Good day and welcome to Essex Property Trust's third quarter 2025 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 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. 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. Welcome to Essex third quarter earnings call. Barb Pak will follow with prepared remarks, and Rylan Burns is here for Q&A. We are pleased to report solid results for the third quarter, highlighted by a $0.03 FFO outperformance and an increase to our core FFO full-year guidance. Today, I will cover key takeaways from the quarter, a high-level outlook for 2026, and provide an update on the transaction markets. Starting with operations, our portfolio performed well amid a backdrop of muted job growth across the U.S. and heightened policy uncertainty. Year-to-date through the third quarter, we generated a blended lease rate growth of 3% at all leases and 2.7% on like-term leases. This is a proven example of the competitive advantage of our low-supply markets. As expected, Northern California is our best-performing region, and the fundamental backdrop remains favorable, with forward-looking supply continuing to decline, comparable to a level in the years following the great financial crisis. Within the Bay Area, San Francisco and Santa Clara counties are generating the highest rent growth year-to-date, reflecting attractive rent-to-income ratios, demand benefiting from AI-related startups, and above-historical-average migration trends. Our Seattle region remains healthy but is trending at the low end of our full-year expectations, driven by a combination of challenging year-over-year comparison, soft demand, and pockets of supply temporarily limiting pricing power in certain submarkets. Finally, on Southern California, this region is generally performing in line with our expectations. As we have discussed, Los Angeles has lagged, primarily attributed to delinquency recovering, muted job conditions similar to the U.S., and pockets of supply on the Westside and downtown L.A. With supply expected to drop in 2026, the infrastructure spending earmarked for Los Angeles, and market occupancy improving, we see a path to pricing power. Given the soft economic environment and policy uncertainty, we are not surprised that hiring and investment decisions have been delayed across the U.S., but we are pleased to see the West Coast once again outperforming the U.S. average, a trend we anticipate continuing. Looking to 2026, our portfolio is well-positioned relative to other U.S. markets, supported by low levels of housing supply, attractive affordability, and demand catalysts from the technology sector. Directionally, we assume Northern California to continue outperforming and rank among the top U.S. markets, as job growth in Northern California gradually gains momentum, which is supported by announcements of significant office expansions. Next in the ranking would be the Seattle region. With total housing supply deliveries declining by almost 40% next year, we are optimistic about the market's outlook. For Southern California, we expect stable economic conditions, with Los Angeles fundamentals to improve. Moving on to early building blocks, we forecast our blended lease rates for the second half of the year to land at a similar level to last year. As such, we anticipate another year of stable growth, with 2026 earning between 80 - 100 basis points. Lastly, on our investment activity and the transaction market. Page S16.1 of the supplemental demonstrates the value created from our capital allocation strategy since 2024. We have focused our investments on the highest growth submarkets in Northern California, acquiring almost $1 billion of assets in this region, while achieving accretion relative to dispositions and improving overall age of the portfolio. As for the transaction market, year-to-date volume on the West Coast is slightly above 2024 but remains below average historical levels. We continue to see a competitive bidding environment for high-quality properties in our markets, and cap rates are generally in the mid-4% range, with most of the Bay Area transactions in the low 4%. Although cap rates have compressed in Northern California, we will continue to enhance value from our operating platform and drive FFO and NAV per share growth for our shareholders. With that, I'll turn the call over to Barb. Thanks, Angela. I'll begin with a recap of our third quarter results, followed by comments on investments and the balance sheet. Beginning with our third quarter results, we achieved a solid quarter with core FFO per share exceeding the midpoint of our guidance range by $0.03, attributed to lower G&A and interest expense. As a result of the third quarter beat, we are pleased to raise the midpoint for core FFO per share to $15.94. As for operations, we remain on plan and are reaffirming the full-year midpoint for same property revenue, expense, and NOI growth. Turning to the structured finance portfolio, year-to-date, we have received $118 million in redemptions and anticipate $200 million in total proceeds for the full year. As you may recall, over the past two years, we have made the strategic decision to redeploy the redemption proceeds into acquisitions at better-than-market rate yields and in markets with the highest near-term rent growth potential. This strategy has resulted in better NAV growth, improved cash flow for reinvestment, and higher quality of FFO earnings. Looking ahead to 2026, we are pleased that we are in the final year of the redemption-related headwinds, and the realignment of this business will be behind us. Overall, we expect roughly $175 million in additional redemptions next year. Given heavy redemptions in 2025 and expected in 2026, we anticipate this will reduce our 2026 core FFO growth, net of reinvestment, by approximately 150 basis points, depending on timing of redemptions. As we look further out to 2027 and beyond, we expect that FFO volatility from this business will abate, as the size of our structured finance book will have decreased from the peak of $700 million in 2021 to around $250 million in total investments. Lastly, a few comments on capital markets and the balance sheet. Throughout 2025, we executed several financings to further strengthen our balance sheet, increase our liquidity, diversify our capital sources, and proactively address near-term maturities at attractive rates in the current market environment. With manageable maturities over the next 12 months, healthy net debt to EBITDA of 5.5x, and over $1.5 billion in available liquidity, our balance sheet is strong heading into 2026. I will now turn the call back to the operator for questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press tar two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. To allow everyone in the queue to be able to ask their question, we ask that everyone limit themselves to one question and one follow-up only. Our first question comes from the line of Nick Yulico with Scotiabank. Please proceed with your question. Thanks. I wanted to see if there was any way you could break out the blended rate growth a bit in the third quarter, just for some perspective on how much L.A. and Orange County might have been a drag on those numbers. Hey, Nick. It's Angela here. Good morning, and thanks for your question. As expected, you called it, L.A. has been a drag, but that's not a surprise to anybody. In terms of our blended for the third quarter, Southern California came in at around 1.2%, and Northern California close to 4%, and Seattle right in the middle at about 2%. To call out L.A. specifically, L.A. is below the 1.2% average for Southern California. L.A. is really 1%. That gives you the range and the magnitude. On the high end, when we're looking at Northern California, San Francisco and San Mateo, they're in kind of that 6.5% range in terms of the blended. Hopefully, that kind of gives you the bookends of our portfolio. It's a pretty wide range. Okay, great. Thanks, Angela. My follow-up question is just in terms of Northern California, whether you've seen any real pickup in demand. If we see again from some of the job announcements of new company formations or some of the activity on the office side in San Francisco or the broader Bay Area, is there anything you can share on how that's actually translating into demand on the ground? Thanks. Yeah, that's a good question. We certainly are seeing a steady strength in the Northern region. When we look at the top 20 tech postings, the postings have remained steady with September's slight uptick in California, mostly benefiting from the Northern region, the San Francisco, San Mateo, and of course, the Santa Clara counties. It's tough to get exact numbers because they don't show up. The BLS numbers, as we talked about, have been challenging. What we are seeing is that we're seeing more startups than we ever seen in the past. Anecdotally, what we're seeing is that office space, less than 10,000 sq ft, are in hot demand. That is a new phenomenon that we've not seen in the past. Okay, thank you. Thank you. Our next question comes from the line of Eric Wolfe with Citi. Please proceed with your question. Thanks. It's Nick Joseph here with Eric. You mentioned the 2026 earning of estimated to be 80- 100 basis points. I was hoping you could break that down between Northern California, Southern California, and Seattle. Hey, Nick. I don't have the exact breakdown in front of me. I will just point to that we, of course, we're assuming that Northern California will lead and Southern California will rank third in terms of the major three regions, with Seattle in the middle. I think a helpful data point could be that if you look at our blended lease rates in the third quarter, it's comparable to what we achieved last year, a little bit lower than what we achieved last year. However, what we're seeing in the fourth quarter is we're on track for fourth quarter to do better than last year. Year-o ver- year, for the second half, we're assuming that we're going to land in the same zone, somewhere in the low 2%. That gives us the 80 - 100 basis points earning. Thanks. Appreciate that. On the preferred book, I think you said 150 basis points headwind. What's the sensitivity around the timing of the potential redemptions for next year? Hi, Nick. It's Barb. There are a couple that are maturing in the first quarter, and if they may need an extension for a month or two, that's really the sensitivity that I'm talking about. The maturities are very much in the first half of the year. What we've guided to and what I provided was assuming that they're fully redeemed at maturity. If they get extended, it might be a little bit lower. Got it. Thank you. Thank you. Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question. Great. Thank you. Just to follow up on the first question Nick had asked, I think his follow-up question on jobs. It does seem like we're seeing mixed signals between AI hiring and tech layoffs. How are you thinking about this into next year, maybe even medium term? What are you hearing from, let's say, any peers or any executives that you talk to in terms of the job outlook in your region? Thank you. Yeah. Hey, Jeff, that is a great question because it really goes to the heart of where is AI taking us, right, in more of a broad conversation from that perspective. A lot of things are happening right now, which is noisy. We are seeing recent layoff announcements. Keep in mind that large tech companies get most of the headlines. Broadly across the U.S., layoffs are occurring. For example, UPS in Atlanta is cutting 48,000 jobs. From what we're seeing on the ground here, this is a normal part of the business cycle. In an environment where the macro environment is soft, business R&D should be focusing on efficiency. I don't think, from what we're seeing, that they are AI-driven job losses. In terms of what we think is going to happen with the conversation about AI displacing jobs and becoming, or is viewed to be, a disruptor, we do think that's going to happen at some point. AI capabilities, it's growing rapidly, and we're seeing research suggesting that most companies are experimenting with AI. That experimentation level is very high, but the adoption level is low because the return on investment is still unclear. For example, Essex, where we see AI benefiting data analytics and certain repetitive tasks, but it is still in early developmental stages, and we need additional technology to interface with AI applications for utilization. Essex has not had significant workforce reduction using AI. What we do expect is that the pace of disruption or job displacement will be more gradual. On the flip side, what we're seeing is, as I mentioned earlier, an unprecedented number of startups, small companies that, because of AI, can form businesses. That is not being picked up by BLS, but certainly it's being picked up by the demand that we're seeing in Northern California. Does that make sense? Thank you. That's helpful. Maybe can you talk a little bit more about San Francisco specifically, let's say, downtown. We're seeing all these great articles on downtown, the city, first-year suburbs. How is your portfolio benefiting from all of this? Interestingly, downtown, we view Northern California generally is still in a recovery phase and getting more rents out relative to pre-COVID levels. The suburban started recovering last year. Downtown is recovering starting this year. When we look at relative blended rates for our markets, if I break out San Francisco, for example, year-to-date blended rate growth is 5.2%, where San Mateo is 6%, and San Jose in the 4% range. The relativity, the dispersion isn't huge, and they're all quite strong. When we look at announcements of new office space, it's just as concentrated in the suburban areas as it is downtown. Great. Thank you. Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question. Hi, this is Sanket on for Steve. Switching a bit, you guys have been very active on the transaction front this year, and we just wanted to understand what are the cap rates or yields on acquisitions and dispositions for those assets, and how deep is the investor pool within that market? Thank you. This is Rylan here. I'd point you to Essex 16.1, where we've tried to break out specifically the cap rates that we've been targeting and been successful at acquiring over the past year and a half. I also point you to the Essex yield, which is 40 basis points higher, which is, as a result, and something we've talked about, our operating platform. Given our asset collection models in these markets, we're able to pull out a significant amount of controllable expense by putting them onto our platform. That's been one of the driving factors in our acquisition strategy. As Angela mentioned, cap rates have compressed. There's been a significant sentiment change as it relates to Northern California over the last year. I'd say we've been relatively early and been able to acquire significant, almost $1 billion of assets in these submarkets at that 4.8% market rate and a 5.2% yield to Essex. We're pleased with what we've accomplished, and we're hoping to continue. As a follow-up to that, are you guys evaluating share repurchases given where the stock price has been? It's been a common theme across your peers. Hey, Sanket, that's a good question. I think you've seen that we have a very solid track record of buying back stocks and assessing all the relative value leading to that decision. If you look at where we are today, where we're trading today, it's much more compelling from a stock buyback perspective than it was in the third quarter. I do want to highlight that our transaction in the third quarter was around a 5% cap rate. You add growth to that, it's quite compelling because stock back then was trading in kind of that low to mid 5% range. Once again, you'll see us being very disciplined in making sure that we're going to maximize the yield depending on our cost of capital and the investment instrument available to us. Makes sense. Thank you. Thank you. Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question. Great. Thanks. Hello, everybody. Going back to the lease rate growth during the quarter versus the back half projections, I think it was around 2.7% as of last quarter. Was Southern California lower than projected, or was it Seattle, as you mentioned in the prepared remarks, that drove maybe pricing being a little bit softer than you thought last quarter? I'm just wondering if you think the Seattle softness is kind of a temporary phenomenon or could persist into 2026. Thanks. Hey, Austin. I think you make a—excuse me. Sorry, I have something in my throat. Okay. It's really driven by Seattle. What we're seeing in Seattle is that the demand is coming softer. We had expected that demand to moderate throughout the year on a national level. Keep in mind, Seattle does not have the benefit of the AI startups that Northern California does. Northern California has 80% of the AI business. Seattle is going to be more in line with the U.S. average at the current cycle. I do want to note that some of the headline news, like Amazon laying off corporate employees, they have multiple locations. It's not a Seattle-specific issue. When our team dug into the WARN notices, it's less than 10% of the layoffs that is Seattle-specific. This leads us to believe that this is not a market where we're seeing red flags. It's a market that's stable. It's still performing well. Certainly, it's not reaching above-average CAGR growth that we had hoped, but it's still a good market. With next year's supply going down by almost 40%, it's going to do just fine. Appreciate the thoughts. Just the 4% growth in blended lease rates in Northern California, coupled with some of the office leasing you've referenced across the Bay Area, do you think that the region can sustain that level of growth in 2026? Was there any specific phenomenon like back to office that maybe provided a little bit of an incremental lift that maybe is less sustainable to the extent job growth remains more muted, more of a broader comment than specific to the area? Thanks. Yeah. Hey, Austin. I think there are different influences in every cycle that drive job growth. Currently, what we're seeing in the Bay Area is really more of a recovery story. We have not begun the growth story yet, because if you look at the top 20 tech hiring companies, the postings are still kind of at and slightly below the long-term average. What we're seeing, that 4% forecasted, is a catch-up, if you will, and this market still has a lot of legs. Appreciate the thoughts. Thank you. Thank you. Our next question comes from the line of Jamie Feldman with Wells Fargo. Please proceed with your question. Hi. Thank you for taking my question. This is Connor on with Jamie. Can we talk about your fourth-quarter leasing strategy? Where are you seeing renewals go out for the quarter? If you have any insights on new lease growth quarter to date? Hey, Connor. Yeah. Our general strategy for the third quarter at the beginning, as we approach the seasonal peak, is to push rents in the Northern California and Seattle region. In Southern California, we toggle between rents and occupancy, subject to market conditions. As we wrap up the third quarter, we pivot to more of an occupancy or more defensive focus, especially as we saw strength early on, which, of course, tapered off. That's a normal seasonal cycle. In terms of the renewal growth, what we're seeing is that it's been quite sticky. In the third quarter, we sent renewals out around mid 4%, say around 4.6%, and we landed for the quarter around 4.3%. Only 30 basis points of negotiations, which is quite good. Currently, for November, December, we're sending renewals out around mid 5%. With negotiation, we probably will land at maybe high 4%. This is another reason that gives us conviction that fourth-quarter blended rates will be better this year than last year. In terms of the—what was the third question? New lease rates? Connor, what was your third question? Yeah. This is on the new lease rates. Thank you. New lease rates for October, for the same store, are pretty much flat, and that's expected, especially for this time of the season. I think a good data point I'll point you to is loss to lease because we talked about that in the past as a good gauge of the portfolio. Where we're sitting today in October, we have a gain to lease of 1.6%. That's not exciting, but having said that, it's also nothing alarming. Just to give you some context, pre-COVID, 2019, so it gives you a sense more of a historical range, our gain to lease was worse. It was at 2.3%. This is so far playing out to be a normal seasonal cycle in a soft macro economy. We're quite pleased with how the portfolio is performing. Thank you for the color. That's super helpful. Maybe on the preferred book, it looks like there was a $21 million commitment this quarter. Is there anything we should read into that as a way to maybe selectively offset some of the redemptions going forward? Just trying to kind of think about use of proceeds here beyond acquisitions. Thanks. Hey, Connor. Rylan here. As we've said, we are not getting out of this business. This is a good business, and there are interesting opportunities where we believe we'll get a premium yield to what we can buy on the fee simple side. In general, the strategy is just to make this a more manageable size relative to our total business. If we see good opportunities, in this case with partners that we know very well and we're really comfortable with our position in the stack, we will continue to make investments in this book. We're not getting out of it. It's really just trying to control the size of it and just pick the best opportunities for our shareholders. Thank you. Thank you. Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your question. Hey, I think it's still morning out there. Good morning. I just want to circle back to the debt and preferred equity book. I know, Barb, you've articulated this for a while to trim the book given it had gotten too big as a percent of FFO. In the current environment where acquisition yields are in the 4%, which is well inside of where your stock is trading, and the DPE you guys have a long successful track record with and provides better returns, and you've been good at that. Would you guys consider reassessing the decision to dramatically shrink it? Maybe 10% of FFO was too much, but it just seems like it's a good tool that you guys have to be competitive in a low cap rate world. Unfortunately, it seems to be relegated back to almost up to the attic, if you will. Hi, Alex. It's Barb. Rylan just made a good point that we're not getting out of the business. We're just being more selective. Given the redemptions are very heavy, it is shrinking. There's been a lot of capital raise that's chasing this business, and so yields have compressed. It's not risk-adjusted like we would like. We're not going to go and do all the deals out there just to backfill this book. This business will ebb and flow. Right now, based off of what we know and where the environment is, it is shrinking. It could change over time, and it has evolved over time. This is just where we are in the cycle today. Okay. Angela, the New York mayoral election certainly has gotten a lot of buzz, but Seattle's got an interesting election coming up next week with the mayor and city attorney that are both being challenged from the progressive side. Can you just give some thoughts on how the apartments are looking at what the consequences of, if both the progressives win, what that means for apartments in Seattle? If you think that, as a result, that means divesting more Seattle, buying more on the east side, just want to understand better the ramifications of what folks can expect from next week. Hey, Alex. Yeah, that's a good question. We've been, as you know, following the legislative environment as closely as possible. It is hard to predict what will happen, but this is what we know. Washington did enact rent control early this year. It was effective around May. What was enacted was very similar to California. It was CPI + 7%, max of 10%. In this environment, that signals to us that the legislators understand the need to protect tenants from price gouging, but at the same time, they also understand that heavy regulation is going to be counterproductive. It's going to reduce housing production and community investment, which ultimately results in higher costs all around. Given that they recently enacted rent control, we would expect, naturally, that this will play out for some period of time before any further changes are made. Okay. What about on the mayor? If the mayor or the city attorney changes, do you see any negative consequence to apartment communities or not really? Hard to say. We haven't heard anything that's being proposed that would give us great concern from the ultra-progressive side. My example to you is what got enacted had a lot of input from all parties. It's hard to predict, but so far, we don't see a meaningful change right away. Okay, thank you. Thank you. Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed with your question. Hi, this is Derrick Metzler on for Adam Kramer. Thanks for the question. I was wondering if you could share your thoughts on SB 79. Does this impact your South San Francisco developments at all or any other potential developments you might have in the pipeline? Do you see an impact on future development opportunities from this in combination with the recent changes to SECA? Hey, Derrick. Rylan here. It's a good question. At a high level, we view this and several of the recent legislative changes that have occurred at the state level as good for California. We need more housing. The SB 79 specifically says that if you're within a half-mile radius of a transit stop in markets where there's greater than 15 rail stations, you can establish the ability to get higher density. As an illustrative example, if you go to a city and get entitlements that allow, say, 80 units to an acre, now you'd be able to get 120 units to the acre. This should be beneficial. It's not going to benefit our South San Francisco deal as we're already through the entitlement period and under construction there. When we think bigger picture of what this could do to the supply landscape in California, it should help on the margin create some more opportunities. There are some mitigating factors to keep in mind. Transit-oriented development has been a focus of the state and cities for the past 20 years. The majority of our city's arena plans are concentrated along transit sites. In other words, zoning has already become more favorable in these locations. Secondly, I think the real gating issue today on increased development are just the returns. The majority of deals that we've underwritten last year have in-place yields around 5%, many of them sub that. In summary, it's long-term beneficial to California, but I don't see it taking a dramatic change in the supply outlook for our markets. Great. That's helpful. That's it for me. Thank you. Our next question comes from the line of Haendel St. Juste with Mizuho Securities. Please proceed with your question. Hey there, guys. Thanks for taking my question. A couple of quick ones from me. First off, I'm hoping you could comment on the use of concessions across the portfolio, where it is today versus maybe a year ago, and how it compares across the key regions: So Cal, Nor Cal, Seattle. Are you offering concessions on renewals? Thanks. Hey, Haendel. From a concession perspective, let's see. Right now, our concession levels are comparable to the same period last year. One week. That's pretty typical for this time of the year. In terms of the breakdown across the region, Northern California is right at a week. Actually, everybody's right around a week and not a whole lot different. Keep in mind, concession is also more driven by competitive supply nearby. That's going to probably be more of an influence than what's happening with the macro economy. As far as what's the concessions on renewals, no, we don't. It's de minimis. Negligible on renewals. It's mostly on new leases. Gotcha. Appreciate the color. My second question, I guess it's on L.A. and the new versus renewal spreads you're seeing there. I think you mentioned the blends in L.A. were around 1%. Assuming renewals are low single-digit positive, that would apply. New leases are negative and a pretty decent spread there. I'm curious if you could set some color on what that spread is on the new versus renewals in L.A. and if that's a sustainable spread and if you think that maybe perhaps renewals could come under pressure. Thanks. Yeah. Renewals are negative once again, but that's not unusual for this time of the year. We're about 100 basis points in the negative for Southern California. I'm sorry, I meant new leases. New leases are negative. Right. New leases. Right. New leases. Yes. L.A. is much wider in that. L.A. is closer to 1.8%, so closer to, say, - 2% on new leases. Renewal, they're sitting around mid 3% in September for Southern California, and L.A. is in the low 3% range. Not too different. Renewal is pretty consistent across the board, generally speaking. New lease, it's hard to say whether it's going to come under pressure. It's, of course, going to follow where market rent ultimately ends up next year. That has a lot of factors. It's job growth. That's where supply is going to be. What we're seeing right now with supply decreasing and occupancy stabilizing in L.A., we wouldn't expect more pressure on new leases next year versus this year. Just to give you an example, occupancy net of delinquency right now is sitting at above 94%, which is great. In September, it was still below 94%. It was 93.9%. It's been steadily increasing. That tells us that this market is stable and there are underlying fundamentals to support the stability and potentially growth. Wonderful. Thank you for the color. Thank you. Our next question comes from the line of Julien Blouin with Goldman Sachs. Please proceed with your question. Thank you for taking my question. In Seattle, you talked about the fact that Seattle doesn't really benefit from the AI tailwinds the way San Francisco does. I was wondering, do you think it could actually end up being a relative loser within the tech markets if investment and talent within tech sort of continues to flow towards AI? Do you see any impact from that? I think the Seattle economy has a good, stable group of industries anchoring it. I don't see that AI being ultimately a negative to not just Seattle, but any other economy. You can make the same argument for parts of Southern California or other areas outside of California where there's AI presence. We do view that AI will be net additive, and the economy in Seattle will continue to grow. You got Amazon there, which is huge. Microsoft is very solid and quite a few other ones. We don't see AI as a net negative for Seattle. Got it. Thank you. Maybe just a quick one on Contra Costa, where occupancy fell about 60 bps sequentially in the third quarter. Can you just give us a sense of what you're seeing in that market? Yeah. Contra Costa, I mean, that market is going to ebb and flow, and it's been digesting a huge amount of supply over the past two years. We've pushed rents because we saw some strength there. Of course, ultimately, sometimes that comes in at the expense of occupancy. We did see sequential revenue growth there, which was a good indicator that the market is doing fine. Okay. Great. Thank you. Thank you. Our next question comes from the line of Robin Haneland with BMO Capital Markets. Please proceed with your question. Hi, everyone. You've leaned into some declarative decisions as of late. Can you elaborate on the long-term potential in these markets versus buying back your stock today? Also, curious if rebalancing your exposure to the city of San Francisco is on the horizon. Robin, Rylan here. I mean, if you look at that 16.1 and where we've been able to source deals and that initial yield layered in with what we think the micro market supply outlook and the potential for rent growth there, as Angela mentioned earlier this year, we think that was definitely the highest risk-adjusted return opportunity available to us. As we've said, in recent days with the stock falling off, that math is being reevaluated. We feel really confident and excited about the acquisitions that we have been able to acquire in there. Again, the micro market fundamentals in terms of the supply outlook for the foreseeable future. I think your second part of your question was San Francisco. We have underwritten every institutional deal that's come to market in San Francisco. There have not been a lot of them. What we generally found is that the cap rates there have been even more aggressive. The competitive bidding has made the relative value opportunity for us to create value on the buy in San Francisco really not emerged relative to where we were able to purchase along the peninsula with similar fundamental outlook. We will continue to underwrite everything in Northern California and step in if we see a unique opportunity. We noticed that San Diego and Oakland are seeing decelerating same-store revenue. Can you maybe supplement us with new lease rates in the markets and then comment on how demand is trending in those two? San Diego, we've had supply concentration in pockets of North City and North Coast submarkets that directly competes with our portfolio, although that is starting to abate. That's good. Of course, San Diego is influenced by a general soft demand in Southern California and the U.S., and those are the key drivers of the weakness. Similarly, on Contra Costa as well, we've had much heavier supply in Contra Costa for several years, but that market has been recovering. Although we don't have, we actually have sequential improvements in revenues for Contra Costa. Just San Diego, where we don't have sequential growth in gross revenues. Thank you. Thank you. Our next question comes from the line of Rich Anderson with Cantor Fitzgerald. Please proceed with your question. Hey, thanks. Good morning out there. Jeff Spector asked a question about jobs, and he said he understood the answer, and I didn't. Let me see if I can sort of ask it a different way. What is your view when you think of West Coast jobs in 2026 versus national jobs in 2026? When you keep in mind perhaps the blessing and curse impact on jobs from AI, entertainment in L.A., Seattle kind of being somewhere in the middle with Amazon, do you think that your markets, from a job growth perspective alone, will outperform the nation, be in line with the nation, maybe below the nation? What is your view on jobs going into 2026, if you have one right now? Hey, Rich. Our view with respect to jobs is that we should outperform the U.S. average. The question here is magnitude. That, as we would all expect, is going to be influenced by the macro economy. What we're seeing is Northern California has, of course, the AI benefit that is a catalyst. It's also in a recovery phase, and we are seeing positive immigration, which is not the historical norm. That's going to benefit Northern California. Seattle is anchored by the broad tech economy, which has gone through its massive pivoting and layoffs about a year and a half ago. It's stable with upside. Southern California is going to perform similar to the U.S., albeit with more professional services. It should do better. More importantly, fundamentals in L.A., we see, have troughed or are near the bottom. While we don't know how long it's going to take to recover, we do see that there should be more upside than downside in that market. Hopefully, that gives you a better breakdown that you're looking for. Yeah. Thanks. That was great. Appreciate that. Second question. Thinking about perhaps moving some of your investment incrementally more from Southern California to Northern California. Obviously, much talked about with the Olympics coming to L.A. Perhaps housing for athletes. I wonder if there'll be an opportunity to sell in front of the Olympics now. I'm thinking 1996 in Atlanta when there was sort of this wave of housing, and then there was a hangover effect after the Olympics. That was a little disruptive. Atlanta obviously became a great market eventually. Do you want to be there for a year after the Olympics in bulk? I'm wondering if you're thinking about your business as an option for the Olympic Committee as a mechanism to move more product maybe a little bit quicker out of that area and into other areas of your portfolio. Thanks. Rylan here. Interesting question. As we mentioned, we are fundamentally a little bit more positive on the L.A. market going into next year as the supply is coming down. We do see some near-term catalysts as it relates to the Olympics. We do not plan to convert any of our existing leases into short-term rentals to take advantage to the extent that that was your question. That's pretty difficult to do with existing tenants hoping to stay and be able to enjoy the Olympics and the World Cup in our units. Just speaking broadly on the transaction market, outside of downtown L.A. on the Westside, the Tri-Cities to the north, these are still well-bid markets with lots of transactions occurring in that 4.5% or 7.5% type range. We saw a deal close last quarter, Marina del Rey, that was a sub 4.5% cap rate. There is still a lot of capital interest in the broader L.A. market with downtown being a notable exception as it's still challenged with operating performance. I think we'll see more transaction opportunities in downtown L.A. in the next year. As we do with all of our markets, we're underwriting everything and looking to take advantage of any mispriced opportunities. Okay. Great, Rylan. Appreciate that. Thanks, everyone. Thank you. As a reminder, if anyone has any questions, you may press star one to join the queue. Our next question comes from the line of Linda Tsai with Jefferies. Please proceed with your question. Hi. Thanks. It hasn't really come up on the call, but are you hearing of any impact on employment outlooks as it relates to the higher cost of H-1B visas going forward? Hey, Linda. What we're hearing is that it potentially could be a net positive because the intention of this legislation is really to minimize the middleman, some of these H-1B consulting firms like Deloitte, for example. What this will allow is the large companies that can actually pay the fee to just go direct instead of having to pay a consulting fee and then still incurring other costs. Potentially, what we're hearing is that they could actually get a better or increased allocation, which would ultimately be good. We don't expect a meaningful impact to Essex, and it may actually become a net benefit. Thank you. Thank you. Our next question comes from the line of Alex Kim with Zelman & Associates. Please proceed with your question. Hey, thanks for the time. Just a quick one from me. Could you walk through the decline in year-over-year repair and maintenance costs? Can that be attributed to the continued decrease of same-store turnover? Is it sustainable into Q4 in 2026 and beyond? Yeah. This is Barb. Repair and maintenance is lumpy, and it does vary from quarter to quarter and even from year to year. I think we have done a good job on trying to control our costs via our procurement programs. We are seeing a little bit lower turnover, and the delinquency turnover that we had incurred the last few years has been much more stable this year. It's a combination of a variety of things. Too early to talk about 2026. We're still in the midst of our budget process, some more to follow. What I would say, though, about overall controllable expenses, we've done a good job keeping those around 3% for many years. I don't see anything on the horizon that's going to change that heading into 2026. Great. Thank you. Thank you. This does conclude today's question and answer session. This also concludes today's conference. You may disconnect your line at this time. We thank you for your participation.