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Essex Property Trust Reit Inc (NYSE:ESS)
Q2 2021 Earnings Call
Jul 30, 2021, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Essex Property Trust Second Quarter 2021 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 filing with the SEC.

It is now my pleasure to introduce your host Mr Michael Schall, President and Chief Executive Officer for Essex Property Trust. Thank you, Mr Schall, you may begin.

Michael J. Schall -- President and Chief Executive Officer

Thank you for joining us today, and welcome to our second quarter earnings conference call. Angela Kleiman and Barb Pak will follow me with prepared remarks and Adam Berry is here for Q&A.

On today's call, I'll start with our second quarter results, which were driven by a strengthening economy and positive [Technical Issues] and also to underlie a robust recovery on the West Coast. I'll also discuss the status of reopening the West Coast economies and related factors concluding with an overview of the West Coast apartment transaction markets and investments. Our second quarter results were ahead of our initial expectations entering the year, as the economic recovery from the pandemic occurred faster than we expected. With a strong economy and high vaccination rates, we are now confident that the worst of the pandemic-related impacts are behind us.

As noted on previous calls, our strategy during the pandemic was to maintain high occupancy and scheduled rent, both necessary for rapid recovery. To that end, net effective rent surged during the second quarter, along with year-over-year improvement in occupancy, other income and delinquency. The recovery and net effective rents continued unabated in July and we are now pleased to announce that July net effective rents for the Essex portfolio have now surpassed pre-pandemic levels with our suburban markets leading the way. While the downtowns are improving, but still generally below pre-pandemic levels. Obviously these higher rents will be converted into revenue as leases turn and Angela will provide additional details in a moment.

Having passed the midpoint of 2021 and looking forward, we made a second set of positive revisions to our West Coast market forecast, which can be found on page S-17 of the supplemental. Driving the changes is an increase in 2021 GDP and job growth estimates to 7% and 5%, up from 4.3% and 3.2% respectively from our initial forecast. As a result, we now expect our average 2021 net effective rent growth to improve to minus 0.9% from minus 1.9% from the beginning of the year. To put this into perspective, consider that our net effective rents were down about 9% year-over-year in Q1 2021.

Given our current expectation of minus 0.9% rent growth for the year, year-over-year net effective market rents are now forecasted to increase about 6% in the fourth quarter of 2021. Cash delinquencies were up modestly on a sequential basis at 2.6% of scheduled rent for the quarter and well above our 30-year average delinquency rate of 30 to 40 basis points. The American Rescue Plan of 2021 provides funding for emergency rental assistance, which was allocated to the stage for distribution to renters for pandemic-related delinquencies. During the second quarter, collections of delinquent rents from the American Rescue Plan were negligible as the pace of processing reimbursements has been slow, since the program launched in March. We expect that to improve in the coming months.

We expect delinquency rates to return to normal levels over time as more workers enter the workforce and eviction protections labs on September 30 in both California and Washington. at this point. Only about $7 million of the $55 million in delinquent rent shown on page S-16 of the supplemental has been recorded as revenue. Given uncertainty about the timing of collections, no additional revenues are contemplated in our financial guidance.

Even with the approved job and economic outlook, the reopening process was gradual through the second quarter, with full reopening declared in mid-and late June for California and Washington respectively. The unemployment rate was still 6.5% in the Essex markets as of May 2021 underperforming the nation. Through Q2 we have regained about half of the jobs lost in the early months of the pandemic. Employment in the Essex markets dropped over 15% in April 2020 and while job growth in our markets outpaced the nation in the second quarter, we are still 7.9% below pre-pandemic employment, compared to 4.4% for the U.S. overall.

We see the gap is an opportunity for growth to continue in the coming months, as we benefit from the full reopening of the West Coast economies. We believe that many workers that exited the primary employment centers during pandemic-related shutdowns and work from home programs, will return as businesses reopen and resume expansion that was placed on hold during the pandemic. As we proceed through the summer months, we edge closer to the targeted office reopening dates set by most large tech employers in early September. As recent reports about Apple and Google suggest, the COVID-19 Delta variant could lead to temporary delays in this reopening process. Our survey of job openings in the Essex markets for the largest tech companies continues to be very strong as we reported 33,000 job openings as of July, a 99% increase over last year's trough.

New venture capital investment has set a record pace this year with Essex markets once again leading with respect to funds invested providing growth capital that supports future jobs. Generally economic sectors that sell before this during the pandemic, are now positioned for the strongest recovery and the reopening process led by restaurants, hotels, entertainment venues, travel and so many. Return to office plans, which remain focused on hybrid approaches will continue to draw employees closer to corporate offices. Given that many workers won't be required to be in the office on a full-time basis, we expect average new distances to increase.

As we highlight on page S-17.1 of our supplemental, this transition has already started in recent months as our hardest hit markets in the Bay Area once again experienced net positive migration from beyond the NorCal region. In particular, since the end of Q1, the submarket surrounding San Francisco Bay have seen positive net migration that represents 18% of total move-outs over the trailing three months compared to minus 8% a year ago. These inflows are led by residents returning from adjacent metros, such as Sacramento and the Monterey, Peninsula as well as renewed flow of recent grads -- graduates arriving from college towns across the country, a notable positive turnaround from last year. In Seattle CBD, we've seen similar or even stronger recent inflows and we're likewise experiences -- experiencing a strong market rent recovery.

On the supply outlook, we provided our semi-annual update to our 2021 forecast on S-17 of the supplemental with slight increases to 2021 supply as COVID-related construction delays shifted incremental yields from late 2020 into 2021. We expect modestly fewer apartment deliveries in the second half of 2021 with more significant declines in Los Angeles and Oakland. While it is still too early to quantify recent volatility in lumber prices and shortages for building materials may impact construction starts and the timing of deliveries in subsequent years. Multifamily permitting activity in Essex markets also continues to trend favorably, declining 200 basis points on a trailing 12 month basis as of May 2021 compared to the national average, which grew 230 basis points.

Median single family home prices in Essex markets continued upward in California and Seattle, growing 18% and 21% respectively on a trailing three-month basis.

The escalating cost of homeownership combined with greater rental affordability from the pandemic have increased the financial incentive to rent. We suspect these trends will continue given muted single family supply and limited permitting activity and I believe these factors will be a key differentiator for our markets in the coming years compared to many U.S. markets with greater housing supply.

Turning to apartment transactions, activity is steadily accelerated since the start of the year, with the majority of apartment trades occurring in the low-to-mid 3% cap rate range based on current rents. Generally investors anticipate a robust rate recovery, especially in markets where current rents are substantially below pre-pandemic levels. With the recent improvement in our cost to capital, we have turned our focus once again to acquisitions and development while remaining disciplined with respect to FFO accretion targets.

With respect to our preferred equity program, we continue to see new deals, although the market is becoming more competitive. Lower cap rates from pre-pandemic levels have produced higher-than-anticipated market valuations, which in turn has resulted in higher levels of early redemption.

That concludes my comments. It's now my pleasure to turn the call over to our COO, Angela Kleiman.

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

Thanks, Mike. My comments today will focus on our second quarter results and current market dynamics. With the reopening of the West Coast economy, the recovery has generated improvements in demand and thus pricing power. Our operating strategy during COVID to favor occupancy while adjusting concessions to maintain scheduled rents enabled us to optimize rent growth concurrent with the increase in demand resulting in same-store net effective rent growth of 8.3% since January 1 and most of this growth occurred in the second quarter. A key contributor of this accomplishment is the fantastic job by our operations team in responding quickly to this dynamic market environment.

While market conditions have improved rapidly, during our second quarter -- driving our second quarter results to exceed expectations. I would like to provide some context for why sequential same-property revenues declined by 90 basis points compared to the first quarter. The two major factors that drove the decline were 50 basis points of delinquency and 50 basis points in concessions. Delinquency in the first quarter was temporarily lifted by the one-time unemployment disbursements from the stimulus funds. As expected in the second quarter, delinquency reverted back to 2.6% of scheduled rent versus the 2.1% in the first quarter.

On concessions, the nominal amount increased from higher volume of leases in the second quarter relative to the first quarter of this year. To declare concessions in our markets have declined substantially and are virtually none existent except for select CBD markets. Our average concession for the stabilized portfolio is under one week in the second quarter compared to over a week in the first quarter and over two weeks in the fourth quarter. Although concessions have generally improved in the second quarter, they remain elevated ranging from 2.5 to 3 weeks in certain CBDs such as CBD, LA, San Jose and Oakland.

Given the extraordinary pandemic-related volatility in once in concessions over the past year and a half. I thought it would be insightful to provide an overview of the change in net effective rents compared to pre-COVID levels. As of this June, our same-store average net effective rents compared to March of last year was down by 3.1%. Since then, we have seen continued strength and based on preliminary July results, our average net effective [Indecipherable] are now 1.5% above pre-COVID levels. it is notable that this 1.5% portfolio average diverged regionally with both Seattle and Southern California up 5.8% and 9.3% respectively while Northern California has yet to fully recover with net effective rents currently at 8% below pre-COVID levels.

On a sequential basis, net effective rents on new leases have improved rapidly throughout the second quarter and preliminary July rent increased 4.7% compared to the month of June, led by CBD San Francisco and CBD Seattle, both up about 11%. Not surprisingly, these two markets were hit hardest during the pandemic, and are now experiencing the most rent growth.

Moving on to office development activities, which we view as an indicator of future job growth and accordingly housing demand. In general, the areas along the West Coast with the greatest amount of office developments have been San Jose and Seattle. Currently San Jose has 8.1% of total office stock under construction and similarly Seattle has 7.7% of office stock under construction. Notable activities include Apple leasing an additional 700,000 sqft and LinkedIn announced recent plans to upgrade our existing offices in Sunnyvale. In the Seattle region, Facebook expanded their Bellevue footprint by 330,000 sqft and Amazon announced 1400 new web services jobs in Redmond.

We expect in the long-term areas with higher office deliveries such as San Jose and Seattle will have capacity for greater apartment supply with our impacting rental rates. While these normal relationships were disrupted during the pandemic, we anticipate conditions to normalize in the coming quarters.

Lastly, as the economic recovery continues to gain momentum, we have restarted both our apartment renovation programs and technology initiatives including actively enhancing the functionality of our mobile leasing platform and smart rent home automation.

Thank you, and I will now turn the call over to Barb Pak.

Barb M. Pak -- Executive Vice President and Chief Financial Officer

Thanks, Angela. I'll start with a few comments on our second quarter results, discuss changes to our full year guidance, followed by an update on our investments and the balance sheet. I'm pleased to report core FFO for the second quarter exceeded the midpoint of the revised range we provided during the NAREIT conference by $0.08 per share. The favorable results are primarily attributable to stronger same property revenues, higher commercial income and lower operating expenses. Of the $0.08, the $0.03 relates to the timing of operating expenses and G&A spend, which is now forecasted to occur in the second half of the year.

As Angela discussed, we are seeing stronger rent growth in our markets than we expected just a few months ago. As such, we are raising the full year midpoint of our same-property revenue growth by 50 basis points to minus 1.4%. It should be noted, this was the high end of the revised range we provided in June. In addition, we have lowered our operating expense growth by 25 basis points at the midpoint, due to lower taxes in the Seattle portfolio. All of this resulted in an improvement in same property NOI growth by 80 basis points at the midpoint to minus 3%. Year to date, we have revived our same-property revenue growth at the midpoint, up 110 basis points and NOI by 160 basis points.

As it relates to full year core FFO, we are raising our midpoint by $0.09 per share to $12.33. This reflects the stronger operating results, partially offset by the impact of the early redemption of preferred equity investments, which I will discuss in a minute. Year-to-date we, have raised core FFO by $0.17 or 1.4%.

Turning to the investment markets. As we've discussed on previous calls, strong demand for West Coast apartments and inexpensive debt financing has led to sales and recapitalization of several properties underlying our preferred equity and subordinated loan investments resulting in several early redemptions. During the quarter, we received $36 million from an early redemption of a subordinated loan, which included $4.7 million in prepayment fees, which have been excluded from Core FFO.

Year-to-date, we have been redeemed on approximately $150 million of investment and expect that number to grow to approximately $250 million by year-end. This is significantly above the high end of the range we provided at the start of the year. However, this speaks to the high valuation apartment properties are commanding today which is good for Essex and the net asset value of the company.

As for new preferred equity investments, we have a healthy pipeline of accretive deals and we are still on track to achieve our original guidance of $100 million to $150 million in the second half of the year. As a reminder, our original guidance assumed new investment would match redemptions during the year. However, the timing mismatch between the higher level of early redemptions coupled with funding of new investments expected later this year has led to an approximate $0.10 per share drag on our FFO for the year.

Moving to the balance sheet, we remain in a strong financial position due to refinancing over 1/3 of our debt over the past year and a half taking advantage of the low interest rate environment to reduce our weighted average rate by 70 basis points to 3.1% and lengthening our maturity profile by an additional two years. We currently have only 7% of our debt maturing through the end of 2023.

Given our laddered maturity schedule, limited near term funding needs and ample liquidity, we are in a strong position to take advantage of opportunities as they arise.

This concludes my prepared remarks, I will now turn the call back to the operator for questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Nick Joseph with Citi. Please proceed with your question.

Nick Joseph -- Citi -- Analyst

Thanks. Maybe just starting to follow up on the comments you just made on the preferred equity and the mezz loan. In terms of the pipeline today, are you seeing any compression on yields or expected returns or any changes to the competition there?

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Hey, this is Adam. To answer your question, yes, we're seeing compression on cap rates, we're seeing, it's a much more competitive market now with proceeds going well above where we're typically comfortable and rates going significantly below where we've been in the market. So to some, yeah, well, we are seeing the absolute compression on valuations.

Nick Joseph -- Citi -- Analyst

Thanks. And then in terms of the early redemptions that you've seen, I mean, is there a risk of further early redemptions that could at least create an air pocket on the earnings side?

Barb M. Pak -- Executive Vice President and Chief Financial Officer

Hi Nick, this is Barb. At this point, I think we factor that all in based on what we know today and probably -- almost in August. So I think we factored that into the current guidance. So I'm not expecting any more redemptions at this point for the rest of the year.

Nick Joseph -- Citi -- Analyst

Thanks

Operator

Our next question comes from the line of Rich Hill with Morgan Stanley. Please proceed with your question.

Rich Hill -- Morgan Stanley -- Analyst

Hey, good morning, guys. I wanted to just come back to sort of trends that you're seeing in your markets and I appreciate all the color and commentary you gave us, but I'm hoping you can compare and contrast what you're seeing in your market, specifically versus maybe what someone typically thinks about in San Francisco, Los Angeles, the broader West Coast urban markets. So specifically are you seeing people still continue to migrate in? Are you seeing people migrate out? What are those trends in your markets that give you confidence relative to maybe some of the urban market trends?

Michael J. Schall -- President and Chief Executive Officer

Hi, Rich. This is Mike. I think I'll handle that one and others may want to comment as well. But I think we feel really very good about what's happening here. Noted in my comments that were fully recovered with respect to market rents versus pre-pandemic levels while only recovered about half the job so far. So I think that's a powerful place to start. And as we look around the West Coast, we feel great about what's happening, and we expect good times to continue that consumer is super optimistic, they've saved money via COVID versus COVID by not traveling and a variety of other things. The millennials are forming households and there is a lot of hiring here on the West Coast.

So that's why we talked about the top 10 tech companies and how many open positions they have, they come a long way in the past year. After what we perceive is, them pulling back amid COVID on their expansion plans. I think that they are now turning that corner, have turned that corner hiring more people pursuing things that they put on hold a year ago and so everything feels like it's it's in good order at this point in time. As you go to the cities, the main driver of job growth at this point in time has been the recovery of all the industries that have been so dramatic -- so dramatically affected a year ago. Including the leisure hospitality, restaurants, filming in Southern California, etc. And as we look at the world. We're looking at whether we believe these industries are poised for future growth and we think absolutely they are. We think that we're in affluent areas, affluent areas demand services, you're starting to see those services to come back in terms of restaurants and variety of other areas, and so we see this turning around nicely and again, I wouldn't have expected to be fully back with respect to brands at a time when we've only recovered about half the jobs that we lost. Makes sense?

Rich Hill -- Morgan Stanley -- Analyst

Yeah, it makes perfect sense. I will just wait and see if anyone else is going to follow-up. That's perfect, Mike. As we look forward and at the risk of asking you to guide, which I'm not, we had this obviously pretty significant trough that came late last year and earlier this year. Is it sort of reasonable to think that 2022 will be the mirror image of that and then maybe we can -- we may be even continue to push rents above a normal trend over the medium term?

Michael J. Schall -- President and Chief Executive Officer

It's a good question. And Barb will look at me very straightly if we start talking about '22 at this point in time. So -- and you know how we are, we tend to be pretty careful in terms of guidance. And so we don't want to go too far out there, but I would say that I would expect. Certainly the return to office to be a good thing for the downtown locations because most of the top 10 tech companies or most of tech companies in general have announced a hybrid type of approach, which means that people are going to have to be closer to the offices to show up, let's say, plus or minus three times per week. As a result of that the people that moved to the hinterland, the most suburban parts of our portfolio, probably you're going to need to come back and I think about Ventura, I don't want to pick on Ventura, because you said, great. But it's a long way on a commute pattern from Ventura into where the jobs are in LA, and I don't think people are either going to want to do that three times a week. So I think that kind of frames, the dynamics those that had a year given the pandemic to make a different choice about where to live, I think will likely make a different choice going forward. Now that there is more clarity about what the company is going to do with respect to their work from home or return to office programs.

Rich Hill -- Morgan Stanley -- Analyst

Okay.

Barb M. Pak -- Executive Vice President and Chief Financial Officer

The only other thing I would add is, leases we're signing today. We will have half a impact to the rent this year to our rent roll and that will carry forward into next year too. I mean look as Angela mentioned, we had a strong July and so that is going to only affect part of this year's numbers.

Rich Hill -- Morgan Stanley -- Analyst

Yep.. I got it. Thank you, guys. I'm not sure that's entirely what I wanted, but I appreciate the response. Thank you.

Michael J. Schall -- President and Chief Executive Officer

Sorry.

Operator

Our next question comes from the line of Joshua Dennerlein with Bank of America. Please proceed with your question.

Joshua Dennerlein -- Bank of America -- Analyst

Hey, guys. Hope you're all doing well. Just kind of curious what your mark-to-market is in your portfolio. And maybe if you have it by region, like Seattle, Northern California and Southern California.

Barb M. Pak -- Executive Vice President and Chief Financial Officer

Are you talking about Wesley e-commerce?

Joshua Dennerlein -- Bank of America -- Analyst

Yeah. Wesley. Sorry.

Barb M. Pak -- Executive Vice President and Chief Financial Officer

No that's alright. Well, in terms of the loss lease, we actually are in a much better position and at a level even better than pre-COVID. So if we look at July loss of lease for the Essex portfolio, it's now at 7.4%. And so -- and that of course varies CRO at a highest at about 12, Southern California in the middle of the pack at about 8 and Northern California at the lower side as well as 3.5.

Joshua Dennerlein -- Bank of America -- Analyst

Okay, awesome. And in your guidance range, are you assuming as far as like a recovery for the rest of the year and and rate for the Northern California market.

Michael J. Schall -- President and Chief Executive Officer

I'll start. The second half of the year as each. We have to turn leases in order to impact our same store, our revenue. And so as you get toward the end becomes less relevant and more relevant obviously next year. So take a transaction in October. You only have three months of that new lease in 2021. The rest is going to be in 2022. So there is an inherent lagging concept with respect to what's going on with market rents which Angela just talk about versus how it shows up on the income statement. So I think that's important in terms of just look at that market rents. We tried to provide a little bit of color on that. And with respect to S-17, what we're trying to to get out, that overall our economic rent growth on S-17 is at minus 0.9% and that's 1/12th of every month throughout the year. So January 2021 versus January 2020 plus February through the year divided by 12 is what that number represents. So we start of the year at a rate in the minus 9% to minus 10% range and that implies to get the 0.9% -- minus 0.9% on S-17 that the fourth quarter will be plus 6% and that does not anticipate a lot of rent growth between now and then, which is pretty typical. We typically hit the peak of market rents in July at the end of the peak leasing season and then it flattens out for the rest of the year. So that's what's assumed in those numbers.

Joshua Dennerlein -- Bank of America -- Analyst

Great, thanks for the time.

Michael J. Schall -- President and Chief Executive Officer

Thank you.

Operator

Our question comes from the line of Austin Wurschmidt with KeyBanc. Please proceed with your question.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Great, thanks guys. It seems possible that your markets could experience an extended leasing season. It's certainly come up on other calls and some seem pretty optimistic about the prospects. But clearly as you identified, there are some risk to take into consideration. So just wondering kind of how you went about your back half guidance. And did you assume typical seasonality or sort of that another leg up in demand in the late summer, early fall timeframe?

Michael J. Schall -- President and Chief Executive Officer

Yeah, this is Mike. And I agree with you. We did not -- we assume more or less the typical trend with respect to market rent. So kind of peaking in July and not a lot of growth for the rest of the year. If -- as we think about it, however, there are some things that are different. For example, will the tech companies continue hiring normally what happens is hiring tails off at the end of the year, companies get business plans at the -- toward the third and fourth quarter and then they start implementing them in the first quarter. That's what really drives the peak leasing season. So the question here is will companies continue hiring at a higher level given COVID than they have in the past. I think there is a very good chance that that could happen. Also this work from home and return to office concept could have an impact on that as well. If more people are moving back into the more urban areas from the people that were displaced as California and Washington, we're shutting down a year ago. If those people continue to come back late -- later this year, that could possibly push rents higher in the second part of the year. So we've again assumed based on our experience and what typically happens in normal curve with respect to rents. But there are some things that are different here. And so we could end up with being surprised with the positive side.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Okay, that's very helpful. And then Angela, I think you mentioned that you're starting the -- restarting the redevelopment program. Could you give us kind of the scale of that or the annual run rate and then maybe offer up some additional details on sort of the economics, that would be really helpful.

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

Sure Austin. We -- normally pre-COVID, our run rate was about in terms of units, about 4,000 units a year and what we did was scaled back significantly last year. So, second half of last year, we only renovated about 600, little 600 units, 650 units. So the target the restart for the second half of this year is to double that. So to achieve close to 1300 units this year. We are looking at a couple of large developments for future -- for next year that will have greater opportunities. But in terms of just the return on investments, we're actually looking at ranges pretty unconsistent with pre-COVID levels and so while cost has gone up, but rents have gone up as well concurrently. So we think we're in a pretty good spot.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

And what are those numbers on the economics?

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

They tend to range depending on the asset and the scope and the market, but I'll give you a range that might be a little bit better than a hard number. They tend to range stay in the high single digits to the high double digits. So it's a pretty wide range.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Got it. Thank you.

Operator

Our next question comes from the line of Amanda Sweitzer with Robert W Baird. Please proceed with your question.

Amanda Sweitzer -- Robert W Baird -- Analyst

Thanks, good morning. Following up on some of your comments on ramping up your development spending. Can you just provide an update on areas you're targeting for this potential product -- projects as well as underwritten yields you think you could achieve?

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Hey, Amanda. This is Adam. You referring to redevelopment or development?

Amanda Sweitzer -- Robert W Baird -- Analyst

I thought you mentioned ramping up development along with acquisitions earlier in the call, but I could be mistaken.

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Okay. Yeah, I'm happy to take that one. So on development. Yeah. Given where our stock is trading and given some opportunities that we're seeing out there now where we can make sense of accretive transactions, we are definitely looking at ramping up the development pipeline. I'd say, our main areas of focus would be primarily Northern California, Seattle, though I see is probably the two best markets in that respect. But we're looking throughout our portfolio and throughout our footprint for sort of.

Amanda Sweitzer -- Robert W Baird -- Analyst

And then, any change in terms of underwritten yield. Do you think you could achieve on those projects versus pre-COVID levels.

Adam W. Berry -- Executive Vice President and Chief Investment Officer

So yeah, good question. So what we're seeing, we've underwritten several dozen deals over the last few months. The deals that we see going down primarily, cap rates have definitely compressed. So on the development side, we're seeing on trended grants return on cost of about 4 to 4.25 basically. So it's still a gap between where existing deals are trading, which are on 3.25 to 3.5, we're going to look at numbers higher than that. We have not -- we wouldn't transact at call to development yield, but we're going to -- we would be looking at the 4.5 to high fours.

Amanda Sweitzer -- Robert W Baird -- Analyst

Thanks, I appreciate the time.

Operator

Our next question comes from the line of Rich Anderson with SMBC. Please proceed with your question.

Richard Anderson -- SMBC -- Analyst

Thanks, good morning everybody. So I'm interested in this 17 supplemental or S-17, I should say, the migration trends that you referenced in your prepared remarks. Is that everything or is it predominantly kind of close in like Monterrey, Sacramento type of net migration or in migration and does it net out people that are leaving California entirely? Is this the full number, number one? And number 2, what do you think about this 18%? Is this like a sort of a knee jerk response to working remotely but closer to the office in that probably this is peaking out at this time and it starts to come back down. What's the ceiling on this graph, do you think?

Barb M. Pak -- Executive Vice President and Chief Financial Officer

All right. This is Barb. Yeah, 17.1%. the 18% is a net number. If you look back a year ago, we did have out migration. And that's what's showing in the negative 8% and now we have people moving back and they're really coming from Sacramento and some of the outer lying areas within California, but we're also noticing people moving in from college town. So people recent college grads are coming here for jobs and it's really geographically dispersed. I mean there is no discernible pattern from where they're coming from. It's kind of all over. And we do think that it does speak to the strength of our markets and people coming back and returning after the services have reopened and the economy has reopened, now we're seeing the people return. So we think it's a good sign and a good leading indicator. You should note that this Seattle in our portfolio looks similar as well. We're seeing a big in migration in Seattle as well. So we didn't show it here, but it's Bay Area and Seattle, both have a similar chart where there is a big influx. And I think you're seeing it in the rent growth that Angela spoke to and San Fran being up 11% in the CBD and and the NorCal and some of the other suburban markets in NorCal having bigger sequential rent growth, more recently is partly due to this in-migration.

Michael J. Schall -- President and Chief Executive Officer

Rich, that kind of make a broader comment, and I would say the broader comment is that the migration out of the West Coast, our view was largely driven by business is being shut down and putting people in the position of not having a paycheck and effectively forcing them to move to somewhere else. And I know that the sort of -- it doesn't fit the narrative. The narrative is that all these people wanted to leave, California. I think the reality is completely different from that. And therefore, I go back to my basic comment, which is, do we feel comfortable with the businesses that are here and with job growth going forward. And when you look at the components of that -- OK, the hotels are now mostly open here on the West Coast, the restaurants are opening and -- but we were still at 50% of capacity, a month or two ago. So we open completely on June 15, but that process has been relatively slow. And I think that's why job growth has lagged the U.S. as we've come out of the pandemic and -- but I guess the key point here is, most of the migration that occurred was not voluntary migration. It was caused by shutting down businesses. And then if you look at the flip side of that, are those business is likely to reopen given COVID is mostly behind us and we feel 100% absolutely convinced that that will occur.

And so when we look, we have some more broader information on migration in general and a lot of the same things that we talked about a year or two ago, are still in place the inflows into our markets tend to be the high cost East Coast metros and the outflows tend to be into lower cost Western areas. So those trends really haven't changed all that much, but Barb, this S-17.1 is trying to address specifically the cadence of what's coming in, what's going out and to your point, yes, everything -- of course everything is in there. Here to try to push a narrative that is not reality because if we do that, we're going to shoot ourselves on the foot. So there is no evidence, I think of Essex trying to be overly optimistic. And so we're trying to communicate what's really happening out there and what we're really seen.

Richard Anderson -- SMBC -- Analyst

It wasn't implying that-- I just -- you mentioned sort of near in areas and Michael, just want to make sure I was looking at the same thing. So the second question, 15-20 years ago, Mike Schall and Keith Guericke were heroes with 10% plus growth in California was the place to be. Now if you at that point made some investments in the Sunbelt, you'd be a hero, so the tortuous past at least for now, but I assume you're a reversion of the mean is your mind that certainly, it sounds like what you're saying. And do you see now as a particularly interesting time to be investing in your markets. For all the reason you just described, but also is particularly special because of what's happened outside of California and Washington and what you think might come back and that that will be sort of a narrowing of the performance gap over the next several years.

Michael J. Schall -- President and Chief Executive Officer

Yeah, hey it's great question, Rich. And our Board is pretty focused on this geographic diversity issue and some of the challenges that we've had more recently with respect to regulation and other things, but we don't want to get too far away from sort of this longer term pattern because we -- it isn't like we're going to grow every year the same, conditions change, but we remain focused in our analysis on which areas have the highest caters of rent growth over time and it may surprise you, because you can say the West Coast is dropped off of that. More recently. yes, but if you look back, let's say 15 years, because I have these numbers right out of our strategic plan in front of us. Seattle led all the major markets bond with a 5.6% 15-year rent growth CAGR from 2014 to 2019 so to the pre-COVID level and Northern California was pretty close to that, and we start going down the list and certainly Boston and Miami are pretty attractive in that respect to as Northern New Jersey, but then there are a lot of markets that really have fallen well below that. And so our whole thesis here has been, let's try to identify the things that promote long term rent growth and let's invest in those markets and we can, as you know, we've looked at some things on the East Coast before and we'll continue doing that, but I guess, as we think about English [Phonetic], let me just make a simple comparison.

Let's compare San Jose with Austin and you know there are series of about the same size, same population. Austin has about 20,000 multifamily units in construction, where San Jose has about 8,000. We also don't produce very much housing or for-sale housing in San Jose and the median price is well over $1 million. So as an apartment owner, we look at that and say are we better off being in San Jose or in Austin and we conclude that it is better to be in San Jose. I mean Austin has to get extraordinary amounts of growth over and above, San Jose, which of course is driven by the tech companies which are doing really well and they hire a lot of people. So I guess I would say the Bloom is not off the West Coast. Yes. We grew really fast from 2011 through 2016 when by the way we had job growth in the 4% to 5% range on the West Coast and then it slowed down because of affordability issue, because you can't have rents grow twice as fast as incomes over long periods of time without creating affordability issue.

So there is a long-term approach to the business and I think that that making vast portfolio decisions based on with all the unique circumstances in COVID would be misguided.

Richard Anderson -- SMBC -- Analyst

Really great color. Thanks, Mike. Appreciate everybody.

Michael J. Schall -- President and Chief Executive Officer

Thanks, Rich.

Operator

Our next question comes from the line of Neil Malkin with Capital One Securities. Please proceed with your question.

Neil Malkin -- Capital One Securities -- Analyst

Hi, everyone. Good morning to you. Just first Mike, and, it seems like you a lot of your prepared comments, the risks of COVID or the Delta variant throwing a wrench into the recovery seemed like maybe I'm understanding wrong like a lower or I mean that you're really not maybe waiting a lot and I guess my question on that part is are you -- have you thought about the Delta variance, how it's spreading a lot quicker. I think I've just seen studies that say like vaccinated people can also get it as well like as easily as nonvaccinated and the markets that you're in most likely to reach reshutdown or reimplement restrictions if cases rise, hospitalizations rise, etc. So given that's likely to happen as the fall. What kind of waiting do you kind of give to that notion of a potential hiccup from reimposed restrictions?

Michael J. Schall -- President and Chief Executive Officer

Yeah, it's a good question and an important question and I guess I would say, unfortunately, we have no way to really figure out what COVID might do going forward. And -- but we're definitely aware of the risks. One thing that I think is a little bit different in California. Clearly, we've got population densities that are pretty high and so, the risk of COVID is perhaps greater given that and I think the government are actually sort of a very good job here of trying to promote vaccination rates in the Essex markets and I think our vaccination rates are pretty high relative to the rest of the world. So the information I have is that the people with at least one shot that are 12 years and older, we're in California, Washington about 82% vaccinated versus 67% for the US. So I think that what's happened here as we've tried to -- the government has tried to react to that risk by really pushing the vaccination rate and they've done a very good job of that. So I think that lowers our exposure to some extent, but no doubt areas with high population density have a different COVID risk than some of the other areas and in this case, I think it's been dealt with effectively.

Neil Malkin -- Capital One Securities -- Analyst

Okay. So that's really helpful stat. Thank you for that. Other one for me is your previous comment, you talked about not making, I guess rash decisions or thinking about things on a historic level and I guess if you look at two large peers, you would like to say names, but Coastal players have recently announced pretty significant capital plans in Raleigh, Charlotte, Atlanta, Dallas, Austin. And I would imagine they have Boards and a lot of stakeholders that they probably consulted with before they allocate a lot of capital so kind of with that being said, does that -- I mean you give credit for that at all. I mean does that -- does it make you think maybe a little bit more about that. I mean you referenced that permitting is down in your markets and you maybe that is like a good thing, maybe that's like a bad thing of people are focusing their growth prospects and capital elsewhere.

Michael J. Schall -- President and Chief Executive Officer

Yeah, it's a good question and very valid. This is why we spend so much time in our prepared remarks talking about on with the top 10 tech companies, we created that index, so that we could keep our eye on where are the open positions for the top 10 tech companies, are they moving more to some of these other locations. And if so, what do we do about it. So I didn't mean to imply actually that we're so focused on 15 year tankers of rent growth. So definitely the historical information is important, but we're trying to supplement that in a hundred different ways with a ton of data sources that are either confirming or raising questions about what the future looks like. That's why you're Angela was talking about how much office construction. If you're going to build office buildings, presumably, there're going to be employees in there and we're going to need to build apartments to house those employees. I mean these are all indicators of what's happening in the future.

Keeping our eye on the top 10 tech companies and their hiring trends, again both within California and outside of California, super important in that regard. Again I go back to the industries. What are the driving industries and what are the industries and sort of drive the entire machine, we can -- it's certainly not the hospitality and the restaurant workers that are driving it. They are really the result of affluent wealthy areas, demand ill services and guess what they pay a lot more than in other places of the country, because of that. And so I think what's happening here is we're draw -- in the process of all those people that were just placed from shutting down the restaurants, and other services. We're going to need to draw them back into the area, but I think that given the demand for those services and given the wealth. It is been created here by the tech community by motion pictures in Southern California and other people that want to live near a beach, let's say, those services are in demand and they're going to come back at some -- it will take a little bit of time perhaps to do that, but again we're trying to say, OK, let's stay focused on what are the drivers of the economy here. And again, as I look at it and hopefully everyone will agree, tax not going away or hasn't gone away, certainly all the information that we've given out with respect to the tech companies over time confirms the thesis that they're here, they're not going away. They continue to invest in our markets. Motion Pictures in Southern California, you can't shoot film -- films where you require 50-100 people on a set during COVID, completely shut down. Demand for content not going away anytime soon. Therefore, there is a very good chance that is going to resume. And I can go on beyond that, but I think that that's a point. If the drivers are intact, the things that follow the demand for services, restaurants etc. will follow and the thesis of the company in terms of job growth remains intact. And then if you don't produce enough housing supply, I review that as a good thing.

Neil Malkin -- Capital One Securities -- Analyst

Okay. Well. I really appreciate it. Thank you.

Operator

Thank you. Our next question comes from Alexander Goldfarb with Piper Sandler. Please proceed with your question.

Alexander Goldfarb -- Piper Sandler -- Analyst

Hey, good morning. So, Mike. two questions. First, the data on S-17, that is superb. So if like -- if we were out in the Bay Area, like a month ago and saw San Francisco sort of empty. Are you seeing that with this 18% increase that now like San Francisco would be active and all of the apartment REITs that have reported this quarter, who have all shown the San Francisco to be the weak link that will -- you're saying that we will see that changed substantially in the next few quarters.

Michael J. Schall -- President and Chief Executive Officer

Alex, so you're referring to be this -- move it back to the inner Bay Area portfolio on 17.1.

Alexander Goldfarb -- Piper Sandler -- Analyst

Yeah.

Michael J. Schall -- President and Chief Executive Officer

Well, I would say that the trend has reversed and move it back to the Bay Area has begun. I would, yeah I caveat that, I think most of that is the these service businesses, restaurants and leisure hospitality is the leader in terms of jobs coming back that was the area that was most severely disconnected during the pandemic, but -- and then we have coming out us in the not too distant future the tech companies and the return to office program. So I think if that continues that trend and again, there are a lot of restaurants that converted to take-out-only mode. I think we'll go back to a more normal type of situation where those restaurant workers continue to come back as well. So yeah, I think it's it's met being not as fast as we want to again I go back to the initial premise, which is we've gotten all the rent there, all the rents back to where they were pre-COVID with half the employment. I think that's a pretty powerful statement.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. If I'm just trying,I guess, Mike, if you look at like Manhattan, I know you guys are not in New York City. But the city came back a lot quicker than many expected even though work from home, only whatever percent of buildings have people in them. But city rents and the occupancy rates have rebounded strongly, whereas San Francisco and Seattle Downtown respectively, we're still lagging. So I guess I'm curious if your view is that within a few quarters, we will see the downtown of San Francisco and downtown of Seattle rebound strongly like we've seen in New York-based on what you guys are showing in this attachment S-17.

Michael J. Schall -- President and Chief Executive Officer

Yeah, it's a good question, Alex. So, New York. If you look at trailing three month of job growth. In New York, it was 10.2%, San Francisco was 5.2% and San Jose was 5.2%. So you have a pretty dramatic underperformance with respect to overall job growth. So I attribute that to again the West Coast needing to open up yet. We were still well into June at like 50% of capacity in restaurants and that type of thing. Whereas, I'm assuming that New York. I don't know exactly what they did, but it is something to cause a fairly dramatic difference in terms of their resurgence and employment that hasn't happened yet on the West Coast, I think it's coming, but we're just a little bit slower than some of the other metros, including New York.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. And then the second question, Barb, on the guidance, you said that because of the mismatch in terms of accelerated debt and preferred equity, redemptions versus what you guys can put out. There is about a $0.10 drag. So is that $0.10 only in NAREIT FFO, but not in company FFO or is it in both?

Barb M. Pak -- Executive Vice President and Chief Financial Officer

This is Ed could the prepayment penalties are fees that we receive this year about $7.5 million. Those are only internal also non-core FFO. But what I'm referring to is just a timing issue. We've been redeemed gotten money back early. So we don't have any of the interest income from those investments. And we haven't put any money back to work and so that's the $0.10 that I'm referring to.

Michael J. Schall -- President and Chief Executive Officer

We're looking at since that prepayment penalty is just really compensated us for having our money outstanding for a certain period of time I'm advocating with Barb to change out so that it's not a non-core item because we -- it's really we have a minimum earned preferred return and unfortunately, it's showing up in the non-core category rather than core.

Alexander Goldfarb -- Piper Sandler -- Analyst

Yeah, that, Mike -- that was going to be my point. You guys are very productive on this and whether you get paid out over time or you get it redeemed early, but they pay up and pay a penalty for that that is core part of your business. So that was my question is why you would exclude the positives that come from this platform and I mean it sounds like you guys are having that internal debate. But I mean you're successful at it and no point and not really showcasing the earnings potential there.

Barb M. Pak -- Executive Vice President and Chief Financial Officer

Yeah, it's, where -- we have looked at it, we have a sense of follow GAAP accounting rules, and so it's more complicated than it appears on the surface. But yes, there is an internal debate internally. But what we booked year-to-date has all been noncore for the prepayment.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. Listen, thank you.

Michael J. Schall -- President and Chief Executive Officer

Thanks, Alex.

Operator

Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

John Kim -- BMO Capital Markets -- Analyst

Thank you. Regarding Northern California and the recovery. I think, Angela mentioned in the prepared remarks that July effective rents are still 8% below pre-COVID levels and I'm not sure if that was a market rent concept or for Essex, but I was wondering if you're going against easier comps given you were more aggressive on concessions beginning in the third quarter last year. And if the recovery could be faster than we think.

Michael J. Schall -- President and Chief Executive Officer

Yeah, I'll let Angela to comment on the number for San Jose, but I would say what's happened here is, and we had colors on previous calls that have said hey, with negative job growth, how are you able to maintain high levels of occupancy in the cities, and obviously a great question and the answer is that was of course that we drew people -- because the price point was lower, we drew people from other places into some of the better locations. So they improve their location given lower rents, and so now you look at this equation, we're 96% occupied people starting to come back and there is no availability and therefore market rents are doing what they're doing. So I think a lot of this is really driven by our strategy during the pandemic, and now it will be interesting to see what happens over the next couple of years because market-with- market rents now back to where they were pre-pandemic level, you have what is the movement within the portfolio yield, both in and out of those locations that have much higher rents. So in the case of San Jose. San Francisco and Oakland, there is still substantially below the prior rent. So there's still reason to believe that those -- the people that moved in given lower rents will stay, but that may uncouple over the next several years.

And so, was that 8% figure that Angela quoted was that for Essex or the market overall?

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

That was for Essex.

John Kim -- BMO Capital Markets -- Analyst

Okay. Mike, you mentioned cap rates in your markets are low to mid 3%, which sounds like it's compressed about 50 basis points at least from last quarter. Can you comment on the assumptions that you think the market is placing now that's changed whether it's rental growth or exit cap rate and whether or not you agree with those assumptions or I believe the rationale?

Michael J. Schall -- President and Chief Executive Officer

I'll start with the comment and the comparison in the last quarter. And then give back to Adam to talk about cap rates more generally, but I think last quarter what we said was in some of the hard hit areas that buyers will performing some rent recovery. So it probably wasn't a whole 50 basis point reduction. It was really that they were using really the current net effective rents. They were assuming a bit higher rent level. So that reconciles part of that. But Adam, you want to talk about cap rates in general?

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Yes, sure. So I think the general assumption that buyers are making is that there will be a full recovery. And by that I mean with rents greater than pre-pandemic levels and we're already seeing those rents that we've already talked about during the call. So, it's in the low threes, I think pretty robust rent growth over the next few years. And then probably knowing out is what I is the various people. I've talked to that with our modeling and then non-exit caps. I think this is as aggressive as ever. So I don't think there's much assumption that there is a big expansion on the exit side. So it -- underwriting has has definitely gotten more aggressive.

John Kim -- BMO Capital Markets -- Analyst

Is there a big difference between your markets or urban versus suburban?

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Yeah, good question. So going kind of north to south, Seattle, we've seen -- we've actually seen a pretty big pickup in transactional volume and that's probably among the most aggressive markets that we're seeing in the CBDs on kind of current net effective rents, we're seeing high-twos to low-threes and in the markets that really just too much of a hit on rents, we're seeing those like maybe in the 3.25 to 3.5 range and that is much more suburban outer markets. And then going down very little in Northern California is traded. So that the hard to really opine there, but it's in that probably low threes range and then down to San Diego, Orange County, those markets performed better from a rental aspects. So, those cap rates on current net effective aren't quite as low as what we've seen in those harder hit markets. So it's probably closer to that 3-4, 3-5 kind of range and very little in LA traded as well. So it's down in the kind of low threes, but there is very few data points. Thanks for the color.

Operator

Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your question.

Brad Heffern -- RBC Capital Markets -- Analyst

Hey, everyone. On the federal funds. I think you mentioned in the prepared comments that there was a negligible amount received to date and that there really isn't much in the guide either. I was curious if you had any figures around maybe what you have applications out for some sort of risk assessment of what you might receive on that?

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

Yeah, hi. Its Angela here. So out of, I think we reported that we have about $55 million of delinquencies out there and we've applied for about $18 million and to date, we've received $4 million of it. So about 20 some percent recovery rate. As far as we can tell, it's really more of a slow going because California just has a more complicated and slower reimbursement process. So in our view, the $18 million. We don't view that $18 million as having significant risk from that perspective. The reason we didn't bake it into our guidance for this year is really the timing is the question and just given that the rate of the reimbursement has just been much slower. So that's really the key driver of why it's now in this year's guidance.

Brad Heffern -- RBC Capital Markets -- Analyst

Okay, got it. And that $4 million. I assume that's largely been this month just given you said there wasn't in the sort of negligible in the first half, is that right?

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

Yeah. Yeah, for the most part of this month.

Brad Heffern -- RBC Capital Markets -- Analyst

Okay, got it. And then just one administrative sort of one if I could, in the press release, there was a 6.3% blended rate number for July. But then in the commentary, I heard a 4.7 number, I just wanted to verify what those two things, we're talking about?

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

Oh, sure. So the 4.7% is a sequential month to month, so what I was trying to do is provide a real time picture of what's happening in our markets. So comparing July to June of this month, it's already up sequentially 4.7% on a net effective basis. And so what's in our supplement, they blended lease rate is a year-over-year. So that compares July of this year to July of last year.

Brad Heffern -- RBC Capital Markets -- Analyst

Okay, perfect. Thank you.

Operator

Our next question comes from the line of Alex Kalmus Zelman and Associates. Please proceed with your question.

Alexander Kalmus -- Zelman and Associates -- Analyst

Hi, thank you for taking the question. Looking at your Southern California occupancy is quite high and we've heard a lot this quarter from others that the delinquencies are in their portfolios or sort of concentrated in this part of the country. So I'm just curious, what would happen if -- once the moratoriums are up. Does that affect the occupancy levels on a physical basis in your mind, or how do you see that playing out there.

Michael J. Schall -- President and Chief Executive Officer

Yeah, this is Mike. It's a good question. Yes, we agree with the others that Southern California and really specifically Los Angeles is a big part of the delinquency, the largest part of the delinquency and therefore there is some question about what might happen, but it's not a huge percentage, and we expect to work with our residents to the extent we can and so I don't think it will have a huge impact on occupancy overall, so, but it remains to be seen, because we can't envision exactly what that scenario is going to look like. And so we -- but it's just not enough, I think to really severely impact us.

Alexander Kalmus -- Zelman and Associates -- Analyst

Got it. Thank you very much. And just thinking about the regulations on your rent increases that are in place when you're sort of internally discussing the difference between holding occupancy or pushing rate. Is there any momentum to say you'd rather keep the base rates pretty high to then expand a little more there and maybe lose a little occupancy as a sacrifice or is still hold occupancy as a primary driver?

Michael J. Schall -- President and Chief Executive Officer

It's different by in each region and so there is a 1,000 different pieces of that equation because there's been so much movement in rent. And so we're going to -- so the answer is going to very varied by region, and so it's difficult to generalize throughout the portfolio. But we think that we will be able to work with residents. We've tried to do that in the past that will continue going on in the future and certainly with respect to any of the delinquency that's not covered by some of these programs to make good on the COVID-related delinquencies. We will try to work with our residents that we -- as we have in the past.

Again, it's a little bit difficult to try to figure out exactly what that means from different areas because sets of regulations and a variety of different places from emergency orders to stay rent control and the like. And so it's sort of a case-by-case basis. It's difficult to generalize.

Alexander Kalmus -- Zelman and Associates -- Analyst

Okay, no problem. Thanks for the color there.

Michael J. Schall -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of John Pawlowski with Green Street Advisors. Please proceed with your question.

John Pawlowski -- Green Street Advisors -- Analyst

Thanks for keeping the call going. Adam, I appreciate on the cap rate commentary. I'm trying to square there is really low cap rates to the commentary about ramping or being more positive on external growth because from the cap rates quoted feels like you guys are trading at NAV discount. So can you maybe just help square the external growth appetite and the prevailing private market pricing.

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Sure. Yeah, I mean you hit the nail on the head. It's the reason why we haven't been super active on the external growth side, but these are -- the most of the transactions that have gone down and have not been accretive and your point from an NAV standpoint not accretive as well. We're seeing a few more opportunities out there that will fit and our stock is reasonably up although still I'd say when you're looking at the low threes that's still that puts us in the trading below NAV range. So we are underwriting everything being more aggressive, where we feel like we can make some -- make a difference on growth accretion as well as FFO. But I guess you, you know that. that's why we haven't done much so far.

Michael J. Schall -- President and Chief Executive Officer

John, I would add to that. This is Mike. Obviously, I would add that we're closer now than we were 30 year or 45 days ago somewhere. We're getting close. I mean debt rates have come down quite substantially as you know, and so there at least is a hope that we will be more active, look at it a lot of deals, Adams talked about a lot of deals. And so we're pricing things out and trying to make, make the numbers work and again we're going to remain disciplined to NAV of the company versus what we're seeing out there in the transaction area. We picked up the fundamental behind the success of the company over long periods of time.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. Now understood things are moving quickly. Maybe just at a more Mike, pace up prevailing private market pricing today, if you had to double down on the market., you had to exit the market, what are the kind of the top and bottom fix.

Michael J. Schall -- President and Chief Executive Officer

Yeah, I'll let Adam deal with that one.

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Good question. Yeah. Thanks, John. So double down. I'm a big fan of Seattle in general. I mean I would say East side especially given the jobs picture there. Even though supply is slightly elevated, I think the jobs picture there is significant and it's a lot of tailwinds. To exit a market, you have all of our markets, but maybe Hamid. So we're definitely interested in actually getting better. That's one property. Now I joke. Yes. Ventura has had a pretty good run here as of late and it continues to do fine but again if we had to pick a market. But like I said, we. We are focused on our entire footprint and so we'll will go in, where we see opportunities.

John Pawlowski -- Green Street Advisors -- Analyst

All right. Thanks so much.

Michael J. Schall -- President and Chief Executive Officer

Thanks, John.

Operator

There are no other questions in the queue. I'd like to hand the call back to management for closing remarks.

Michael J. Schall -- President and Chief Executive Officer

Okay, very good. Thank you, Doug. Appreciate that. And I want to thank everyone for joining us on the call today. I appreciate your time and we know we covered a lot of ground. If there are any follow-up questions, don't hesitate to reach out to us and we thought it was a great dialog and we look forward to seeing many of you hopefully at a conference in in-person in the near future. Thanks for joining the call. [Operator Closing Remarks]

Duration: 77 minutes

Call participants:

Michael J. Schall -- President and Chief Executive Officer

Angela L. Kleiman -- Senior Executive Vice President and Chief Operating Officer

Barb M. Pak -- Executive Vice President and Chief Financial Officer

Adam W. Berry -- Executive Vice President and Chief Investment Officer

Nick Joseph -- Citi -- Analyst

Rich Hill -- Morgan Stanley -- Analyst

Joshua Dennerlein -- Bank of America -- Analyst

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Amanda Sweitzer -- Robert W Baird -- Analyst

Richard Anderson -- SMBC -- Analyst

Neil Malkin -- Capital One Securities -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Brad Heffern -- RBC Capital Markets -- Analyst

Alexander Kalmus -- Zelman and Associates -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

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