Camden Property Trust Q4 2024 Earnings Call Transcript

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

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : So I was just hoping you could provide some more color on your blend assumptions. Can you talk about what you're thinking in a new and renewal lease growth throughout the year and how do you think it trends first quarter to first quarter?

Question: Brad Heffern - RBC Capital Markets - Analyst : Are you seeing signs right now of the impact of supply fading on the ground and if so, what are those signs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 4:00PM, CPT.N - Q4 2024 Camden Property Trust Earnings Call

Question: Sanket Agrawal - Evercore ISI - Analyst : This is Sanket on for Steve. I had a question around transaction guidance. So after a muted couple of years from transaction markets standpoint, it seems like things are opening up and you're guiding to $750 million of acquisitions and dispositions. Can you help us provide more color on this in terms of timing, cap rate, what are the type of buyers and seller pools you're seeing in the market today?

Question: Jeffrey Spector - Bank of America Global Research - Analyst : Ric, I'll ask a follow up to that point. I mean post world financial crisis, there was a lot of distress. And as of today, I'd say we're hearing mixed things or not really hearing distress or what do you -- I guess what are you seeing and hearing that gives you confidence that there will be similar distress that Camden can take advantage of?

Question: Haendel St. Juste - Mizuho Securities USA - Analyst : So I'm hoping you could walk us through the quarter a bit, and give us some color on how the portfolio performed in terms of the new lease rate expectations. They seem to be a bit more resilient in the fourth quarter versus your peers. And with the stability of new lease rates and improvement in January occupancy, I think above 95%, it seem like you could push rate a bit sooner this year than we might have previously expected. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 4:00PM, CPT.N - Q4 2024 Camden Property Trust Earnings Call So maybe give some color on how you think what new lease rates are embedded in the first quarter guide you provided, but broadly, the sense of how much perhaps the improvement or stability you're seeing here can result in perhaps you perhaps being a bit more aggressive on that front.

Question: Eric Wolfe - Citi - Analyst : It seems like based on your interest expense guidance, you're front loading the acquisitions. Can you just talk about the rationale around the strategy? And also you mentioned I think 0 bps to 100 bps of potential GAAP dilution from this activity and that this transaction activity could last through 2027. So should we be building in our models like say 50 bps of GAAP dilution on $750 million of transactions for the next couple of years, or is that sort of not what you meant by the sort of this continuing through 2027?

Question: Austin Wurschmidt - KeyBanc Capital Markets - Analyst : So keeping the conversation going on your portfolio management objectives and Alex, you hit on this with your comments about selling down in D.C. and Houston, which you guys have talked about. I guess what's kind of the right exposure for those top markets? Are there any new markets that you could enter with this strategic plan? And then I guess just given the constructive outlook for fundamentals in the next few years, what would it take for you to lean into your balance sheet capacity instead of kind of the tax efficient fair trade strategy?

Question: John Kim - BMO Capital Markets - Analyst : I want to ask about revenue enhancing and repositioning CapEx, which you're looking to increase this year versus last year. Can you remind or update us on the typical return or rental uplift you get? And what was the contribution to either blended rents or same-store revenue for the $86 billion last year you had?

Question: Richard Hightower - Barclays - Analyst : I just want to get a sense of I mean I think it's been a pretty consistent theme this earning season that there is a pretty progressive step up in blended rents and ultimately rent growth in Sun Belt markets over the course of the year, but I'm trying to get a sense of the risk that all of us are wrong about the pace of supply dropping off over time and and how much of that cushion is baked into the current same-store guidance?

Question: Ami Probandt - UBS Equities - Analyst : So we discussed Tampa, LA, San Diego, Washington D.C., and Houston is the top markets. Do you think that Camden's performance in these markets is representative of the overall market, or are there some Camden-specific attributes that are leading to stronger performance? And then specifically on Tampa, you mentioned a boost in demand in the fourth quarter. So I'm wondering if that's hurricane related and sustainable.

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Regarding the $175 million to $675 million development start guidance, can you talk about where expected yields on any of these new starts are penciling today given construction costs and expected rents? If you need to wait for anything to start those projects? And also where is the expected yield there versus the expected yield on the three North Carolina assets you currently have under construction?

Question: Adam Kramer - Morgan Stanley - Analyst : Wanted to ask about Washington D.C. a little bit and maybe a few questions in here. I think just first, just maybe the latest on demand. There are obviously a lot of headlines around what's happening with kind of federal workers and and maybe a smaller federal government. Maybe just what's happening from the demand side in the last couple weeks there and maybe what your outlook is as maybe the composition of the government changes. And then just the second part there again, still in D.C., what are you guys seeing in terms of cap rates or even on a per square foot basis in terms of the transaction market in D.C.?

Question: Julien Blouin - Goldman Sachs Research - Analyst : I just wanted to ask on the spread between the low end and the high end of development starts in 2025. Sort of what drives you to sort of trend closer to the low end versus the high end this year?

Question: Connor Mitchell - Piper Sandler Companies - Analyst : Maybe just going back to the broader transaction markets. I appreciate all the color so far. And it just seems like there's still a ton of money bidding on apartments inside financing costs and the expectations for rent growth to eventually overcome that obstacle. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 4:00PM, CPT.N - Q4 2024 Camden Property Trust Earnings Call But you guys have talked about the -- maybe the increased pick up in the back half of the year. So I guess my question is just how much longer do you think the negative leverage will last, especially thinking about how much more there is to come in transactions in the back half? And I guess just a quick follow up on that. Do you think that the market might be too aggressive on the rate of growth being underwritten for '26, '27, or is it really that high of an expectation that justifies the negative leverage?

Question: Michael Lewis - Truist Securities - Analyst : I wanted to come back to this decision to have no more than 10% of your portfolio in any market. So there's been this trend toward diversification of apartment rates lately. As you know, a lot of that is Coastal investors diversifying into more of your markets. Aren't there any markets that you just think are better, right? They're just flat out better apartment markets for the next 10 or 15 years or whatever it might be, or is that not really the case? There's nothing structural or secular there? I'm just thinking about does this decision say more about Houston and D.C. or does it say more about a wide opportunity set across your markets and it being a little bit difficult to distinguish? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 4:00PM, CPT.N - Q4 2024 Camden Property Trust Earnings Call

Question: Daniel Tricarico - Scotiabank - Analyst : It's Daniel Tricarico for Nick. Alex, I wanted to clarify your answer to Jamie's question at the beginning. You said new lease rates are turning positive in Q3 and continuing from there. Does that mean it's going to continue to improve on an absolute basis? Like are you assuming like a normal seasonal pattern into the fourth quarter, or is there a comp benefit with that being absorbed that would cause Q4 to look seasonally?

Question: David Segall - Green Street Advisors LLC - Analyst : I just wanted to drill down a bit more onto the proposed the development part -- the development starts. Can you ballpark the range or rents per unit you would need to achieve in Nashville and Denver to achieve the 6% yield? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 4:00PM, CPT.N - Q4 2024 Camden Property Trust Earnings Call

Question: Alexander Kim - Zelman & Associates - A Walker & Dunlop Company - Analyst : I always appreciate the song choices leading up this call as well. I was wondering if you could talk about your leasing trends so far for the three communities in lease-up, and how that flows just into the lease-up revenue line for the quarter and then more broadly for your 2025 view.