Demand Drivers and Market Outlook
Q: How are macro trends and migration impacting your guidance and demand expectations?
A: The strong job numbers, with 353,000 jobs added, are not fully baked into our guidance, which is based on more conservative assumptions. Job growth, especially in Texas and Florida, continues to lead the nation and benefits us. Multifamily housing is taking market share from single-family homes, with demand increasing from a historical 20% to 40% of total household formations. The difficulty in buying single-family homes has led to only 10.7% of our residents moving out to purchase homes in 2023. Additionally, 30% of Americans now live alone, boosting apartment demand. In-migration remains strong, with 17.5% of our Q4 move-ins coming from non-Sunbelt areas , and online searches from New York and California for Texas apartments up 72% and 52%, respectively.

Rent Growth Projections for 2024
Q: How does your 2024 rent growth forecast compare to a normal year without supply headwinds?
A: Typically, we expect about 3% rent growth in a normal year, but for 2024 we're projecting 1.4% due to increased supply pressures. Demand remains strong, but we're cautious given the supply factors. We believe rents will bottom in 2024 and start an uptick in 2025 as new supply gets absorbed.

Supply and Demand Dynamics
Q: Do you expect the supply peak in 2024 to lead to revenue declines in 2025?
A: We anticipate an uptick in 2025 rather than a decline. Demand drivers, such as multifamily taking market share from single-family and strong in-migration, are expected to continue. Projected demand of over 200,000 units in our markets should create a balanced environment despite high supply. A strong job market could further aid absorption in 2025.

Acquisition and Disposition Strategy
Q: Given low leverage, what are your plans for acquisitions and dispositions in 2024?
A: We plan to match dispositions and acquisitions, aiming for a net-zero position this year. We're waiting for better going-in yields before increasing acquisitions, as there's currently a significant bid-ask spread between buyers and sellers. When we find value, we'll be aggressive, but patience is prudent now.

Development Plans and Yields
Q: Can you provide details on your anticipated development starts and expected yields?
A: We're planning up to $300 million in new development starts, focusing on suburban, three-story walk-up projects in Charlotte. We aim to start these in the back half of the year, delivering into 2026 and 2027, with expected stabilized yields in the mid-5% to low-6% range. These numbers are consistent with our current development pipeline.

Occupancy and Leasing Spreads
Q: What are your expectations for occupancy and leasing spreads in 2024?
A: We're targeting flat occupancy at 95.3% for 2024. We anticipate new leases to be down 0.6%, renewals up 3.6%, for a blended increase of 1.2%, following typical seasonal patterns. In Q1, we expect blended trade-outs of about 0.2%, with improvements throughout the year as we enter stronger leasing seasons.

Concessions in High-Supply Markets
Q: How are concessions trending in markets with significant new supply?
A: In our most supply-constrained markets like Austin and Nashville, concessions are significant, ranging from 2 to 3 months free. In less pressured markets, concessions range from 1 month to 6 weeks to 2 months.

Real Estate Tax Outlook
Q: What are your expectations for real estate taxes, and are you seeing a new norm?
A: Our property tax increase is projected at 3%, consistent with 2023 and reverting to the long-term mean of 3% to 3.5%. Texas, which accounts for about 40% of our property taxes, is expected to increase only 2.2%, benefiting from favorable legislation.

Bad Debt Expense
Q: Why isn't bad debt expense improving, and what's your outlook?
A: We're in unprecedented times, determining the new normal. We anticipate bad debt expense to remain at about 1.1% of revenues, similar to Q4 levels. If we return to the historical norm of 0.5%, there could be potential upside, but we're being cautious.

Capital Expenditure Increase
Q: What is driving the higher CapEx budget for the year, particularly in nonrecurring expenses?
A: The increase is due to large exterior and foundational projects at a couple of our communities. We don't expect this level of spending to continue into 2025.

Potential for Stock Buyback
Q: With low leverage and free cash flow, would you consider buying back stock?
A: We continually evaluate all capital allocation options, including stock buybacks. We've repurchased stock in the past when it made sense and are open to doing so again when we believe it's the best use of capital.

Impact of Supply Delays
Q: Are development delays affecting the supply outlook, and are any developers facing financial stress?
A: We haven't seen developers going bust, but project delays are common due to labor shortages. Banks are working collaboratively with borrowers. Delays could benefit our supply-demand equation by smoothing deliveries over time.

Gain-to-Lease and Renewal Rates
Q: Are you at a gain-to-lease position, and can you achieve planned renewal increases?
A: We're currently flat on gain-to-lease. We're anticipating renewal increases around 3.9% in Q1, close to what we're offering residents.

Cost Pressures on Development
Q: Are you seeing relief on materials or labor costs in development projects?
A: Not significantly. While cost increases have slowed, there's been no material decrease in pricing. High construction costs, combined with flat rents, make it challenging to justify new construction, contributing to a projected decrease in starts.

Dispositions and Asset Selection
Q: Why are you selling certain assets like Camden Vantage in Atlanta, and where else might you see disposition activity?
A: We continually assess our portfolio, and Camden Vantage was identified as an asset we'd prefer to sell. The cap rate on the sale is 5.75%. Going forward, we'll match acquisitions and dispositions to keep our portfolio aligned with strategic goals.