Good morning. Thank you for joining Essex's third quarter earnings call. I will follow with prepared remarks and Rylan Burns is here for Q&A. We are pleased to report our third guidance raise this year as a result of another healthy quarter with core FFO per share exceeding the midpoint of our guidance range. Today, my comments will focus on our performance year-to-date, preliminary considerations for 2025, and an update on the investment market. Starting with highlights to date, notable milestones this year include record low turnover, excellent progress resolving delinquency, and positive inflection points in several key demand drivers. These factors combined with a muted level of new housing supply have enabled Essex to deliver results exceeding the high end of our original 2024 expectations. Year-to-date, we've achieved solid results with market rents generally trending consistent with historical patterns as shown in the chart on Page S-13.2. In the third quarter, rents peaked in July and remained resilient through August before moderating in September. As we expected, the blended rate growth of 2.5% for the quarter was tempered by the combination of seasonal moderation in rents, which started in September, and difficult year-over-year comparisons. Especially since last year, our rents did not moderate until late October. As we enter the fourth quarter, our market remains stable. We shifted our operating strategy to focus on occupancy as we've done in prior years in anticipation of slower demand characteristics of normal seasonality. Moving to regional highlights. Seattle has been our top performer this year, delivering a strong 3.8% blended rate growth in the third quarter. The East side, where we have approximately 70% of our portfolio, was our strongest market with 4.7% blended growth. For the rest of the year, we anticipate a heavier supply delivery and thus more concessions usage in this region. Northern California has performed well, achieving 2.3% blended rate growth in the third quarter, led by Santa Clara County with 3.6%. The overall supply for this region remains very low, but we anticipate most of the deliveries for San Jose this year to occur in the fourth quarter. Therefore, we plan for higher concessions to address this short-term impact. On to Southern California, which achieved 2.1% blended lease rate growth in the third quarter. Lease rates in this region were tempered by headwinds related to delinquency recovery in Los Angeles. Excluding LA, this region produced 3.5% blended rate growth for the third quarter. While the exact timing is difficult to pinpoint, we are cautiously optimistic that new lease rates will begin to recover next year in LA as the volume of delinquent units continues to subside. Heading into year-end, we are well positioned at 96.1% financial occupancy for October with year-over-year comps easing in November and December. Turning to our expectations for 2025. We've provided high-level revenue drivers on Page S-16.2 of the supplemental. We expect our earnings for next year to surpass what was achieved in 2024, ranging from 80 to 100 basis points. Additionally, we anticipate a 40 to 60 basis points tailwind from delinquency improvements. Combined, these two components should generate approximately 120 to 160 basis points of same property revenue growth in 2025. As for market rent growth, supply and demand will ultimately be the key building blocks. The fundamental backdrop remains stable and continues to gradually improve. On the supply side, detailed on Page S-16 of the supplemental, we expect total supply growth of only 50 basis points in 2025. This is consistent with the low level of supply in 2024 and well below our long-term average of 1% for our markets. On the demand side, we've seen positive inflection points and several major demand drivers this year. Job postings at the top 20 technology companies have been steadily recovering, demonstrating a sentiment shift from retrenchment in 2023 to positioning for future growth. Additionally, these same companies continue to increase their return to office requirements, which has resulted in increased demand in the San Jose and Seattle regions. Related to this is migration back to our markets, which has steadily improved and is rebalancing toward historical patterns. Given the low supply environment in the Essex markets, we are well positioned to achieve new lease rate growth with incremental demand. Lastly, on the transaction market, strong investor interest for multifamily properties on the West Coast has resulted in cap rates trading consistently in the mid 4% range with numerous transactions in the low 4%. Within this competitive landscape, our investment team has done a terrific job originating several opportunities at better than market yields, acquiring over 1,700 units to date, totaling over $700 million at our pro-rata share. We continue to execute transactions with attractive returns relative to our cost of capital and we are confident in our ability to generate opportunities to drive NAV and FFO per share accretion for our shareholders. Finally, I'll conclude with a brief comment on California Proposition 33. It is no surprise to anyone that excessive regulation dramatically restricts housing production in California, leading to high costs of housing. As such, we have joined Governor Newsom in endorsing a no vote on Proposition 33. We all know that building more housing is the only solution to the state's housing shortage. With that, I'll turn the call over to Barb.

Thanks, Angela. I'll begin by briefly discussing our third quarter results, followed by comments on the remainder of 2024 and conclude with investments and the balance sheet. I'm pleased to report third quarter core FFO per share of $3.91, a $0.04 beat to the midpoint of our guidance range. The outperformance was primarily driven by higher same property revenues. For the full year, we are raising the midpoint of core FFO for a third consecutive quarter by $0.06 to $15.56 per share, which represents 3.5% year-over-year growth. A key contributor to the full year increase relates to same property revenue growth, which has outperformed our expectations. As such, we are raising our midpoint by 25 basis points to 3.25% growth for the year. The increase is driven by lower delinquency and higher other income. With no change to our expense outlook, we expect same property NOI growth of 2.6%, a 30 basis points increase at the midpoint. Turning to investments. Year-to-date, we've acquired approximately $700 million in multifamily properties at pro-rata share, which has been funded on a leverage neutral basis with $200 million of dispositions, $450 million of proceeds from structured finance redemptions and free cash flow, and $25 million in OP units. As it relates to our structured finance book, we have received $106 million in cash redemptions through October and anticipate an additional $40 million for the balance of the year. We've reinvested these funds into new acquisitions, which offer the most attractive risk-adjusted return today given the growth potential in our markets. While this strategic reallocation results in short-term FFO dilution, growing the company via apartment acquisitions improves the quality of our cash flow and the long-term growth profile of our portfolio. This in turn drives better NAV and core FFO growth for our shareholders. Looking to 2025, we expect between $100 million to $150 million of redemptions with up to 50% expected by the end of the first quarter. Barring a change in the investment landscape, we are most likely to redeploy these proceeds into acquisitions, resulting in a continued reduction of the structured finance book and better alignment with our target range for this business at 3% to 5% of core FFO. Finally, a few comments on the balance sheet. Over the last several years, we have opportunistically refinanced our debt maturities early when we see an attractive issuance window. We continued that trend this quarter as we issued $200 million in 10-year unsecured bonds at an effective rate of 5.1%. With a manageable debt maturity schedule next year, we have ample flexibility to be opportunistic. Overall, our balance sheet remains in a strong position with low leverage as defined by net debt to EBITDA at 5.5 times. In addition, with over $1 billion in liquidity and ample sources of available capital, the company is well positioned. I will now turn the call back to the operator for questions.

The first question comes from Nick Yulico from Scotiabank.

This is Daniel Tricarico on with Nick. I wanted to ask a question on bad debt, with the 50 basis points of improvement in 2025. What gives you the confidence LA Alameda County will normalize like your other markets? And just to confirm your comment, Angela, from your prepared remarks, this assumption would imply maybe broader supply/demand fundamentals should improve in those markets as well.

With respect to LA Alameda, a couple of things are happening on the ground that give us some confidence that things are improving. So for example, delinquency in terms of just the volume has really improved. In fact, at year-end, last year in December, our delinquency as a percentage of rent for LA was almost 5%. Today, it's 1.6%. So that is significant progress. And we've seen a direct correlation as the courts continue to move through the eviction process, and that's been a key to continuing that trend. But as far as just general economic viability for LA, a couple of things that actually give us a positive sign. For example, we have, of course, the World Cup coming and the Olympics. And so what we are anticipating is that there will be benefits from economic investments, both domestically and internationally, to this region. But further, just this week, Governor Newsom proposed to double California's film and television tax credit program from the current $330 million to about $750 million. So these are all great signs that we're seeing that give us that level of optimism.

As a follow-up, you mentioned signs of improving tech job backdrop, something not necessarily heard from office landlords. So maybe you could expand a bit more on where and what you're seeing specifically related to that?

So we track the openings of the top 20 tech companies. And that is the closest thing to apples-to-apples that we can see, and they're really the drivers of the overall health of the technology sector. We follow that and we use a third-party independent report. We have seen that for the first time in almost two years, the job openings have reached pre-COVID averages. It's a good start because openings are an indication that these companies will be positioning to hire in the future. The one thing that I'll ask you to keep in mind is that this is a lumpy trend and it's not an immediate impact. But obviously, things are going in the right direction here.

The next question is from the line of Eric Wolfe from Citi.

It's Nick Joseph here with Eric. Appreciate the '25 building blocks. I guess my question is just around pricing strategy going forward. I mean, you've laid out kind of the improving bad debt situation, particularly in Southern California, continued low supply. So half a percentage point next year. How are you thinking about the ability to actually push on the new lease side, and how are renewals going out over the next 30 and 60 days?

In terms of our operating strategy, we have shifted to an occupancy strategy in the fourth quarter. That's typical to address the seasonal slow demand that's characteristic of our business. What we are expecting is the deceleration that we have seen in September and October, which we have factored into our guidance, will start to abate. For example, in October last year, our concessions were only half a week, and this year, it's about a week. That doesn't seem like a big number, but half a week represents 1% of rent. You can see the year-over-year impact on the financials. As far as the renewals are concerned, we're sending renewals out in the mid-4s, a strong number consistent with our plan. Early indications are that we're landing around the high 3s, once again well within the range. Typically, negotiations range from zero to 100 basis points, and this is kind of in the middle of that. These are all good indications for the rest of the year and for our pricing power next year.

And then just on the potential repeal of cost, I want to understand all the arguments on the policy side. But if it were to pass, if the repeal occurred, how do you think about what could happen over the following few months? And what is your exposure to municipalities that have some form of rent control currently?

We kind of battle internally on how to think about this risk. Let me just start with a couple of data points that may be useful in making an assumption like this, because it is a very difficult hypothetical question to answer. Right now, every city in California can enact rent control on buildings built before 1995. We have about 483 cities in California, and only about 8% of these cities have been active in rent control, where in a lot of these cities, the rent control is actually quite moderate. As far as Proposition 33 is concerned, 23 mayors have come out and announced that they were against Proposition 33. Some of these mayors are the same ones that have rent control, like San Jose and Santa Ana. So for us to interpolate something that is so unlikely, it's just too difficult to predict. But more importantly, on the campaign itself, this is following the same pattern as the 2018 and the 2020 pattern, and both times, they were defeated by a landslide. The public and the legislators understand the impact of something so onerous, and this is evidenced by the most expensive cities in California being the ones with the most onerous rent control, like San Francisco and Santa Monica, and the ones with the highest brands. So the net-net is that the campaign continues to gain momentum, and we are confident this will be defeated.

The next question is from the line of Haendel St. Juste from Mizuho Securities.

So a couple of questions from me. I think in your prepared remarks, Angela, you mentioned that rents last year did not moderate until October. You had tough comps this year in September and October, but it looks like the comps are getting easier ahead. So I guess I'm curious what you're sending out for renewals today and any color on October new lease rates? But more broadly, is there a scenario where we can see a reacceleration in blends on these easy comps? Just curious what's kind of embedded in your near-term outlook here.

We are sending new renewals out in the mid-4s. So far, the early indications from those who have signed leases are landing in the high 3s, say 3.9%, 3.8% on average. These are definitely good trends and positive indications. As far as the possibility of a reacceleration, it's certainly possible because, as I mentioned, rents continue to increase through October last year. Renewals remain strong, and this year, we do not have the same headwinds in November and December that we did last year. On the immigration front, we are seeing that this year has benefited our numbers, especially if you look at the job growth environment. It's generally not robust for the US and the West Coast, but it's stable and moving along. For us to outperform, it's demand coming from elsewhere relative to our original forecast. Predicting how that impacts next year is early to tell for two reasons. One is that we believe most of the return to office benefits were captured this year. Our immigration as a percentage of our total leases isn't yet at pre-COVID levels, but it's close. We may say we've captured 70% to 75% of the return to office. Better job growth will drive demand for housing next year, but we need better indications on a macro level of where the consensus job forecast will land and what it means for the West Coast, as we are still all interrelated to the entire economy.

The next question is from the line of Steve Sakwa from Evercore ISI.

Could you provide a little bit of color on the cap rate pricing on the sort of different acquisitions that you did as well as the dispositions?

We were pleased to buy out two of our joint venture partners in the third quarter. These were long-running negotiations. In both cases, we had debt maturing, which necessitated conversations. We believe we were able to buy those at a very attractive basis, probably 20% to 25% discounts to replacement cost today at yields in the high 4s. So we think it's better than market pricing. In one instance, we were able to negotiate an OP unit transaction at a 305 strike price, which was, when we negotiated it, when the stock was around 270. Subsequent to quarter-end, the portfolio transaction noted in the release is similar to a portfolio we did earlier in the year, where market cap rates are in the low 5s. Given this is a slightly older portfolio, but one that we've owned for many years. We've invested in it, and we know it well. Our basis as we were already majority owners is going to cap rates closer to a 6. The disposition subsequent to quarter-end in San Mateo was a 76-year-old asset at approximately a 5 cap to Essex, inclusive of capital. We are seeing better risk-adjusted opportunities elsewhere, and we're able to redeploy that capital into higher returning investments.

I realize development might still be a bit of a dirty word. But how are you guys thinking about future developments and where would developments perhaps pencil today on current costs and in-place rents? I'm trying to figure out how far away you think you might be from being able to start some new projects?

It's something we've been really focused on over the past year. We haven't started a new development for almost five years. The risk-adjusted returns just didn't make sense. What we've seen more recently is that I think others are recognizing the challenging return environment, and we've seen capital pull back. Permits are starting to come down, hard costs are starting to come down. If you can secure land at an attractive basis and design an efficient building, we're getting closer. We have a history of being a counter-cyclical developer. With others pulling back, we are sharpening our pencils, and we'll have more to come here in the next several quarters.

The next question is from the line of Alexander Goldfarb from Piper Sandler.

Two questions. First, Angela, you mentioned some comments around supply on the east side of Seattle, and I think you also mentioned maybe with San Jose. But just big picture collectively, can you outline the supply picture you're looking at? How much of the portfolio do you think it impacts? And if it's just sort of in the next six months or if you think it's something that extends longer and impacts more of '25?

On the supply landscape, we do see that the San Jose impact should really be more concentrated in the fourth quarter, maybe a little overlap into the first quarter because it really depends on how the delivery occurs. If they all come at once or if they will be pro-rata over the next several months, it'll have a different impact. But having said that, the total stock in San Jose remains very low. For the full year, 2,400 units should be delivered. Unfortunately, about 1,100 of those happened in the fourth quarter. But it's still very low, and that's why we expect that absorption to occur quickly. There will be some concessions involved, but it won't be as challenging as what we've seen, for example, in Downtown LA or Oakland. Seattle has had a higher supply delivery market with stay slightly above 1% of total supply. The shift from the east side should start in the fourth quarter and probably continue into the first quarter. However, Seattle has generated the highest level of demand in the market, so with a higher level of job growth, we expect that the demand or the supply will be absorbed timely.

Barb, a question for you on the recycling. As you guys whittle down the preferred and debt book and recycle into assets, sort of in aggregate, especially as we think about '25. Is there some sort of pennies or way that we can think about the dilution impact? Is it $0.05, $0.10, is it more than that? Just trying to get a sense of how we should think about redeployment from the preferred and debt book into income-producing assets?

What you can do is assume we're losing at 10% on the preferred and redeploying it around 5%. That's the impact you're seeing from an FFO perspective. But we're targeting 3% to 5% of our core FFO per share. In 2024, we were at about 5.5%. We do expect that will moderate to the low 4% range next year as a lot of our redemptions this year were back-end loaded, and then we have some front-end loaded redemptions next year. We expect it to moderate throughout next year. But we should have higher NOI as we are redeploying this money back into acquisitions.

The next question is from the line of Adam Kramer from Morgan Stanley.

Just wanted to ask about the advocacy expense, lobbying expense that was disclosed this quarter. Maybe just quantify what it was this quarter and what it's been year-to-date as well, and if there's more to come here in 4Q, given the timing of the election versus the timing of the quarter-end?

In the third quarter, we spent $10 million. Year-to-date, we're at $16 million, and for the full year, our guidance assumes a little over $30 million on the advocacy front.

The next question is from the line of Jamie Feldman from Wells Fargo.

So I think you renewed your insurance policy in December. Can you give us your initial thoughts on how that's looking and maybe just frame what you're seeing and hearing on the commercial property insurance market overall?

We are in the midst of our insurance renewal right now. It's a little too early to know how it's going to play out. What we have seen in the industry this year is a moderation in insurance premium increases. The last two years, we've seen our premium increase 20% to 30% annually, and we expect that it will moderate from there next year. However, the level is a little difficult to discern at this point. We'll obviously have more color on our fourth quarter call.

The next question is from the line of Josh Dennerlein from Bank of America.

I was looking at Exhibit or Page S-16.1 in the supplemental. Could you go over that earn-in? I see that you added concession impact. I just want to clarify what that means and how we should think about it versus like our models out here.

The earn-in is consistent with how we calculated it last year. It's really just taking the leases we've signed through October and our projections for November and December and what does that carry forward next year, assuming no market rent growth next year. It doesn't include concessions because concessions are below the line. This is just the gross rent excluding any concessions. I don't think it's too dissimilar from how the industry calculates this number, but 90 basis points is our projection based on the leases signed. Does that answer your question?

Why have you, just thinking about capital recycling, do you think you'll lean into maybe taking out or consolidating additional JVs versus outright purchases of income-producing assets or is it opportunity-driven?

The joint venture business has really been an efficient source of capital. It has and will continue to benefit the company through various points of the cycle. We have great partners who want exposure to West Coast housing and like investing alongside a company like Essex that's financially aligned and can provide a best-in-class operating platform. In 2024, from Essex's perspective, we saw an opportunity to purchase communities that we knew well, we had invested in for many years, and most importantly, it was accretive to shareholders. Going forward, we still have 7,700 units that are owned in joint venture partnerships, and it's going to be a function of our discussion with partners, our cost of capital, and the opportunity set in the market. We are open and eagerly looking at all avenues to grow.

The next question is from the line of John Kim from BMO Capital Markets.

I wanted to ask about the spread you have between renewal and new leases this quarter. It was 330 basis points; over the last two years, it's been 350. A lot of your peers are at 600 basis points or more in some cases. It seems like your renewals are a little more sensitive to market rents than others. I wonder why that's the case?

I don't know if our renewals and market rent sensitivity is really what's driving the spread. I think it's more the operating strategy that's driving the spread. We focus on maximizing revenues, sending renewals where we anticipate the market will be a month or two from today. This strategy is influenced by whether we're focusing on occupancy and what's happening in the supply landscape and job landscape. Some of our peers focus on new lease rates or renewal rates; therefore, that focus impacts the others. Our business objective is focused on maximizing revenue, not a specific rate.

But in the case of some companies, the move out to buy a home is at all-time lows. I'm wondering what that ratio is for you right now. Because of that all-time low, they're able to push renewals maybe harder than one would expect versus new leases. I'm wondering because home prices are high in your markets, does that present potential upside for you going forward?

For us, the move out to buy homes has not been a meaningful factor in our pricing strategy, whether it's now or in prior cycles, primarily because it's a smaller percentage. Pre-COVID, during lower interest rates, our move-out to buy homes was somewhere around the 10% range. Today, the move-out ratio is about 5%. However, we talk about approximately 2.8% to 3 times more expensive to own than to rent. This increase in that cost of ownership is not going to influence our pricing strategy significantly because it's already very expensive.

The next question is from the line of Linda Tsai from Jefferies.

With comparisons getting a little easier from here, would you expect new lease rates to inflect more positively for the last two months?

That's what we are anticipating. New rates went negative in October, starting in September. With the easier year-over-year comp, we do expect an inflection point where it either becomes neutral or turns positive.

We're constantly monitoring the market. Most of the maturities due next year total $500 million in unsecured bonds. We'll be looking at the bond market to refinance that in the near term. It depends on the tenor and where the treasury is at. Issuing the 10-year paper in August was at 5.1%. Today, we're probably 30 basis points wide of that. There will be an earnings impact as we roll off a 3.5% coupon bond and go up into the low 5s. We'll continue to monitor the market to see if there's an attractive opportunity.

The next question is from the line of John Pawlowski from Green Street.

I wanted to drill into the return to office theme some more and use Seattle as a case study. Can you share any specific metrics to help us understand how the leasing conditions have improved since Amazon and a few others announced stricter return-to-office policies?

In Seattle, we saw our demand increase or spike when Amazon and other companies first announced their return-to-office schedule, and the correlation was clear. However, with Amazon announcing their return to full-time in January, the question now is when they start enforcing it, which is when we will see that benefit.

Ladies and gentlemen, that concludes the question-and-answer session. And it also concludes the conference of Essex Property Trust. Thank you for your participation. You may now disconnect your lines.