Kim Callahan welcomes listeners to the Camden Property Trust First Quarter 2024 Earnings Conference Call. She introduces the speakers and mentions that the event is being recorded. She also reminds listeners that the call will include forward-looking statements and encourages them to review the company's filings with the SEC. She also mentions that the complete earnings release is available on the company's website and asks participants to limit their questions to one. Finally, she hands over the call to Ric Campo.

Ric Campo, CEO of Camden, shares that the company has been included on Fortune's list of the 100 best companies to work for for 17 consecutive years. This is due to the high satisfaction of employees, as shown by a 95% agreement on the final survey question. Campo thanks the Camden team for their dedication to improving the lives of employees, customers, and shareholders. He then discusses the issue of high apartment supply in their markets, but notes that the market is adjusting and apartment starts are decreasing.

The article predicts a decline in apartment construction in 2025, but strong demand due to population and employment growth, affordability, and positive demographic trends. The top 10 cities have seen an increase in population while the bottom 10 have experienced a decline. Employment growth has been strong, except in Los Angeles. Apartment affordability has improved and fewer residents are moving out to buy homes. Demographic trends suggest continued demand for apartments. Overall, the article suggests that rent growth may accelerate in 2025 and 2026 if the economy remains stable.

Keith Oden discusses Camden's better-than-expected first quarter performance, with lower bad debt and positive trends for insurance and property taxes. The top five markets for revenue growth were as projected, with San Diego, Inland Empire, Southeast Florida, Washington DC Metro, L.A. Orange County, and Houston showing the strongest performance. Nashville and Austin had slightly negative revenue growth. Camden initiated a marketing strategy in February to boost occupancy and increase pricing power, resulting in improved rental rates and occupancy for April. Turnover rates remain low due to fewer residents moving out to buy homes. Alex Jessett, Camden's President and CFO, will now speak.

In the first quarter of 2024, the company stabilized a community in Charlotte and began leasing at two new developments in Texas and North Carolina. They also sold a community in Atlanta and issued $400 million in senior unsecured notes. They repaid a term loan and repurchased $50 million of their common shares. Their debt is mostly fixed rate and their balance sheet is strong. They reported core FFO of $1.70 per share, beating their previous quarterly guidance.

The company's first quarter performance was better than expected due to lower bad debt and operating expenses. The lifting of restrictions on rental contracts and a shift in pricing strategy also contributed to the outperformance. However, the company is maintaining its full year guidance at 1.5%, but with some changes in assumptions such as 1.2% rent growth and flat occupancy.

The company has revised its revenue guidance to reflect growth in market rental rates and occupancy gains due to a successful marketing initiative. The estimates for bad debt have also been revised, leading to an increase in revenue growth. The company has also lowered its expense guidance due to lower insurance and property taxes. This has resulted in an increase in the midpoint of the same-store NOI guidance. However, the core FFO remains the same due to higher-than-budgeted floating rate interest expense.

The company is providing guidance for the second half of the year, including acquisitions and dispositions with no net accretion or dilution, development plans, and earnings guidance for the second quarter. The company expects a slight decline in core FFO per share due to lower cash balances, increased overhead costs, and seasonal expenses. The call is then opened up for questions, with Keith Oden discussing the company's ability to pivot with technology to combat identity theft. The next question asks about the operating strategy for the portfolio during peak leasing.

Keith Oden and Ric Campo discuss the company's occupancy rate and plans for pushing rent in certain markets. Oden states that they have regained the desired occupancy and will now focus on increasing rent. He also mentions the success in D.C. Metro and Houston. St. Juste asks about new lease rates, and Campo responds by saying they have adjusted their assumptions and expects an increase in new lease rates for the year.

The speaker is discussing the company's expectations for lease growth in the second quarter and beyond. They are predicting a negative 2% for the second quarter and a negative 1% for the following two quarters. They also mention that their original guidance included a 25 basis points increase in market rental growth, but they have adjusted this due to higher occupancy and better bad debt. The speaker assures that this revised rate is realistic and based on their analysis of market conditions. They also mention that the decrease in rental rates is across the board, but is offset by lower bad debt. The next question is about the revised lease rate growth assumption and the implied lease rate growth needed for the rest of the year.

The company is expecting a 1.5% increase in blended new lease and renewal rates for the year. This is due to a combination of factors, including an earn-in component, market rent growth, and lower bad debt. The CEO also mentions the potential for increased development activity in the future, depending on market conditions.

The speaker discusses the best trade in the first quarter being selling assets and buying stock, and how they are currently buying stock at a higher cap rate. They also mention that they will become more aggressive in the middle of the summer when they see the supply being taken up. The speaker then addresses a question about the difference in perspective between their company and others, stating that everyone talks to their own book and that they are only focused on their own markets and data.

The speaker discusses data from Ron Witten, a data provider, which shows strong demand and accelerating rent growth in 2025 due to multifamily demand. They acknowledge that there may be bias in their own market observations, but they have been operating in their markets for over 30 years and understand the dynamics. They highlight the job growth in Sun Belt markets compared to the West and East coasts, and question the large gap in implied cap rates between Mid American Camden and equity in Avalon Bay. They believe that once the market supply balances out, the same factors that drove outperformance in revenue growth in the past will continue to do so.

Ric Campo discusses the possibility of starting new developments and mentions Charlotte as a potential market due to its strong absorption rate. He also notes that Nashville and Austin have significant supply issues and the company will carefully consider the numbers before making any decisions.

Ric Campo discusses current cap rates and trades in the real estate market, highlighting that some are buying at a lower cost with the expectation of rent spikes in the future. He also mentions the need to see more leasing activity before committing to development. Alexander Goldfarb asks about the strength of the Sunbelt job market and how it relates to the overall economy. Campo agrees that the Sunbelt seems to be performing well despite concerns about a potential recession.

Ric Campo, CEO of Camden Property Trust, discusses the disconnect between broader economic concerns and the demand and absorption in their markets. He mentions the risk of recession and the recent job numbers, but believes that as long as the economy remains strong, demand for multifamily housing will continue. He also expects a 10 basis point contribution from occupancy for the rest of the year, which would result in a 95.5% occupancy rate.

Alex Jessett and Eric Wolfe are discussing the projected occupancy rates for the second, third, and fourth quarters. Jessett confirms that their calculations are correct and that they are expecting occupancy to be around 95.4%. Wolfe asks about indicators of future occupancy, and Ric Campo explains that they use a tool called YieldStar to project future occupancy based on current trends and upcoming lease renewals. He is encouraged by the tool's projections and plans to make strategy changes accordingly.

The speaker explains that they used a model and their experience to make strategic decisions. They then answer a question about capital allocation and mention their preference for owning 100% of their assets. They also discuss their strategy for buying back shares and potentially making new developments or acquisitions in the current market.

The speaker discusses the improvement in bad debt and how it is sustainable. They mention the impact of legislation in Atlanta and believe that the current level of bad debt can be maintained for the rest of the year. They also mention the possibility of getting below the long-term average of 50 basis points, but it is uncertain at this time.

The speaker is discussing whether consumer behavior has changed for the worse and the potential impact of technology on offsetting this change. They are optimistic about being able to reach a 50% offset, but not expecting it to improve beyond that. The next question from an analyst asks for clarification on the negative 1% new lease rate growth mentioned earlier, and the speaker explains that this assumes renewals will be close to 4% in the third and fourth quarters. They do not currently have a scenario where new leases are flat. Another question asks about the cadence of supply and deliveries in the upcoming quarters and into next year.

The speaker discusses the impressive improvement in new lease and occupancy rates despite the unprecedented supply in the market. They mention that there will be an acceleration in deliveries in the coming months and quarters, but they do not see 2025 being worse than 2024 in terms of total number of deliveries. The speaker also believes that with strong demand and continued migration to the Sunbelt, 2025 looks like a promising year for absorption of apartments.

During a conference call, the company's operators took questions from analysts. One analyst asked about changes in market expectations compared to the previous quarter, and the company's CEO and COO responded. They stated that there were no major changes in market expectations, but they may have been harsher on Austin and Nashville due to lower lease rates. They also mentioned their plans to expand in Nashville and decrease exposure in Houston and D.C. over the next few years. The call then concluded.

During a conference, Alex Jessett from Camden Property Trust answered a question from Austin Wurschmidt of KeyBanc about the company's new lease rate growth assumption. Jessett explained that the third quarter is a high demand quarter for the company and that pricing initiatives in the first quarter will help drive stronger pricing during peak leasing. He also mentioned that the comps become easier as the year progresses. The call ended in under an hour and the company looks forward to seeing everyone at NAREIT.

This summary was generated with AI and may contain some inaccuracies.