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CP

CAMDEN PROPERTY TRUST (CPT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 Core FFO of $1.73 per share beat the company’s guidance midpoint by $0.03; EPS was $0.37 and FFO $1.68, each $0.01 above guidance midpoint, aided by lower property insurance claims and tax valuations .
  • Same‑property metrics improved: revenues +0.8% YoY, expenses +0.2%, NOI +1.2%; occupancy rose to 95.3% (from 94.9% YoY) while blended lease rates remained slightly negative, reflecting supply absorption in progress .
  • Initial 2025 guidance sets Core FFO at $6.60–$6.90 (midpoint $6.75) with same‑property NOI planned roughly flat (−1.5% to +1.5%); 1Q25 Core FFO guided to $1.66–$1.70; Q1 dividend raised to $1.05 per share (from $1.03 in Q4) .
  • Strategic pivot for 2025: front‑loaded acquisitions and selective dispositions (target ~$750M each at midpoints), portfolio diversification (no single market >10% NOI), and development starts targeting ~6% yields as supply peaks and tailwinds build into 2026–2027 .

What Went Well and What Went Wrong

  • What Went Well

    • Core FFO outperformed guidance due to lower‑than‑anticipated core property insurance claims and favorable tax valuations; management quantified a $0.025 per share benefit from lower operating expenses and $0.005 from other income .
    • Same‑property NOI grew 1.2% YoY in Q4; occupancy improved to 95.3%, and bad debt declined to 0.7% (from 1.1% YoY), indicating healthier resident credit trends .
    • Clear strategic plan: “It’s time to move on” toward capital recycling, acquisitions below replacement cost, and development with ~6% yields, positioning for outsized growth in 2026–2028 (“tailwinds” as supply declines) .

  • What Went Wrong

    • Property revenues modestly declined YoY to $386.3M (−0.3%), with signed blended lease rates at −1.2% and effective blended at −1.1%, reflecting ongoing pricing pressure from new supply .
    • Austin and Nashville remained challenged (expected another −0% to −3% revenue year in 2025), highlighting submarket oversupply despite broader portfolio stability .
    • Sequential same‑property blended trade‑outs in Q4 were negative, and management guided flat blended lease trade‑outs for Q1 2025, signaling a slow turn before anticipated H2 2025 improvement .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Property Revenues ($USD Millions)$387.587 $387.232 $386.319
Diluted EPS ($)$2.03 ($0.04) $0.37
FFO per share ($)$1.72 $1.65 $1.68
Core FFO per share ($)$1.73 $1.71 $1.73
Core AFFO per share ($)$1.44 $1.48 $1.46
Same‑Property KPIsQ3 2024Q4 2024
Revenue Growth YoY (%)0.6% 0.8%
Expense Growth YoY (%)1.8% 0.2%
NOI Growth YoY (%)0.0% 1.2%
Occupancy (%)95.5% 95.3%
Signed Blended Lease Rates (%)0.1% (3Q24) (1.2)% (4Q24)
Bad Debt (%)0.9% (3Q24) 0.7% (4Q24)
Q4 2024 vs Q4 Guidance MidpointGuidance MidpointActualVariance
EPS ($)$0.36 $0.37 +$0.01
FFO per share ($)$1.67 $1.68 +$0.01
Core FFO per share ($)$1.70 $1.73 +$0.03

Segment snapshot (Same‑property NOI growth YoY, Q4 2024 – top markets):

MarketNOI YoY GrowthSource
Orlando, FL+6.9%
San Diego/Inland Empire, CA+5.0%
D.C. Metro+4.8%
Raleigh, NC+5.5%
Tampa, FL+1.7%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS per diluted share ($)1Q25N/A (initial)$0.32–$0.36; Midpt $0.34 New
FFO per diluted share ($)1Q25N/A (initial)$1.64–$1.68 New
Core FFO per diluted share ($)1Q25N/A (initial)$1.66–$1.70 New
EPS per diluted share ($)FY2025N/A (initial)$1.00–$1.30; Midpt $1.15 New
FFO per diluted share ($)FY2025N/A (initial)$6.50–$6.80; Midpt $6.65 New
Core FFO per diluted share ($)FY2025N/A (initial)$6.60–$6.90; Midpt $6.75 New
Same‑property Revenues (%)FY2025N/A (initial)0.0%–2.0%; Midpt 1.0% New
Same‑property Expenses (%)FY2025N/A (initial)2.25%–3.75%; Midpt 3.0% New
Same‑property NOI (%)FY2025N/A (initial)−1.5%–+1.5%; Midpt 0.0% New
Dividend per share ($)Q1 2025$1.03 (Q4 2024) $1.05 (Q1 2025) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Supply and pricingQ2: Same‑property revenue +1.4% YoY, occupancy ~95.3%, early share repurchases . Q3: supply peak commentary; blended trade‑outs ~flat; Q4 occupancy guide 95.2–95.4% .Expect supply to decline through 2025; blended lease trade‑outs flat near‑term; positive new lease rates by Q3 2025 .Improving H2 2025 → 2026–2027 tailwinds .
Capital allocationQ2: Development starts in Charlotte; repurchases outstanding . Q3: paused four predevelopment sites; set up for more acquisitions .Front‑load acquisitions; use reverse 1031s; ~100bps GAAP dilution in 2025 on acquisitions vs dispositions, tighter thereafter .Scaling recycle program 2025–2027 .
Market mixQ3: Houston/D.C. strong; plan to reduce over‑exposure .Target ≤10% NOI per market; raise Nashville to ≥4% NOI; Austin/Nashville still challenged .Diversifying footprint .
Operating tech/processQ3: cost discipline/insurance actions .“Team works smart implementing new technologies” improving experiences and costs .Ongoing efficiency gains.
Tariffs/construction costQ3: cost redesign on pipeline .Tariffs add 2–3% to costs; construction costs flat/down modestly; development yields ~6% .Watch inputs; selective starts.
Regulatory/legalDOJ amended complaint added CPT; company to defend vigorously .No financial impact discussed; reiterated stance .Ongoing case; monitoring.

Management Commentary

  • “We believe 2025 is the year for Camden to move on… As headwinds turn into tailwinds… there are attractive opportunities for us to continue development starts and to pursue acquisitions” (Ric Campo) .
  • “Q4 Core FFO of $1.73 per share, $0.03 ahead of midpoint… outperformance resulted from $0.025 lower operating expenses… and $0.005 higher other income” (Alex Jessett) .
  • “We expect Core FFO per share for the first quarter of 2025 to be $1.66 to $1.70… with blended lease trade‑outs relatively flat” (Alex Jessett) .
  • “Our plan… no 1 market representing more than 10% of NOI and no market less than 4% by end of 2027” (Alex Jessett) .

Q&A Highlights

  • Leasing trajectory: Expect blended lease growth 1–2% for 2025, with new leases turning positive by Q3 as supply wanes; January showed encouraging improvements (management qualitative) .
  • Transactions/cap rates: Market thawing; cap rates in mid‑4s for quality assets with buyers underwriting 2026–2027 rent growth to overcome negative leverage today .
  • Reverse 1031s: Acquisitions ahead of dispositions for tax efficiency; 2025 GAAP FFO spread ~100bps narrowing in 2026–2027; AFFO impact expected relatively flat .
  • Development yields: Target ~6% on new starts; costs flat to modestly down with broader subcontractor base improving buyout pricing mid‑year .
  • Reposition ROI: 8–10% ROIC (~$150 per door rent uplift), supports competitiveness vs new supply .

Estimates Context

  • We attempted to fetch S&P Global consensus for Q4 2024 (EPS, revenue, EBITDA and related metrics) but it was unavailable at the time of this analysis. As a result, comparisons to Wall Street consensus cannot be provided. Values retrieved from S&P Global were unavailable due to request limits.
  • Relative to internal guidance, CPT delivered a modest beat on EPS/FFO/Core FFO as shown above .

Key Takeaways for Investors

  • Near‑term: Q4 beat was cost‑driven (insurance/taxes), with flat blended trade‑outs near‑term and sequential Core FFO guide down ~$0.05 in Q1 from Q4; trading setups hinge on H2 2025 demand inflection and transaction visibility .
  • Medium‑term: Strategic recycling (buy below replacement cost; sell older/capital‑intensive assets) plus development at ~6% yields sets up for NOI acceleration as supply abates into 2026–2027 .
  • Portfolio risk management: Diversification targets (≤10% NOI per market; ≥4% minimum) mitigate concentration risks, with Austin/Nashville monitored for supply digestion; Houston/D.C., Southern California and Tampa leading .
  • Balance sheet secure: Net Debt/Annualized Adjusted EBITDAre at 3.8x (Q4), strong coverage and ample liquidity (> $1.0B) supports programmatic acquisitions and selective development .
  • Dividend support: Q1 2025 dividend raised to $1.05, signaling confidence in cash flows despite a transition year .
  • Watch cost inputs and policy: Tariffs and insurance/tax trends can shift OpEx trajectory; management has shown discipline in mitigating these items .
  • Catalysts: Supply slowdown, transaction market activity (mid‑year), positive lease rate inflection by Q3 2025; estimate updates (once available) likely to reflect flattish 2025 NOI then ramp in 2026 .

Citations: Press Release and 8‑K Q4 2024 ; Earnings Call Q4 2024 ; Prior Quarter Q3 2024 ; Q2 2024 ; Dividend Q4 2024 ; DOJ press release .