Oct 28, 2026 earnings call — Northern California rent strength and capital deployment
Management raised full year blended rent growth to around 2.9% driven by Northern California strength.
Revenue $0.5B (est $0.5B) · EPS $1.52 (est $1.47)
Key quotes
"We achieved blended rent growth of 7.3% which was elevated by a strong leasing season with an extended peak that continued through September."
"Priced over $200 million and well below replacement cost, this asset is expected to generate a mid-5% yield."
"Our total debt maturities for 2027 at pro rata share are around $575 million of which the lion's share is the $350 million in bonds that mature in May."
Analyst Q&A 16
new lease rates by region
Q (Nicholas Yulico · Scotiabank): How did new lease rate growth look in Q3 overall and in Northern California versus other regions?
A: Management said they focus on blended growth, not just new lease rates, because pulling occupancy to boost new lease rates hurts total revenue. They said new lease rate growth this year has done much better than last year and sequentially improved versus the prior year. Northern California remains very strong with great momentum, and Seattle and LA show improving signs.
path for new lease growth in 2027
Q (Steve Sakwa · Evercore): Is there a path for new lease growth to accelerate in 2027 given a mixed job market and low supply? Also, where are renewals headed into Q4 and early 2027?
A: They said they prioritize blended results and will not sacrifice occupancy to chase new lease rates. Northern California remains strong; Seattle is showing positive trends as tech job openings recover, and LA is gradually improving. Renewals are going out in the mid-4% range in Q4, asking rents are in the low to mid-5s, and actual renewals are expected around the mid-4s.
"The renewals are going out. In the mid-4% range, in the fourth quarter and so it is unplanned and it is actually a little bit stronger than what we had originally hoped." — Angela L. Kleiman (CEO)
October spreads and concessions
Q (Brad Heffern · RBC): How are October spreads trending and how have concessions changed by market?
A: They said October spreads are generally in line with plan and tapering as seasonal lows approach; Northern California leads, with new spreads well north of 10% while others are negative in October. On concessions, portfolio average moved from about 6 days last year to around 10 days this year, and heading into Q4 it's around a week. Northern California has effectively no concessions, PNW less than a week, and Southern California a little over a week.
"On the October, spreads, it is let me take a quick look. it is it is generally in line with plan." — Angela L. Kleiman (CEO)
earn-in and Seattle impact
Q (Eric Wolfe · Citi): Can you confirm earn-in and comment whether Microsoft layoffs affect Seattle fundamentals or the expected late-next-year inflection?
A: They confirmed earn-in was originally around 150 basis points and they now assume an additional 5 to 10 basis points, noting last year was about 85 basis points. On Seattle, they acknowledged Microsoft announcements but pointed to unemployment and continuing claims remaining well below long-term averages, suggesting layoffs have been absorbed or rehired and not disrupted normal market functions.
"Our earn-in, which we originally published at around 150 basis points about a month ago, we are assuming a slightly higher earn-in, probably an additional 5 to 10 basis points." — Angela L. Kleiman (CEO)
aerospace hiring and Seattle split
Q (Alexander Goldfarb · Piper Sandler): Is aerospace/defense hiring in Southern California already driving apartment demand? Also, can you break down Seattle submarkets and risks?
A: They said aerospace/defense has new commitments and allocations, making it a meaningful future catalyst, but hiring is just starting so effects will take time to show. For Seattle, the Eastside is benefiting from migrations and remains solid, downtown has supply overhang but deliveries are declining, and they hope legislation will be adjusted to be more business-friendly.
"Now having said that, once again, these are relatively new and money is just getting allocated." — Angela L. Kleiman (CEO)
capital allocation and lending opportunities
Q (Jana Galan · BofA): How do you weigh the recent Oakland acquisition (mid-5s yield) against buybacks, and are there more lending or preferred equity opportunities?
A: They said their capital strategy is to seek highest risk-adjusted returns across acquisitions, development, reinvestments, buybacks, and debt paydown, and they remain nimble to allocate to where NAV and FFO per share can be created. The Oakland deal is a mid-5 initial yield and they believe East Bay is on a growth path; regarding lending and preferred equity, they see potential as financing markets tighten but it is still early as markets adjust to recent rate moves.
"When we think about our menu of options from acquisitions, development, reinvestments, stock buybacks, debt pay down, we have allocated to 5 of those 6 in 2026." — Rylan Burns
renewals vs occupancy and expenses
Q (Austin Wurschmidt · KeyBanc): Are you prioritizing occupancy over rents now, and how has occupancy trended after quarter end? Also, what drives the expense pickup late in the year?
A: They said they favor building occupancy into the seasonal slow in Q4, while still taking advantage of pockets in Northern California to push rents; occupancy sits around 93. On expenses, controllable expense spend is increasing in H2 due to timing of finishing projects, driving about a 5% year-over-year Q4 expense increase; property taxes may revert toward historical 3%–4% growth next year after favorable appeals this year.
"And so we typically favor occupancy heading into our seasonal slow in the fourth quarter." — Angela L. Kleiman (CEO)
JV swap resets and term loan hedging
Q (James Feldman · Wells Fargo): How should we model earnings impact from JV swap resets moving $496 million from 2.7% to 5.3% and the remaining $128 million, and why wasn't the term loan hedged?
A: They said three JV swaps mature (one Dec 1, two end of March) and they've executed swaps for 80% at an all-in fixed rate of 5.3%; hedging now avoided even higher rates that would be in the high-5s. The swaps executed will increase joint venture interest expense by $0.09, with the unhedged 20% floating adding a couple more pennies, for an all-in $0.10 to $0.12 increase next year; the recent term loan wasn't swapped because hedging costs were prohibitive and they will monitor for a better window.
"We have executed new swaps for 80% of that at an all in fixed rate of 5.3%." — Barbara Pak
San Francisco affordability and LA outlook
Q (John Kim · BMO): How much more can San Francisco rents rise given affordability and will Oakland/East Bay catch up? Also, what green shoots are you seeing in LA for 2027?
A: They said the intentional occupancy decrease in San Francisco reflected pushing rents and that market rents are still catching up; they estimate San Francisco may be about halfway back to long-term CAGR and affordability metrics suggest more room to run (example: rents could increase over 20% to return to pre-COVID affordability with no wage growth). For LA, they see declining supply and some defense-related catalysts coming, but timing is unknown; LA is broadly tied to the US economy with professional services providing stability.
"As far as the. what is to come in this module or, I guess, you know, what. what is left in the gas tank?" — Angela L. Kleiman (CEO)
Seattle expenses and SoCal A&D exposure
Q (Adam Kramer · Morgan Stanley): Was the elevated Seattle same-store expense growth in the quarter driven by anything specific? And which SoCal submarkets benefit from aerospace/defense?
A: They said Seattle's higher expense was timing: a bit more controllable spend this quarter and higher property taxes, but nothing structurally unusual. For aerospace/defense benefits, it's mostly concentrated in the South Bay from Hawthorne to Long Beach and nearby areas, and they can share a map after the call to show their footprint there.
"No, nothing specific to call out." — Barbara Pak
AB1482 caps and political risks in California
Q (Richard Hightower · Barclays): Which Bay Area submarkets are hitting AB 1.48k rent caps and where is loss-to-lease? Also any political ballot risks like a wealth tax?
A: They said San Francisco and San Mateo are bumping against AB 1.48k, with parts of Alameda and San Jose getting close; East Bay is less affected, which supports their East Bay investment thesis. Loss-to-lease in September sits at about 1.4% overall, with Northern California close to 8%; on political risks, they called outcomes hard to anticipate, noted some proposed anti-business measures haven't passed committee, and they hope moderation and focus on housing production continues.
"As far as loss to lease, I have that. Okay. So loss to lease in September this year is sitting at about 1.4%." — Angela L. Kleiman (CEO)
Northern California renewals and guidance drivers
Q (Ami Probandt · UBS): Could you explain renewal upside in Northern California for 2027 and whether updated same-store revenue guidance includes occupancy or non-rental changes?
A: They said Northern California drives much of the earn-in and renewals are capped by AB 1.48k (inflation plus 5%, max 10%), so there is still room on renewals and new leases are uncapped but capture may take time. On same-store revenue guidance, they said the update is 100% driven by scheduled rent growth alone, with no changes to occupancy or non-rental revenue assumptions.
"No. The update for same store revenues, the increase is 100% driven by scheduled rent growth." — Barbara Pak
selling San Jose JV asset
Q (Wesley Golladay · Baird): Why sell a relatively new asset in San Jose and did you consider buying your partner's stake?
A: They said the sale was a joint venture decision and they received good value; they considered buying the partner's interest but chose to redeploy capital into a more attractive East Bay acquisition with a better risk-adjusted return. They noted they still have the option to buy JV interests when it makes sense, but capital is finite and they prioritized the better opportunity.
"But again, with finite amount of capital, we are looking to allocate to the best risk adjusted returns." — Rylan Burns
supply forecast differences
Q (Julien Blouin · Goldman Sachs): Why does your supply outlook show declines into next year while third-party data suggests supply could increase? Also, why do renewals step down from 3Q to 4Q now?
A: They said their supply forecast accounts for construction delays and realistic lease-up pace, and they have high conviction that supply in their markets will come down around 20% next year versus this year. On renewals, they explained the apparent deceleration from Q3 to Q4 reflects an unusually strong Q3; Northern California renewals are close to 8%, Southern California in the 2s–3s, Seattle around 3–4%, and the company-wide average is near 4.5%.
"The differences between our supply forecast, which account for delays as well as the actual lease up pace of buildings in a more likely manner." — Rylan Burns
LA fundamentals and urban high-rise cap rates
Q (John Pawlowski · Green Street): Why do you call LA stable despite slowing revenue growth, and what are market clearing cap rates for urban high-rise LA apartments?
A: They said LA delinquency has remained stable and gross occupancy hovers in the mid-95s, which supports a stable view despite quarter-to-quarter noise; sequential revenue in LA County improved by 10 basis points and year-to-date revenue is up 1%. On high-rise urban LA cap rates, they have not seen enough transactions to pinpoint a cap rate and noted downtown/high-rise is a tougher, less-bid submarket with vacancy and operating challenges.
"First, the delinquency in LA has remained stable." — Angela L. Kleiman (CEO)
development yields and Bay Area divergence
Q (Alex Kim · Zelman and Associates): Is South Linden's expected stabilized yield improving with strong Northern California rents, and how are urban vs suburban Bay Area rent trends diverging?
A: They said South Linden yields are improving and the project is on track, possibly delivering ahead of schedule, and they are progressing on entitlements for Middlefield. On Northern California, blends diverge: Santa Clara, San Mateo, and San Francisco are outperforming above 7% blends, while Alameda and Contra Costa (East Bay) lag at about 5.5%, implying roughly a 300-basis-point spread and supporting their East Bay strategy.
"So on the blends in Northern California, they are running much higher, closer to, say, above 7%." — Angela L. Kleiman (CEO)