Essex Property to Report Q3 Earnings: Here's What to Expect

Essex Property Trust, Inc. ESS is scheduled to report its third-quarter 2025 results on Oct. 29, after market close. The company’s quarterly results are likely to reflect year-over-year growth in revenues and core funds from operations (FFO) per share.

In the last reported quarter, this San Mateo, CA-based residential real estate investment trust (REIT) delivered a surprise of 1.00% in terms of core FFO per share. Results reflected favorable growth in same-property revenues and net operating income.

Over the trailing four quarters, Essex Property surpassed the Zacks Consensus Estimate on each occasion, the average surprise being 0.89%. The graph below depicts the surprise history of the company:

Essex Property Trust, Inc. Price and EPS Surprise

Essex Property Trust, Inc. price-eps-surprise | Essex Property Trust, Inc. Quote

Let’s see how things have shaped up before this announcement.

US Apartment Market in Q3

After two years of robust growth, the U.S. apartment market has finally hit a pause, with rent growth slipping into negative territory in the third quarter of 2025. According to RealPage data, effective asking rents fell 0.3% between July and September, the first rent cut between July and September since 2009. In the year-ending third quarter, rents slipped 0.1%. The slowdown reflects a cooling economy.

About 637,000 market-rate apartments were absorbed in the year-ending third quarter of 2025. While still healthy by long-term standards, it is a clear step down from the record nearly 784,900 units absorbed in the year-ending second quarter of 2025. “Sluggish new lease activity” is the culprit, said RealPage Chief Economist Carl Whitaker, pointing to weaker job growth and more cautious consumer behavior as key factors behind the shift amid an uncertain economic backdrop.

While demand cooled, construction of roughly 474,800 units was completed nationwide over the past year, including 105,500 in the third quarter alone. That’s below last year’s peak but still well above normal supply levels. With so many new units hitting the market, landlords have had to compete harder to fill vacancies. Occupancy slipped to 95.4% in the quarter, down 30 basis points and ending five consecutive quarters of gains.

To attract renters, concessions became more common, with 22% of properties offering discounts averaging 6.2%. Operators are increasingly prioritizing occupancy over pricing power, suggesting rent softness may persist until concessions taper off. Interestingly, resident retention rose year over year, as renters chose to stay put amid economic uncertainty.

The rent cuts haven’t hit every region equally. Markets that built aggressively during the boom, especially across the South and West, are seeing the steepest declines. Rents dropped nearly 8% in Denver and Austin and around 5% in Phoenix and San Antonio, TX. Meanwhile, tourism-driven cities such as Las Vegas, Orlando, Nashville and San Diego are softening, too, as travelers spend less and local economies cool. In contrast, markets with lighter construction pipelines, such as the Midwest and Northeast, have held up better. Tech-heavy coastal hubs like San Francisco, New York and San Jose even saw modest rent growth, likely helped by return-to-office policies and limited new deliveries.

Factors to Consider Ahead of ESS’ Upcoming Results

Essex Property is poised to have benefited from its substantial exposure to the West Coast market. The West Coast is home to several innovation and technology companies that drive job creation and income growth. This region has higher median household incomes, an increased percentage of renters than owners and favorable demographics. Also, due to the high cost of homeownership, the transition from renter to homeowner is difficult, making renting apartment units a more flexible and viable option.

Moreover, by leveraging technology, scale and operational expertise, Essex is likely to have driven efficiency, reinforcing its portfolio in a region characterized by favorable demographics and decent economic conditions.

In its September investor presentation, Essex reported that its superior same-property revenue and core FFO per share growth compared with peers has been largely fueled by continued strength in Northern California. The company also reaffirmed that same-property revenue growth remains in line with full-year expectations, which call for sub-3% growth in the third quarter and an uptick to above 3% in the fourth quarter.

Nonetheless, Essex Property is likely to have continued to encounter headwinds in attracting renters during the third quarter, as elevated supply in certain markets put pressure on rent growth and occupancy levels. Furthermore, interest expenses are likely to have increased year over year.

Projections for ESS’ Q3 Results

The Zacks Consensus Estimate of $475.51 million for third-quarter revenues calls for a 5.51% increase year over year. The consensus estimate for same-property revenues is pegged at $414.33 million, marginally up from $413.21 million in the year-ago period. 

For the third quarter, we expect same-store property revenue growth of 2.7% and net operating income to rise 2.6% year over year. For the quarter under discussion, we project financial occupancy of 96.4%, up 20 basis points sequentially. We expect interest expenses to increase 9.1% year over year in the third quarter.

For the third quarter of 2025, Essex Property projected core FFO per share in the range of $3.89-$3.99. Before the third-quarter earnings release, Essex Property’s activities were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly core FFO per share has been revised a cent north in the past two months to $3.96. It suggests a year-over-year increase of 1.28%.

What Our Quantitative Model Predicts for ESS Stock

Our proven model predicts a surprise in terms of core FFO per share for Essex Property this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here. 

Essex Property currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are two other stocks from the residential REIT sector — American Homes 4 Rent AMH and UDR Inc. UDR — that you may want to consider, as our model shows that these also have the right combination of elements to report a surprise this quarter.

American Homes 4 Rent, scheduled to report quarterly numbers on Oct. 29, has an Earnings ESP of +1.44% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

UDR is slated to report quarterly numbers on Oct. 29. UDR has an Earnings ESP of +0.41% and carries a Zacks Rank of 3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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