Camden Property Trust Q3 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Eric Wolfe - Citi - Analyst : If you think about the four pre-development projects that you paused, and how much would rents have needed to be up from current levels before those projects made sense? And then more generally, how much do you think rents need to rise relative to construction costs for development to be more economic?

Question: Alexander Goldfarb - Piper Sandler Companies - Analyst : Rick, maybe just keeping with that merchant developer theme, you guys for the past number of years and the industry overall has been waiting to capitalize on developers that have to sell, the financial clock is ticking, they need to pay back, et cetera. And yet all these developers seem to get lifelines, the banks don't pressure them, the rents come back or something happens. So do you have confidence -- or like what gives you confidence that in the next few years, you'll see more opportunity from these forced sales or your comments more just in general that, hey, it's one area that we think that's going to provide opportunity rather than we think there's a huge opportunity from these merchant guys?

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc. - Analyst : I haven't really come up for a while about Houston. So just revisiting the comment about reducing exposure to this market. I think it's around 13% of NOI today. I guess how much of a decrease makes sense to you today when you revisit strategically taking a look at the portfolio? And could dispositions from this market be a source of funds to redeploy into some of the investment opportunities you just spoke about to the earlier questions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CPT.N - Q3 2024 Camden Property Trust Earnings Call

Question: Brad Heffern - RBC Capital Markets - Analyst : You maintained leasing spreads higher through September than your Sunbelt peers, but then it seems like there was a significant falloff for the October, both effective leases and the signed leases. Was there a strategy change there moving towards occupancy? Was that more of an impact from supply? Or what would you attribute that to?

Question: Steve Sakwa - Evercore ISI - Analyst : I guess I wanted to go back on the development. A couple of things. I noticed that the projects that are currently in lease-up didn't seem to have a huge movement in percent lease from the mid-July to mid-October. So I was just wondering if you could comment on that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CPT.N - Q3 2024 Camden Property Trust Earnings Call And then for the projects that it looks like you're going to start in the near future, the cost went up quite a bit. I realize the Nashville project got more units, but I think the cost went up considerably versus the number of units. So can you maybe just talk about the cost creep and whether those yields really still hit your return thresholds?

Question: Rich Anderson - Wedbush Securities Inc. - Analyst : So a question on cap rates. And Rick, you mentioned the opportunity set with debt coming due and merchant developers being stretched in a few years. If there's a lack of transaction activity, but when we do see something it's a 5% or lower perhaps, is that just a function of the moment something does hit, there's a wave of capital. And I use the example of senior housing, which the opportunity set in front of it right now is very positive, yet cap rates are 7.5%, 8%. The opportunity set in front of multifamily and at least in your markets may get positive soon, but for the time being, is a little bit of a question and yet cap rates are still in the 5s. Is it just there's just so many people that want so few deals, if that's question number one. And then corollary to that is, do cap rates need to adjust for you to be active on that opportunity that I described earlier? Or are you willing to take a little bit of a hit upfront to get a deal that will make sense for you two or three years later?

Question: Jamie Feldman - Wells Fargo Securities, LLC - Analyst : So maybe one for Alex. As you think about -- I think you and several of your peers, the course of this year has been reducing your top line outlook, but getting nice cost savings to keep your NOI outlook. So I guess two questions. Number one, Can you talk about where you probably were most conservative to start the year and where you got the benefit throughout the year? And then secondly, as we think about 2025, I mean, do you think there's still enough juice in expense savings to have a similar outcome given there is a lot so much uncertainty around top line revenue where you could start the year on a conservative basis and get some upside?

Question: John Kim - BMO Capital Markets - Analyst : I'm afraid to talk.

Question: John Kim - BMO Capital Markets - Analyst : Very scary. I wanted to follow up on Austin's question on Houston. If you look on your presentation, page 6, the migration trend for Houston seems like it's going to accelerate quite a bit over the next couple of years. I'm wondering what's driving that? And also, I mean, we do have a chance that we'll have another Trump presidency, who's been very supportive of the oil and gas industry. Can you remind us if that's a positive for the Houston economy? And if either of those items come into fruition, acceleration in migration or if Trump wins the presidency, will that impact your decision to reduce your exposure to the market?

Question: Haendel St. Juste - Mizuho Securities Co. Ltd - Analyst : So I wanted to ask, I know you're not giving guide at this point, but I was hoping you could perhaps give some color on some of the building blocks like the estimated earn-in for next year like some of your peers have provided. And maybe some thoughts on where you think you can get bad debt to overall by the end of next year and maybe some thoughts on Atlanta and LA specifically.

Question: Julien Blouin - Goldman Sachs Research - Analyst : Just wanted to ask, what do you expect for trajectory of new lease rates into November and December relative to the negative 4.8%

Question: Michael Lewis - Truist Securities - Analyst : Rick, you mentioned keeping some land parcels that you have written down in past downturns and those eventually recovered in value or the development viability came back. The parcels that you're writing down now, do you intend to sell those? And then also related to land, I think Alex mentioned that you have some additional parcels under contract. So maybe where are you looking to buy land at?

Question: Adam Kramer - Morgan Stanley - Analyst : Just wondering, obviously, with the development shift. I was wondering where you would rank acquisitions versus development versus maybe other uses of capital, if you were to rank the different capital allocation possibilities here? I noticed you guys haven't bought anything in some time. So maybe if you could also just categorize the state of the acquisitions market and maybe early expectations for deal flow in the coming quarter or two?

Question: Wess Golladay - Robert W. Baird & Co lnc - Analyst : I just want to go back to that comment about the construction costs increasing. Was that a market-specific labor thing? Or is that pretty broad-based? And then can you comment on how land pricing is versus the peak?

Question: Wess Golladay - Robert W. Baird & Co lnc - Analyst : Looking at the Camden Baker and the Camden Gulch, the cost -- not for the active construction but the shadow pipeline, the Baker and the Gulch went up. I didn't know if that was the market-specific labor that went up or just construction costs overall? And then the follow-up question was, how is land pricing versus the peak?

Question: Linda Tsai - Jefferies - Analyst : Given your comments about the quality of your construction, building a better product, and luck helping you avoid the worst of some of the recent hurricane impacts. The average age of your portfolio is also lower. Is there any way to quantify the resiliency of your portfolio versus the surrounding multi-family buildings in the regions in which your portfolio to operates? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CPT.N - Q3 2024 Camden Property Trust Earnings Call

Question: David Segall - Green Street Advisors, LLC. - Analyst : I was curious what difference in performance do you see between your urban and suburban assets in submarkets? Is it just driven by rent growth? Is there an element of CapEx differences? And I was also curious if you're thinking on the urban, suburban divide is consistent across markets? Or are there any exceptions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CPT.N - Q3 2024 Camden Property Trust Earnings Call

Question: Alex Kim - Zelman & Associates - A Walker & Dunlop Company - Analyst : I wanted to ask about turnover quickly, which was down 4% year-over-year in the third quarter. Could you talk about some of the drivers there and your expectations moving forward?