Camden Property Trust: A Core Sunbelt-Focused REIT To Sleep Well At Night

Core Viewpoint - Camden Property Trust (CPT) is a multifamily REIT with a conservative leverage profile, offering safety over high yield, and is currently viewed as having potential upside despite not being objectively "cheap" [1][2][31]. Group 1: Company Overview - Camden Property Trust operates in high-growth markets, focusing on employment, population, and migration trends to ensure consistent earnings growth [5][6]. - The company has a diversified portfolio with a strong balance sheet, low leverage, and ample liquidity, making it attractive for investment [6][8]. - Camden has a solid track record of capital and dividend growth, maintaining a diversified portfolio with a focus on high-quality assets [8][12]. Group 2: Financial Performance - The company reported an average occupancy rate of 95% across its 172 communities, with an average monthly rental rate of $1,994 per home [9]. - Camden's average household income for new tenants is $122,000, with a rent-to-income ratio of under 20% [10]. - Recent results showed a 3% increase in dividends to $4.12 per share, alongside significant share buybacks [14]. Group 3: Market Trends - Employment and population growth are projected to increase significantly in key markets like Dallas and Houston, with estimated gains of 183,000 and 341,000 respectively from 2024 to 2026 [7]. - The multifamily housing market is expected to see increased demand due to low housing starts and a high number of young adults living at home, with a projected demand growth around 2025-2027 [18][19]. Group 4: Valuation and Investment Thesis - Camden currently trades at a P/FFO of 15.75x, with a target price of $130 per share, indicating an attractive investment opportunity despite a higher valuation than before [23][29]. - The company is expected to maintain a dividend yield of approximately 3.9%, with a payout ratio of 73% [35]. - The investment thesis supports buying undervalued companies, with a focus on capital gains and dividends, while being prepared to rotate positions as valuations change [31].