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Welcome to the Essex Property Trust first quarter 2026 earnings call. As a reminder, today's conference call is being recorded. Statements made on this conference call regarding expected operating results and other future events are forward-looking statements that involve risk 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. 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 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.

Good morning and welcome to Essex first quarter earnings call. Today, I will cover our first quarter performance, discuss regional trends and conclude with an update on the transaction market. Barb Pak will follow with prepared remarks and Rylan Burns is here for Q&A. Starting with the macro environment. U.S. economic conditions year to date have generally unfolded in line with our outlook, with national labor trends remaining soft. Additionally, heightened geopolitical tensions and inflationary pressure in recent months have contributed to increased near-term uncertainty. Against this backdrop, we delivered a solid first quarter, with Core FFO per share exceeding the high end of our guidance range and same-property revenues trending ahead of plan. Two key factors contributed to these results. First, we successfully deployed an occupancy-focused strategy to maximize revenues, generating a 20 basis points year-over-year occupancy gain.

Second is the strength in Northern California, combined with the durability of our supply-constrained West Coast markets. There is a direct correlation between housing supply and the cost of housing for consumers. It is no surprise that markets with some of the highest rental rates are typically markets with significant legislative burden on housing providers, which deters building activities leading to a chronic housing shortage. Looking forward, permitting activities remain at a historical low in California. As such, we expect new housing deliveries to remain low at around 0.5% of the existing stock for the next several years. On the demand side, we are seeing early indicators of improvements in three areas. First, job postings from the top 20 technology companies have remained steady despite the layoff headlines. Second, elevated levels of venture capital investments in the Bay Area are funding a new wave of start-up companies.

Third, continued office expansion announcements in our markets. In summary, the low level of housing supply throughout our markets provides resilience across a wide range of economic conditions, while improving demand indicators position the portfolio for sector-leading long-term rent growth. Moving on to property operating highlights. We achieved same-store blended rent growth of 1.4% for the quarter, which is generally in line with our expectations as we executed an occupancy-focused strategy ahead of the peak leasing season. From a regional perspective, Northern California was our best market, performing ahead of plan for the quarter with blended rent growth of 3.2%, led by San Francisco and San Mateo, followed by Santa Clara County. During the quarter, while occupancy increased by 50 basis points sequentially, we were also able to increase rents, demonstrating the strength of this market.

Attractive affordability, favorable demand drivers and limited supply support our expectations for solid growth to continue in this region. As for Seattle, this region performed in line with our expectations for a slow start to the year, with blended rent growth of negative 80 basis points. This was primarily driven by a soft demand environment combined with the absorption of supply delivered last year. Encouragingly, during the quarter, we achieved sequential improvements each month in net effective new lease rent growth and occupancy while reducing concessions. With additional office expansions recently announced in the region, we maintain our conviction with the long-term outlook for this market. On to Southern California, which is closely linked to broader national employment trends. This region also performed on plan with blended rent growth of approximately 1% led by Orange County and Ventura. In Los Angeles, incremental improvements continues at a modest pace.

Heading into peak leasing season, we have shifted our operating strategy to driving rent growth across most markets, and our portfolio is well positioned with April financial occupancy in 96.4% and blended lease rate growth north of 3%. Turning to transaction activities. With minimal forward-looking supply deliveries and favorable fundamentals, interest in multifamily assets on the West Coast remains healthy, especially in the Bay Area, as evidenced by the 50 basis points cap rate compression since 2024. Essex has been the largest investor in this market in the past two years as we allocated approximately $1.7 billion of capital ahead of the cap rate compression, generating substantial value for our shareholders.

Overall, cap rates across our markets remain consistently in the mid-4% range. However, with our stock trading close to a 6% implied cap rate over the past several months, which is a significant discount to private market valuation, we shifted gears and repurchased approximately $62 million of stock, thereby continuing our strong capital allocation track record of maximizing accretion for our shareholders. With that, I'll turn the call over to Barb.

Thanks, Angela. Today, I will discuss our first quarter results and full year guidance and conclude with comments on the balance sheet. We are pleased to report a solid first quarter with Core FFO per share exceeding the midpoint of our guidance range by $0.11. There are three key drivers of the outperformance. First, same-property revenues, which grew 2.9% on a year-over-year basis, was 50 basis points ahead of plan and accounted for $0.04 of the beat. Higher occupancy and other income were the key components of better revenue growth during the quarter. Second, same-property operating expense growth was flat on a year-over-year basis, which was lower than expected and accounted for another $0.04. However, this benefit is timing related and expected to reverse in the second half of the year.

Non-same property and co-investment NOI make up the remaining $0.03 of outperformance. For our full year outlook, we are reaffirming our same-property growth and Core FFO per share guidance ranges. We have started off the year in a solid position with revenue growth trending ahead of plan, we'd like to get further visibility into peak leasing season before adjusting our forecast due to the current macro uncertainty. It relates to the remainder of our FFO forecast, there are two key factors that are different from our original guidance. We expect to receive approximately $90 million in early structured finance redemption proceeds, which are expected to occur in the second quarter. We are pleased to see this early redemption activity despite it causing a $0.07 headwind to our second half forecast as it demonstrates the continued strength of the West Coast markets.

The second factor is share buybacks. We took advantage of the significant discount in our stock price and repurchased approximately $62 million at an average price of $243.76, which equates to an attractive FFO yield of 6.5%. The near term earnings headwinds from the structured finance redemption is largely offset by the benefits from the buybacks, and our full year forecast is unchanged at this time. Concluding with the balance sheet. We recently repaid $450 million in unsecured bonds that matured, resulting in limited remaining maturities for the balance of the year. With net debt to EBITDA of 5.5 times over $1 billion in available liquidity and ample sources of available capital, the balance sheet remains in a strong position.

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

Thank you. Our first question is from Nick Yulico with Scotiabank. Nick, you may go ahead.

Thanks. Hi. In terms of the blended rent growth, I know, Angela, you gave the April stats there. I think you said north of 3%. Can you just remind us how to think about, you know, how that's going to trend this year to get to your 2.5% guidance for the year?

Good morning, Nick, and thanks for your question. We're on plan as it relates to our guidance. If you look at, you know, first quarter coming in at 1.4% and April is already north of 3%, it's, you know, we don't anticipate challenges to hitting that 2.5% for the year. At this point, we're still anticipating the first half and second half are pretty similar to each other, you know, things are on plan.

Okay, great. Thanks. A second question, I guess, Barb, you talked about the FFO guidance and, you know, the $90 million. I just wanted to be clear the $90 million of additional or early redemptions, is that like a pull forward for redemptions you assumed, you know, in the back half of the year? Or is it just an additional level of capital coming back altogether? How should we think about, you know, is there any potential for, you know, that FFO headwind to get even worse throughout the year if this kind of repeats again? Thanks.

Hey, Nick, that's a good question. The $90 million is effectively maturities that were set to mature in 2027 and 2028, so it's been pulled forward into 2026. Because of that, we don't have any redemptions in 2027 and 2028 now. The headwind is effectively behind us at this point.

Our next question is from Jana Galan of Bank of America. You may proceed.

Hi. Thank you. Sorry, just a quick question on the change in methodology for the net effective rate growth. I guess, like, 1, what drove the decision to change it? 2, when comparing with the prior disclosure, it appears like it's, you know, higher in 2Q, 3Q, and then lower in 4Q and 1Q. Would that be correct?

Hey, Jana. You are right on point on the cadence when it comes to the lease rates. Effectively, you know, we made this change, and we actually signaled this change last year when we reported or detailed like for like lease terms. We also reported all lease terms because with feedback from investors that it was easier for everyone to look at how we report the same way as our peers. Just really to be in line with our peers. There's no change to our business and certainly no change to how we approach our business. As far as the cadence, you know, all leases means there'll be a little bit more variability and with the highs in the second and third quarter and lower lows, you know, around the first and the fourth quarter.

Thank you. Appreciate the color on kind of the April operating stats. I was wondering if you could share where renewals are being sent out for the summer.

Yeah. Yeah. We are actually in a good position. You know, we continue to be with renewals sending out around 5%. Of course, that can get negotiated. So far, our renewals have been pretty darn sticky, which is a good indication of the fundamentals of our markets.

All right. Our next question is from Eric Wolfe with Citi. Eric, you may proceed with your question.

Thanks. It's Nick, just here with Eric. Looking at California's off to a strong start, but obviously there have been some recent layoff announcements from some of the larger tech companies. Are you seeing any changes in that market or are all the forward indicators holding strong?

Yeah, Nick, that's a good question. You know, the demand side is something we do watch closely. You know, BLS visibility is not as great nowadays. What we are seeing is the layoff announcements. If you look through to the WARN notices, it shows that majority of the layoffs are not in our markets. These are, you know, these layoffs apply to global locations. A couple of areas that we track that I'm happy to share with you, that, you know, gives you better forward-looking indication. One is that when we look at the top 20 tech job openings, they remain steady. It's actually improved a little bit in the past couple of months, but we don't expect that to accelerate. Having said that, things are just fine on the ground.

We also look at both new and continued unemployment claims, which remains at a low level. This tells us that if people are displaced in our markets, they're able to find another job quickly. Most importantly is our Northern California performance. That market has the highest concentration of tech companies and is our best performing region.

Thank you very much.

All right. Our next question is from Steve Sakwa from Evercore. Steve, you may go ahead.

Yeah, thanks. Good morning out there. Maybe just going back to the, I guess, the repayment. Is there any chance that, you know, you could backfill that with, I guess, new investments? I don't know exactly kind of what the market looks like to make some of these new investments and kind of where your head is in terms of making new investments.

Hey, Steve, Rylan here. As we've communicated, we remain actively involved in many conversations related to new investments on the structured finance side. We were not anticipating going into this year that we'd get that $90 million back. As Barb alluded to, you know, this business has kind of been level set at a lower rate. We're continuing those conversations. We're tracking a few deals that we think could present really attractive risk-adjusted returns. We remain committed to the business, and we'll continue to look for opportunities when the opportunities present themselves.

Okay. Maybe just going back to the expense, can you provide just maybe a little bit more color? I mean, I realize it was pretty flat in the first quarter, and it sounds like a lot of that was timing. Can you maybe just provide a little more detail on kind of where the surprises came in the first quarter and what I guess is likely to reverse itself in the back half of the year?

Yeah. Steve, this is Barb. On the expense side, it really came down to lower controllable expense spend in the first quarter as we delayed several projects from the first quarter into the second and third quarters. That's really what drove it. For the full year, our controllable expense spend is expected to be around 2%, so it's still very low and anemic. We do still think it's gonna hit at this point. It was just a delay in our spend.

Great. Thank you.

Okay. Our next question is from Brad Heffern with RBC. Brad, you may proceed with your question.

Yeah. Hey, everybody. Thank you. Barb, last quarter you said that you were assuming no redemption proceeds for a couple of the 2026 maturities. I was wondering if you have any update there or if that's still the case.

Yeah. Good memory. That is the case. We did have one of our investments did mature at the end of March, and the sponsor did contribute some additional equity. We did grant a small extension on that investment.

There is still a lot of moving parts to that investment, and not everything is finalized. While we could have continued to accrue from an FFO perspective, and it would have benefited our FFO, we given some of the uncertainty related to this investment, we decided not to continue to accrue. There is value there, and there will be upside to our FFO, but it really is depending on the timing of when we can settle a few of these open items. Right now it looks like it's probably an early 2027 event, but more to follow as we go forward. The other large investment that we had stopped accruing on in the fourth quarter, we're in ongoing discussions with the sponsor. That one doesn't mature for a couple more months, so more to follow on that one.

No, no difference in how we budgeted that one as of yet.

Okay, got it. Just to follow on to the change in the spread methodology, do you have the number handy for what 1 Q would have been under the old methodology, just so that we can kind of compare to what we have in our model?

Sure. Happy to. Angela here. On a like-for-like Q1 blended would have been 2%, so a little bit higher than, you know, on all lease. The components are new lease will be negative 1.2% and renewal will be the same, 3.9%.

Okay. Appreciate it.

Our next question is from Jamie Feldman with Wells Fargo. Jamie, you may proceed with your question.

Great. Thanks for taking my question. Appreciate the color on blends in 1Q across the regions and even in April. Can you talk about new versus renewal in April? Then also for 1Q, can you talk about new versus renewal across the regions?

Sure. Happy to. In April. I'll start with April. New versus renewal. Let's see. New is. Where'd it go? Hold on a second. I have it somewhere. Here we go. Thank you. New is about negative 90 basis points, and renewal is about 5%. That takes April to 3.1%. On a regional basis, Northern California, once again the shiny star, with the blend at north of 5% and followed by Seattle with a blend north of 2% and Southern California in around 1.5%. That gets you to that 3.1. It's generally playing out as we had anticipated. I know I had, you know, guided to for the full year renewal around 3%-4% and new around 0%-1%.

All the markets are, pretty much coming in in line with exception of Northern California outperforming.

Okay. Thank you for that. There's been a lot of kind of political tax headlines across some of the West Coast markets. I mean, any thoughts or any feedback from tenants, if there's any implications to demand or it sounds like you're feeling pretty good about the job market and job postings, but any color or conversations with your peers about how people are thinking about the political environment?

Yeah, that's a good question. It's so hard to predict, and it's just too early to know how this will play out. You know, there's the wealth tax that is probably what you're referring to, but at the same time, there's also what we're seeing is a lot of opposition to it. There's actually a counter ballot measure, you know, to advocate responsible expense management rather than imposing more taxes. I think we just need a little more time to see how this plays out. We've not seen any impact to our business. We've not heard, you know, from others about having a direct impact to Essex or multifamily as directly.

Okay. Thank you.

Our next question is from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.

Hey. Hello there. Could you guys speak to, you know, affordability within Northern California and just, you know, given kind of the optimism that you highlighted around, you know, job trends, and supply conditions, I guess, you know, what the runway looks like for you to continue to push on, you know, blended lease rate growth within that region?

Austin, this is Rylan here. This has been a key component of our fundamental thesis on Northern California for the past several years. You've seen significant steady increases in household income growth over the past decade continued through COVID. As it stands today, our current rent-to-median-income ratios in Northern California stand at around 21.5% compared to a 20-year average of almost 26% and a historical peak over the past 20 years closer to 32%. There is significant rent upside on that, those metrics alone to get back to a point that's more in balance or closer to those historical peaks. Again, it's not the primary driver, but it is a fundamental thesis that we feel very attractive as it relates to Northern California.

Wages continue to increase in these markets. Yeah, again, I think the consumer is feeling very, very healthy in Northern California in particular.

That's helpful. Just switching maybe to Southern California. I mean, last quarter, I think you indicated maybe it was L.A. specifically, that conditions were stabilizing and maybe you were seeing sort of, you know, some early signs of rent growth improving. What's sort of the latest thoughts and outlook for that region as well? Thank you.

Yeah, Austin, good question. You know, L.A. is progressing at a glacial pace. You know, it continues to be our most challenging. For example, if we excluded L.A. portfolio, our April new lease rates actually would be 180 basis points higher. It will flip to 90 basis points positive. Having said that, we didn't anticipate things to move quickly. You know, we expected progress to be slow and choppy, which has been the case. You know, we don't get too caught up by short-term numbers because you'll see puts and takes. For example, if you look at economic occupancy compared sequentially from fourth quarter to first quarter, it's a slight decline. If you look at blended, it actually went up by 70 basis points. You're gonna see that dynamic to continue to play out.

The net-net is that this market is stable. You know, we've seen this trough and there's now it's trending better, but just slow.

Thank you. Appreciate the time.

Our next question is from John Kim with BMO Capital Markets. You may proceed with your question.

Thank you. We're halfway or half an hour into this call. I don't think you've mentioned AI. I'm wondering if you feel like you're getting a direct benefit or a direct beneficiary of AI job growth, or is it more indirect for you or more moderate given most of your assets are in Santa Clara and San Mateo County. I was just wondering if you could just comment on if you're seeing a lot of tenants in your market employed by AI companies.

Sure thing, John. I do believe that we are getting a direct benefit from AI, you know, especially as you get closer to San Francisco. What we don't have clarity on is all the startups that's happening because of AI, and that is throughout our markets. If you look at the strength of our market, well, downtown is doing strong or doing well. It also is still in recovery because it recovered later than, you know, the Peninsula. We certainly anticipate that benefit of AI to continue. More importantly, you know, we are also seeing a lot of these large AI companies expand to the Peninsula as well.

Over the long term, I think all of our markets will continue to benefit, particularly, you know, in the suburban markets.

Okay. I wanted to ask Jana's question maybe a little bit different way, looking at your lease growth, under the old definition, you had a peak in the second quarter and a deceleration of 70 basis points in the third quarter. Under your new definition, that drop-off is steeper. It's 130 basis points. Do you see that a similar dynamic occurring this year, or do you think the seasonal trends will be different and that drop-off will be more moderate?

Yeah, John, that's a good question. You know, big picture from when you look at all lease perspective, you're gonna have more variability. Now, I don't know the exact magnitude at this point because we are just, you know, starting to enter into our peak leasing season. It wouldn't surprise me that that drop becomes more significant. Keep in mind, you know, all leases means you're gonna have different terms, so it's gonna just have a lot more noise in it.

Okay. Thank you.

All right. Our next question is from Alexander Goldfarb with Piper Sandler. Please proceed with your question.

Hey, good morning out there. 2 questions. The first is on Seattle. We sort of hear different things like, you know, East Side super strong, Seattle CBD softer. You know, certainly on the office side we hear that, and then the apartment side sounds like the same. Yet, you know, there's a lot of job growth out there, especially on the East Side. Can you just provide a little bit more color on how the market breaks out? You know, Seattle CBD would certainly seem culturally to be a little bit more exciting than maybe, you know, sort of the nine-to-five Bellevue. Can you just provide more color of how the residents are looking at the broader market and how you guys are thinking about where you want to either own more assets, divest assets, et cetera?

Hey, Alex. Yes, it's a good question. With Seattle, it's a combination of two things. It's demand and supply, because Seattle historically generates, you know, more supply than California. It's the impact of those two playing out that then drives the rent growth. East Side has performed better than CBD, although not by a huge margin from what we're seeing. Over the long term, East Side has historically outperformed, mostly because it has a strong employer base but lower supply. We do expect that to continue. Generally speaking, you know, this is a market that has greater highs and lows because of supply, combination of the supply. You know, with first quarter, demand was soft and we anticipated that. We, you know, the performance was pretty much in line with our expectations.

Okay. The second question is, obviously looking at public information, but, you know, Camden has their portfolio out there for sale. You know, you guys obviously look at everything. The interest that you hear that they're receiving, is it what you expected or are you surprised by maybe the number of people who are coming to look at the portfolio? I'm just trying to get a sense of, you know, the appetite for California real estate, Southern Cal real estate, if it's in line from an institutional perspective, if it's more than, you know, you're like, wow, there are a lot more people coming or wow, I would have thought more people would have come. Just try to get a sense for the investment appetite as people look at California versus other parts of the country.

Hey, Alex, Rylan here. You know, as you mentioned, we do look at everything in our markets. You know, we're also subject to nondisclosure agreements, so I can't elaborate on details on any one deal specifically. What I would say is I feel like there has been a significant uptick in terms of capital interest on the West Coast, partly driven by performance issues you're seeing throughout the rest of the country and the relative strength and the forward-looking fundamentals, particularly as it relates to supply, as well as some of the demand drivers that Angela mentioned. I think there's been an increase in capital interest on assets in the West Coast. You've seen this in terms of the cap rate compression we've seen in Northern California.

As we look at the fundamentals over the next several years, I wouldn't be surprised if that continues. Very healthy demand for assets on the West Coast.

Thank you.

All right. Our next question is from Adam Kramer with Morgan Stanley. Please proceed with your question.

Hey, thanks for the time here, guys. Just wanted to ask about renewal growth trends. I recognize sort of the methodological change here that might be, you know, might be sort of impacting this comparison I'm about to make. I guess just bear with me. If I look at Q4 2024 versus Q1 2025, looks like about a 10 basis point decel in renewal growth. If I look at, you know, what you guys just reported yesterday, it looks like it was more about an 80 basis point decel this year. Just wondering, you know, I guess number one, if some of the methodological changes played any impact here on just sort of what's happening with renewal growth.

Maybe there's sort of an operational or strategic change in terms of how you guys are thinking about renewal growth. Yeah, just sort of wanted to focus on that piece here today, just sort of that quarter-over-quarter decel that you reported last night.

Yeah. Hey, Adam, a good question. As far as our pricing methodology or operating strategy hasn't changed. You know, the reporting change to all leases is purely a reflection of what is just to make things easier for comparative purposes versus our peers. Ultimately, we continue to focus on maximizing revenues, and we don't manage to a specific metric. What you're seeing on renewal is really a output, not an input. Ultimately, you know, we can manufacture a high lease rate by reducing occupancy, but you wouldn't want us to do that. You know, just back to the basics, we're running a business here, and the goal is to try to maximize revenues. I wouldn't get too caught up on the renewal rates.

You know, at a minimum, I would point you to look at the blends. The blends have improved, continued to improve, sequentially. Ultimately, that is what really hits the bottom line, the combination of your blended and your occupancy.

That's helpful. Thank you. Just maybe switching gears to capital allocation. I don't think we've touched on that yet. You know, I recognize there was some buyback activity in the quarter and subsequent to quarter end. I don't think you did much, if any, buybacks last year, so a little bit of a shift there. Stock has moved a little bit, you know, versus sort of the average share price that you had bought back at. Just wondering, as, you know, sort of as you sit here today with where the stock is, how do you sort of think about stock ranking capital allocation opportunities and where does the buyback fit into that?

Hey, Adam, it's Angela here again. You know, I do wanna point to last year, the environment was different in that cap rate compression has not, you know, really take hold, and we were very opportunistic in our capital allocation strategy. By buying assets, you know, before cap rate compression, we were actually able to generate a lot of accretion. Also, the pricing level was different back then. You know, I'm very pleased with our finance team executing at that 243 pricing on average. That's a terrific execution. What you'll see us do is we're going to be thoughtful and opportunistic and at every point in, you know, when you look at the investment spectrum, we're gonna pick our spots.

That means that there's not an exact price today because the relative value will change based on what's available to us in the future.

Great. Thank you.

Our next question is from Handal St. Juste of Mizuho Securities. Please proceed with your question.

Hey, good morning out there. Wanted to go back to Seattle. Your tone there seems to be more constructive to relative to L.A., where it sounds like things will be more challenged for a bit longer. Is your view on Seattle, I guess the more constructive, more hopeful view tied to that reduction in supply you're referring to? Perhaps is, are there other KPIs you're watching more closely? I'm curious what those are and what they're telling you. When do you think we can expect Seattle to track a bit more closely to San Francisco, which historically has shared a lot of the same demand drivers? Thanks.

Yeah. Hey, Handal. Yes, I think you picked up on my tone being more constructive on Seattle for a couple of reasons. One, you mentioned on the supply. I think that it certainly, you know, has a direct impact. First quarter, we did expect that legacy absorption for last year is going to have some overhang. It's good that we are mostly behind that. More importantly, as we look at where leases are. You know, while Q1 overall lease rate was negative, the rates actually flipped positive in March and has continued in April. We are aware that, you know, because this is our most seasonal market, it can flip quickly. The fundamentals are quite sound in this market.

You know, we do view that, it already has started to trend toward what the midpoint of our expectations.

May be unfair to ask, but I'll try anyway. Would it be your expectation that Seattle would perform more closely to San Fran next year, narrow the gap?

That's a good question. I'm not sure on the exact timing. You know, we are seeing office announcements and expansions into Seattle. You would expect that Seattle does follow the Northern California market. It's hard to predict the actual timing because once they expand, they're going to have to hire, and we don't know how long that's going to take. I will tell you that, at this point, you know, just even on the renewal side, Seattle is starting to catch up to the Bay Area markets, which is a good sign. It tells us that it's going to get there. I just don't have enough data to be able to tell you when.

Fair enough. Fair enough. My second question is on concessions. Maybe some color on where they stand today across the portfolio, how that compares to a year ago, last quarter, some context. Thank you.

Sure. Happy to. Concessions, it's not a whole lot different. First quarter concession for the portfolio was about 6 days. Last year, first quarter was about 4 days. It's not a huge variation. I think, you know, the largest area is really L.A. continues to be lumpy. L.A. concessions this year is a little bit higher than last year, although that's not anything that we're surprised by. San Diego is a little higher because of supply that I talked about, which you would expect. The rest of it generally performing in line.

Okay. Thank you much.

All right. Our next question is from Julian Leline, with Goldman Sachs. Please proceed with your question.

Yes. Hi. Thank you for taking my question. Sorry if I missed it, but on the new reporting last year, was April the highest blended month? I'm just trying to get a sense on that north of 3% for April. Would you expect it to be even higher as we move into May and June?

Yeah. Typically, you would expect blends to continue to improve as we head into our peak leasing season. On average, you would say, you know, we would anticipate blends to peak, say, around June through July, somewhere in that time period. The question here is really the trajectory, you know, of that increase. I do wanna say that while we're performing well here, we are still in a soft demand environment generally across the U.S. and with, you know, geopolitical uncertainty. How much that blend is going to increase will have some of that impact. One of the reasons why we didn't raise our same-property revenues, we're very comfortable with where we're at.

In fact, you know, our same-property, if it performed consistent with what we had anticipated when we released our guidance, just based on the first quarter results, same-property revenues would be about 15 basis higher. Having said that, when we set our guidance last year in early February, we weren't in a war with any or with a new country. Things are moving around and there's a lot of noise out there in the broader economy.

Okay, great. Thank you. That's helpful. That's all for me.

Our next question is from Wes Golladay with Baird. Please proceed with your question.

Good morning, everyone. Can you comment on what's going on in Alameda? It looks like it's having a little bit of an acceleration. Just curious if this is more of a concession burn-off or a pickup in demand?

Hey, Wes. It's a combination of couple of things. One is that we do have concession burn-off. You know, we had talked about supply abating and starting to benefit this year. Concession in the first quarter of last year was almost 2 weeks, and now it's half a week, which is terrific. We're seeing, you know, both rental rates and financial occupancy improve. We're also seeing that there's, of course, the spillover effect that helps with San Francisco, you know, performing well. There's some demand driver as well. Both of those components are helping Oakland, which is playing out what we had expected.

Okay. Thank you for that. Maybe just one on the financial modeling, do you have a timing expectation for the preferred investments being redeemed for the second half?

They're expected to be redeemed in the second quarter. I think if you model mid-Q2 redemption, that will get you close on the guidance.

Okay. Thank you for that.

Our next question is from Michael Goldsmith with UBS. Please proceed with your question.

Hi, this is Amy. I'm with Michael. We were just wondering, what are you seeing in terms of residents moving in from outside of your MSAs? Has there been any change in either domestic or international immigration?

Hi, Amy, this is Barb. On the immigration front, what we're seeing is domestic immigration within the Bay Area has continued to improve, and it is above pre-COVID levels. I think that's a function of the demand for tech jobs and tech workers. In terms of international immigration on the legal side, we haven't seen any material change on H-1B visas or anything like that. We know that the H-1B visas for 2027, they've already hit the cap, those will all get filled. Overall, it's been a slight benefit on the immigration side to our market, specifically in the Bay Area, no material change from what we've said in the past.

Great. Thank you. Just to follow up on some of the questions about the structured finance opportunities, how has competition trended for these deals? For the deals that you guys look at and underwrite, how far off are you from getting these deals and being the selected bidder?

Hi, Amy. A good question. As we've said for the past couple of years, there was a significant amount of capital raised, you know, in the past several years to, invest in this, app structure. There has been more competition. We have seen yields compress and, you know, somewhat opaque in terms of, like, where on specific deals we might miss out. We're just trying to be diligent and stick to our process. We still feel it's a relationship business. If you start to see developments pick up, that will create some more opportunities for us. We have a long history in this business. We're viewed as a good partner on the preferred side.

We're gonna continue to see opportunities, but we're just trying to stay disciplined as it relates to our underwriting process and not chase the market, you know, as some covenants get weaker and/or yields compress. We're gonna stay disciplined to our return re-requirements.

Yeah. Amy, it's Angela here. Ultimately, there's been a lot of volatility to our earnings because of the preferred book overhang and the size of the preferred book. You know, I for one and poor Barb here has had to deal with the direct impact, and we are quite relieved that this is our last year of that volatility. Going forward, what we have been is much more selective in an effort to maintain a size that's going to be accretive to the portfolio and our business, but not create so much noise that it becomes a distraction to our business.

Absolutely. Makes sense. Thank you.

Our next question is from John Pawlowski with Green Street. Please proceed with your question.

Thanks. On the capital allocation front, assuming your cost to capital stays in a, in a similar zip code as it is today, what rough range of disposition volume can we expect this year, and then the most likely use of those funds?

Hey, John, Rylan here. You know, as Angela mentioned, our capital allocation strategy doesn't change. We're really trying to maximize FFO and NAV per share accretion and improve the growth profile of the company. We have several assets, you know, that are currently on the market. We will probably do several dispositions this year, and those proceeds will be allocated to, you know, whatever is the highest risk-adjusted return at the time of that. We have the ability, you know, as we talked about the health of the transaction market, which I think you're aware of, we have the ability to ramp that up and down as we see fit. Again, the strategy has not changed, and we'll continue to do as we have for many years.

Okay. Today, given the health of the private market pricing, is it fair to assume that currently the best use of the funds is share repurchases in your guys' math?

I don't think so, John. Once again, you know, it depends on what the opportunity is available at the time. I would point back to the transactions that we completed. Over 60% of it was off market. We certainly have incredible network and extensive, you know, relationships and a reputation that gives us an advantage. You know, the stock price is gonna change every day. To pinpoint what we're gonna do based on today's stock price is probably not something you want us to do.

I would add on that, you know, I look at our menu of investment opportunities today. We've got several development land sites that we're quite excited about. We think these are gonna be very attractive, you know, risk-adjusted returns as well as our redevelopment opportunities, particularly ADUs. This is a business that we've been ramping up where we're getting 10% return on cost. The per unit costs are a fraction of in place value. Those are two areas that we're gonna continue to invest in because the returns in many cases exceed, you know, the highest risk-adjusted returns.

Okay. Last one from me. Barb, can you talk a little bit about the insurance market, the property insurance market? I think you're expecting maybe a 5% decline on your insurance and other expenses this year. Curious if the market is healing faster and more dramatically than you thought or if that's still a fair bogey.

Yeah. John, we actually went to the insurance market and did our renewal for property in December. We did see a healthy reduction in our property insurance. I do think that market has held up from what we're hearing even today. I know we're, I think 4 months past or 5 months past the renewal. It sounds like on the commercial side, that is the case. I think if you're talking residential, it's a much more challenging market. We have seen the reinsurers come back in and the insurance premiums have come down from where they were over the last 2 years.

Okay. Thanks for your time.

Our next question is from Omotayo Okusanya of Deutsche Bank. You may proceed with your question. If you're muted, we can't hear you. Okay. If you'd like to ask a question, please proceed. Our next question is from Alex Kim from Zelman & Associates. Please proceed with your question.

Hi. Thanks for taking my question. I wanted to circle back quickly to Los Angeles and the extent to which the eviction processing timeline impacts the pace of improvement. Have those eviction processing timelines improved at all in first quarter? You know, when do you anticipate that the supply reduction in 2020 shows up in meaningful pricing power improvement? Thanks.

Yeah. That's a great question on L.A. Delinquency processing or the core processing time has improved over time. As far as just from fourth quarter to first quarter, it's pretty sticky. It's around four months. You know, this is a huge improvement from wasn't too long ago when it was six months and thereafter. What we would want to see is for that to improve, say, closer to three months, that's closer to a long-term average. That'll definitely help on the delinquency front. As far as pricing power is concerned, we would want that economic occupancy to be at about 95% or better. We are very close right now.

We were, you know, above 94% in the fourth quarter, and we're still above 94% in the first quarter, although it's a little bit lower than the fourth quarter. But pricing power will be available to us once we hit 95, and we're feeling good that we're close to it.

Got it. Just it's taking a bit longer than, occupancy returns. That's all for me. Thank you.

Yeah, it's taken longer, but then again, we didn't expect this to happen quickly. We had thought it was gonna take, you know, multiple years.

All right. Our last question is from Rich Anderson with Cantor Fitzgerald. Please proceed with your question.

Hey, thanks for holding the fort down for me. Angela, when I was just reading the transcript from last quarter, you were talking about Los Angeles, and you described it as just so close to the magic 95% economic occupancy where things perhaps get a little bit better for you. I know you described, you know, SoCal in general is in line, perhaps L.A. in line with your expectations. Deep in your heart, were you expecting more this quarter from L.A. that you didn't get? I'm just curious, I have a follow-up to that.

Hey, Rich. Always happy to hold out for you. Deep in my heart, I always hope for better numbers. I think anybody who works with me knows that we push pretty darn harder. Having said that, the expectations are such, you know, and sometimes things do better. You know, Northern California exceeded expectations and sometimes they meet expectations. With L.A., I think, you know, we have always said that it was gonna take a little bit longer and occupancy once again is so close. But even though we didn't see significant occupancy improvement from quarter to quarter, which we didn't expect, 70 basis points improvement blends, that's not bad. I'll take it.

Okay. On the Camden process, I don't think you're a buyer, but is there anything about it that's informing you strategically around, you know, the, the area, you know, whether it's L.A., Orange County, San Diego, Inland Empire, that, you know, that they're looking to sell that you're sort of tapping the reception that they're getting, which sounds like it's been pretty substantial. Does it inform you about what you might do, as a corollary to the process they're undertaking? Whether as a, as a buyer or a seller or anything?

Yeah. Rich, that's a good question. You know, as far as Southern California is concerned, it's a stable part of our portfolio. We have about, you know, 40% in SoCal, and a little bit more in NorCal, maybe 45%-ish. That allocation makes sense to us. We're in Southern California because it mirrors the U.S. and with more professional services and lower supply as a whole. You know, other companies are gonna make capital allocations differently than us. I will say that, you know, Camden is a good company. It's run by smart people. Dynamics are different, right? Because having a handful of portfolios in a huge region, it's very tough to be efficient.

Versus for us, 70% of our portfolio, of our properties are within 3-5 miles for each other. We can run it incredibly efficiently. It's just very different reasons why people make portfolio allocation decisions.

Okay. Fair enough. Thank you.