This article will present a simple logical chain portending a significant rise in the value of shopping centers. Vacancy among existing space is minimal Incremental demand remains steadily positive Incremental demand will need to find new space Construction cost of new retail is around $300-$500 per foot Current NOI per square foot does not support $300-$500 cost to build Therefore, NOI must rise until such a point that it supports construction. At that point, new construction will serve incremental deman ...

Financial Data and Key Metrics Changes - Camden Property Trust reported core funds from operations (FFO) for Q1 2025 of $189.8 million, or $1.72 per share, which was $0.04 ahead of the midpoint of prior guidance [17] - The company increased the midpoint of its full-year core FFO guidance by $0.03 per share from $6.75 to $6.78, primarily due to lower projected interest expenses [19] - The annualized net turnover rate for Q1 2025 was 31%, one of the lowest in the company's history, indicating strong resident retention [12] Business Line Data and Key Metrics Changes - Same property revenue growth in the top five markets ranged from 1.3% to 4.5%, compared to an overall portfolio growth of 0.8% [10] - Effective new leases were down 3.1%, while renewals were up 3.3%, resulting in a blended rate of negative 0.1% for the quarter [10] - Camden's customer sentiment score reached 91.1, the highest since measurement began in 2014, reflecting strong resident satisfaction [12] Market Data and Key Metrics Changes - New supply in Camden's markets has peaked, with apartment absorption remaining strong; new starts are at a 13-year low, down 80% in Austin and 65-80% in several other markets [6] - The Sunbelt markets are 50% to 60% less expensive for residents compared to high-cost coastal markets, contributing to job and population growth [7] - Occupancy for Q1 averaged 95.4%, showing slight improvement from 95.3% in Q4 2024, with expectations for stability throughout the year [11] Company Strategy and Development Direction - Camden is focused on expanding its presence in high-demand markets like Nashville and Austin, with plans for acquisitions and developments in these areas [14][83] - The company aims to maintain a geographically diverse portfolio to weather economic uncertainties, emphasizing the importance of the Sunbelt region for growth [7] - Camden is actively marketing older, capital-intensive assets for sale while pursuing new acquisitions to enhance its portfolio [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the current economic uncertainty but expressed confidence in the company's strong position and operational performance [22] - The company is cautious about guidance changes due to market volatility but remains optimistic about future performance as supply-demand dynamics improve [30] - Management noted that while Nashville and Austin face challenges, they are expected to recover quickly once market conditions improve [31] Other Important Information - Camden completed two acquisitions totaling $199 million and commenced construction on a new development community with an estimated cost of $184 million [14] - The company entered into a $600 million commercial paper program to supplement its existing line of credit, allowing for lower interest rates [16] - Camden's development pipeline is being rebuilt, with a focus on disciplined underwriting amid rising construction costs [88] Q&A Session Summary Question: Maintaining same store guidance amid macro uncertainty - Management indicated that the current uncertainty has influenced their cautious approach to guidance changes, but they feel confident about the business's performance [22] Question: Stabilization of deliveries in Sunbelt markets - Nashville and Austin are expected to remain challenged, but improvements are anticipated in the latter half of 2025 as supply decreases [29] Question: Impact of oil prices on Houston market - Management believes that lower oil prices will not significantly affect Houston's market due to the consolidation and efficiency of the energy sector [110] Question: Projections for A and B assets in Sunbelt markets - Class A urban assets are currently performing slightly better than Class B suburban assets, reflecting changing supply-demand dynamics [68] Question: Insights on bad debt levels - Bad debt improved to 60 basis points, nearing the normalized level of 50 basis points, with significant improvements in previously problematic markets [95]