The paragraph outlines the details of a webcast event for Camden's third-quarter 2024 earnings release. It mentions that forward-looking statements will be made during the call, which involve risks and uncertainties. These statements reflect management's current views and are not updated after the call. Camden's earnings release and reconciliations to non-GAAP financial measures are available on their website. The call is set to last one hour, and participants are asked to keep questions brief. Any additional questions can be addressed after the call. Ric Campo takes over to emphasize the theme of unity, especially relevant with national elections imminent, and encourages Camden associates to vote if they haven't yet.

The paragraph discusses Camden's economic performance, mentioning strong third-quarter earnings and robust apartment demand driven by job growth and in-migration. It highlights that renting remains more affordable compared to homeownership, with high housing costs and mortgage rates boosting rental demand. Despite high apartment absorption, rent growth is limited due to a surge in new supply. The paragraph references a Wall Street Journal article predicting 2024 housing sales to be the worst since 1995. Multifamily starts are projected to decrease, with rents expected to bottom out in 2024-2025 before recovering in 2026-2027. Camden plans to share future market strategies and 2025 guidance in its next report.

The paragraph highlights the performance and developments of Camden's third quarter. Revenues aligned with expectations, with lower-than-anticipated expenses. Top markets for revenue growth included Southern California, Washington DC metro, and others. Rental rates showed a slight increase despite a decline in new leases and an occupancy of 95.5%. There is a slight moderation in lease pricing and occupancy for October, with November and December renewal offers averaging a 3.5% increase. Resident retention is high, and net turnover decreased in 2024 compared to 2023. Keith Oden encourages voting, ending the year strong, and staying humble. Alex Jessett notes recent hurricanes but reports minimal property damage and safety of residents and staff.

After Hurricane Milton, Camden reported minimal damage due to quality construction, preparation, and some luck. They've built a significant portion of their Southeast portfolio and emphasized the importance of readiness and strong community and vendor relationships. They expressed gratitude to their team for maintaining high standards in high-demand markets. Looking ahead, Camden has significant development projects planned, with $320 million already underway and more set for early 2025 and beyond. Third-quarter financials showed better-than-expected results, with core FFO of $1.71 per share, primarily due to lower operating expenses and other financial favors.

The paragraph discusses various financial performance metrics and projections for a company's third-party construction business. It highlights factors such as cost savings, increased fee and interest income, and legislative changes that positively impacted results. Property revenues met expectations, and guidance for the full year was adjusted: same-store revenue growth is now projected at 1.1% to 1.5%, while expense growth is expected at 2.1% to 2.5%. A reduction in full-year revenue and expense guidance is noted, with core FFO midpoint raised slightly due to strong third-quarter results outside of property holdings. The company expects fourth-quarter 2024 core FFO per share to decline slightly, ranging from $1.68 to $1.72.

The paragraph discusses the company's financial performance, particularly focusing on property Net Operating Income (NOI). A one-cent increase in NOI per share is attributed to lower property expenses due to seasonal declines, despite a decrease in revenue from typical occupancy seasonality. However, this increase is offset by a one and a half cent per share decrease in interest and other income because of a shift from a net cash position and changes in timing of fee and asset management income. Additionally, net interest expense increased by half a cent due to ceased interest capitalization on certain development sites, although lower interest rates on floating rate debt provided some relief. The company maintains a robust financial position, with 80% of debt at fixed rates, minimal outstanding credit facility debt, low upcoming maturities, and a strong net debt to EBITDA ratio of 3.9 times. Following this, the call is opened for questions, starting with Eric Wolfe from Citi, who inquires about the paused pre-development projects and required rent increases for their viability.

In the paragraph, Ric Campo discusses the current state of the development market, highlighting that while construction costs remain high, rents have decreased due to an increase in supply. As they plan for capital deployment in 2025 and 2026, Campo emphasizes their conservative financial policies and proper capital allocation, leading them to evaluate their properties. They decided against starting four projects because they didn't meet investment criteria, due to issues such as reducing exposure in California and shifting focus in Houston from urban to suburban areas. In Atlanta, the value of land they purchased during the financial crisis is significantly lower on their balance sheet compared to current market rates.

The paragraph discusses a strategic decision to limit exposure in Buckhead, Atlanta, due to its high concentration of luxury residential units. The speaker mentions that the area could benefit from alternative developments like condos or hotels. They emphasize disciplined capital allocation and anticipate a vibrant transaction market in the coming years as a significant amount of multifamily debt matures in 2026. The focus is on shifting their portfolio from urban to suburban locations. Eric Wolfe highlights rent growth projections, referencing a standard three to three and a half percent compounded growth rate used in financial models. However, current market conditions might require higher growth rates for developments to be viable, with forecasts suggesting four to six percent growth in 2026 and 2027.

The paragraph discusses a real estate company's strategy in managing capital allocation and development risks. The company prefers to invest in existing properties in growing markets at below replacement cost to avoid lease-up risks, rather than relying heavily on new developments that require projecting significant rent growth to achieve desired investment returns. Despite this cautious approach, the company remains involved in development, with plans for new projects in 2025 and a development pipeline. They mention past instances where properties written down after the financial crisis later appreciated significantly, demonstrating the long-term value of strategic capital allocation. There is also a discussion about the real estate industry's expectations that struggling developers would eventually have to sell, but these developers often receive financial support or lifelines, allowing them to hold onto their properties.

The paragraph discusses the current state and future prospects of the real estate market, specifically focusing on transaction volumes and opportunities. Ric Campo expresses skepticism about encountering distressed transactions that are desirable, noting that many problematic properties are not worth pursuing. He highlights the merchant builder model, where developers build, lease, and sell properties to achieve profit, emphasizing the cyclical nature of this approach. He explains that despite some pressures, such as an 8% preferred return that can erode developer profit, there is still strong interest in multifamily properties due to anticipated rent growth through 2025 to 2027. This makes investing attractive now, even though developers are under no immediate pressure to sell.

The paragraph discusses the situation in the banking and multifamily real estate markets for 2023 and 2024. Banks have been extending maturing loans into the future, anticipating that interest rates will decrease. A significant amount of debt is set to mature in 2025 and 2026 due to these extensions. The market is showing signs of recovery, with people holding significant capital ("dry powder") waiting for market conditions to improve. Multifamily asset sales are at 2022 levels, indicating a thawing market. The expectation is that there won't be a distress scenario due to the substantial capital ready to be invested in multifamily properties. The paragraph ends with Austin Werschmidt from KeyBanc Capital Markets asking about reducing exposure to the Houston market, which constitutes around thirteen percent of NOI currently.

In the paragraph, Ric Campo discusses the strategic review of Camden's property portfolio, focusing on reducing their exposure in the markets of DC and Houston. Despite these cities being strong markets currently, Camden plans to trim its Houston assets gradually, partly due to the market's sensitivity to oil prices. Campo mentions their low-leverage balance sheet, which allows them to grow without extensive disposals. They aim to maintain a balanced market presence, keeping 6-9% of assets in each market, and adjust based on population and inventory considerations. Brad Heffern from RBC Capital Markets then highlights that Camden's leasing spreads remained higher through September compared to their Sunbelt peers but noted a significant decline in October for both effective and signed leases.

In this conversation, Alex Jessett addresses questions regarding their development strategy, occupancy efforts, and leasing progress. He confirms a strategic shift towards occupancy starting in the third quarter, which is continuing into the fourth quarter. Addressing concerns about leasing progress from Steve Sakwa, Jessett notes that single-family rental communities generally lease slower than multifamily properties, booking about 10-15 units monthly compared to 20-30 units for typical multifamily developments. The Durham development is leasing at 25 units per month, which is meeting or exceeding expectations. Jessett also acknowledges an increase in project costs and discusses their impact on return thresholds, specifically mentioning a Nashville project that added more units, causing a cost increase that still aligns with expected returns.

The paragraph discusses a company's approach to real estate development, specifically regarding their pipeline projects in Nashville and Denver. They have done a thorough analysis and believe the current construction costs and yields are favorable, which is why they plan to start some Nashville and Denver projects in early 2025. A question from Rich Anderson of Wedbush follows, focusing on cap rates and the potential for deals in a market with low transaction activity. He questions if low cap rates are due to high demand for few deals and asks if the company is prepared to adjust their strategies or take an initial loss for potential future gains. Ric Campo is then prompted to respond.

At the start of the year, multifamily properties were not the top choice for institutional investors, who preferred retail and industrial properties. However, by the third quarter, multifamily has become the most favored commercial real estate investment, followed by industrial, retail, and office, due to an anticipated inflection point in supply and demand. Despite high delivery rates, rental growth remains positive or stable in most markets except Austin and Nashville, which are overbuilt. Investors are increasingly interested in multifamily properties, anticipating favorable conditions, and recent deals show competitive bidding and declining cap rates.

The paragraph discusses challenges and strategies in real estate investment, particularly regarding achieving a seven percent unlevered internal rate of return (IRR) given recent shifts in the ten-year Treasury yield, which has risen by at least fifty basis points in the past thirty days. This increase has impacted investment calculations due to the return to negative leverage. The speaker mentions that buying below replacement cost and enhancing operations within a specific price range (four and a half to five) is crucial. They plan to capitalize on projected above-average rental growth in the coming years and will adjust their portfolio accordingly, providing more details in their first-quarter call. The paragraph concludes with a transition to a Q&A session, where Jamie Feldman from Wells Fargo asks a question about top-line outlook adjustments for the year.

The paragraph discusses the financial strategies and outcomes for a company, focusing on cost savings and their impact on the Net Operating Income (NOI) outlook. Alex Jessett highlights that the most conservative estimates at the start of the year were in insurance and taxes, which turned out to be advantageous. Taxes, which constitute 36% of total expenses, were expected to increase by 3% but remained flat, while insurance costs decreased by 10% after proactive measures were taken. Looking ahead to 2025, it is considered unlikely to maintain flat property taxes, as they typically rise by about 3% annually.

The paragraph discusses the potential effects of various factors on property values, insurance, and the Houston economy. It mentions that real property values have decreased compared to two to three years ago, offering some relief against taxing authorities. The paragraph also highlights the uncertainty in insurance markets, noting that if global insurance claims are low, it could lead to favorable outcomes. The speaker then touches on the impact of the oil and gas industry on Houston's migration trends and economy, suggesting that a supportive Trump presidency could further influence these factors. The conversation also touches on future economic conditions in Houston and whether they might affect decisions regarding market exposure.

The paragraph discusses a strategy to reduce exposure in Houston's real estate market, despite benefiting from the oil and gas industry's positive impact on the area. The speaker mentions progress in this strategy, alongside a significant acquisition that increased Houston exposure but remains committed to balancing market concentrations. The company aims to avoid having double-digit exposure in any market, including Houston and Washington DC. The paragraph also includes a discussion about revenue strategies, with a focus on maximizing revenue through occupancy rather than strictly targeting rates, which influenced third-quarter revenue aligning with expectations.

The paragraph discusses expectations for Camden's market performance in the fourth quarter and beyond. Despite anticipated rate reductions due to increased occupancy, the company remains confident in meeting its revenue guidance for the year. Keith Oden mentions employment growth in Camden's markets, with projections of 460,000 jobs in 2024 and 440,000 in 2025. He also notes that supply-demand dynamics in 2025 will likely resemble those in 2024. Haendel St. Juste asks about potential estimates for earnings next year and issues like bad debt, particularly in Atlanta and LA. Alex Jessett responds that their plan should result in flat to slightly positive earnings for 2025 if the next two months go as planned.

The paragraph discusses the management of bad debt in a portfolio, specifically highlighting challenges in Atlanta and LA County, California. The company anticipates reducing bad debt to fifty basis points by the end of 2025, having already achieved this level elsewhere. Issues in LA and Atlanta, primarily due to delays in processing delinquencies, are gradually being addressed, with improvements seen since the COVID-19 pandemic. The company has shut down avenues for new fraud to enter, and they're actively working to resolve past fraudulent cases. There's optimism that by 2025, both LA and Atlanta will return to a normal pace for eviction processing, similar to other markets.

Ric Campo discusses the revenue challenges in Los Angeles, highlighting that the city faces a demand problem rather than a supply issue. He compares job growth in various cities since February 2020, noting that Houston and Dallas have experienced significant job increases, while Los Angeles and San Francisco have seen job losses. Despite low supply in these markets, revenues are improving slightly, but primarily because they are recovering from significant downturns. Campo suggests that demand is the primary challenge and doesn't foresee a dramatic change in the long term. Julian Bloyne from Goldman Sachs asks about the trajectory of new lease rates, which saw a decline in October, and inquires about expectations for November and December. Alex Jessett responds, indicating that the fourth quarter will likely be similar to October, with new lease rates down and renewal rates up. He notes that the blend of renewals and new leases will shift slightly toward more renewals as the year progresses.

In the paragraph, Ric Campo discusses their approach to handling land parcels in the current market climate. He states that although some land parcels have been written down in past downturns, they may hold onto them until it's advantageous to sell, as the present land market isn't favorable. They feel no pressure to sell immediately and prefer to wait for better opportunities. Campo notes that the development and merchant builder market is currently challenging, with fewer projects starting due to financial constraints and unsold properties. However, this situation might present opportunities to acquire shovel-ready projects, which they have successfully done in the past. Currently, they have transactions under contract in Tampa.

The paragraph discusses the company's shift from urban mid-rise to suburban construction projects, indicating a preference for simpler constructions in suburban areas. The speaker, Ric Campo, outlines the company's strategic considerations around capital allocation, prioritizing investments that offer a reasonable return over their weighted average cost of capital. While the company hasn't made recent acquisitions, they anticipate significant deal flow in 2025. The balance between development and acquisitions will depend on market conditions, with plans to invest significantly in both areas in the coming years.

The paragraph discusses the company's approach to acquisitions and stock buybacks. It mentions a lack of significant acquisition opportunities so far this year, but anticipates more activity in 2025 and 2026. The speaker suggests that current stock prices present an opportunity, as they are trading at a higher cap rate compared to private market values. The conversation then shifts to a Q&A session, where a question about rising construction costs is addressed. Alex Jessett clarifies that the costs have increased due to enhancements and redesigns in their project pipeline, rather than market-specific labor issues, and also addresses a question about land pricing compared to its peak.

The paragraph discusses the current state of land prices, noting that they have decreased by 15-20% from their peak but remain stable due to landholders not needing to sell in a weak market. As a result, there are few land transactions happening. The conversation then shifts to the resilience of the company's portfolio compared to neighboring properties, with Alex Jessett highlighting the superior quality and maintenance of their properties, such as proper landscaping and drainage management, which helps them withstand harsh environmental impacts like hurricanes better than surrounding multifamily buildings.

The paragraph discusses Ric Campo's remarks on the company's real estate management practices in the face of hurricanes, particularly Hurricane Harvey in Houston, Texas. He highlights the importance of buying properties outside floodplains to minimize flood damage. Despite Hurricane Harvey being a significant flooding event, their portfolio experienced minimal damage, with only two buildings affected. The focus is on strategic property location and preparation to handle windstorm events effectively. The conversation then shifts to a question from David Stable of Credit Suisse about the performance differences between urban and suburban assets, specifically regarding rent growth.

The paragraph discusses the differences in performance between suburban and urban real estate assets. Alex Jessett notes that suburban properties are outperforming urban ones, with suburban assets showing about eighty basis points better revenue growth across the entire portfolio. Ric Campo explains that this trend is due in part to demographics, as a significant portion of their target demographic (ages 21-32) resides in the suburbs. This has led to greater demand in suburban areas, compared to urban areas that have experienced an oversupply. Keith Oden adds that turnover rates have decreased by four percent year over year, largely due to fewer move-outs to purchase homes, which has been consistently low at nine percent for the year.

The paragraph discusses the impact of the housing market on move-outs to home purchases, highlighting how the current nine percent rate, compared to the usual fifteen to twenty percent, has significantly improved retention rates over the past few years. The trend is expected to continue into 2025 due to persistent conditions in the single-family home market. The section concludes with Ric Campo thanking participants and mentioning an upcoming NAREIT event in Las Vegas.

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