The paragraph is an introduction to Camden Property Trust's First Quarter 2025 Earnings Conference Call. Kim Callahan, the Senior Vice President of Investor Relations, introduces the key members of the team participating in the call, including Ric Campo, Keith Oden, and Alex Jessett. The event is being webcast and recorded, and the audience is advised that forward-looking statements will be made, which involve risks and uncertainties. These statements are based on current expectations and are not guarantees of future performance. The call will discuss non-GAAP financial measures, and the company aims to conclude the call within an hour. If time allows, only one question per participant is preferred, but follow-ups can be made via phone or email afterward. Ric Campo is then given the floor to speak, with the call's hold music featuring the 1970s rock band Bad Company.

The paragraph discusses the recent achievements of Bad Company, being inducted into the Rock & Roll Hall of Fame, and Camden, recognized for the 18th consecutive year by FORTUNE magazine as one of the 100 Best Companies to Work For. Camden attributes its success to its dedicated team and reports exceeding first-quarter financial expectations. Despite a complex operating outlook, Camden notes positive market conditions such as decreased new supply, strong apartment absorption, and favorable rent affordability due to wage growth. Camden's Sunbelt markets remain strong in job and population growth, offering more affordable living compared to coastal areas. The company remains confident in its ability to thrive amid economic uncertainties due to its strong financial position and diverse portfolio.

The Sunbelt region has consistently outperformed other markets in recovering from economic challenges. Camden's teams are prepared to welcome new residents. According to Keith Oden, the portfolio's performance met expectations, with Tampa, L.A./Orange County, San Diego Inland Empire, Washington, D.C. Metro, and Houston leading in revenue growth, ranging from 1.3% to 4.5%. The first quarter showed a slight decrease in overall rental rates, but outcomes were better than the previous quarter of 2024, with occupancy improving to 95.4%. Renewal offers for the upcoming months have an average increase of 4.2%. The annualized net turnover rate of 31% is among the lowest in the company's history, aided by low move-outs for home purchases and strong resident retention, supported by dedicated team efforts and high customer sentiment scores.

In the first quarter of 2025, Camden achieved its highest customer sentiment score of 91.1 since it began tracking this metric in 2014, indicating high appreciation and satisfaction among residents and customers. Camden was also recognized by FORTUNE magazine as one of the 100 Best Companies to Work For, ranking 18th, marking its 18th consecutive year on the list. Alex Jessett, Camden's President and CFO, reported recent activities including real estate acquisitions worth $199 million, construction on a new development for $184 million, and progress in leasing three development communities completed in 2024. Camden expanded its footprint in the growing Nashville market with developments like Camden Nations, enhancing its presence in high-demand areas.

The paragraph discusses Camden's real estate activities and financial performance. Camden is working towards stabilizing several developments, including single-family rental communities in Houston and a multifamily community in Raleigh-Durham. They have begun leasing at a new development in Raleigh, with plans to acquire and sell properties totaling $750 million. Despite not completing any sales in the first quarter, they expect closings in mid-2025. Camden has already started $184 million in development projects for 2025. They have initiated a $600 million commercial paper program to complement their credit line, achieving another financing option with potentially lower interest rates. For the first quarter, Camden reported core funds from operations of $189.8 million, or $1.72 per share, surpassing estimates by $0.04, due to higher revenues, favorable timing of repairs, and tax refunds, albeit with slightly higher utility costs.

The paragraph discusses financial performance details and projections for a company. Despite outperforming in the first quarter due to lower interest expenses and timing of fee and overhead expenses, the company is not adjusting its full-year same-store guidance. However, it is raising its full-year core funds from operations (FFO) guidance midpoint by $0.03 per share, mainly due to lower interest expenses from a new commercial paper program. The company expects an average of $565 million in outstanding borrowings for the rest of the year at a 4.2% rate. For the second quarter of 2025, the company forecasts core FFO per share between $1.67 and $1.71, noting a sequential decline due to various factors, including a decrease in same-store NOI, increased interest expenses, and higher overhead costs. This decline is partially offset by earnings from new developments and acquisitions. Non-core FFO adjustments are expected to remain at $0.10 per share due to legal and transaction costs. The paragraph ends by opening the floor for questions from analysts, with Eric Wolfe from Citi being the first to ask a question.

In the article, Ric Campo discusses the impact of current macroeconomic uncertainty on the company's same-store guidance. He mentions that if there were more certainty about the future, they might have considered adjusting their guidance. However, due to the current unpredictable environment, they have chosen a cautious "wait-and-see" approach despite feeling positive about their business performance. Jamie Feldman from Wells Fargo then asks about the stabilization of deliveries in Sunbelt markets and where new leases could turn positive. Campo responds by indicating that Nashville and Austin will likely face challenges through 2025.

The paragraph discusses the real estate market performance and outlook across various regions. Although deliveries in two unspecified markets decreased slightly, they are expected to improve by the latter half of 2025, potentially leading to positive new lease rates. The D.C. Metro, Houston, San Diego Inland Empire, and L.A./Orange County markets have shown strong first-quarter performance due to favorable supply-demand ratios, a trend expected to continue in 2025. Tampa and Orlando are anticipated to experience positive new lease growth. Conversely, Nashville and Austin are currently facing oversupply issues but are expected to rebound quickly due to strong job growth and future prospects, prompting property investments and development in those areas.

The paragraph discusses the outlook for new and renewal leases in the second quarter, expecting a flat to positive 1% growth, reflecting a more positive view compared to the first quarter. Brad Heffern from RBC Capital Markets asks about the impact of DOGE on the D.C. market. Ric Campo responds that there is no negative effect from DOGE in D.C., and the market is performing well with high occupancy and strong lease rate growth. There has been no significant impact on lease agreements or employment in the federal government, according to current data, despite ongoing uncertainty and rhetoric.

The paragraph discusses the employment situation and its impact on the housing market, highlighting a 10,000 overall increase in government jobs in April, despite a 9,000 job loss in the federal government, ex-Postal. The unemployment rate is low, at 4.2%, and even lower at 3.2% for individuals over 25 with college degrees. Many individuals in D.C. are college graduates, contributing to a tight labor market. The text suggests that job losses have not significantly affected the housing business, with effective blended rent increases surpassing 4% in the first quarter and occupancy in the DMV area being the highest at 97%. Overall, the business remains strong despite discussions about government job losses.

In the paragraph, Ric Campo discusses how they are handling construction costs amid tariff impacts. They are accounting for a 2% to 3% increase in costs due to tariffs, citing improved supply chain resilience and adjustments from past experiences. He highlights that subcontractors are shrinking their profit margins to absorb some of these costs, especially since construction is at a 50-year peak but future starts are declining. Consequently, there is room in the margins to adjust for these increased expenses, which is seen as positive.

The paragraph discusses concerns about potential supply chain challenges affecting project components, which could delay projects even if pricing issues are resolved. The company is underwriting current rent rates, anticipating flat trends this year with an increase expected next year and substantial revenue growth by 2027-2028. This optimism is based on projected strong rental market growth, akin to post-financial crisis and post-COVID conditions. Haendel St. Juste from Mizuho questions about the company's Funds From Operations (FFO) guidance, noticing an implied deceleration in the second half of the year. Alex Jessett explains that the projections include $750 million in both acquisitions and dispositions.

In the paragraph, Alex Jessett discusses the company's strategy of selling older, more capital-intensive assets and acquiring newer ones. Although the older assets provide higher yields, the acquisition of newer assets will lead to a temporary negative impact on the FFO spread by late 2025. However, these newer assets are expected to grow faster, which should mitigate this impact by 2026 and 2027. Additionally, Alexander Goldfarb questions Alex Jessett about the commercial paper (CP) program and whether it affects bond pricing. Jessett addresses concerns from the unsecured bond community, noting that many who were initially against the CP program have changed their stance, while affirming respect and appreciation for the unsecured community.

The paragraph discusses a company's prudent use of a financing tool as a substitute for its line of credit for short-term borrowings. The speaker emphasizes that this tool will not be used to fund long-term assets, addressing concerns from the unsecured community. They highlight a significant pricing differential of 50 basis points, leading to a $0.03 per share increase in their 2025 guidance. It is mentioned that the company, being one of the largest REITs with a commercial paper program, does not expect any negative impact on bond pricing. Afterward, there is an exchange during a Q&A session where John Kim from BMO Capital Markets asks if there has been softness in new leases in April, to which Alex Jessett responds that there has been no such softness, contrary to reported data.

Richard Hightower and Alex Jessett discuss the performance of Class A vs. Class B assets in Sunbelt markets, noting that Class B suburban assets have outperformed in the past due to limited supply of urban Class A assets. However, recent data shows that Class A urban assets are now performing slightly better. On acquisitions and dispositions, there is a significant interest in value-add opportunities. Many local operators with substantial funds and solid operating histories are actively participating in the market, suggesting a strong buyer pool and interest in these types of real estate investments.

The paragraph discusses the current real estate market dynamics, where older, capital-intensive assets are viewed as value-add opportunities despite higher cap rates and additional capital expenditure needs. Ric Campo mentions a property being marketed in Dallas that received 35 offers, highlighting strong demand for such deals. Financing options from entities like Freddie Mac, Fannie Mae, insurance companies, and banks remain readily available, with private capital being particularly active despite broader market concerns. Private equity and family office groups have shown consistent investment activity. The operator then transitions to a question from Jana Galan of Bank of America regarding lease renewal rates, to which Keith Oden responds that there is typically a 50 basis point reduction from the stated rate, and notes that the company's renewal rate is at a historical high.

The paragraph discusses updates on lease renewal rates and lease growth expectations from a company's representatives, Alex Jessett and Jana Galan. Jessett confirms that despite initial assumptions of full-year blended lease growth of 1% to 2%, with new leases slightly negative and renewals in the high-3% range, there are no changes to these assumptions or to the projected timing of growth. He anticipates positive growth in new leases by the third quarter. The conversation also features questions from analysts Adam Kramer and Wesley Golladay.

The paragraph discusses a company's plans to increase its real estate presence in specific markets, particularly Austin and Nashville, to boost their net operating income. The company aims to not have one market exceed 10% of their portfolio but wants to increase exposure in certain areas like Raleigh and Tampa. Dallas is also a targeted market, with plans to trade assets. They intend to acquire quality real estate to create shareholder value, excluding Houston and the DMV due to their large existing presence. The conversation also covers the intention to rebuild their land bank to start more development projects, following recent land sales.

The paragraph discusses challenges and observations related to a single-family rental (SFR) product in suburban Houston, specifically Woodmill Creek and Long Meadow Farms. The lease-up has been slow due to the demographics of the renters, who take longer to make decisions, but the speaker is optimistic that once residents move in, they will stay longer. Both projects are nearing stabilization, with expectations of completion later in the year. There is confidence in the product, and if it proves to be efficient when integrated with existing multifamily communities, there could be an expansion of similar projects in the future.

In the conference call, Conor Peaks from Deutsche Bank asked about the improvement in bad debt levels, which had improved to 60 basis points. Alex Jessett responded, indicating they are close to reaching a normalized level of 50 basis points, with encouraging progress in challenging markets like California and Southeast Florida. This improvement is primarily attributed to new technology initiatives aimed at curbing fraudulent entries. Keith Oden reflected on the high levels of bad debt experienced during the COVID-19 pandemic and noted that they are now 10 points away from returning to the company's 30-year average, emphasizing that they are moving in the right direction.

In the discussion, Ric Campo comments on the ability to acquire properties below replacement costs in specific markets like Austin and Nashville, attributing it to prolonged market recovery and economic uncertainties, including technology sector volatility and tariffs. He suggests these factors cause hesitation among investors, resulting in properties being available at cheaper rates in these high-tech and medical-centric areas. Other markets, with a more optimistic rental outlook, may not afford the same opportunity. Despite fluctuating economic conditions, including volatility in bond yields, institutional investors remain cautious, likely leading to continued reasonable property prices. The supply of new properties entering the market is also a contributing factor.

The paragraph discusses the current financial dynamics affecting merchant builders and the implications for real estate markets. Banks, after being accommodating, are starting to pressure builders to sell or refinance, which may lead to more properties being available for acquisition. Markets like Austin and Nashville are seeing significant discounts, while other areas might see prices closer to replacement costs. Alex Kim acknowledges the information, and Alexander Goldfarb raises questions regarding the impacts of oil price fluctuations on Houston's market and the situation in Hollywood and Glendale due to industry disruptions. Ric Campo explains that low oil prices are temporary, as oil executives believe they will rise due to economic concerns and OPEC's strategies.

The paragraph discusses the impact of oil prices on economies and the energy business, particularly in Houston. It notes that while some economies need oil prices above $70 to thrive, the efficiency and consolidation of the energy sector mean oil prices have less impact on businesses like Chevron and Exxon, which are not altering their strategies in response to current prices. Both companies have relocated their headquarters to Houston, contributing to local employment. The paragraph also briefly touches on the strong occupancy rates and tenant turnover in Camden Hollywood and Glendale in L.A., highlighting their resilience post-COVID.

The paragraph discusses the strong occupancy rates in a portfolio, highlighting that a 96% occupancy level is favorable compared to the overall average of 95.4%. It touches on regulatory developments in California, particularly around rent control, noting recent positive trends. Ric Campo mentions Apple's expansion in Houston, reflecting a broader trend of companies onshoring operations to Texas due to its low cost, high productivity, and low risk. Houston's population growth, driven by domestic and international migration, supports economic expansion. The region's energy resources also attract data centers, contributing to job creation and growth for Houston and Texas as a whole.

The paragraph is part of a conversation during an investor call. Ric Campo discusses their plan to hold off on selling assets in D.C. due to market uncertainties but mentions positive investor interest in Texas. Brad Heffern clarifies this strategy. Haendel St. Juste then shifts focus, asking Alex Jessett about financial forecasts, specifically regarding Fund from Operations (FFO) and the expectations for the second quarter versus the second half of the year. Jessett explains that they anticipate modest growth in blended trade-out figures, estimating a 1% to 2% increase for the full year.

The paragraph discusses the company's strategies and outlook related to their leasing and insurance. They previously ran a special program to lease stale units with lower pricing, resulting in 16-month leases that benefit current comparisons. The company is confident in their 1% to 2% target range. Additionally, the insurance renewal was recently completed with premiums reduced by over 10%, which is favorable. However, they anticipate insurance losses in 2025 may not be as low as in 2024 due to historical trends.

The paragraph discusses a successful insurance renewal and anticipates that insurance costs for 2025 will remain flat, despite expected increases in losses from 2024. The company hasn't changed its full-year expense growth assumptions, as savings from insurance might be offset by increased repair and maintenance costs and slightly higher utility expenses, partly due to tariff activities. The paragraph concludes with Ric Campo thanking participants and looking forward to future engagements.

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