On Nov. 1, California-based real estate investment trust Essex Properties Trust (NYSE:ESS) once again came through in the clutch with growth in net income and funds from operations. The company reported for its third quarter ended Sept. 30, 2006, that net income available to common stockholders rose to $10.3 million, vs. $8.3 million for the year-ago quarter. Essex also announced that its funds from operations had risen 8.9% when compared to the quarter ended Sept. 30, 2005.

These increases prompted the company to raise its full-year guidance for its funds from operations. The company's charismatic CEO, Keith Guericke, said, "We are delighted by the strong growth from our supply-constrained markets during the third quarter."

The apartment REIT sector as a whole has been on fire in 2006. Essex competitors AvalonBay (NYSE:AVB), Equity Residential (NYSE:EQR), and BREProperties (NYSE:BRE) all reported growth in their funds from operations this week as well. All four of these REITs are trading near all-time highs. The quarterly results for Essex compelled RBC Capital Markets to upgrade the company's common stock from a "Sector Perform" rating to an "Outperform" rating.

Over the long haul, Essex shareholders have fared quite well. The company's stock price has experienced seven up years and no down years dating back to 1999, and 2006 should make it eight in a row. The stock's 2.5% dividend yield and consistent performance make it an excellent long-term investment. The company's portfolio is primarily concentrated in the Southern California, San Francisco Bay area, and Seattle markets. The company's strategic positioning of its portfolio in these prime locations makes it less dependent upon the state of the nationwide apartment rental market as a whole. Essex presently maintains a total occupancy rate of 97% for all of its properties.

The REIT has also been active in acquiring existing apartment communities and developing new ones. During the third quarter, Essex acquired a 697-unit community in San Mateo, Calif., for a price tag of $97.3 million. It also acquired a 71-unit complex in Belmont, Calif., for $14.7 million in October. The REIT made $271 million in combined acquisitions during the nine months ended Sept. 30, 2006. These purchases allowed the company to exceed its initial projection of $200 million in acquisitions for the period by 36%. During the third quarter, Essex completed the construction of the foundation of a 275-unit development in Los Angeles that is scheduled to begin leasing in December 2007.

While the rapid run-up in the price of REITs over the past two quarters has left some analysts wondering if the sector is overvalued, I am convinced that Essex's consistent earnings, market positioning, and expansion activities will preserve this stock's hit streak for the immediate future.

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Fool contributor Billy Fisher does own shares of Essex Properties Trust. The Fool's disclosure policy makes for a happy home.