Essex Raises Core Earnings Outlook As Bay Area Rents Climb 5.4% And Los Angeles Stalls
The West Coast apartment landlord's quarterly net income fell 40.6% on a year-earlier sale gain, while core FFO per share edged up 0.8%.
Essex Property Trust, the REIT that owns apartment communities in Southern California, Northern California and Seattle, raised its 2026 forecast for core funds from operations per share to a range of $16.10 to $16.22, it said in third-quarter results on Tuesday. Northern California rent growth did the lifting while Los Angeles County barely moved.
Core earnings edge up, net income drops
Core FFO, a REIT profit measure that strips out property-sale gains and other non-core items, came to $4.00 per diluted share, up 0.8% from $3.97 a year earlier. The company said that was $0.01 above the midpoint of its own guidance, driven by same-property revenue growth.
Net income fell to $1.52 per diluted share from $2.56, a 40.6% drop the company attributed mainly to gains on sales of real estate and land in the third quarter of 2025. Total FFO slipped 1.2% to $3.98 from $4.03.
The revised full-year core FFO range is $16.10 to $16.22, with a $16.16 midpoint that is $0.02 higher than before. Net income guidance moved up $0.10 at the midpoint to $5.68, while the Total FFO midpoint of $15.48 is unchanged. Fourth-quarter core FFO is guided to $3.95 to $4.07.
San Francisco leads, Los Angeles lags
Same-property revenue rose 3.0% and net operating income 3.1% from a year earlier. Revenue growth in Northern California was 5.4%, led by San Francisco at 8.0% and San Mateo County at 6.6%, against 1.5% across Southern California. Los Angeles County managed 0.5%.
Seattle revenue rose 1.3%, and its net operating income fell 0.4%. Same-property revenue improved 1.0% from the second quarter.
Essex is a REIT that owns, operates and develops apartment communities, mostly on the West Coast. As of December 31, 2025, it had interests in 259 operating communities with 63,077 apartment homes.
Sales, a new loan and an Oakland purchase
Essex sold three apartment communities for a combined $111.9 million in pro rata contract price. In September it took out a $275.0 million unsecured term loan priced at SOFR plus 0.80%, maturing in September 2029 with two one-year extension options.
After quarter end it acquired a 378-unit Oakland community built in 2024, following the liquidation of its $64.2 million subordinated loan interest, and will consolidate it in the fourth quarter. The company had $883.5 million of authority left under its at-the-market stock sale program and no outstanding forward sale agreements at September 30. It repurchased no shares in the quarter, and has bought back 254,001 shares for $61.9 million this year.
Management hosts its earnings call Wednesday, October 28, at 12 p.m. ET.
