DCF Studio

    ESS · NYQ · Real Estate

    Essex Property Trust, Inc.

    Also onConsensus Drift

    Implied value per share

    USD 42.79

    Market price

    USD 265.56

    Implied upside

    -83.9%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedReported capital expenditure averages 8.42% of revenue against depreciation and amortisation of 32.83%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 32.83% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Current EV/EBITDA of 20.7x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 42.79-83.9%
    Exit multiple
    USD 212.60-19.9%
    Market price
    USD 265.56

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m308m617mFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 2.0bnUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.4bnUSD 2.5bnUSD 2.6bn+3.1%
    EBITUSD 610.1mUSD 632.2mUSD 654.2mUSD 676.0mUSD 697.7mUSD 719.0mUSD 740.0mUSD 760.6mUSD 780.6mUSD 800.1m+3.1%
    NOPATUSD 610.1mUSD 632.2mUSD 654.2mUSD 676.0mUSD 697.7mUSD 719.0mUSD 740.0mUSD 760.6mUSD 780.6mUSD 800.1m+3.1%
    Add depreciation & amortisationUSD 640.5mUSD 663.6mUSD 686.7mUSD 709.6mUSD 732.3mUSD 754.7mUSD 776.8mUSD 798.4mUSD 819.4mUSD 839.9m+3.1%
    Less capital expenditureUSD -640.5mUSD -686.3mUSD -733.7mUSD -782.4mUSD -832.5mUSD -883.7mUSD -936.1mUSD -989.4mUSD -1.0bnUSD -1.1bn+6.2%
    Capex, % of revenue32.8%33.9%35.1%36.2%37.3%38.4%39.6%40.7%41.8%42.9%-
    Less increase in working capitalUSD 6.7mUSD 7.5mUSD 7.5mUSD 7.4mUSD 7.3mUSD 7.2mUSD 7.1mUSD 7.0mUSD 6.8mUSD 6.6m+0.2%
    Free cashflow to firmUSD 616.9mUSD 617.0mUSD 614.7mUSD 610.7mUSD 604.8mUSD 597.2mUSD 587.8mUSD 576.5mUSD 563.3mUSD 548.4m-1.3%
    Discount factor0.96340.89420.82990.77030.71500.66360.61590.57160.53060.4924-
    Present valueUSD 594.3mUSD 551.7mUSD 510.2mUSD 470.4mUSD 432.4mUSD 396.3mUSD 362.0mUSD 329.5mUSD 298.9mUSD 270.0m-
    Present Value Of The ForecastUSD 4.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.803Reported 0.706, pulled toward 1.0 (Blume)
    Cost of equity8.29%Risk-free + beta x equity risk premium
    Cost of debt6.27%Risk-free + 138bp, the spread for a BB+ rating at 2.3x interest cover. Book interest / average debt was lower, at 3.8%.
    Market capitalisationUSD 18.3bn72.8% of capital
    Total debtUSD 6.9bn27.2% of capital, book value as a proxy
    Tax rate0.0%Effective, capped at statutory
    WACC7.74%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 42.79

    55% of EV

    Forecast FCFF, final year
    USD 548.4m
    Capex at depreciation, working capital in reinvestment
    USD 800.1m
    Less reinvestment at g/ROIC (32.3% of NOPAT)
    USD -258.4m
    Capitalised
    USD 541.8m
    ROIC (WACC floor)
    7.7%
    Terminal value, undiscounted
    USD 10.6bn
    Terminal value, discounted
    USD 5.2bn
    Enterprise value
    USD 9.4bn
    Less net debt
    USD 6.7bn
    Equity value
    USD 2.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 212.60

    79% of EV

    Terminal value, undiscounted
    USD 32.8bn
    Terminal value, discounted
    USD 16.2bn
    Enterprise value
    USD 20.4bn
    Less net debt
    USD 6.7bn
    Equity value
    USD 13.7bn

    Spread between methods: 133%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.74%99.0496.2393.4290.6287.81
    6.74%68.8666.6064.3462.0859.82
    7.74%46.5144.6542.7940.9339.07
    8.74%29.3027.7426.1824.6223.06
    9.74%15.6414.3212.9911.6710.34

    Outlined: this model. Green text: above today's price of 265.56. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year5.5%3.1%14.4%
    EBIT margin31.9%31.3%79.1%
    Discount rate-7.7%3.8%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.