Essex Property Trust Inc (ESS) 2023 Q3 法說會逐字稿

Good day, and welcome to the Essex Property Trust Third Quarter 2023 Earnings Conference Call. As a reminder, today's conference call is being recorded. Statements made in this conference call regarding expected operating results and other future events are forward-looking statements that involve risks and uncertainties. Forward-looking statements are made based on current expectations, assumptions and beliefs as well as information available to the company at this time.

美好的一天，歡迎參加埃塞克斯房地產信託 2023 年第三季財報電話會議。提醒一下，今天的電話會議正在錄音。本次電話會議中有關預期營運績效和其他未來事件的陳述屬於前瞻性陳述，涉及風險和不確定性。前瞻性陳述是根據當前的預期、假設和信念以及公司目前可獲得的資訊做出的。

A number of factors could cause actual results to differ materially from those anticipated. Further information about these risks can be found on the company's filings with the SEC. It is now my pleasure to introduce your host, Ms. Angela Kleiman, President and Chief Executive Officer for Essex Property Trust. Thank you, Ms. Kleiman, you may begin.

許多因素可能導致實際結果與預期結果有重大差異。有關這些風險的更多資訊可以在該公司向 SEC 提交的文件中找到。現在我很高興向大家介紹東道主安吉拉·克萊曼女士，她是埃塞克斯地產信託公司的總裁兼首席執行官。謝謝克萊曼女士，您可以開始了。

Good morning, and thank you for joining Essex's third quarter earnings call. Barb Pak and Jessica Anderson will follow with prepared remarks, and Rylan Burns is here for Q&A. My comments today will focus on how we performed to date, our initial outlook for 2024 and a brief update on the investment markets.

早上好，感謝您參加艾塞克斯第三季財報電話會議。 Barb Pak 和 Jessica Anderson 將發表準備好的講話，Rylan Burns 也將出席問答環節。我今天的評論將重點放在我們迄今為止的表現、我們對 2024 年的初步展望以及投資市場的簡要更新。

Overall, 2023 has unfolded generally in line with our expectations. We increased our same property revenue and NOI growth in middle of the year despite a challenging operating environment with almost 2% of rent delinquent for the first 9 months of the year. For context, this delinquency level is approximately 5x our historical average. The unprecedented eviction protections enacted during COVID exacerbated by subsequent court delays has resulted in protracted exposure to nonpaying tenants and uncertainty on timing of when we could recapture these units. That said, we made considerable progress reducing delinquency, as a percentage of rent, which is now at 1.3% in October. This improvement has naturally resulted in a temporary trade-off between rate growth and occupancy but has proven to be an optimal strategy to maximize revenues, as we make progress towards normalization in our markets.

整體而言，2023 年的發展整體符合我們的預期。儘管經營環境充滿挑戰，今年前 9 個月拖欠租金近 2%，但我們在年中的房地產收入和 NOI 成長仍保持不變。就背景而言，這一拖欠水平約為我們歷史平均水平的 5 倍。新冠疫情期間頒布的史無前例的驅逐保護措施因隨後的法院拖延而加劇，導致我們長期面臨不付房租的租戶，並且我們何時可以收回這些單位的時間也存在不確定性。儘管如此，我們在減少拖欠租金方面取得了相當大的進展，目前拖欠租金佔租金的比例為 10 月的 1.3%。這種改善自然會導致房價成長和入住率之間的暫時權衡，但事實證明，隨著我們在市場正常化方面取得進展，這是實現收入最大化的最佳策略。

Looking ahead to 2024, we plan to publish a more comprehensive outlook for the West Coast in conjunction with our full year guidance on our fourth quarter earnings call. For now, we have provided our initial 2024 supply outlook for our markets on S-17 of the supplemental, which forecasts total supply growth of only 0.5% of total housing stock. Unlike many other U.S. markets, total housing supply in our markets is expected to remain at low levels, and we do not see a near-term catalyst for increasing housing supply growth in the Essex market. This supply landscape also minimizes our risk to job growth relative to other markets, especially if we encounter a softer demand environment and will be a tailwind for Essex when the economy accelerates.

展望 2024 年，我們計劃結合第四季財報電話會議的全年指引，發布更全面的西海岸展望。目前，我們已在補充資料的 S-17 中提供了 2024 年市場的初步供應前景，其中預測總供應成長僅佔房屋存量總量的 0.5%。與許多其他美國市場不同，我們市場的房屋供應總量預計將保持在較低水平，我們認為埃塞克斯市場的房屋供應成長短期內不會出現催化劑。相對於其他市場，這種供應格局也最大限度地降低了我們就業成長的風險，特別是如果我們遇到需求疲軟的環境，並且在經濟加速時將成為埃塞克斯的順風車。

While muted supply is part of our thesis, we also see conditions that could drive demand for housing. First, after a year of retrenchment, layoff in the tech industry appears to be slowing and return-to-office is gaining momentum with percent of remote job hiring at the largest tech companies now in the low single digits. Implying that once tech hiring resumes in a meaningful way, job growth will be highly concentrated near major employment centers. Second, it remains to be seen how the artificial intelligence industry will grow. We know the success in this industry will require immense scale and capital resources, and these types of companies are largely concentrated in the Bay Area and Seattle.

雖然供應疲軟是我們論文的一部分，但我們也看到了可能推動住房需求的條件。首先，經過一年的裁員，科技業的裁員似乎正在放緩，重返辦公室的勢頭正在增強，目前最大的科技公司的遠距工作招聘比例僅為低個位數。這意味著，一旦科技招聘以有意義的方式恢復，就業成長將高度集中在主要就業中心附近。其次，人工智慧產業將如何發展仍有待觀察。我們知道這個產業的成功需要龐大的規模和資本資源，而這類公司主要集中在灣區和西雅圖。

Third, affordability, particularly in Northern California. Today, the Bay Area is as affordable as we've seen since we began tracking this data, and we expect this will provide a long runway for rent growth. In summary, the combination of this potential demand backdrop and a muted supply outlook gives us confidence that the West Coast is well positioned to outperform in the long run.

第三，負擔能力，特別是在北加州。如今，自從我們開始追蹤這些數據以來，灣區的房價是最便宜的，我們預計這將為租金成長提供一條漫長的道路。總而言之，這種潛在的需求背景和疲軟的供應前景相結合，讓我們相信西海岸從長遠來看有能力跑贏大盤。

Lastly, an update on the apartment investment market. Deal activity slowed further in the third quarter as interest rates increased sharply in recent month, compressing prospective returns and resulting in many buyers remaining on silence. We have seen several marketed deals now transact this year, as sellers await a less volatile interest rate environment. There is little evidence to suggest transaction activity will pick up in the near term as bid-ask spread remains wide. We have navigated through many economic cycles, and our finance team has done an excellent job in fortifying the balance sheet, which positions Essex well for any environment. With that, I'll turn the call over to Barb.

最後，介紹一下公寓投資市場的最新情況。由於近個月利率大幅上升，第三季交易活動進一步放緩，壓縮了預期回報，導致許多買家保持沉默。由於賣家等待波動性較小的利率環境，今年我們已經看到了幾筆市場交易。幾乎沒有證據顯示交易活動會在短期內回升，因為買賣價差仍然很大。我們經歷了許多經濟週期，我們的財務團隊在強化資產負債表方面做得非常出色，這使埃塞克斯在任何環境下都處於有利地位。這樣，我就把電話轉給倒鉤。

Thanks, Angela. Today, I will discuss our third quarter results, along with investments in the balance sheet. Starting with our third quarter performance. I'm pleased to report that core FFO per share for the quarter came in $0.03 ahead of our midpoint. The outperformance was driven by slightly higher revenues, other income and lower G&A expenses. Partially offset by higher operating expenses. Most of the beat in the third quarter is timing related. As such, we are reiterating the midpoint of our full year core FFO per share and same property revenue, expense and NOI growth. As it relates to operating expenses, 2023 has been elevated compared to our historical run rate, given above average increases in repairs and maintenance costs and insurance. This was partially offset by real estate taxes, which increased by only 1% due to the favorable outcome we received in Seattle. As we look to 2024, we expect operating expenses will remain elevated, primarily driven by noncontrollable items such as insurance and utilities. In addition the tax benefit we received in Washington share is not expected to repeat in 2024.

謝謝，安吉拉。今天，我將討論我們第三季的業績以及資產負債表中的投資。從我們第三季的業績開始。我很高興地報告，本季每股核心 FFO 比我們的中點高出 0.03 美元。業績優異的原因是收入、其他收入略有增加以及一般及行政費用減少。部分被較高的營運費用所抵銷。第三季的大部分節奏都與時間有關。因此，我們重申全年核心 FFO 每股以及相同財產收入、費用和 NOI 成長的中點。由於與營運費用相關，鑑於維修和保養成本以及保險的增幅高於平均水平，2023 年的運行費用比我們的歷史運行費用有所提高。這部分被房地產稅所抵消，由於我們在西雅圖獲得了有利的結果，房地產稅僅增加了 1%。展望 2024 年，我們預計營運支出將保持在較高水平，這主要是由保險和公用事業等不可控項目推動的。此外，我們在華盛頓股票中獲得的稅收優惠預計不會在 2024 年再次出現。

However, it should be noted that we have done a good job over the past 4 years, improving the operating efficiency of the platform, which has led to a modest increase in our controllable expenses. Since 2019, our controllable expenses have increased around 2.75% annually despite elevated inflationary pressures and higher costs related to our delinquent units during this period. This favorable outcome is primarily driven by the rollout of Phase 1 of our property collections model. As always, we are continuously looking for ways to improve efficiencies within the platform in order to optimize our cost structure.

但值得注意的是，過去4年我們做得很好，提高了平台的營運效率，這導致我們的可控費用略有增加。自 2019 年以來，儘管通膨壓力加大，拖欠單位相關成本上升，但我們的可控費用每年增長約 2.75%。這一有利的結果主要是由我們的財產收藏模型第一階段的推出所推動的。一如既往，我們不斷尋找提高平台效率的方法，以優化我們的成本結構。

Turning to investments. For the year, we expect preferred equity redemptions to be around $70 million, as we anticipate being fully repaid on a $40 million investment in the fourth quarter. As we look to 2024, we expect redemptions within our preferred equity book to be around $100 million. While we are actively looking for new deals to replace these investments, there could be a timing mismatch in terms of when we get repaid and when we can reinvest. We are finding there are still significant capital sources eager to invest in this portion of the capital stack, while at the same time projects with reasonable return expectations are becoming harder to find. We will remain disciplined in this environment, meaning on our deep network on the West Coast to source deals at attractive risk adjusted returns.

轉向投資。今年，我們預計優先股贖回金額約為 7,000 萬美元，因為我們預計 4,000 萬美元的投資將在第四季度全額償還。展望 2024 年，我們預計優先股帳簿中的贖回金額約為 1 億美元。雖然我們正在積極尋找新的交易來取代這些投資，但我們何時獲得償還以及何時可以再投資可能會出現時間不匹配。我們發現仍有大量資金來源渴望投資這部分資本，同時，具有合理回報預期的項目變得越來越難找到。在這種環境下，我們將保持自律，這意味著我們在西海岸的深層網路能夠以有吸引力的風險調整回報來尋找交易。

Turning to capital markets and the balance sheet. In July we closed $298 million in 10-year secured loans at a fixed rate of 5.08%. The proceeds will be used to repay our 2024 consolidated maturities. We were proactive in refinancing our debt early in today's volatile rate environment, locking in favorable financing ahead of the recent acceleration in treasury yields. As such, the company is well positioned with minimal financing needs over the next 18 months. We are pleased that our net debt-to-EBITDA ratio continues to trend lower and stands at 5.5x today as compared to 5.8x 1 year ago. With over $1.6 billion in liquidity, the balance sheet remains a source of strength.

轉向資本市場和資產負債表。 7 月份，我們以 5.08% 的固定利率完成了 2.98 億美元的 10 年期擔保貸款。所得款項將用於償還我們 2024 年的合併到期日。在當今波動的利率環境下，我們很早就積極主動地為債務再融資，在近期國債殖利率加速之前鎖定有利的融資。因此，該公司處於有利地位，未來 18 個月的融資需求極低。我們很高興看到我們的淨負債與 EBITDA 比率持續呈下降趨勢，目前為 5.5 倍，而一年前為 5.8 倍。憑藉超過 16 億美元的流動性，資產負債表仍然是實力的來源。

I'll now turn it over to Jessica Anderson.

我現在把它交給傑西卡·安德森。

Thanks, Barb. For my comments today will cover our recent operating results and strategy, followed by an update on our delinquency progress and regional highlights. Operating results were solid for the quarter, including same property revenue growth of 3.2% on a year-over-year basis. We experienced a normal peak leasing season across all markets. Market rents peaked in August at 6% growth year-to-date compared to December 2022, and has subsequently moderated by 10 basis points in September, which is consistent with typical seasonality. While we took advantage of opportunities to push rents during peak season, we shifted back to an occupancy-focused strategy midway through the third quarter as we began to recapture a larger volume of units from nonpaying tenants. This shift in strategy tempered our blended trade-out rates in Q3, which were similar to Q2 at 2.1%. Renewal growth rates were healthy at 3% in Q3 and 5.3% in October, boosting our blended trade-out rates while new lease growth was muted at 1.2% for Q3 reflecting new lease incentives to backfill recently vacated nonpaying units.

謝謝，巴布。我今天的評論將涵蓋我們最近的經營業績和策略，然後是我們的拖欠進展和區域亮點的最新情況。本季營運業績穩健，房地產收入年增 3.2%。我們在所有市場都經歷了正常的租賃旺季。與 2022 年 12 月相比，市場租金在 8 月達到峰值，今年迄今成長了 6%，隨後在 9 月放緩了 10 個基點，這與典型的季節性相符。雖然我們利用旺季期間推高租金的機會，但在第三季中期，我們開始從未付費租戶手中奪回大量單位，因此轉向以入住為中心的策略。這項策略的轉變緩和了我們第三季的混合換出率，與第二季相似，為 2.1%。第三季和10 月的續租成長率保持健康，分別為3% 和5.3%，這提高了我們的混合換出率，而​​第三季的新租賃成長率則為1.2%，反映出新的租賃激勵措施旨在回填最近騰出的未付款單位。

Eviction-related move-outs increased in September, allowing for improvement in delinquency as a percentage of rent to 1.9% in September and even further improvement in October to 1.3%. Several of our markets such as Santa Clara, San Mateo and San Diego have returned to delinquency levels close to the long-term run rate. Los Angeles and Alameda counties remain elevated, but significant progress is also being made in these areas after protections expired earlier in the year. As Angela mentioned, the improvement in delinquency will result in a temporary trade-off with new lease growth and occupancy, which can be seen in our preliminary October numbers, but we view this progress as a positive for the company. Consistent with our approach all year, we remain nimble and will shift our strategy as necessary to maximize revenue in any operating environment.

9 月與驅逐相關的搬遷增加，拖欠租金佔租金的比例在 9 月改善至 1.9%，10 月進一步改善至 1.3%。我們的幾個市場，如聖克拉拉、聖馬刁和聖地牙哥，拖欠率已恢復到接近長期運行率的水平。洛杉磯縣和阿拉米達縣的氣溫仍然很高，但在今年稍早的保護措施到期後，這些地區也取得了重大進展。正如安吉拉所提到的，拖欠率的改善將導致新租賃成長和入住率的暫時權衡，這可以從我們 10 月的初步數據中看出，但我們認為這一進展對公司來說是積極的。與我們全年的做法一致，我們保持靈活性，並將根據需要改變我們的策略，以在任何營運環境下實現收入最大化。

Finally, I want to thank the Essex team for their diligent efforts this past quarter. They've been a major driver of the improvement we've achieved.

最後，我要感謝艾塞克斯團隊在上個季度的辛勤工作。他們是我們進步的主要動力。

Moving on to regional specific commentary. Beginning with Seattle, this market has performed as expected this year. Blended net effective rent growth averaged 0.5% for the quarter, improving 70 basis points from Q2. Despite nominal trade-out growth, demand fundamentals were solid in Q3, and I am pleased with the recovery of this market after a slow start to the year. Market rents in this region were the first to peak in July on par with a typical year, and we anticipate a normal seasonal moderation. Although higher levels of supply deliveries in the fourth quarter may have an impact on pricing.

接下來是針對區域的具體評論。從西雅圖開始，該市場今年的表現符合預期。本季綜合淨有效租金平均成長 0.5%，比第二季提高 70 個基點。儘管名義上的貿易成長，但第三季的需求基本面依然穩固，我對這個市場在今年緩慢開局後的復甦感到高興。該地區的市場租金在 7 月首次達到與往年持平的峰值，我們預計會出現正常的季節性放緩。儘管第四季度供應量增加可能會對定價產生影響。

Turning to Northern California. Blended net effective rent growth averaged 1.4% for the quarter, consistent with Q2. Market rents peaked in late August, later than normal, an indicator of solid fundamentals in this market. Santa Clara was our top performing market for the quarter as outlined on Page S-9 of the supplemental. The ongoing return-to-office along with corporate housing activity contributed to these positive quarterly results. San Francisco and Oakland CBD, which account for a small portion of our NOI, have lagged the regional average. Oakland continues to be impacted by supply, which is expected to continue into 2024.

轉向北加州。本季混合淨有效租金平均成長 1.4%，與第二季一致。市場租金在八月下旬達到峰值，晚於正常水平，這表明該市場基本面穩固。正如補充資料 S-9 頁所述，聖克拉拉是我們本季表現最好的市場。持續的重返辦公室以及企業住房活動促成了這些積極的季度業績。舊金山和奧克蘭中央商務區僅占我們 NOI 的一小部分，但落後於地區平均。奧克蘭繼續受到供應的影響，預計這種情況將持續到 2024 年。

Lastly, Southern California continues to be our top performing region led by San Diego. Market rents in Southern California were last to peak in mid-September and blended net effective rates remained resilient at 3.7% despite the headwinds in Los Angeles, our market most impacted by delinquency. In October, delinquency in Los Angeles was at 4.6%, reflecting a 2.1% improvement since the start of the year. We anticipate making continued progress on delinquency in Los Angeles, and as such, we expect rents and occupancy in this area to be more volatile in the near term.

最後，南加州仍然是我們表現最好的地區，其中以聖地牙哥為首。南加州的市場租金最後一次在 9 月中旬達到峰值，儘管受拖欠率影響最嚴重的洛杉磯市場面臨阻力，但混合淨有效利率仍保持在 3.7% 的彈性水平。 10 月份，洛杉磯的拖欠率為 4.6%，較年初以來下降了 2.1%。我們預計洛杉磯的拖欠問題將繼續取得進展，因此，我們預計該地區的租金和入住率將在短期內更加波動。

In summary, we are encouraged by the improvement we are seeing on the delinquency front and expect continued progress heading into next year. As we conclude the balance of the year, we remain focused on preserving occupancy and positioning the portfolio favorably heading into 2024.

總之，我們對在犯罪方面看到的改善感到鼓舞，並預計明年將繼續取得進展。在今年剩下的時間裡，我們仍然專注於保持入住率，並在 2024 年之前對投資組合進行有利的定位。

I will now turn the call back to the operator for questions.

我現在將把電話轉回給接線員詢問問題。

(Operator Instructions) Our first question comes from Austin Wurschmidt with KeyBanc.

（操作員說明）我們的第一個問題來自 KeyBanc 的 Austin Wurschmidt。

Jessica, you highlighted that you had shifted your strategy from pushing new lease rate growth to growing occupancy, due in part to the elevated move-outs of nonpaying tenants but from what I recall, the guidance assumed both an improvement in cash delinquency and reacceleration in new lease rate growth towards that high 2% range in the back half of the year. So I guess I'm just curious if anything else changed from a demand perspective that also contributed to that shift in sort of operating strategy?

傑西卡，您強調說，您已將策略從推動新的租賃率成長轉向提高入住率，部分原因是不付費租戶的遷出增加，但據我記得，該指導意見假設現金拖欠率有所改善，並且重新加速今年下半年新租賃率將成長至 2% 的高點。所以我想我只是好奇從需求角度來看是否還有其他變化也促成了營運策略的轉變？

Well, just to emphasize, we are on track for the year. And as mentioned in my prepared remarks, there is essentially a trade-out. We did expect delinquency to stay elevated above the 1.3% that we reported for October, so that is lower than we had planned, although we had experienced the trade-out with occupancy and our new lease trade-out rate. So as far as demand goes, all the markets are performing as expected as we move into the seasonal slow period, and we're encouraged by recapturing the nonpaying units because it will position us well as we head into 2024.

好吧，只是強調一下，今年我們正步入正軌。正如我在準備好的發言中提到的，本質上是一種權衡。我們確實預計拖欠率將保持在 10 月報告的 1.3% 以上，因此低於我們的計劃，儘管我們已經經歷了入住率的折舊和新的租賃折舊率。因此，就需求而言，隨著我們進入季節性淡季，所有市場的表現都符合預期，我們對重新獲得無償單位感到鼓舞，因為這將使我們在進入 2024 年時處於有利地位。

Got it. That's helpful. And then can you just remind me, I know you guys report financial occupancy, but does that capture cash delinquency? Or is that figure more a reflection of gross potential rent?

知道了。這很有幫助。然後你能提醒我嗎，我知道你們報告了財務佔用情況，但這是否反映了現金拖欠情況？或者這個數字更反映了總潛在租金？

Financial occupancy does not include delinquency.

財務佔用不包括拖欠。

Our next question comes from Eric Wolfe with Citi.

我們的下一個問題來自花旗銀行的埃里克·沃爾夫。

Just curious what you think drove the decline in delinquencies in October sort of specifically versus, say, 2 months ago and -- or even a couple of months ago and some of your peers started seeing it. And do you think that the improvement is sustainable going forward?

只是好奇你認為是什麼推動了 10 月份拖欠率的下降，特別是與兩個月前、甚至幾個月前相比，你的一些同行開始看到這一點。您認為這種改善未來可持續嗎？

Hi, Eric, this is Jessica. Well, we're definitely encouraged by the improvement that we've seen in October, and there are several factors that are contributing to that. The first is for all of our areas outside of Los Angeles and Alameda protections expired in July last year. And at the time, we were reporting that evictions we're taking in the range of 10 to 12 months and some longer. And so now that we're a year plus into those areas, we are seeing a lot of those units have made their way through the system. And the move-outs that we're experiencing. As far as Los Angeles and Alameda though those protections earlier in the year. And those tenants are realizing that there are no more protections. There is no more emergency rental assistance. So overall, the tenant sentiment has changed, and there's a greater sense of urgency. So we are seeing increased move-outs as tenants are realizing this.

嗨，艾瑞克，這是傑西卡。嗯，我們確實對 10 月看到的改善感到鼓舞，有幾個因素促成了這一點。第一個是針對去年 7 月到期的洛杉磯和阿拉米達以外的所有地區。當時，我們報告說，我們將在 10 到 12 個月甚至更長的時間內進行驅逐。現在我們進入這些領域已經一年多了，我們看到很多這樣的單位已經通過了系統。以及我們正在經歷的搬遷。就洛杉磯和阿拉米達而言，今年稍早就採取了這些保護措施。這些租戶意識到不再有任何保護。不再提供緊急租賃援助。總的來說，租戶的情緒發生了變化，緊迫感也更大了。因此，隨著租戶意識到這一點，我們看到搬出的情況增加。

And as far as forward looking, 1 month certainly doesn't make a trend, and we've seen some choppiness in delinquency as we've worked through it the last couple of years. But we're certainly encouraged by our recent results, and we're going to be monitoring that closely, and we'll have more information on our fourth quarter earnings call.

就前瞻性而言，1個月當然不會成為一種趨勢，而且在過去幾年的工作中，我們已經看到了拖欠率的一些波動。但我們最近的業績無疑令我們感到鼓舞，我們將密切關注這一情況，我們將在第四季度的財報電話會議上獲得更多資訊。

That's helpful. And I guess, it leads to my second question, which is around the -- you're dropping through new lease rates to increase occupancy of the nonpaying tenants, I guess, how long would you sort of expect that process to take? And would you expect new lease rates to sort of go back up to that sort of 2.8% that you discussed on the last call? Or should renewals have to come down? Because I think you also talked about renewals tending to follow a new lease. So just trying to understand how long new lease rates will you depress and if we should also expect renewals to come down to follow them.

這很有幫助。我想，這引出了我的第二個問題，即你正在降低新的租賃費率以增加非付費租戶的入住率，我想，你預計這個過程需要多長時間？您是否預計新的租賃利率會回到上次電話會議中討論的 2.8% 水準？還是續訂應該下降？因為我認為您也談到了續租傾向於遵循新租約。因此，我們只是想了解新的租賃利率會被壓低多久，以及我們是否也應該預期續租率也會隨之下降。

All right. Let me tackle that. I'll tackle new leases and then renewals. So as far as what we can expect for new lease rates through the quarter, I expect those to remain muted. We have come into a period of easier comps, but since we've increased incentives to backfill these units, that's going to mask some of that progress. And overall, we view that as a positive. I think it's neutral over the short term with only a couple of months left in the year, but a positive as we look to 2024 because essentially, we have people occupying units that are not paying rent. And so if that unit becomes vacant, it's now vacancy, but essentially, that's a neutral trade-out. And we're offering concessions to refill -- backfill these units as quickly as possible. And at that point, you have somebody occupying the unit that will be paying full market rent in the near term. So it sets us up favorably for 2024.

好的。讓我來解決這個問題。我將處理新租約和續約事宜。因此，就我們對本季新租賃利率的預期而言，我預計這些利率將保持低迷。我們已經進入了一個比較容易的時期，但由於我們增加了回填這些單位的激勵措施，這將掩蓋一些進展。總的來說，我們認為這是正面的。我認為，從短期來看，今年只剩下幾個月了，這是中性的，但展望 2024 年，這是積極的，因為從本質上講，我們有人佔用的單位不支付租金。因此，如果該單位空置，那麼它現在是空置的，但本質上，這是一種中性的交易。我們提供重新填充的優惠－盡快回填這些單元。到那時，有人佔用該單位將在短期內支付全額市場租金。因此，這為我們 2024 年的發展奠定了有利的基礎。

And with regards to renewals, renewals is where you're seeing our comps show up. Renewals are insulated from some of the choppiness of the day-to-day pricing strategy as we've increased incentives to backfill these units. But what you're seeing in October is essentially 50-50 gross rent growth and then also concession burn-off in that 5.3%. I expect for the quarter, renewals will be pretty consistent. We've sent them out around 5%. And we'll monitor conditions closely. We may negotiate those a little bit, but expect those to be fairly consistent through Q4.

至於續訂，續訂是您看到我們的比較的地方。由於我們增加了回填這些單位的激勵措施，因此續約不會受到日常定價策略的一些波動的影響。但你在 10 月看到的基本上是 50-50 的總租金增長，然後還有 5.3% 的特許權消耗。我預計本季的續訂將非常穩定。我們已經把它們發出了大約 5%。我們將密切監視情況。我們可能會對這些進行一些協商，但預計這些在第四季度將保持相當一致。

Our next question comes from Nick Yulico with Scotiabank.

我們的下一個問題來自豐業銀行的尼克尤利科。

It's Dan Tricarico with Nick. First question is on market rent growth thoughts for next year. With the 0.5% supply growth you gave in the sub, just curious what sort of demand environment would drive negative market rent growth next year given that supply backdrop, just looking to sensitize possible outcomes.

這是丹·特里卡里科和尼克。第一個問題是關於明年市場租金成長的想法。鑑於您在子項目中給出的 0.5% 的供應增長，只是想知道在這種供應背景下，明年什麼樣的需求環境會導致市場租金負增長，只是希望對可能的結果敏感。

Yes, that's a good question. It's Angela here. We -- one of the reasons why we held off on publishing our macro outlook is because we listen to our investors' feedback to better understand the value of publishing that outlook because that ultimately impacts our view on market rent growth. And we have decided not to change -- I mean, to change our approach to -- so we would provide the outlook early next year. So it aligns better with the timing and the release of our guidance.

是的，這是一個好問題。這是安琪拉。我們推遲發布宏觀展望的原因之一是，我們聽取了投資者的回饋，以更好地了解發布該展望的價值，因為這最終會影響我們對市場租金成長的看法。我們決定不改變——我的意思是，改變我們的方法——所以我們將在明年初提供前景。因此它與我們指南的發佈時間和發布更加一致。

And so, we want to give you that backdrop. But ultimately, the market fundamentals really are going to be impacted by a couple of factors. And we start with looking at the third party macro economist forecast, which is still evolving. And we've not seen anyone with a robust outlook, but it is too early to predict. We will say is that Essex is in a better position relative to other markets due to low supply that you mentioned earlier, which, of course, reduces the risk to rent growth and, of course, having some potential upside when it comes future demand. And so those are all the different moving pieces that we are evaluating at this time.

因此，我們想為您提供這樣的背景。但最終，市場基本面確實會受到幾個因素的影響。我們首先來看看第三方宏觀經濟學家的預測，該預測仍在不斷發展。我們還沒有看到任何人有樂觀的前景，但現在預測還為時過早。我們要說的是，由於您之前提到的供應量較低，埃塞克斯相對於其他市場處於更好的位置，這當然降低了租金增長的風險，當然，在未來需求方面也有一些潛在的上漲空間。這些都是我們目前正在評估的所有不同的移動部分。

No, that's good. And the next question would be on just your different regions. SoCal has been your strongest, but curious if you could see that gap to Northern California and Seattle remaining or maybe converging next year? Any thoughts on the puts and takes there.

不，那很好。下一個問題將涉及您的不同地區。南加州一直是你最強的，但你很好奇，明年與北加州和西雅圖的差距是否仍然存在或可能會縮小？關於看跌期權和看跌期權的任何想法。

Well, I think Northern California is our steady eddy market. And it has a profile -- employment profile that's similar to the U.S. but with higher level of professional services. So the demand remains constant. In Northern California, we do expect that recovery will come. Of course, the timing is the question, right? And so ultimately, it should continue -- it should outperform if not just if nothing for the sake of it's in -- still in the recovery mode. And so that's how we're thinking about the 2 regions.

嗯，我認為北加州是我們穩定的渦流市場。它的概況－就業概況與美國相似，但專業服務水準較高。所以需求保持不變。在北加州，我們確實預期復甦將會到來。當然，時機是問題，對嗎？所以最終，它應該繼續下去——它應該表現得更好，如果不是因為它什麼都沒有——仍然處於恢復模式。這就是我們對這兩個地區的看法。

Our next question comes from Steve Sakwa with Evercore.

我們的下一個問題來自 Evercore 的 Steve Sakwa。

First, Jessica, could you provide a kind of a loss-to-lease and an earn-in figure for the portfolio?

首先，傑西卡，您能否提供投資組合的租賃損失和收益數據？

Sure. As far as loss-to-lease goes at the end of September, we were looking at roughly 1.5%, which is consistent with periods pre-COVID, the 3 years average pre-COVID. And as far as earning goes, typically, in the past, we look at using roughly 50%, maybe a little bit more of that loss-to-lease number, which gets us to roughly 70 or 100 basis points and then we'll look at whatever our market rent forecast is for the year and take 50% of that, and it's still early and we'll be evaluating that and providing more information on our fourth quarter. We do see some other building blocks as far as earning for next year with some other income initiatives as well that will contribute to revenue growth as well next year.

當然。就 9 月底的租賃損失而言，我們預計約為 1.5%，這與新冠​​疫情爆發前的時期（即疫情爆發前 3 年的平均值）一致。就盈利而言，通常，在過去，我們會考慮使用大約 50%，也許更多一點的租賃損失數字，這使我們達到大約 70 或 100 個基點，然後我們將看看我們今年的市場租金預測是多少，並取其中的50%，現在還為時過早，我們將對其進行評估並提供有關第四季度的更多資訊。就明年的收入而言，我們確實看到了一些其他的基石，還有一些其他的收入舉措，這些舉措也將有助於明年的收入成長。

Great. And then maybe just on the investment side, I guess, I think Barb might have talked about some repayment of some of the preferred investments. I guess just what are you seeing in the marketplace today? From either developers or other investors who might be in trouble from a financing perspective?

偉大的。然後也許只是在投資方面，我想，我認為巴布可能已經談到了一些優先投資的一些償還。我想您今天在市場上看到了什麼？來自開發商或其他可能在融資方面遇到麻煩的投資者？

Steve, Rylan here. We are still seeing a few opportunities. I would say, just a little historical context, the majority of our deals up until last year were development based. This year, it's been a mix, I would say about 50-50 between development and stabilized recaps. And I anticipate next year, we're going to see more opportunities for stabilized properties that are seeking recaps. We've seen several deals in the past couple of years with above 50% leverage and very low interest rates capped or swap that will roll in the next few years at a very different interest rate environment. So with limited NOI growth we've seen in several of our markets, we think there are going to be opportunities to put some capital to work.

史蒂夫，瑞蘭在這裡。我們仍然看到一些機會。我想說，僅介紹一點歷史背景，截至去年我們的大部分交易都是基於開發的。今年，這是一個混合體，我想說大約 50-50 介於開發和穩定回顧之間。我預計明年，我們將看到更多尋求重述的穩定資產的機會。在過去的幾年裡，我們看到了幾筆槓桿率超過 50% 且利率上限非常低的交易，或者互換，這些交易將在未來幾年以非常不同的利率環境進行。因此，鑑於我們在幾個市場看到的 NOI 成長有限，我們認為將有機會投入一些資本。

Our next question comes from Joshua Dennerlein with Bank of America.

我們的下一個問題來自美國銀行的 Joshua Dennerlein。

I appreciate that your markets have lower supply than a lot of other markets out there across the country. But just kind of curious on what you're seeing as far as demand goes in San Francisco and Seattle. And then what do we need to see to kind of see an acceleration of that demand in those markets?

我知道你們市場的供應量比全國許多其他市場要少。但只是對你所看到的舊金山和西雅圖的需求感到好奇。那我們需要看到什麼才能看到這些市場需求的加速呢？

It's Angela here. I think on the demand side for Northern California, we do want to acknowledge that it remains soft. But I do think that we got 2 things happening. One is from a year-over-year comp perspective, September was still quite robust last year because that was before the tech sectors began their retrenchment. And at this point, what we're seeing is that, that has stabilized. And so that's definitely a good indicator.

這是安琪拉。我認為在北加州的需求方面，我們確實要承認它仍然疲軟。但我確實認為我們發生了兩件事。一個是從年比角度來看，去年 9 月仍然相當強勁，因為那是在科技業開始緊縮之前。此時，我們看到的是，情況已經穩定下來。所以這絕對是一個很好的指標。

As far as other indications, we look at, of course, unemployment claims that remains stable and WARN notices, it's back to pre-COVID levels. So that all points to that the market is functioning as it should. In terms of looking forward, we do think that the technology sector, the hiring needs to return in a more robust way. It's -- this is -- what it looks like is that they're going through kind of the tail end of the retrenchment. And so we do see light at the end of the tunnel from that perspective. And of course, having the remote or the remote job hiring, which is now 8% versus, it was 25% last year, and of course, 100% during COVID that we need to continue to decline and which we expect that to happen. And then, of course, the last piece is really the international migration, which has been quite muted as a result of COVID and of course, the various retrenchment. And so with those 3 elements, those are all potential upside for our markets.

至於其他跡象，我們當然會關注保持穩定的失業救濟人數和警告通知，已回到新冠疫情前的水平。因此，所有這些都表明市場正在正常運作。就未來而言，我們確實認為科技業的招募需要以更強勁的方式回歸。看起來他們正在經歷裁員的尾聲。因此，從這個角度來看，我們確實看到了隧道盡頭的光。當然，遠距或遠距工作招聘的比例現在是 8%，而去年是 25%，當然，在新冠疫情期間我們需要繼續下降 100%，我們預計這種情況會發生。當然，最後一個因素其實是國際移民，由於新冠疫情以及各種緊縮政策，國際移民的影響已經相當小。因此，有了這三個要素，這些都是我們市場的潛在上漲空間。

Okay. I appreciate that color. And then maybe just one quick one, and apologies if I missed this, but what does your guide assume the rest of the year as far as the new lease rate growth goes?

好的。我很欣賞那種顏色。然後也許只是一個快速的，如果我錯過了這一點，我深表歉意，但是就新的租賃率增長而言，您的指南對今年剩餘時間的假設是什麼？

Josh, it's Barb. So there is a specific number that we need to achieve to hit the fourth quarter guidance. It's going to be a variety of factors. As Jessica mentioned, we got back a lot of units from nonpaying tenants. It has had an impact to our occupancy but there's a trade-off there. So there's a variety of factors that will play into the fourth quarter guidance and if there's not a specific rent growth number that we need to achieve because there's all the other factors play into it.

喬什，這是巴布。因此，我們需要達到一個具體數字才能達到第四季的指導目標。這將受到多種因素的影響。正如傑西卡所提到的，我們從不付錢的租戶那裡拿回了很多單位。它對我們的入住率產生了影響，但也需要權衡。因此，有多種因素會影響第四季度的指導，如果我們沒有需要實現具體的租金成長數字，因為所有其他因素都會發揮作用。

Our next question comes from Jamie Feldman with Wells Fargo.

我們的下一個問題來自富國銀行的傑米·費爾德曼。

Can you talk about sort of the occupancy first initiative in the first half, do you think that sets you up for a potential acceleration next year?

您能否談談上半年的入住率第一舉措，您認為這是否為明年的潛在加速做好了準備？

Jamie, this is Jessica. Can you clarify your question? Are you talking the first half of 2023, first half occupancy acceleration?

傑米，這是潔西卡。你能澄清你的問題嗎？您指的是 2023 年上半年入住率加速嗎？

Yes, I'm just thinking about like what the year-over-year comps could be into next year? Like where did you push harder in the first half of '23 that you may get the benefit might be harder to have the comps for the first half of '24, both on occupancy by market and also by rent?

是的，我只是在想明年的年比比較會怎麼樣？就像你在23年上半年在哪裡更加努力地推動你可能會獲得的好處一樣，在24年上半年，無論是按市場佔用率還是按租金計算，你可能會更難獲得補償？

Yes, I understand what you're saying. Yes, year-to-date occupancy, I believe, we're sitting about 96.5% and right now, we floated down to 95.9%, but again, there's a trade-out, so it's revenue neutral over the short term, but potentially positive as we head into 2024. So where we're heading right now with occupancy, it's hard to peg exactly where we'll end the year. As I mentioned, we remain focused on occupancy and backfilling units. It's a seasonally slow period. So it's uncertain how much progress we'll be able to make with occupancy over the short term. So with that said, as we head into the year, we certainly could be lower than last year, but stable is what my expectation is from an occupancy perspective. But there's other components that will add to a favorable revenue outcome as we see our delinquency come down.

是的，我明白你在說什麼。是的，我相信，今年迄今為止的入住率約為 96.5%，現在，我們下降到 95.9%，但同樣，存在一種權衡，因此短期內收入是中性的，但有可能當我們進入2024 年時，情況是正面的。因此，我們目前的入住率走向，很難準確確定年底的情況。正如我所提到的，我們仍然關注入住和回填單位。這是一個季節性淡季。因此，短期內入住率能有多大進展尚不確定。話雖如此，當我們進入今年時，我們肯定會低於去年，但從入住率的角度來看，我的預期是穩定的。但隨著我們的拖欠率下降，還有其他因素將增加有利的收入結果。

And as far as occupancy by area, I mean, generally speaking, we're seeing our stronger occupancies in Orange County, San Diego, Ventura, Seattle is performing quite well now and having quite stable seasonal slowdown, particularly when compared to last year and is sitting around 96%. Los Angeles is 95.4%, and I would expect that market to be particularly impacted with a lower occupancy, but again, an upside on the delinquency front, and the Bay Area is also sitting around 96%. Does that answer your question?

就各地區的入住率而言，我的意思是，一般來說，我們看到奧蘭治縣、聖地亞哥、文圖拉、西雅圖的入住率較高，目前表現良好，並且季節性放緩相當穩定，特別是與去年和占96%左右。洛杉磯為 95.4%，我預計該市場將特別受到入住率下降的影響，但同樣，拖欠率方面也有上升空間，灣區的這一比例也約為 96%。這是否回答你的問題？

Yes, that's helpful. And then, I guess, just switching gears for the investments here to investment potential. I mean you mentioned Oakland. I mean some of these submarkets that do have more supply. I mean, would you want to expand there if you saw better opportunities or better pricing?

是的，這很有幫助。然後，我想，只是將這裡的投資轉向投資潛力。我的意思是你提到了奧克蘭。我的意思是其中一些子市場確實有更多的供應。我的意思是，如果您看到更好的機會或更好的價格，您會想在那裡擴張嗎？

Jamie, it's Rylan here. I'd say we are open to any good investment opportunity subject to the conditions that are presented to us. At a high level, as we've talked about, we are relatively bullish on the prospect for Northern California on the next several years. And I think Angela has reiterated several other reasons for that case. Oakland will be challenged for the next year or 2 given the supply that's went out there. So it would have to be a pretty compelling investment opportunity. But it's -- we are open and eagerly looking for opportunities in all of our core markets.

傑米，我是瑞蘭。我想說，根據提供給我們的條件，我們對任何良好的投資機會都持開放態度。正如我們所討論的，從總體上看，我們對北加州未來幾年的前景相對樂觀。我認為安吉拉重申了該案的其他幾個原因。鑑於那裡的供應量，奧克蘭將在未來一兩年面臨挑戰。因此，這一定是個非常有吸引力的投資機會。但我們持開放態度，熱切地在所有核心市場尋找機會。

Our next question comes from Brad Heffern with RBC.

我們的下一個問題來自加拿大皇家銀行的布拉德‧赫芬 (Brad Heffern)。

Can you talk about some of the return-to-office mandates you've been watching, like we saw with Meta in September and has there been a noticeable impact in leasing activity on the ground from those?

您能否談談您一直在關注的一些重返辦公室的要求，就像我們在 9 月看到的 Meta 一樣，這些要求對當地的租賃活動是否產生了顯著影響？

Yes. It's Angela here. The return-to-office mandate that we've seen so far, it's been a good sign that it's sticking. So what I mean by that is last year when the tech employers announced, they had to make some adjustments. They have settled 3 days and then they move back to 2 days, and they were still hiring remotely. This year, what we're seeing is that the rehiring -- the remote hiring has stopped. And in fact, it's become policy. And the -- and of course, the return-to-office has been gaining momentum. It's difficult to point exactly to the -- to our financial lease rates because we're in the middle of working through the evictions and delinquency issue, and that's taking precedent. So there's a lot of noise in that, certainly, we expect that, that's been a benefit. But to point to an exact number, just it's not as straightforward as possible at this point.

是的。這是安琪拉。到目前為止，我們看到了重返辦公室的強制要求，這是一個好兆頭，表明它正在堅持下去。所以我的意思是去年科技雇主宣布他們必須做一些調整。他們已經解決了 3 天，然後又回到了 2 天，而且他們仍然在遠端招募。今年，我們看到的是重新招募——遠距招募已經停止。事實上，這已經成為政策。當然，重返辦公室的勢頭一直在增強。很難準確指出我們的融資租賃利率，因為我們正在解決驅逐和拖欠問題，而且這是先例。因此，這裡面有很多噪音，當然，我們期望這是一個好處。但要指出一個確切的數字，目前還不是那麼簡單。

Okay. Understood. And then concessions have come up a few times on the call. I'm just curious if you could walk through the individual markets and just give the average concessions that you're offering right now?

好的。明白了。然後在電話會議上多次提出讓步。我只是好奇你是否可以瀏覽各個市場並只給予你現在提供的平均優惠？

This is Jessica. Yes, as far as concessions go, what we're offering across the portfolio is an average of 1 week free. And I anticipate that may go up we'll monitor the nonpaying units as they come in and adjust as needed to manage our new lease velocity. As far as by market, we have the largest volume of concessions concentrated in pockets. Southern California is still generally just a few days outside of Los Angeles. And we're seeing larger concessions in Los Angeles areas -- the Bay Area. And then Seattle, surprisingly is only a few days at this point. As I mentioned a few minutes ago, it's been a very stable seasonal slowdown in that market.

這是傑西卡。是的，就優惠而言，我們在整個產品組合中提供平均 1 週的免費服務。我預計這可能會上升，我們將在非付費單位進來時對其進行監控，並根據需要進行調整以管理我們新的租賃速度。就市場而言，我們的優惠量最大，集中在口袋裡。南加州通常距離洛杉磯僅幾天路程。我們在洛杉磯地區（灣區）看到了更大的讓步。然後西雅圖，令人驚訝的是此時只有幾天。正如我幾分鐘前提到的，該市場出現了非常穩定的季節性放緩。

Our next question comes from Adam Kramer with Morgan Stanley.

我們的下一個問題來自摩根士丹利的亞當·克萊默。

Just a couple of questions on kind of a couple of different demand drivers you guys have touched on in the past. I think one would just be some of kind of the in-migration to your markets, right? And that can be overseas tech workers, visas other kind of integration factors. Just want to maybe kind of walk through that because I know there's a lot of focus on the outward migration. So maybe just kind of think about the in-migration to your markets. And then the other kind of demand driver question is just on kind of the end of the writer strike, actor strike, if that -- what potential impact that could have on your business?

只是關於你們過去接觸過的幾種不同需求驅動因素的幾個問題。我認為其中之一隻是某種形式的移民進入您的市場，對嗎？這可能是海外科技人員、簽證等其他整合因素。只是想簡單介紹一下，因為我知道人們非常關注向外遷移。因此，也許只需考慮一下您的市場的人口遷移。然後，另一個需求驅動問題只是關於作家罷工、演員罷工的結束，如果是這樣——這可能會對您的業務產生什麼潛在影響？

Adam, it's Angela here. Good question on the in-migration. Those -- the data are on that front is not as readily available. But what we've been tracking is really the move-ins. And as I mentioned, last year, we saw a good uptick and I think part of that relates to really a recovery. And since then, it's been steady. And so the in-migration data into our markets from outside of California and Washington have generally remained steady. The piece that we're still missing actually is the international migration part of it. And I think that, that will return and just not as immediate at this point. And as far as the hospitality industry, it's very telling that when we look at the drivers of job growth in the third quarter, it's mainly education and health care and other services. Hospitality and leisure was very muted. And we do think that, that's partly attributed to the strike. And so we do think that, that could be a potential demand catalyst as well.

亞當，我是安琪拉。關於移民的好問題。這些——這方面的數據並不那麼容易取得。但我們一直在追蹤的實際上是入住情況。正如我所提到的，去年我們看到了良好的成長，我認為這部分與真正的復甦有關。從那時起，它就一直穩定。因此，從加州和華盛頓州以外進入我們市場的移民數據總體保持穩定。實際上我們仍然缺少的是國際移民部分。我認為，這種情況將會回歸，但目前不會那麼直接。就酒店業而言，當我們審視第三季就業成長的驅動因素時，它主要是教育和醫療保健等服務，這一點非常能說明問題。熱情好客和休閒活動非常冷淡。我們確實認為，這部分歸因於罷工。因此，我們確實認為，這也可能是潛在的需求催化劑。

Our next question comes from Wes Golladay with Baird.

我們的下一個問題來自韋斯·戈拉迪和貝爾德。

You mentioned getting, I think, repaid on $100 million extra structured finance. Do you have a timing estimate on that? Do you -- is there any chance to extend that? And then when looking at the entire structured finance book, is there any geographic concentration?

我想，你提到要償還 1 億美元的額外結構性融資。您對此有時間估計嗎？你有機會延長這期限嗎？那麼，當縱觀整個結構性金融書籍時，是否存在地域集中度？

Wes, it's Barb. I think for now, you could assume midyear on the $100 million is probably a safe assumption. I think we have some in the first half of the year and some in the back half of the year, so maybe your assumption is good there. And then in terms of geographic concentration, our portfolio is actually -- it mirrors our actual portfolio in terms of our investment. So about 40% in Northern California, 40% in Southern California and 20% in Seattle is how the portfolio aligns in terms of where it's located geographically.

韋斯，這是巴布。我認為現在，你可以假設年中的 1 億美元可能是一個安全的假設。我認為我們在上半年有一些，在下半年有一些，所以也許你的假設是好的。然後就地理集中度而言，我們的投資組合實際上反映了我們投資方面的實際投資組合。因此，大約 40% 在北加州，40% 在南加州，20% 在西雅圖，這就是投資組合根據其地理位置進行調整的方式。

Our next question comes from John Kim with BMO Capital Markets.

我們的下一個問題來自 BMO 資本市場的 John Kim。

On the 5.3% renewal rate growth achieved in October, can you break that down between how much of that was rate growth versus concession burn-off from a year ago?

關於 10 月實現的 5.3% 的續訂費率成長，您能否將其中的費率成長與一年前的特許權消耗比例進行比較？

John, it's Jessica. Yes, that -- it's roughly 50-50. So we're seeing about 2.5% to 2.8% or so in rate growth and then the rest is concession burn-off.

約翰，這是潔西卡。是的，大約是 50-50。因此，我們看到利率成長率約為 2.5% 至 2.8% 左右，然後剩下的就是特許權消耗。

So when you compare the concessions that you mentioned earlier that you're offering versus a year ago, is it additive to renewal rate growth going forward?

因此，當您將之前提到的優惠與一年前進行比較時，您會發現它是否會促進續訂率增長？

Where we sit right now, it is additive. So last year, we were at roughly 2 weeks pretty consistently across Q4. And right now, we're sitting at a week. Like I said earlier, we may increase the volume of concessions and the amount, but we'll monitor that. But as of right now, that's a positive.

我們現在所處的位置，它是累加性的。所以去年，我們在第四季的時間維持在大約兩週左右。現在，我們已經過了一週了。正如我之前所說，我們可能會增加優惠的數量和金額，但我們會對此進行監控。但就目前而言，這是積極的。

Okay. Has there been an update on the gross delinquency outlook for the second half of this year, it was less at 1.9%. I think you're basically there, including October. Has that changed at all?

好的。今年下半年的總拖欠率前景有更新嗎，為 1.9%。我想你基本上已經到了，包括十月。這有什麼改變嗎？

John, it's Barb. We didn't make any changes to our guidance for the full year. We believe we're on target for that. There may be puts and takes. And if delinquency does come in favorable, there may be a trade-off with occupancy. And so net-net, we're in line with our full year guidance.

約翰，這是巴布。我們沒有對全年的指導做出任何改變。我們相信我們已經達到目標了。可能會有放和取。如果拖欠確實有利的話，可能會與入住率進行權衡。所以，我們的全年指導是一致的。

Our next question comes from John Pawlowski with Green Street.

我們的下一個問題來自 Green Street 的 John Pawlowski。

Barb, I have a question about the potential deferred repair and maintenance and CapEx costs that might be in the portfolio today associated with delinquent tenants. Have you -- could you give us an order of a sense, like an order of magnitude of the total amount of dollars you think that needs to get spent over the coming years on these units? I'm just trying to get a sense of whether -- or early innings of seeing the cost flow through from evictions or you've already worked through most of it?

倒刺，我有一個關於潛在的延期維修和維護以及資本支出成本的問題，這些成本可能存在於當今與拖欠租戶相關的投資組合中。您能否給我們一個大概的感覺，例如您認為未來幾年需要在這些設備上花費的美元總額的一個數量級？我只是想了解一下，是否在早期階段看到驅逐帶來的成本流動，或者您已經完成了大部分工作？

John, it's Angela here. Let me give you just a high-level answer to that because, frankly, what we're seeing is the turnover as it relates to delinquent tenants has not -- the higher level of CapEx is not material relative to in the past when we have delinquent tenants. And some actually have just decided to leave. And so the turnover just a natural turn. And there's going to be bad actors from time to time. But once again, it's at a comparable rate as pre-COVID. And so that's why there is a number that Barb can point to. Our CapEx at this point is really more driven by other activities like storm damage. And as far as eviction is concerned, it's a higher volume, but it's not a greater damage because of evictions.

約翰，我是安琪拉。讓我給你一個高層次的答案，因為坦白說，我們看到的是與拖欠租戶相關的營業額，但與過去相比，更高水平的資本支出並不重要。拖欠租金的租戶。有些人實際上只是決定離開。如此週轉就順理成章了。而且時不時就會出現壞演員。但再次與新冠疫情爆發前的水平相當。這就是為什麼倒鉤可以指出一個數字。目前我們的資本支出實際上更多是由風暴破壞等其他活動所驅動的。就驅逐而言，數量更大，但並沒有因為驅逐而造成更大的損害。

Okay. Maybe shifting over to the private market, and I joined the call a few minutes late, so apologies if I missed this. But Rylan, I'm curious what -- where you think market clearing cap rates are right now and like kind of the urban cores of San Fran and San Jose. I imagine they're pretty close to red line right now. So I'm just curious what type of pricing do you think buyers and sellers might agree on pricing in the kind of urban high-rise environment San Fran, San Jose?

好的。也許轉移到私人市場，我遲到了幾分鐘才加入電話會議，所以如果我錯過了這一點，我深表歉意。但瑞蘭，我很好奇——你認為現在的市場出清上限率是多少，就像舊金山和聖荷西的城市核心一樣。我想他們現在已經非常接近紅線了。所以我只是好奇，在舊金山、聖荷西這樣的城市高層環境中，您認為買家和賣家可能會就哪種定價方式達成一致？

John. I appreciate the question. I hesitate to give you a specific number because as you are well aware, when there's not any transactions, it's very difficult to pinpoint where buyers are. I also would take some pause with the idea of redlining a whole city, we are still seeing -- we've seen some transactions occur year-to-date, and the buyer profile is different than what we've typically seen. I think you're seeing some family office buyers who are coming and looking at the basis versus replacement costs that are still continuing to transact in some of the submarkets that you mentioned. So obviously, a challenged market fundamentally over the past year or 2. But as those turn, I suspect you're going to see people investors come back in. And so I'll leave it at that without giving you a specific number, but hopefully, that color is helpful.

約翰。我很欣賞這個問題。我不願意給你一個具體的數字，因為你很清楚，當沒有任何交易時，很難確定買家在哪裡。我也會暫停一下對整個城市進行紅線劃定的想法，我們仍然看到——我們已經看到今年迄今為止發生了一些交易，而且買家資料與我們通常看到的不同。我認為您會看到一些家族辦公室買家前來關注基礎成本與重置成本，這些成本仍在您提到的一些子市場中繼續進行交易。很明顯，在過去的一兩年裡，市場從根本上受到了挑戰。但隨著情況的轉變，我懷疑你會看到投資者重新回歸。所以我就這樣留下來，不會給你具體的數字，但是希望這種顏色有幫助。

Yes. No, it definitely is. Maybe one follow-up. Just curious, I know you've been talking more suburban in the last few years. Like what pricing becomes interesting to you to go back into these urban markets that have not really healed in COVID? What kind of range of cap rates would you be willing to be a buyer at?

是的。不，絕對是。也許會有一個後續行動。只是好奇，我知道過去幾年你一直在談論郊區。例如，對於那些在新冠疫情中尚未真正痊癒的城市市場，你會感興趣什麼價格？您願意在什麼樣的上限利率範圍內成為買家？

Thanks, John. Another good question. As you know, we force rank our 30-plus submarkets and forecast to rent growth for 5 years forward-looking based on our fundamental analysis. And so the cap rates have to accommodate for a higher IRR based on those rent growth estimates. So there is a price at which we would be willing to invest in these submarkets. I will say, given the performance we've seen over the past several years with the suburbans strongly outperforming. And where we're looking at supply for the next few years, I would think on average incremental dollars will go towards our portfolio investments that look similar to what our portfolio mix currently is demonstrating. But there is a price, and we have our -- we're turning over every rock and looking for opportunities, and I'm optimistic we're going to see more in the next few years.

謝謝，約翰。另一個好問題。如您所知，我們對 30 多個子市場進行強制排名，並根據基本面分析預測未來 5 年的租金成長。因此，上限利率必須根據租金成長預測來適應更高的內部收益率。因此，我們願意投資這些子市場是有一個價格的。我想說的是，考慮到過去幾年我們所看到的表現，郊區的表現明顯優於郊區。在我們考慮未來幾年的供應方面，我認為平均增量資金將流向我們的投資組合，這些投資看起來與我們目前的投資組合組合相似。但這是有代價的，我們有我們的——我們正在翻遍每一塊石頭，尋找機會，我樂觀地認為，我們將在未來幾年看到更多機會。

Our next question comes from Connor Mitchell with Piper Sandler.

我們的下一個問題來自康納·米切爾和派珀·桑德勒。

Just wanted to follow-up on some of the in-migration discussion. Would you be able to kind of give a weighting or the amount of impact that you're expecting from international migration maybe compared to historical figures, whether that's 10% of the growth compared to the current return-to-office we're looking for? Like how much of an impact you think that could have versus the other demand factors looking forward?

只是想跟進一些移民討論。您能否與歷史數據相比，給出您所期望的國際移民影響的權重或影響程度，無論是與我們當前期望的重返辦公室相比增長的 10% ？就像您認為與未來的其他需求因素相比，這可能會產生多大的影響？

Yes. Connor, it's Angela here. That's a good question. The one thing I can point you to is California historically has a negative in like net in-migration. So 17 out of the last 20 years, even during years when we have significant growth. And so the 1Q faster in international, net migration becomes positive. As far as the exact percentage, that's influenced by a lot of factors. It's influenced by, of course, supply and the demand and where the macro economy generally is. And of course, it's influenced by the affordability ratio. So I don't think I could do you justice by making a straight line from migration number to an absolute percentage of increase.

是的。康納，我是安琪拉。這是個好問題。我可以向您指出的一件事是，加州歷史上的淨移民流入量呈負數。因此，過去 20 年中有 17 年，即使在我們實現顯著成長的年份。因此，第一季國際淨移民成長率為正數。至於確切的百分比，它受到許多因素的影響。當然，它受到供給和需求以及宏觀經濟總體狀況的影響。當然，它也受到負擔能力比率的影響。因此，我認為我不能通過從移民數量到絕對增長百分比畫一條直線來公正地對待您。

Yes, of course. And then just another question. You've talked about the secured financing a little bit. So after you issued the secured debt earlier this year recently. Just wondering if you could give an update on how the unsecured market is looking now versus the secured market whether there's been any narrowing of the spreads. The unsecured market has improved a little bit since then.

是的當然。然後還有一個問題。您已經談到了一些擔保融資。因此，在您最近今年早些時候發行了擔保債務之後。只是想知道您是否可以提供無擔保市場與有擔保市場相比的最新情況，利差是否有任何縮小。從那時起，無擔保市場略有改善。

Yes, this is Barb. So on the unsecured bond market, for us today, we'd probably be in the high 6% range to do a 10-year unsecured bond offering. And if we were to go to a secured loan, 10-year secured loan like we did, I think we're in the around a mid-6%. So there has been a little bit of a narrowing from when we originally did our secured loan back in July. But yes, there hasn't been a lot of transactions unsecured bond market as well. And so it's a little unknown at this time, but we feel good about where we executed and our capital needs for next year. We don't have a lot of capital needs next year.

是的，這是巴布。因此，在無擔保債券市場上，對我們今天來說，發行 10 年期無擔保債券的利率可能會在 6% 左右。如果我們像我們一樣申請擔保貸款、10 年期擔保貸款，我認為我們的利率在 6% 左右。因此，與我們七月最初發放擔保貸款時相比，範圍有所縮小。但是，是的，無擔保債券市場也沒有大量交易。因此，目前還有些未知，但我們對明年的執行和資本需求感到滿意。明年我們沒有太多的資金需求。

Our next question comes from Haendel St. Juste with Mizuho.

我們的下一個問題來自 Mizuho 的 Haendel St. Juste。

A couple of quick ones for me. First is, I guess I'm curious any perspective on -- there's an article in New York Times the other day it called California called slams San Francisco for 'Egregious' Barriers to Housing, I think, was the header. So I'm curious if you have any thoughts on this, certainly the idea of low barrier to entry, low supply in California the key thing -- key part of the thesis there. So I'm curious if there's any perhaps updated perspective reviews on the barriers to building, if there are any changes that are being contemplated that could be real and how that could impact the marketplace?

對我來說有幾個快速的。首先，我想我很好奇任何觀點——前幾天《紐約時報》上有一篇文章，我認為加州因「嚴重」的住房障礙而猛烈抨擊舊金山，這是標題。所以我很好奇你對此有什麼想法，當然是加州的低進入門檻、低供應的想法是關鍵——這是論文的關鍵部分。因此，我很好奇是否有關於建設障礙的任何可能更新的觀點評論，是否正在考慮任何可能是真實的變化，以及這將如何影響市場？

Haendel, it's Angela here. It's a good question. I think we've all seen the acute housing shortage in California and despite Governor Newsom's efforts to enact multiple legislations to spur housing production, it just has not moved the needle in a meaningful way. And you may recall that he campaigned on building 3.5 million homes by 2025. And as part of that, there were numerous legislation passed and even recently a few more passed but that barrier continues because there is a cost barrier. There is -- as part of legislation, they enacted requiring programming wages. There's environmental protections. And so it just is very challenging. And so I go back to that original goal of 3.5 million homes debt to be built by 2025. Currently, they're on track and have issued about 450,000 permits. So no units built, and we're 2 years away. So that gives you the magnitude of how we view supply and why we do believe that it will remain favorable. And when we look at the permit data, it still remains very low as well.

韓德爾，我是安琪拉。這是一個好問題。我認為我們都看到了加州嚴重的住房短缺問題，儘管紐瑟姆州長努力頒布多項立法來刺激住房生產，但它並沒有以有意義的方式推動這一進程。您可能還記得，他競選時提出到 2025 年建造 350 萬套住房。作為其中的一部分，通過了許多立法，甚至最近還通過了一些立法，但由於成本障礙，這一障礙仍然存在。作為立法的一部分，他們頒布了要求編程工資的規定。還有環境保護。所以這是非常具有挑戰性的。因此，我回到最初的目標，到 2025 年建造 350 萬套住房。目前，他們正在步入正軌，並已頒發了約 45 萬張許可證。所以還沒有建造任何單位，距離我們還有兩年的時間。因此，這讓您了解我們如何看待供應量以及為什麼我們相信供應量將保持有利。當我們查看許可資料時，它仍然仍然很低。

Got it. Got it. And then one more. I believe earlier, you mentioned that concessions in San Francisco broadly in your portfolio average 1 week. I was hoping you could bifurcate that a bit further maybe San Francisco proper versus down in Peninsula.

知道了。知道了。然後還有一張。我相信早些時候，您提到舊金山的優惠在您的投資組合中平均為 1 週。我希望你能進一步區分一下，也許是舊金山本地和半島下方。

This is Jessica. I don't have that information in front of me. I mean San Francisco is such a small market for us, which is 1,000 units and a couple of large buildings. But like I said, as far as what we're currently offering, I would say roughly 1 week free with a little bit more in pockets of the Bay Area, like San Jose, Oakland is supply impacted, so we have higher concessions there. Seattle, very minimal concessions, all of Southern California outside of Los Angeles minimal concessions.

這是傑西卡。我面前沒有這些資訊。我的意思是舊金山對我們來說是一個很小的市場，只有 1,000 個單位和幾棟大型建築。但就像我說的，就我們目前提供的服務而言，我想說的是大約1 週的免費服務，灣區的部分地區（例如聖何塞、奧克蘭）會提供更多一點的免費服務，因此我們在那裡有更高的優惠。西雅圖的優惠非常少，洛杉磯以外的所有南加州優惠也非常少。

Our final question is from Linda Tsai with Jefferies.

我們的最後一個問題來自 Jefferies 的 Linda Tsai。

Over the next 12 months, across which markets would you expect the highest rent growth? And how much faster might growth be in these markets versus your portfolio average?

在未來 12 個月內，您預期哪些市場的租金增幅最高？與您的投資組合平均值相比，這些市場的成長速度可能快多少？

It's Angela here. We do expect our Northern region to outpace the Southern region and so particularly in Northern California and Seattle. And for different reasons, Northern California, a much lower supply. And of course, we'll have a benefit ultimately from the tech hiring when they come. And Seattle, it's been our strongest job growth market, but Seattle also has a higher level of supply, about 2x of that of California as a percentage. So about 1% of stock versus 0.5%. Having said that, both of these markets, particularly in Northern region are rebounding. And of course, Northern California, as I mentioned before, has a much better affordability metric. And so for those reasons, we do expect the Northern region to outperform the Southern regions.

這是安琪拉。我們確實預計北部地區將超過南部地區，尤其是北加州和西雅圖。而由於不同的原因，北加州的供應量要低得多。當然，當他們到來時，我們最終會從技術招募中受益。西雅圖是我們就業成長最強勁的市場，但西雅圖的供應水平也更高，大約是加州的 2 倍。所以大約是 1% 的庫存與 0.5% 的庫存。話雖如此，這兩個市場，尤其是北部地區，都在反彈。當然，正如我之前提到的，北加州的負擔能力指標要好得多。因此，基於這些原因，我們確實預期北部地區的表現將優於南部地區。

And then just one quick follow-up on expenses. Given the commentary about higher utility insurance costs in '24, do you see more markets where there's more pronounced versus others?

然後只是對費用進行一項快速跟進。鑑於 24 年有關公用事業保險成本上升的評論，您是否認為有更多市場的情況比其他市場更明顯？

Yes. This is Barb. On the insurance front, it's just a broad -- it's actually a national issue, not an Essex specific or West Coast issue. We're just seeing a lot of pressure on insurance cost, and we expect that to continue. It's been an issue in '23. We expected to issue in '24. And then on the utilities front, we're up about 6% year-to-date, and we do expect that utility pressures will continue to be above inflationary levels near term despite all of the ESG efforts we're putting into place. And so those 2 will cause expense growth to be elevated next year.

是的。這是倒鉤。在保險方面，這只是一個廣泛的問題，實際上是一個全國性問題，而不是埃塞克斯或西海岸的特定問題。我們看到保險費用面臨很大壓力，我們預計這種情況將持續下去。這是23年的一個問題。我們預計將在 24 年發行。然後在公用事業方面，我們今年迄今上漲了約 6%，而且我們確實預計，儘管我們正在採取所有 ESG 努力，但公用事業壓力近期將繼續高於通膨水平。因此，這兩者將導致明年的費用成長加快。

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

今天的會議到此結束。此時您可以斷開線路，我們感謝您的參與。