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US apartment real estate investment trust (REIT) Essex Property Trust reported second-quarter 2026 core funds from operations (FFO) above market expectations, supported by continued rental growth across Northern California. The company posted core FFO of USD 4.08 per share, exceeding analysts' estimate of USD 4.04 per share. Revenue from its Northern California portfolio increased 4.4% year-on-year, while Southern California recorded 1.5% growth. Essex also reaffirmed confidence in its operating outlook by projecting full-year 2026 adjusted funds from operations (AFFO) of between USD 16.03 and USD 16.25 per share, with the midpoint exceeding analysts' forecasts. The results reflect sustained demand for rental housing in supply-constrained coastal markets.
Essex Property Trust reported stronger-than-expected second-quarter financial results after continued rental growth across Northern California supported earnings, underscoring the resilience of the apartment market in one of the United States' most supply-constrained residential regions.
The apartment-focused real estate investment trust (REIT) announced earlier this week that core funds from operations (FFO), a key industry performance measure, stood at USD 4.08 per share for the quarter ended 30 June 2026. The result exceeded analysts' consensus estimate of USD 4.04 per share, according to data compiled by LSEG.
The company's performance was driven primarily by higher rental income from its Northern California portfolio, where revenue increased 4.4% compared with the corresponding period last year. Essex attributed the improvement to sustained rental demand and limited housing supply, conditions that have continued to support rent growth across the region.
Revenue growth in Southern California was comparatively moderate, rising 1.5% year-on-year during the quarter. Despite the slower pace, the region continued to contribute positively to the company's overall operating performance.
Essex also provided updated guidance for the remainder of the year, forecasting adjusted funds from operations (AFFO) of between USD 16.03 and USD 16.25 per share for 2026. The midpoint of the forecast is above analysts' average expectation of USD 16.11 per share, indicating the company's confidence in continued operating stability through the second half of the year.
The latest results highlight the relative strength of coastal apartment markets, where constrained housing supply has continued to underpin rental demand despite broader economic uncertainty. Limited availability of new housing has enabled landlords in several high-demand locations to maintain rental growth and stable occupancy levels.
Essex Property Trust owns and manages multifamily residential communities primarily across California and the Pacific Northwest. Its portfolio has continued to benefit from strong demand in technology-driven employment centres, particularly in Northern California, where housing shortages have supported rental performance over an extended period.
The company's second-quarter performance contrasts with conditions in several other US apartment markets where elevated new housing supply has moderated rental growth. Essex's concentration in supply-constrained coastal markets has enabled it to outperform broader market expectations, reinforcing investor confidence in the resilience of its residential portfolio and earnings outlook for 2026.
Source - Reuters
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