Essex Property (ESS) Beats on Q1 FFO & Revenues, Ups 2022 View
Essex Property Trust Inc. ESS reported first-quarter 2022 core funds from operations (FFO) per share of $3.37, beating the Zacks Consensus Estimate of $3.34. The figure also improved 9.8% from the year-ago quarter.
Additionally, total revenues of $381.9 million surpassed the Zacks Consensus Estimate of $376.3 million. The figure increased 7.5% year over year.
Improvement in same-property revenues and net operating income during the quarter supported growth in core FFO.
Quarter in Detail
During the first quarter, Essex Property’s same-property revenues increased 6.5% from the prior-year period. Same-property operating expenses and net operating income (NOI) climbed 4.8% and 7.3% year over year, respectively.
On a sequential basis, same-property revenues and NOI increased 2.6% and 2.4%, respectively.
Financial occupancies of 96.3% in the first quarter contracted 20 basis points (bps) sequentially and 40 bps year over year.
Essex Property’s received $17.1 million of earned promote interest as part of the amendment and extension of its joint venture, Wesco III, LLC.
During first-quarter 2022, the final phase (“Phase IV”) leasing began at ESS’s Station Park Green development comprising 107 apartment homes located in San Mateo, CA. It was leased 76% as of Apr 22, 2022.
Balance Sheet
ESS exited the quarter with cash and cash equivalents, including restricted cash, of $108.5 million, up from $58.6 million recorded at the end of 2021.
Essex Property had $1.3 billion in liquidity through an undrawn capacity on its unsecured credit facilities, cash and marketable securities as of Apr 22, 2022.
Dividend Update
In the first quarter of 2022, Essex Property hiked the cash dividend by 5.3%, marking the company’s 28th consecutive annual increase. The dividend of $2.20 per share was paid on Apr 14, 2022, to shareholders on record as of Mar 31, 2022. The annualized cash dividend per common share is $8.80.
Updated Outlook
For 2022, Essex Property revised its guidance upward.
The company increased its 2022 core FFO per share expectations by 25 cents at the midpoint to the range of $13.77 to $14.13, with $13.95 at the mid-point. The Zacks Consensus Estimate is pegged at $13.93. Earlier, the company had guided core FFO of $13.46-$13.94, with $13.70 at the mid-point.
ESS projects same-property gross revenues in the range of 8.1-9.1% for 2022, revised upward from the prior estimation of 7-8.5%. Operating expense remains in the band of 3.5-4.5% while NOI has been revised upward from 8-10.8% to 9.7-11.6%.
For second-quarter 2022, Essex Property projects core FFO per share to be in the range of $3.43 to $3.55. The Zacks Consensus Estimate for the same is currently pegged at $3.47.
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 REITs
SL Green Realty SLG reported first-quarter 2022 FFO per share of $1.65, beating the Zacks Consensus Estimate by a cent. However, the reported FFO per share compared unfavorably with the year-ago quarter’s $1.73.
SLG first-quarter performance was driven by a better-than-expected top line and healthy leasing activity.
Crown Castle International Corp.’s CCI first-quarter 2022 adjusted funds from operations (AFFO) per share of $1.87 surpassed the Zacks Consensus Estimate of $1.80. Net revenues of $1.74 billion exceeded the Zacks Consensus Estimate of $1.70 billion.
Growth in site-rental revenues due to elevated tower space demand aided the top-line performance. CCI also raised the outlook for site-rental revenues and adjusted EBITDA for 2022.
Alexandria Real Estate Equities, Inc. ARE reported first-quarter 2022 adjusted FFO per share of $2.05, surpassing the Zacks Consensus Estimate of $2.00. The reported FFO per share also compared favorably with the year-ago quarter’s $1.91.
Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.
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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