Okay. Thank you so much for joining us today. My name is John Kim with BMO Capital Markets. It is my pleasure to be hosting this panel presentation with Essex Property Trust, one of the preeminent multifamily owners. With me today, Angela Kleiman, CEO and President. To the far left, Barb Pak, Chief Financial Officer, and in between, Rylan Burns, CIO. I think at this time, we're just going to pass it off to Angela for some opening remarks, and then we'll go to Q&A. Great. Thanks, John, and welcome everyone to the Essex presentation. Just a high-level overview. Essex Property Trust is an S&P 500 company and the only public company dedicated to the West Coast geography. Our market cap is about $25 billion. We own some around 258 units, apartment buildings, a little over 63,000 units across our footprint. We have generated 32 years of consecutive dividend growth, earning us the Dividend Aristocrat standing, so we're quite pleased with that. Some of the differentiating factors with the West Coast is really driven by the fundamentals. The key one being that we produce a low amount of housing supply. Currently, actually, we're sitting at a historical low, where we have about 40 basis points of total supply right now, and normally it's about 70 basis points. That's important because it provides a very safe basis in terms of where the economy is. We don't need a lot of job growth to drive demand and to have stable rent growth. On the other side, what's interesting with our market is being in the center of innovation, having right now technology as a key wealth creator, especially with artificial intelligence. We have strong catalysts for job growth and demand. Therefore, in addition to a favorable supply environment, we have a strong growth ahead of us because of that demand. That sets us well as we continue in our investing in our markets, and the prospect for rent growth is much better than the rest of the U.S. Can I just start off? San Francisco, Northern California has just been some of the standout markets in multifamily. How much of the improvement do you think is just cyclical because they were some of the last markets to recover versus structural change in demand, just given all this growth in AI and tech? That's a great question. At this point, we're still looking at Northern California as a recovery story. What I mean by that is, as John alluded, this is a market right now should be generating about 20% rent growth above pre-COVID. On average, it's still in that 10%-ish range. There's still a lot of runway, as that this market just started recovering. We were the last to open our businesses since COVID. There's that catch-up effect. What's happening right now on the ground is very exciting because what we're seeing is the startups with AI, the expansion that's happening up and down our coast. We actually have a presentation slide. Barb, you want to go over some of the fundamentals that we're seeing? Yeah. We do have a slide on page 16 of the presentation. It is available on our website. Just some of the demand drivers that we're watching and seeing, which is leading to above-average rent growth, is not only AI job postings, which are up year to date relative to 2025. We're also seeing the top 20 tech job postings be at the 16 to 19 level, which we think is healthy. For us to see real acceleration in rent growth, we'll want to see that continue to move upward first and stay stable for several quarters. The other thing we're seeing is white-collar job growth in the Bay Area. There's a lot of headlines about layoffs, but the layoffs that are occurring are a fraction of the numbers highlighted in the press because they're all over the U.S., so only about 25% to a third are in our markets. The people that are getting laid off are getting gobbled up very quickly. We're not seeing unemployment claims rise, initial or continuing claims. The last factor that we are seeing is net domestic in-migration, and we're seeing it turn positive for the first time in decades in the Bay Area. That's really that return to office. As Angela mentioned, we were the last to reopen our markets. Tech was the last to require employees to be back to the office. They now are, and there's also this fear of missing out. People are returning and have come back to the Bay Area, which is all leading to a good demand backdrop. AI is strongest in San Francisco, but can you talk about your other markets or sub-markets where you're seeing a lot of the AI job growth? Yeah. We also published a slide on page 17, and you can see that AI is in San Francisco, but it also is throughout the entire peninsula where a lot of our assets are. There's a lot of startups that have been created, so it's not just Anthropic and OpenAI. There's 250 AI-related startups that are creating new products for companies to be able to bolt onto their existing platforms. The growth that we're seeing is throughout the entire peninsula from the AI boom. Okay. Looking at another slide in your presentation, slide 12, it shows that your blended lease rate growth was 1.4% in the first quarter, going up to 3.1% in April, and then 3.7% in May. Can you just talk about your occupancy versus pricing strategy today? Do you have more pricing power in your markets, and where should we see this trend line go? Sure thing. What you're alluding to is on page 12 of our presentation. Typically, our seasonality where the seasonal peak is in the second and third quarter, which means the seasonal low or where demand is lowest is the first and the fourth quarter. During those two periods, first and fourth quarter, we tend to focus on building occupancy, so preserving occupancy. That's more of a defensive move. If we move into the second quarter and we see strength in our market, we've now flipped. For our markets, for the majority, we are pushing rents. We're stepping back on occupancy, pushing rents, and which is why one of the reasons you're seeing that 3.7 blended lease rates. It's definitely heading the right direction and we're seeing that momentum continuing. On that same slide, there's a graph on the left-hand side that shows where we are trending on the market rent relative to historical levels. Where we are right now is we're higher than last year, which is great, heading the right direction, but we're still slightly below the long-term average. That tells us that we still have room and more upside to capture in our markets. You talked about seasonality, and it's been a little bit more unpredictable in recent years. Your guidance basically calls for blended rents to be flat in the second half of the year versus the first half. Are you still expecting that to happen? Or what kind of visibility do you have on the second half of the year? That's a great question. The reason we have a first half and a second half relatively similar is because we did not forecast the economy accelerating in the second half. We're assuming that for the rest of the year, job growth remains somewhat muted. Part of it is not because we're concerned about our markets or we are in fear of a recession. It's really the uncertainties. The second half, we have the midterm elections. What that means is that will employers really make meaningful capital spending and hire in a meaningful way? We don't know, and they probably don't know either. Right now, we're still in a war, or kind of in a war. I'm not quite sure what to call it these days. There's just more uncertainty in the second half. Where we are right now is we are trending ahead of our guidance. Having said that, once we have the second quarter numbers and when we're well into our peak leasing season, we'll revisit how we're going to guide the street. Can we talk a little bit about perception versus reality? Tell us what you're seeing in your portfolio. We talked a little bit about this before, the AI job growth versus the tech layoffs. The tech layoffs are up year-over-year, they're still below 2023 levels. We're seeing the headlines, at the same time, your rent growth is very strong. What are you seeing in your portfolio? Yeah. We just encourage investors to unpack the headline layoff announcements. For example, Meta announced a 9,500-person layoff recently. The WARN notices, which is actually how many people will be laid off within California, was 2,446. Many of these tech companies hired significantly in 2021, 2022, coming out of COVID. We know that that hiring was not occurring in our markets because their campuses were closed in many instances, and we were not seeing the rent growth that would typically be associated with that level of job growth. We're seeing the reversal of that, where many remote hires or in secondary locations, the majority of these cuts are occurring. The headline numbers don't line up with what we're seeing on the ground. At a bigger picture, you've seen AI be incredibly disruptive or productivity improving for software engineers. You would think, hey, you'd see a bunch of software engineers unemployed. We have not seen that in our markets, and we've actually seen the inverse, where software engineers and coders are actually in higher demand as the cost of software is coming down. With AI, you're seeing more companies look to pick these people back up. The reality on the ground is that the Peninsula and San Francisco are doing incredibly well. The economy is vibrant. The city is fun and vibrant again. There's a lot of young people on the streets. It feels really great, and I would encourage everyone to come out and visit our markets because it's not necessarily what we've been seeing on some of the headline news programs over the past several years. Our view is that, hey, this is just getting started in terms of the capital flowing into new AI-enabled companies and that application layer of companies. We think we're really early stages as it relates to an investment cycle in new technology companies along the Peninsula. Turning from your strongest markets to probably your most lackluster, L.A., Southern California. The recovery has been, I think, a little bit slow. What do you need to see to have L.A. recover? We have a mayoral election, which could be kind of interesting. There's the Olympics coming up in a couple of years. What would you like to see for the market to turn? Yeah, we've been describing L.A., its weight on performance in recent years, which I think everyone's very aware of. It's fortunately been somewhat stable the past two year and a half, I would say. Two years ago, we were at 92.5% economic occupancy, so that's physical occupancy less bad debt. We're currently at 94.5%. We're very close to a point where we're going to actually have pricing power in L.A. The supply has started to come down, which is helping us, and in terms of near-term catalyst, it's more difficult to point to in L.A. L.A. is the largest county in the U.S. It's the biggest economy county in the U.S., and so it's much more representative and has historically grown in line with the U.S. economy. To the extent that the U.S. economy starts to pick up and we see widespread job growth, we would expect that to be a positive catalyst for L.A. Some industries to highlight, aerospace as well as defense tech. There are some very interesting companies in Long Beach in particular that are doing some really interesting stuff where it feels like capital's flowing in. The mayoral race, as we talked about here. Who knows how that's going to play out over the next several months, but I do think there's a growing awareness that some of the issues you see when you tour downtown L.A., it's reached a point of frustration for many Angelenos, and they're looking for change. With the Olympics coming in two years, we are cautiously optimistic that we're going to see the political will to really try to reinvigorate our downtown in L.A. and clean it up and make sure people feel safe and that the businesses can come back. L.A. feels stable. We don't have a clear catalyst to point to that this is going to turn this year, similar to our outlook for the U.S. economy. Again, the supply is low relative to the majority of the other markets in the country, so it won't take much for us to really regain that pricing power. Camden Property Trust made the headlines for putting for sale a large Southern California and L.A. portfolio. How did that pricing come out relative to your expectations, and what does that mean in terms of investor demand for SoCal? Yeah. Camden's a good operator and a high-quality portfolio, 2000s and newer in Southern California. We were not surprised, and I think recently a publication came out that disclosed some of the pricing levels, and I'm sure Camden will be speaking more about it in the upcoming earnings calls. There has been significant capital demand for properties in Southern California. It has not matched what I think public perception as viewed through the public rates would be, but we were not surprised. There's been $12 billion of transactions on the West Coast last year. I think we're on pace to exceed that this year. These are deep liquid markets, and the majority of assets that we've seen trade in Southern California, generally around that four and a half cap rate range. There is a lot of capital, private capital that wants exposure to the high quality of life communities in Southern California. I think, as Camden provides some more detail about the level of bidding, it was a well-bid portfolio, and it just speaks to the liquidity in our markets. I think it was either one or two years ago, sometime in the not too distant past, you were looking to buy as much as you could in Northern California and funding that with SoCal sales. Is that still the case, or are you looking for opportunities in SoCal? Yeah, thank you for mentioning that, John. We have allocated about $1.7 billion into Northern California over the past two years, really targeting assets along the peninsula where we can put them onto our operating platform, operate them much more efficiently. What I would say is there has been a significant sentiment shift over the past year in terms of private capital now moving back into Northern California, recognizing some of the demand and supply trends that we've been speaking to. Those cap rates have compressed, but there's always going to be opportunities for us to add value. That is still generally our high. We're looking quite closely through all our markets, but if we see an opportunity to add value, put it on our platform, and increase that NOI yield through our more efficient operations, we will continue to do so. We have been executing on that thesis for the past two years, and that will likely be the go-forward strategy until something else changes. Again, everything has a price, and we are tracking everything in our market to make sure that we are adding value on an FFO and NAV per share basis for our shareholders. Your other major metro market is Seattle, and it's gotten a lot of attention recently because I think Starbucks was looking to move, and maybe they haven't, and Amazon, the same thing. There's more rent control measures and income tax being introduced potentially. Can you just talk about how Seattle has performed relative to the rest of your portfolio and where you see it trending going forward? Yeah. Legislation aside, what we have seen is a very stable and improving performance out of our Seattle portfolio. Some of the softness in Seattle in the recent quarters was more attributed to the fact that there was competitive supply. That supply has, for the most part, abated, and in fact, supply is going to be lower by about 25% this year and another quite a bit lower next year. That's what really drives the pricing power and ability to raise rents in Seattle. In this point, what we have seen is when we look at our lease rates in Seattle, it turned positive in March. Since then, every month, it has improved on that, and it's actually slightly ahead of our expectations at this point. Now, as it relates to your comments on legislation, having income tax, while it's disappointing for the citizens of Seattle, it's not unusual for any state to have a state income tax. That in itself, I don't think will significantly impact the attractiveness of Seattle to do business in. As far as the statewide rent control, the level is comparable to that of California. In that environment, we view it as more of an anti-price gouging. In that environment, it's a win-win for everybody, both the landlord and also for the tenants. Okay. Another large or big news item was the announced merger between two of your peers, AvalonBay and Equity Residential, leaving you as the only coastal multifamily REIT left. Actually, they already went to the Sun Belt. Yeah. How is that going to impact the multifamily sector, and how do you react to that once that closes? Yeah. It's an interesting case study in that, let's start with they're both in our markets right now. They're both currently bigger than us, so they're going to be, I guess, more bigger, but I don't expect that to have any impact on our operations. We run an incredibly efficient operating model. We operate 9-12 properties as one business unit, and that's not going to change. As far as in terms of on the investment side, if you believe that by being bigger, you will have a better cost of capital, then yes, they could become, say, more competitive. You would need to generate a better cost of capital in a way that it's a meaningful margin to all the other companies. It could be an interesting case if that plays out. What I've seen in the past is that the large cap REITs, for the most part, they have less volatility in their name, but overall total return, it depends on the timeframe. There's three to five-year timeframes where smaller mid-cap REITs outperform. I don't know if it's a foregone conclusion just by being the biggest, but it's an interesting strategy. Can you talk about the market share that you have in your markets, and if you had greater scale, would that give you an advantage, do you think, compared to where you are today? Well, at this point, the multifamily sector is pretty highly fragmented, and even though we are the largest public company in those markets, we own less than 10% of the total housing stock. That in of itself probably wouldn't be a game changer. In terms of the scale and concentration, there's a point where you have marginal diminishing return. What I mean by that is scale is great up to a certain number, but once you are beyond that certain number, you still have to add to it. You have to add staff, you have to add infrastructure. Just purely scale for the sake of scale itself wouldn't allow you to have a huge advantage. It's really how you optimize it within your concentration of assets. A lot of the investors look at the multifamily sector and see that a huge disparity between private valuations and cap rates below 5%, like we talked about with the SoCal sale, and the public REITs that trade closer to six. You're at a premium to your peers, so you're in the mid-5s. What do you think the public market is getting wrong, or do you think private market valuations are a little bit too frothy? What's your view on that discrepancy? Yeah. Well, there's a couple of things happening in the public markets that's not as impactful in the private markets. What I mean by that is, for example, in the public markets, there is a sentiment trade that happens, and there's also a rotation from one industry to the other. In the recent past, multifamily has not been a favored asset class. Funds have been going to, say, the data centers and industrial, for example. The private market has a very different view when it comes to investing. They invest in long horizons and not as focused on sentiment trades. We have a private equity business where we have joint ventures and funds with people that want to own, direct the real estate with us, and they tend to have a seven, 10, or even longer investment horizons, and it's more fundamentally driven rather than sentiment driven. When you look at acquisitions, and you compete for acquisition opportunities, how are you underwriting market rent growth, and where do you think the public and private buyers are in terms of underwriting that growth? Yeah. It's not too inconsistent with the guidance we've provided in recent years in terms of broadly rent growth in 4% in Northern California, 2% in Southern California, 3% in Seattle. Those are our base cases. Now there are specific sub-pockets, and every asset is underwritten individually based on the individual characteristics of where we're seeing competitive supply, demand drivers. In some cases, that'll be flexed up and down. I would say on the private side, in the last year to my comment about the sentiment significantly improving along the peninsula, you are seeing groups step in, and in many cases, win deals by being quite aggressive on their growth assumptions. You look at some of these fundamentals, they might not be incorrect in some of these sub-markets, but we have a pretty disciplined process. We want to make sure that every acquisition, we have a high level of conviction that this is going to generate FFO and NAV per share almost immediately for the company. That's where you've seen us step in and be most active. We have been the largest buyer in California for the past two years, all in Northern California. We have stepped in and been aggressive, and I think we're starting to see that thesis play out, and we will continue to be looking for opportunities to add when we know we can add value to our shareholders. Negative leverage transactions, is that still prevalent in the market? That's correct. Which I think confuses a lot of public investors in some instances. Why would someone be willing to buy below in-place debt yields? Again, it goes back to the fundamentals. If you have no supply and positive trade-outs and a really attractive demand side on the other side, hey, it doesn't take that long to get to positive leverage. Many private investors are willing to underwrite through this. They have a little bit of a longer-term focus than a portion of our public investors that are very short-term focused. It doesn't surprise us. You can still make really good returns, beginning with negative leverage in some instances. You have to be cautious, but yeah, that has been the case for the past several years. Any questions from the audience? I wanted to ask about ADUs as a way to add density in some of your projects, and maybe to help with affordability. Can you talk about where you are in your portfolio in terms of ADUs, adding that to your existing communities? Yeah. This is recent California law changes in several years that allowed by-right zoning to add ADUs to your projects. We've done a pretty thorough portfolio analysis of where we have opportunity. We have a very significant opportunity for two reasons. One, our operating model, as we've consolidated our operations into operating 10 buildings as one operating unit, it's unlocked some underutilized leasing spaces that we've turned into very attractive units. What we're most excited about, given that the vast majority of our portfolio is garden-style, well-located assets, we have a lot of tuck under garages where we're adding 10-15 units. The per-unit cost is about a fraction of what it would, half of 50% of what it would cost to build a new unit out of the ground. These are double-digit returns. We've ramped that up. We're expecting to deliver 80 next year, and we're continuing to build that pipeline of ADUs to, one, we need new supply in our markets, but also these are very attractive returns for investors. Okay. I also wanted to ask about your structured finance program. It's been coming down pretty recently. That's created a little bit of earnings headwinds that I think you're going to be past after this year. How should investors think about that program going forward? We remain committed to the business. It's incredibly synergistic with what we do in our relationships with developers. You've had two factors over the past several years. One, you've had development starts come down considerably, which is in the supply numbers that we're talking about over the last few years. That's created fewer opportunities to add preferred investments on the development side. You've also seen a lot of capital that was raised come in 2022, 2023 to take advantage of distress. In many instances, we have not seen that yet. That capital has flowed into that preferred space. We feel like you're seeing examples of stabilized product preferreds in the high single digits. We thought you could get much better risk-adjusted returns by owning the fee simple for the past several years. We remain involved. It's a relationship business. If we see the right opportunity to manufacture a yield and a return that we wouldn't otherwise be able to generate through our other opportunities to invest, you'll see us committed to that business. It's at a much more manageable portion of our business to create less earnings volatility going forward. We feel really good about where we are today, and we'll continue to look to add value through that program. Okay. I think we're going to try to do something a little bit different and go through a speed round. I'm going to ask you a question. Give a very short answer. Maybe one of you answer, and then if the other two agree or disagree, then pipe in. Okay? Game of chairs. this could be a total disaster. Here we go. What is the most underappreciated Essex market today? Most underappreciated? I would say Oakland probably. Oakland has had a tough go because of supply. Supply has significantly dwindled. Oakland at this point is tracking pretty darn close to what San Francisco and South Bay is performing. It's a great up-and-comer. Anyone else? I agree. Yeah. We don't agree on everything, but we agree on that. Okay. This one I'll direct to Barb. What matters more today, AI hiring and job growth or the return to office? I think we've gotten through most of the return to office, so I think it's the AI hiring at this point. Okay. What's one metric, this probably goes to Barb as well, but what's one metric investors should watch most closely in the second half of the year for Essex? Oh, just for 2026? Yeah. I think we're always focused on same-store revenue growth and Core FFO growth. This year, Core FFO growth obviously is going to be a little challenged because of the preferred equity headwinds. We're always trying to maximize our revenue growth, and I think you should watch that number. Angela, what will investors have gotten wrong about Essex one year from today? I think investors underappreciate the power of supply. The kind of supply in our markets, it's so low that we just need very low job growth to outperform. I think investors are looking at other markets and seeing, "well, supply is coming down in other markets as well." They don't realize that in other markets, the supply is heavily influenced by single family. That can ramp up very quickly. Even if you're going from, say, 3% of supply stock to 2%, even though that's a decrease, it's still a lot of supply. Rylan, are private market buyers too bullish or public market investors too bearish? I'm sure I know the answer to this. Yeah, I think you know where I'm going. I think public investors, the marginal public investor, that growth investor, right, is focused on AI and high momentum-type subsectors, and real estate is lag for the past couple of years. Eventually, that'll shift, and I think that flows back into really great wealth compounding return vehicles like Essex. Okay. Any closing remarks? I think we're pretty much out of time. No. Thank you for joining the Essex presentation. Thank you.