Much to the delight of the shareholders of Essex Property Trust Inc. ESS, Moody’s Investors Service – the rating arm of Moody’s Corp. MCO – announced that it has upgraded the company’s senior unsecured rating with a stable outlook. In fact, the rating agency has raised the senior unsecured rating of Essex Property from Baa2 to Baa1.
Based in San Mateo, CA, Essex Property is a residential real estate investment trust (“REIT”), which is engaged in the acquisition, development, redevelopment and management of multifamily residential properties in supply constrained markets. Specifically, the REIT’s assets are concentrated in select coastal submarkets along the West Coast. Notably, in Apr 2014, Essex Property closed the merger with BRE Properties that led to the creation of a premium West Coast pure play multifamily REIT.
The latest rating improvement is based on the company’s meaningful presence and position on the West Coast, its robust balance sheet as well as proven record of operation in supply-constrained markets.
The West Coast is the hub of many innovative and technology companies, and the region is anticipated to witness growth in wage levels. Consequently, apartments located in the centers of technology and innovations are expected to benefit from higher demand. Also, they are poised to deliver above-average growth in rent.
While Essex Property carries a Zacks Rank #3 (Hold), Moody’s holds a Zacks Rank #2 (Buy). The long-term projected growth rates of these two companies are 7.1% and 12.3%, respectively.
A couple of top-ranked stocks in the same space include Equity LifeStyle Properties, Inc. ELS and Post Properties Inc. PPS, each with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term projected growth rates of Equity LifeStyle Properties and Post Properties are 4.9% and 5.4%, respectively.
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