Essex Property Trust raised its full-year 2026 guidance after posting second-quarter Core FFO of $4.08 per diluted share, up 1.2% year over year, according to an earnings exhibit the company filed with the Securities and Exchange Commission on July 29. Same-property revenue grew 2.7% year over year, operating expenses grew 2.8%, and net operating income grew 2.6%, with portfolio-wide occupancy at 96.3%, up slightly from 96.2% a year earlier.
Results varied sharply by region. Northern California led growth by a wide margin: San Francisco same-property revenue rose 7.0% year over year, San Mateo County rose 5.4%, and Santa Clara County rose 4.5%. Southern California, by contrast, posted far more modest gains, with Los Angeles County revenue up 1.0% and San Diego County up 1.1%. Essex’s Seattle-area portfolio posted occupancy of 96.4% for the quarter.
Based on the quarter’s performance, Essex raised its full-year 2026 Core FFO guidance to a range of $16.03 to $16.25 per diluted share, up from a prior range of $15.69 to $16.19, an increase of roughly $0.20 at the midpoint. The company also raised its same-property revenue growth guidance to 2.5% to 3.1% from 1.7% to 3.1%, and its same-property NOI growth guidance to 2.3% to 3.3% from 0.8% to 3.4%. Full-year net income per share guidance was lowered to $5.47 to $5.69 from $5.62 to $6.12, reflecting the absence of large asset-sale gains recorded in 2025. For the third quarter, the company guided to Core FFO of $3.93 to $4.05 per share.
Total FFO per diluted share fell 17.6% year over year to $3.32, and GAAP net income per share fell 71.8% to $0.97, both driven primarily by legal settlement costs and by the comparison against a $126.2 million real estate gain Essex recorded in the second quarter of 2025, versus just $2.0 million in gains this quarter.
On the investment side, Essex disposed of a co-investment apartment community in San Jose for $105.3 million in total consideration ($52.6 million at its pro rata ownership share), recording a $9.2 million pro rata gain. The company also redeemed three structured finance investments for $87.8 million in cash proceeds at an 11.6% weighted average yield, and after quarter-end originated two new preferred equity investments totaling $36.2 million ($18.1 million pro rata) at an 11.5% yield. Essex repurchased 48,261 shares for $11.7 million during the quarter at an average price of $242.47, bringing year-to-date repurchases to $61.9 million, under a new $500 million buyback authorization approved in May. Total liquidity stood at approximately $1.4 billion.
Essex’s sharp San Francisco outperformance adds to a run of Bay Area rental-market data pointing to tightening conditions. San Francisco’s apartment vacancy rate recently fell to its lowest level in roughly 25 years, a trend CBRE and other researchers have tied to renewed AI and tech-sector hiring combined with very limited new apartment construction in the city β a dynamic Essex’s own regional results this quarter appear to confirm from the landlord side of the market.
What it means: Essex’s reported results and raised guidance are the company’s own verified figures from its SEC filing. The sharp divergence between booming Northern California rent growth and modest Southern California gains is a real, measured pattern in this quarter’s data, though whether AI-driven hiring is the primary cause, as other Bay Area research has suggested, is an inference this earnings release itself does not explicitly draw.
