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The outperformance reflected higher same-property and non-same-property net operating income (NOI). ESS raised its 2026 FFO per share guidance.
Total revenues were $489.05 million, up 4.1% year over year and ahead of the consensus mark of $487.32 million. Same-property revenues and NOI grew 2.7% and 2.6%, respectively, while financial occupancy edged up 10 basis points year over year to 96.3%.
ESS' Same-Property Revenue Momentum Continues
Same-property revenue growth was primarily driven by a 2.2% increase in scheduled rents. Other income contributed another 0.6%, while delinquency reduced growth by 0.1%. Cash concessions and vacancy had no year-over-year impact.
Sequentially, same-property revenues improved 0.8% from the first quarter of 2026. Scheduled rents added 0.9%, and other income contributed 0.2%. These gains were partly offset by a 0.2% vacancy impact and a 0.1% delinquency drag.
Essex Property's Northern California Markets Lead
Northern California remained the strongest part of Essex Property’s West Coast portfolio. Same-property revenues in the region increased 4.4% year over year, while operating expenses declined 1.2%. Regional NOI advanced 6.8%. Northern California also achieved 1.8% sequential revenue growth and a 3.4% increase in NOI.
Southern California revenues grew 1.5%, with NOI up 1.1%. Seattle Metro revenues increased 1.7%, but a 14.2% surge in operating expenses resulted in a 2.7% decline in NOI.
ESS' Occupancy Remains Stable Across Markets
Same-property financial occupancy was 96.3% at quarter-end compared with 96.2% a year earlier and 96.5% at the end of the first quarter. The modest sequential decline accompanied positive revenue growth across the overall portfolio.
Northern California posted the highest occupancy at 96.8%, up from 96.6% a year ago. Seattle’s occupancy was unchanged at 96.4%, while Southern California improved 10 basis points year over year to 95.7%.
Same-property operating expenses increased 2.8% from the prior-year quarter. Despite the expense growth, portfolio NOI reached $316.8 million, up from $308.7 million a year earlier.
Essex Property Advances Its Investment Strategy
During the quarter, a joint venture in which Essex holds a 50% interest sold a 218-unit apartment community in San Jose for $105.3 million. The company’s pro rata share of the transaction was $52.6 million, and it recorded a $9.2 million gain.
Essex also received $87.8 million from the full redemption of three structured finance investments. These investments generated a weighted average return of 11.6%.
Subsequent to quarter-end, another 50%-owned joint venture originated two preferred equity investments totaling $36.2 million, or $18.1 million at Essex’s share. The investments carry an initial preferred return of 11.5%.
Essex Property Maintains Financial Flexibility
Essex ended June with approximately $1.4 billion of liquidity. This included $1.23 billion of available unsecured commitments and $167 million of cash, equivalents, marketable securities and undrawn equity forward contracts.
Net indebtedness to adjusted EBITDAre improved to 5.4X from 5.5X in both the prior quarter and the year-ago period. Debt to total assets was 34%, while 93% of adjusted NOI came from unencumbered assets.
The company repurchased 48,261 shares during the quarter for $11.7 million. Year to date, it bought back 254,001 shares for $61.9 million and retained $500 million of repurchase authority at quarter-end.
ESS Raises Its 2026 Core FFO Outlook
ESS raised its full-year 2026 core FFO guidance to $16.03-$16.25 per share from $15.69-$16.19. The revised midpoint of $16.14 represents a 20-cent increase. The Zacks Consensus Estimate is pegged at $16.11, which lies within the projected range.
Management also lifted its same-property revenue growth outlook to 2.5%-3.1% from 1.7%-3.1%. The NOI growth range was raised to 2.3%-3.3% from 0.8%-3.4%, while the operating expense range was narrowed to 2.5%-3%.
For the third quarter, Essex expects core FFO per share of $3.93-$4.05. The consensus estimate is pinned at $3.99, lying within the guided range.
Equity Residential reported second-quarter 2026 normalized FFO per share of $1.02, beating the Zacks Consensus Estimate of $1.01. The figure improved 3% year over year.
Results reflected higher same-store NOI supported by strong physical occupancy and better-than-anticipated renewal rates achieved.
AvalonBay Communities reported second-quarter 2026 core FFO per share of $2.86, surpassing the Zacks Consensus Estimate of $2.80. Favorable same-store residential revenues and expense results drove the FFO outperformance.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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ESS Q2 FFO Beats Estimates on Higher Property NOI, '26 View Raised
Key Takeaways
Essex Property Trust, Inc. (ESS - Free Report) reported second-quarter 2026 core funds from operations (FFO) per share of $4.08, beating the Zacks Consensus Estimate of $4.03. The figure also increased 1.2% from the year-ago quarter.
The outperformance reflected higher same-property and non-same-property net operating income (NOI). ESS raised its 2026 FFO per share guidance.
Total revenues were $489.05 million, up 4.1% year over year and ahead of the consensus mark of $487.32 million. Same-property revenues and NOI grew 2.7% and 2.6%, respectively, while financial occupancy edged up 10 basis points year over year to 96.3%.
ESS' Same-Property Revenue Momentum Continues
Same-property revenue growth was primarily driven by a 2.2% increase in scheduled rents. Other income contributed another 0.6%, while delinquency reduced growth by 0.1%. Cash concessions and vacancy had no year-over-year impact.
Sequentially, same-property revenues improved 0.8% from the first quarter of 2026. Scheduled rents added 0.9%, and other income contributed 0.2%. These gains were partly offset by a 0.2% vacancy impact and a 0.1% delinquency drag.
Essex Property's Northern California Markets Lead
Northern California remained the strongest part of Essex Property’s West Coast portfolio. Same-property revenues in the region increased 4.4% year over year, while operating expenses declined 1.2%. Regional NOI advanced 6.8%. Northern California also achieved 1.8% sequential revenue growth and a 3.4% increase in NOI.
Southern California revenues grew 1.5%, with NOI up 1.1%. Seattle Metro revenues increased 1.7%, but a 14.2% surge in operating expenses resulted in a 2.7% decline in NOI.
ESS' Occupancy Remains Stable Across Markets
Same-property financial occupancy was 96.3% at quarter-end compared with 96.2% a year earlier and 96.5% at the end of the first quarter. The modest sequential decline accompanied positive revenue growth across the overall portfolio.
Northern California posted the highest occupancy at 96.8%, up from 96.6% a year ago. Seattle’s occupancy was unchanged at 96.4%, while Southern California improved 10 basis points year over year to 95.7%.
Same-property operating expenses increased 2.8% from the prior-year quarter. Despite the expense growth, portfolio NOI reached $316.8 million, up from $308.7 million a year earlier.
Essex Property Advances Its Investment Strategy
During the quarter, a joint venture in which Essex holds a 50% interest sold a 218-unit apartment community in San Jose for $105.3 million. The company’s pro rata share of the transaction was $52.6 million, and it recorded a $9.2 million gain.
Essex also received $87.8 million from the full redemption of three structured finance investments. These investments generated a weighted average return of 11.6%.
Subsequent to quarter-end, another 50%-owned joint venture originated two preferred equity investments totaling $36.2 million, or $18.1 million at Essex’s share. The investments carry an initial preferred return of 11.5%.
Essex Property Maintains Financial Flexibility
Essex ended June with approximately $1.4 billion of liquidity. This included $1.23 billion of available unsecured commitments and $167 million of cash, equivalents, marketable securities and undrawn equity forward contracts.
Net indebtedness to adjusted EBITDAre improved to 5.4X from 5.5X in both the prior quarter and the year-ago period. Debt to total assets was 34%, while 93% of adjusted NOI came from unencumbered assets.
The company repurchased 48,261 shares during the quarter for $11.7 million. Year to date, it bought back 254,001 shares for $61.9 million and retained $500 million of repurchase authority at quarter-end.
ESS Raises Its 2026 Core FFO Outlook
ESS raised its full-year 2026 core FFO guidance to $16.03-$16.25 per share from $15.69-$16.19. The revised midpoint of $16.14 represents a 20-cent increase. The Zacks Consensus Estimate is pegged at $16.11, which lies within the projected range.
Management also lifted its same-property revenue growth outlook to 2.5%-3.1% from 1.7%-3.1%. The NOI growth range was raised to 2.3%-3.3% from 0.8%-3.4%, while the operating expense range was narrowed to 2.5%-3%.
For the third quarter, Essex expects core FFO per share of $3.93-$4.05. The consensus estimate is pinned at $3.99, lying within the guided range.
ESS’ 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
Performance of Other Residential REITs
Equity Residential reported second-quarter 2026 normalized FFO per share of $1.02, beating the Zacks Consensus Estimate of $1.01. The figure improved 3% year over year.
Results reflected higher same-store NOI supported by strong physical occupancy and better-than-anticipated renewal rates achieved.
AvalonBay Communities reported second-quarter 2026 core FFO per share of $2.86, surpassing the Zacks Consensus Estimate of $2.80. Favorable same-store residential revenues and expense results drove the FFO outperformance.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.