 3.8%, both exceeding the high end of our original guidance.”
“Fourth quarter results were slightly ahead of our expectations primarily driven by higher income from our joint venture entities.”
“We expect blended rate growth of 3.0% at the midpoint [for 2025]…Seattle and San Jose are projected to lead…at approximately 4%.”
“The low end of our guidance is mainly attributed to policy uncertainty…eviction moratorium…rent freeze proposal [in L.A.].”
“In 2025, we expect to be net acquirers again…cap rates…around mid to high 4%.”

Q&A Highlights

L.A. risk and local assumptions: Base case excludes new moratorium; downside captured in range. For L.A., Essex assumes occupancy recovers to ~96% and rent growth ~2% in 2025; no wildfire impact assumed .
2025 cadence: Expect blended rent growth high‑2% in 1H and just above 3% in 2H as supply skews to 1H and tech hiring converts later in the year .
Sequential 1Q25 Core FFO dip vs Q4: Driven by timing of OpEx and higher interest expense from a higher line balance/other assumptions .
Insurance/OpEx: December property insurance renewal delivered ~2% premium reduction; 2025 same‑property OpEx midpoint 3.75% (controllables <3%) .
Capital markets & returns: Buying cap rates mid‑to‑high 4s; buyers underwriting ~8% unlevered IRR; Essex targets better via operating efficiencies and selective acquisitions .

Estimates Context

Wall Street consensus (S&P Global): Data unavailable due to S&P Global daily API limit; Street comparisons for Q4 are not provided at this time. Management noted the quarter was slightly ahead of internal expectations due to higher JV income .
Potential estimate revisions: FY2025 OpEx moderation (insurance down, controllables <3%) and non‑same‑property NOI from 2024 acquisitions may support upward tweaks to expense/NOI assumptions, while refinancing and structured finance redemptions temper Core FFO growth at ~+1% midpoint .

Key Takeaways for Investors

Core operations resilient; cash delinquencies normalized to 0.6% and AR fully reset—reduces accounting noise going forward .
2025 setup is back‑half weighted: supply heavier in 1H and hiring conversion expected in 2H should improve blended growth and pricing power later in the year .
Near‑term watch items: L.A. policy outcomes and the $500M unsecured refinancing; both are key drivers around the guidance range .
Expense trajectory improving: insurance down ~2% on renewal; same‑property OpEx midpoint 3.75% vs 4.9% in 2024, supporting incremental margin progress .
Capital allocation remains a lever: planned $1B midpoint of 2025 acquisitions and selective development (Oyster Point) targeting mid‑high 5% cap can drive non‑same‑property NOI and longer‑term NAV growth .
Trading implication: Expect range‑bound near term given modest Core FFO growth and Q1 seasonal step‑down, with potential 2H re‑rating if tech hiring and operating momentum materialize and L.A. risks are contained .
Dividend stability: $2.45/sh quarterly dividend declared in December (payable January 15, 2025) underscores balance sheet strength and cash generation .

Appendix – Non-GAAP/Adjustments callouts: Q4 GAAP EPS boosted by $175.6M gain on sale and $40.6M gain on remeasurement; both excluded from FFO/Core FFO. Q4 included a non‑cash AR elimination; cash delinquency trends continue to improve and are the focus of FY2025 guidance .

ESSEX PROPERTY TRUST, INC. (ESS)·Q4 2024 Earnings Summary