Camden Property Trust (CPT)

Rent Growth and Occupancy Outlook
Q: Will occupancy remain high, and what's the rent growth outlook?
A: Occupancy is currently at 95.5%, and we expect it to stay around this level through the year, possibly dipping slightly due to seasonality but remaining above 95% to maintain pricing power. - We're sending out renewals at 4.6%, typically achieving renewals just above 4% after negotiations. - Blended lease growth is expected to be 1.6% in Q3 and 1.3% in Q4, consistent with prior expectations. -

Development Pipeline Yields and Plans
Q: What yields are expected on new developments, and are more starts planned?
A: The new Charlotte projects have untrended yields in the mid to high 5% range and trended yields in the 6%, with IRRs in the low to high 8% range. - We don't plan to start more developments this year due to timing but anticipate starting projects in 2025 and expanding the pipeline, possibly acquiring projects from developers who can't secure financing. -

Expense Management and Cost Outlook
Q: How are expenses trending, and what about property taxes and insurance?
A: Expense growth is lower than expected at 2.85% versus the long-term average of 3%. - Property taxes are up only 0.2% this year but expected to return to a normal 3% growth rate. - Insurance costs, which were up 40% last year, are expected to decrease by 3% this year due to increased competition among providers. -

Bad Debt Improvement
Q: How is bad debt trending, and what improvements are seen?
A: Bad debt is improving, down to 80 basis points in Q2 and expected to be 75 basis points for the rest of the year. - Significant improvements are noted in California, dropping from 2.6% in Q1 to 2.1% in Q2, and Atlanta, from 1.8% to 1.4%. - We are approaching our normal bad debt level of 50 basis points. -

Capital Allocation and Potential Equity Issuance
Q: Will you consider raising equity for acquisitions?
A: If we can acquire portfolios that enhance our strategic plan and are accretive, we would consider using equity alongside debt while maintaining our strong balance sheet. - We anticipate a robust transaction market over the next 18 months and are open to all capital sources if the math works. -

Market Conditions in Houston and D.C.
Q: How are Houston and D.C. expected to perform?
A: Both markets are expected to be top performers, with D.C. likely ending the year as our number 1 or 2 market. - Houston shows robust growth, benefiting from both traditional energy and energy transition initiatives, including a $2 billion hydrogen hub. -

Supply and Demand in Over-supplied Markets
Q: Are over-supplied markets like Austin and Nashville bottoming out?
A: We believe we're still in the middle of the supply cycle in Austin and Nashville, likely extending into mid-2025. - Despite high supply, strong absorption driven by in-migration mitigates the impact, but it's uncertain if we've reached the bottom yet. -

Impact of Employment Trends
Q: How does slowing employment growth affect you?
A: A slowdown is positive as it helps the Fed potentially lower rates, which benefits us. - Our markets continue to attract jobs and in-migration, allowing us to capture household formation despite slower growth. -

Land Costs and Acquisition Opportunities
Q: Are land costs decreasing, and are there acquisition opportunities?
A: Land costs remain sticky with sellers reluctant to reduce prices. - However, opportunities exist to acquire land or projects from developers unable to secure financing. -

Turnover Rate Improvement
Q: How is turnover trending?
A: Turnover typically increases in Q3, but we've improved from 53% in July 2023 to 47% in July 2024, a 600 basis point improvement year-over-year. -

Loss to Lease Position
Q: What is your current loss to lease position?
A: We are at a loss to lease position of approximately 1%. - Markets like D.C. and San Diego have larger losses, while markets like Nashville and Austin have gain to lease. -

Hurricane Impact on Guidance
Q: How does the hurricane affect your guidance?
A: The hurricane impact is treated as a non-core expense. We increased core FFO by $0.05 per share and non-core FFO by $0.03, with the $0.02 difference reflecting the anticipated hurricane impact. -

Acquisition Cap Rates and NAV
Q: What are your thoughts on cap rates and NAV estimates?
A: Transactions are occurring at cap rates in the low 5% range, whereas public market valuations imply higher cap rates. - The public market may be slow to adjust to actual transaction cap rates, and we'll see how the market evolves. -

Blended Lease Growth Expectations
Q: How will blended lease growth improve in H2?
A: Blended lease growth is expected to reach 1.6% in Q3, up from 1.2% in July, due to easier comps and strong renewals. Our renewal rates are up 4%, and decreasing turnover should drive growth.