No bad stock

Camden Property Trust
CEO : Mr. Richard J. Campo

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2023 Q2	6.6% YoY	65.1%	-81.7%	2023-08-04

Ric Campo says,

Key Points from Speech #1

• Camden celebrated its 30th birthday as a public company with a closing bell ceremony at the New York Stock Exchange.
• Camden’s business has grown significantly, from 6,000 apartments in three Texas markets to 60,000 apartments worth $15.5 billion.
• The company has built a strong operating and investment team platform that focuses on constant improvement.
• Market conditions are moderating from the post-COVID housing boom, with a 70% decline in the transaction market compared to last year.
• New permits are starting to fall due to difficult financing and increased cost of capital, which should benefit Camden’s markets as supply is absorbed over the next 18 months.
• Move-outs from family homes are trending lower than in previous years and quarters.
• Recognition and appreciation for Camden’s teams and their commitment to providing excellent living experiences to residents.

Keith Oden says,

Revenue Growth and Guidance

• Same-property revenue growth for Q2 2023 was 6.1%, in line with expectations.
• Camden has maintained the midpoint of its 2023 revenue guidance.

Strong Markets

• Three Florida markets (Tampa, Orlando, and Southeast Florida) showed the highest growth rates.
• Charlotte and Nashville also had strong results.

Demand and Leases

• Despite concerns about supply levels, demand for high-quality apartments in Camden’s markets remains strong.
• Blended lease growth rate for Q2 2023 was 4.1%, with new leases up 2.2% and renewals up 5.9%.
• Preliminary July results show moderating growth rates, with blended rates in the mid-3% range.
• Renewal offers for August and September were sent out in the high 5% range.

Occupancy

• Average occupancy for Q2 2023 was 95.4% and slightly higher in July at 95.6%.
• The portfolio is currently 95.8% occupied, which positions Camden well for the usual seasonal slowdown in Q4.

Turnover and Home Purchases

• Net turnover for Q2 2023 was 44%.
• Move-outs to purchase homes were 11.8% for the quarter and 11% year-to-date.
• This is a decrease from 15.1% in Q2 2022 and 13.8% for the full year of 2022.

Q & A sessions,

Impact of Declining Starts on the Market

• Starts in May were down 13.5% and down 33% from last year, indicating a decline in the market.
• Tight financial markets and difficulty in securing bank financing and equity financing, along with increased cost of capital, are slowing down the market.
• However, absorption has been better than anticipated in most markets, indicating a positive outlook for absorption in the next 12-18 months.
• The supply side of the market is expected to be constructive towards the end of 2024 and into 2025.
• Approximately 15% of the total supply market is impacting Camden’s communities, despite the scary headline numbers of 400,000 apartments being delivered.

Impact of Short Notice Move Outs on Occupancy

• Elevated level of short notice move outs is more than double historical levels and has impacted occupancy numbers.
• Marketing spend and pricing adjustments have been made to maintain occupancy during this period.
• Expected to see a return to normal occupancy levels after a quarter or so of grinding through the process of evictions and move outs.

Construction Cost and Availability of Funds

• Construction cost has flattened but has not gone down, making it difficult to pencil development yields.
• Land costs have decreased, but the lack of motivated land sellers makes it challenging to take advantage of the decline.
• Rental rates and occupancy rates are not increasing as much as before, making it harder to justify development projects.
• Availability of funds is not the only issue, as the overall cost of construction, especially with the rising interest rate costs, makes many projects unfeasible.
• No relief in construction costs is expected, and cost reductions may only be seen in 2025-2026 when contractors start competing for fewer projects.

Concerns of Fraud and Identity Theft

• Identity theft and fraud in the rental industry, where people live in apartments for free, is a growing issue.
• Personal experiences of identity theft highlight the challenges faced by both individuals and competitors in the industry.
• Fraud prevention measures and repairing credit scores after such incidents can take time.

Portfolio Diversity and Middle Market Properties

• Camden’s portfolio is geographically diversified and includes properties with different price points.
• New development tends to be at the top end of the market due to cost structures, leading to a shortage of affordable apartments in America.
• A significant portion of Camden’s properties are in the middle market, where rents are 30-40% lower than new developments.
• Renters in middle market properties are unlikely to move to higher-end properties because they can’t afford them, benefiting Camden’s portfolio.
• Even in the face of oversupply concerns, Camden has operated successfully in the Sunbelt market for 30 years and expects a market correction in the next 18 months.