Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Essex Property Trust, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 2.5% to 1.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 44, DPO 160, DIO 60). At a 7.2% WACC with mid-year discounting, the terminal value (77% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $259.16 per share, suggesting ESS is fairly valued by 6.1% at the current price of $244.16.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,053 | 1,089 | 1,149 | 1,156 | 1,175 | 1,205 |
| (−) Net Interest | 263 | 272 | 287 | 289 | 294 | 301 |
| (+) D&A | 112 | 122 | 124 | 133 | 143 | 146 |
| EBITDA | 1,428 | 1,483 | 1,560 | 1,579 | 1,612 | 1,652 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 169 | 175 | 184 | 185 | 188 | — |
| (−) ΔWC | 163 | 3 | 5 | 1 | 1 | — |
| Free Cash Flow (FCF) | 1,096 | 1,305 | 1,371 | 1,392 | 1,422 | — |
| Peers' EBITDA Multiple | 15.4x | |||||
| Terminal Value | 25,523 | |||||
| WACC / Discount Rate | 7.23% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,059 | 1,176 | 1,152 | 1,091 | 1,038 | 18,004 |
| Enterprise Value | 23,519 | |||||
| Projection Period | 5,515 | 23.5% | ||||
| Terminal Value | 18,004 | 76.5% | ||||
| (−) Current Net Debt | 6,818 | |||||
| Equity Value | 16,701 | |||||
| (÷) Outstanding Shares | 64M | |||||
| Fair Price | $259 | +6.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.5x | 13.5x | 15.5x | 17.5x | 19.5x |
|---|---|---|---|---|---|
| 5.2% | $211 | $251 | $291 | $331 | $370 |
| 6.2% | $199 | $237 | $275 | $312 | $350 |
| 7.2% | $187 | $223 | $259 | $295 | $331 |
| 8.2% | $176 | $210 | $245 | $279 | $314 |
| 9.2% | $165 | $198 | $231 | $264 | $297 |
Current price: $244.16. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.