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 now begin.Michael J. Schall Thank you, operator, and welcome, everyone, to our second quarter 2012 earnings call. Erik Alexander and Mike Dance will follow me with brief comments on operations and finance, respectively; John Eudy and John Lopez are here for Q&A. I'll cover the following 3 topics on the call: number one, Q2 results and market commentary; second, the investment market; and third, an update on California, California itself and the policies and political situation. First topic, Q2 results and market commentary. Last evening, we reported core FFO of $1.66 per share for the second quarter of 2012, which was at the high end of the company's guidance range discussed on last quarter's call. We continue to see strong growth in Northern California and Seattle and an uneven recovery with pockets of strength in Southern California. Apartment conditions remain strong, demonstrated by same-store revenue and NOI growth of 6.3% and 9.2%, respectively. These results lead us to reiterate our expectation for a strong second half of 2012 and continuing into 2013, driven by limited supplies of housing and job growth that exceeds the national averages in Northern California and Seattle and is modestly below the national average in Southern California. We don't see a significant departure from this basic theme until at least 2014. Erik will discuss portfolio trends in greater detail. Our research team tracks many of the major employers in our coastal markets for insights into hiring expectations and other trends that can affect apartments. While job growth has remained quite strong, there are several companies, including Hewlett-Packard, Yahoo! and Cisco, that have reported job reductions, along with restructuring programs. Still, other tech companies have missed analyst expectations and have reported slower earnings growth.
We view these announcements as typical and necessary for technology companies. Tech companies of all sizes are forced to innovate or fail, as timely product R&D, product updates and similar advancements are necessary to survive. When innovation fails, companies are quickly forced into a restructuring mode, and layoffs are a common result. Our expectation is that a relatively small number of tech companies will be in a restructuring mode nearly all the time.Despite the concerns noted above, current trends support continued job growth in technology. In Silicon Valley, for example, year-over-year job growth accelerated from 2.9% in 2011 to 3.8% in June 2012, with no slowdown in Q2. And the labor force grew by over 2.5%. Commercial activity continues to be positive and steady, and many large-scale commercial real estate projects have been started. We provide our annual job growth estimates that are part of our market forecast on Page S-16 of the supplement. This quarter, we increased our estimated job growth for 2012 in Northern California from 1.9% to 2.4%, and in Seattle from 2.0% to 2.4%. Our primary economic concerns relate to the ongoing uncertainty within the broader business environment, including the effects of public sector indebtedness, the potential impacts of the fiscal cliff and global financial issues. These issues threaten to derail the fragile U.S. recovery. We believe that these issues are best addressed by a strong balance sheet and a conservative capital structure. In development, we announced new apartment projects containing 971 apartment homes with an estimated total cost of $422 million. This brings our development pipeline outlined on Page S-9 of the supplement to almost $1 billion. I'm very pleased with the performance of our development team led by John Eudy, as the locations, designs and expected financial benefits from our apartment development activities are exceptional.
As suggested on previous calls, most of our development transactions will be in a co-investment format, in which we own from 50% to 55%. We believe that the co-investment format improves our risk reward scenario and also reduces our forward funding commitments. We've commenced construction on most of our development pipeline, reducing risks of entitlement and construction costs, increases in delays and compressing the time between our funding obligation and the delivery of the community.We also moved up the opening of our Expo project to this October, approximately 6 months ahead of our original schedule, and reduced the estimated cost of construction by approximately $3 million. We now estimate that the stabilized cap rate on Expo will be in excess of 7%. Second topic, the investment markets. Cap rates continue to be aggressive in the coastal markets, and we have not -- and have not changed materially since last quarter. Cap rates range from 4% to 4.5% for A quality property in A locations and from 4.5% to near 5% for B property in A locations. As with 2011, transaction activity abated at year-end and increases throughout the spring and summer months. Through July, we closed $248 million in acquisitions, including the partner buyout at Skyline as outlined on Page S-15 of the supplement. Read the rest of this transcript for free on seekingalpha.com