Multifamily residential real estate trusts (REITs) certainly seem to be on a good run with their Q2 2024 earnings. Essex Property Trust, one of America's largest residential REITs, continued that trend with solid quarterly numbers that exceeded analysts’ expectations in many key metrics. This performance will be welcome news for both Essex shareholders and industry observers.
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Who is Essex Property Trust?
Essex Property Trust (NYSE: ESS) dates back to 1971 when real estate visionary George M. Marcus created the Essex Property Corporation. Essex's portfolio grew in size and value until it went public as Essex Property Trust in 1994. At that time, the trust had 16 properties. This REIT focuses on owning and operating multifamily real estate assets in markets where housing is scarce and prices are high.
Most of Essex Property Trust's asset portfolio is in lucrative markets on the West Coast, including Seattle, Los Angeles, Orange County, and the San Francisco Bay Area. Essex Property Trust's total portfolio consists of 255 multifamily assets and over 62,000 units. Real estate data firm Alreits estimates that Essex Property Trust's portfolio accounts for 15% of the sector nationwide. That makes Essex a major player, and it also explains why their performance is so important.
A Very Strong Quarter for One of America's Biggest REITs
Quarterly numbers always matter, but they mean even more when they come from a major player like Essex Property Trust. In many ways, their performance is seen as an indicator of whether the sector is trending up or down. Investors will be pleased if the rest of the multifamily sector can duplicate this performance. Essex Property Trust's quarterly revenue of $442.255 million is an improvement of 6.3% compared to Q2 2023's $410.043 million.
Those revenue numbers exceeded analysts' expectations by a little over 2%. Essex Property Trust's strong revenue contributed to its even more impressive Earnings Per Share (EPS) of $3.94, a massive improvement on Q2 2023's $1.55. Same-property portfolio revenues are also up 3.4% vs. Q2 2023, and the portfolio’s average occupancy was a strong 96.2%.
The Net Earnings Per Share of $1.45 was lower than one year ago but still managed to outperform the $1.31/EPS average estimate that Yahoo Finance compiled based on eight analyst predictions. The trust also upgraded its estimates for Net Income per share from a range of $8.04-$8.44 to $8.23-$8.47. Net Operating Income (NOI) increase estimates were also upgraded from 0.0% – 2.80% to 1.80% – 2.80%.
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Is Essex Property Trust Right for You?
Essex Property Trust has a well-earned reputation in the multifamily residential REIT sector. Its market cap is $17.87 billion, and it pays a more than respectable 3.49% dividend per share. Both of those numbers, plus the largely upward trend of its share price, suggest that this would be a good potential addition to any portfolio.
On the other hand, Essex Property Trust's status as one of America's stronger residential REITs also makes it an expensive buy. The current share price is $278.36, which means the cost of buying a lot of shares could be prohibitive for some investors. So, the answer comes down to what you're looking for.
If you want a blue-chip REIT stock with a solid performance history, Essex Property Trust will tick all those boxes. On the other hand, if you want a REIT with a high upside and a lower buy-in price, this may not be the right REIT for you. However, the larger take-away from Essex Property Trust's Q2 2024 earnings is that multifamily REITs are back in style – at least for now.
REITs Aren't The Only Answer For High Yield
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields but not only through REITs. Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For example, the Jeff Bezos-backed investment platform just launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100.
Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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