Camden(CPT)2024-11-01 20:10Financial Data and Key Metrics Changes - For Q3 2024, the company reported core FFO of 0.03, driven by lower operating expenses and higher fee income [15][16] - The full year same-store revenue growth is now anticipated to be between 1.1% and 1.5%, with a midpoint of 1.3%, while same-store expense growth is expected to be between 2.1% and 2.5% [17] - The company increased the midpoint of its full year core FFO from 6.81, reflecting non-property components of Q3 outperformance [18] Business Line Data and Key Metrics Changes - Same-property revenue growth for Q3 was in line with expectations, with top markets including Southern California, Washington D.C. Metro, Southeast Florida, Denver, and Houston, all showing growth above the portfolio average of 0.6% [8] - Rental rates showed signed new leases down 2.8% and renewals up 3.6%, resulting in a blended rate of up 0.1% with an average occupancy of 95.5% [9] Market Data and Key Metrics Changes - Apartment absorption in Camden's markets has been the best in 20 years, driven by strong job growth and a shift towards renting due to high home prices and mortgage rates [5][6] - The trailing 12-month starts for new apartments are down 35%, with monthly starts off 49% from the highs, indicating a potential slowdown in new multifamily starts [6] Company Strategy and Development Direction - The company plans to focus on capital allocation, reducing exposure in certain markets like California and Houston, while looking to invest in suburban areas rather than urban cores [21][22] - Future development activities include approximately 375 million anticipated to start in early 2025 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating environment, noting that rental demand remains strong despite high new apartment supply [5][6] - The company anticipates a robust transaction market in the coming years due to significant multifamily debt coming due, which may present acquisition opportunities [24][32] Other Important Information - The company reported minimal property damage from recent hurricanes in the Southeast, attributing this to quality construction and preparedness [12][13] - Approximately 80% of the company's debt is fixed rate, with a strong balance sheet reflected in a net debt-to-EBITDA ratio of 3.9x [20] Q&A Session Summary Question: What are the rent levels needed for paused predevelopment projects to make sense? - Management indicated that construction costs have not decreased while rents have, leading to a reassessment of capital allocation for certain projects [21] Question: How much reduction in Houston exposure is planned? - Management stated that they aim to lower exposure in Houston, which currently represents about 13% of NOI, and will continue to trim the portfolio in that market [36][37] Question: What caused the significant falloff in leasing spreads in October? - Management confirmed that the strategy shifted towards occupancy, impacting lease rates negatively [40] Question: What is the outlook for bad debt and processing issues in L.A. and Atlanta? - Management expects bad debt to decrease to about 50 basis points by the end of 2025, with ongoing efforts to improve processing times for delinquencies [62][63]