CPT - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Camden Property Trust Third Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kim Callahan, Senior VP of Investor Relations. Please go ahead.

Kimberly Callahan

you Camden's thank earnings quarter and call. conference morning, for third joining XXXX Good

we our I statements prepared information advise begin review future could These we filings can Before risks remarks, guarantees be not we current and of be statements our in our are uncertainties everyone and would involve results differ will making these on forward-looking based performance expectations beliefs. that to risks that and to materially about to the encourage SEC and with actual them. cause from you expectations. Further found like

statements today's because update made or Any subsequent management's forward-looking to company statements these on of current the opinions and supplement obligation events. represent no assumes call

in and As website will of a reminder, includes complete it be quarter call. Camden's financial available Investors at discussed the our third measures, camdenliving.com, XXXX to is reconciliations non-GAAP section this which on release earnings

Camden's Oden, Officer. and Chief are remarks week today and we one prepared Executive XX Chairman have me that gone know to be I Jessett, try our within Keith Officer; multifamily complete Alex length, to in of over brief several Ric calls Joining will so in and the our this Chairman; Vice Chief hour. Campo, minutes call Executive attempt Financial

we'll We queue to call concludes. unable speak two, to if happy you to after phone the ask the respond If that the or to questions we are by with today, limit then you queue items rejoin be your to questions email in discuss. have additional additional everyone

turn the call At to over Campo. I'll this Ric time,

Richard Campo

space. hit say it to was, life the a provided they is same Talking multifamily strength Today's seems morning. good titled Thanks, that Kim, and was music which the the Lifetime, by Heads. in their in Once describe as ever In on-hold

supply exceed earnings Apartment to for expected, continues growth same the to job making was third by driven than guidance income Camden's our growth another demand three markets, the in operating higher property leading year. new better in net and average. increase quarter we national that

be million through third in to rate far, choice home to household continue years. $X.X the the Apartments formations formations to for nearly XX high. millennials quarter the remained last continue in capture Household Apartment the strong of and many be has this year highest so increase others.

high on record parents their of their since to finally employment millennials grown are markets. has back apartment the The the still recession owners. the of into started great the faces parents, apartment with puts children bring smiles the the This that living some and

property improve repositioning portfolio continue through land. our the in one REIT sheets acquisitions, quality property and We maintaining to of development, strongest of selected dispositions, the while balance

our give Camden hard I and shout experience and members, lives teams are work out one their improving focus, customers they our a big want team making Thanks. stakeholders' for our vision a at to time. that sure to our

And I here. will let Keith take the call from

Keith Oden

Thanks, Ric.

results leaves close quarter the third raise, beat to positioned straight third out quarterly same-store XXXX. marked a strong us Our well for in which

report for and of quarter We along providing guidance our next will card Camden's XXXX letter with grades each customary markets. be

XXXX are will year. aggregate flat declining to slight forecasts economic see our Most in supply the will next third-party recent indicating most markets peak with of markets Our in in supply in XXXX. Camden's decline a

Houston, However, see expect Orlando, we in to do Dallas, Austin. increases Atlanta, and

third same-store from the X.X% revenue our grew that fact the results sequentially. quarter and include X.X% highlights Some at same-store in

up X%. X.X%, Empire quarter at Denver the markets X.X%, for were both up up X.X%, at and DC Metro Phoenix San Atlanta top X.X%, Raleigh and Our Diego/Inland

South Florida below markets X%. weaker remained and Houston Our

above and and XXXX, up XX.X%. XX.X% the occupancy XXXX. from XX% our quarter in year, Year-to-date, remained XX.X% was Regarding prior on third quarter remains occupancy, occupancy the XX.X% versus in XX.X% slightly above quarter last maintaining third in the of XX%. focus at We averaged XX.X% October of occupancy

to leasing Turning activity.

blended new of X.X%. blend a up X.X%. occupancy last quarter quarter This by compares our increase XX Third XXXX decrease This were XXXX to XX a to third point X.X%, renewals for X.X%, of rents mostly offset rate in basis were up year. in compared point was leases basis

were October average prelims X.X% being out on as for expected roughly November/December a new same renewals and at increase. leases October blend, flat of XXXX. for renewals X% up the as sent an are X%

set year. XXXX. continues quarter to It net for to Our record third last of XX% versus was lows turnover down the new XX%

quarter quarter Move-outs the the was the was as same to third in XX.X%, which of purchased homes last quarter for XXXX.

for to to the XX% normal move-outs For beginning feel Great to like XX% versus this the is XX% homes Recession. to purchased new the to metric, XX% prior rate

initiatives, technology an revenues, overall increase our better and reduce to evaluating provide is for experience Regarding expenses Camden living numerous residents. initiatives

have completed online rollout an and the of for maintenance residents. We enhanced mobile our self-service functionality

We periodically are you our initiatives. update currently proprietary access and mobile on piloting and Chirp, solution, will we our technology innovation

Chief At over to Financial point, Officer. turn call Camden's this I'll Alex Jessett, the

Alexander Jessett

results before financial Thanks, guidance, on markets our And and real and update our on to brief move I recent Keith. capital estate a activities.

a of During Camden new began Diego, construction XXX-unit San the Hillcrest, XXXX, we development California. million in quarter third the $XX on of Hillcrest neighborhood

end, Camden quarter McGowen in Station development to yield a stabilized in low-X% the Texas, range. generating we our Subsequent Houston,

the similar pro returns in As range urban of development. original for high-rise the and result below but mid a submarket, of the slightly forma, elevated this midtown our is within expected our supply yield

dynamic $XXX a be a park. vibrant Florida. Camden public Later development a Station in will As to its in location and irreplaceable the new supply to from further in improve, resulting construction continues fourth we Plantation, for upside XXX-unit million city on transportation adjacent Atlantic, McGowen midtown will quarter, Camden begin there

acquisitions have of starts. new completed $XXX For $XXX development million XXXX, and million we now of

which, included guidance the actively if additional successful, impact are would as estate would on quarter therefore transactions real be several to around working quarter and are the in year-end close fourth immaterial. We our not

other the interest with of after financing to a and to $XXX end, rate all-in expenses giving On our secured bond X.XX% for X.XX% senior million of an offering. bonds subsequent the side, mortgage unsecured early June proceeds effect $XXX due the the quarter completed of we underwriters discounts XXXX. X.XX% our XX-year million offering used prepayment and due $XX redemption XXXX, million to We the existing of

locked into near After average and transactions all and our low are These these by our years. the debt assets effect unencumbered. taking XX-year all-time approximately now extended three of duration yields unsecured transactions, in debt at is our XXX% debt of of now

share. we the combined the one-time conjunction payment represents million and and fourth of previously prepayment, is this to million in charge on full-year quarter the a In with per was amounts charge FFO bond, $X.XX October included from and approximately on mortgage redemption make-whole charge $XXX FFO outstanding This guidance. penalty recorded prepayment related of and write-off the in the cost. remaining Again, $XX the $X.XX loan incurred

funds prior operations by per for This reported $XXX.X lower XXXX quarter than of estate a guidance resulted we million levels same-store night, and of occupancy $X.XX. Last results. financial midpoint from of anticipated the or $X.XX $X.XX combination share per range of of higher the to our from real third from resulting primarily share, than Turning higher outperformance exceeding NOI, taxes. anticipated

operating updated our revenue, our and for guidance and expense, net operating based income year-to-date revised FFO fourth We and expectations our performance quarter. full-year the upon XXXX same-store have

our fourth better-than-expected over midpoint the X.X%, guidance anticipation the X.X%. believe our of our lower guidance of full-year we will quarter and to of revenue our quarter, to to from which fourth quarter, full-year in third carry continued increased result midpoint expense X.XX% property X.X% a same-store we the and of growth the As occupancy, we taxes growth decreased from

the by result property tax The of in rates lower rates anticipated XXXX by passage $X.XX of which property XXXX. X, $X.XX district Bill approximately Texas tax savings as and tax reduces are additional primarily in a being an Texas House driven school

portfolio just to approximately XXX XX prior As under now expense is guidance. guidance basis a midpoint result, full-year this from result lower revenue property to XXXX at increase points guidance anticipating inside X%, we to basis point increase same-store X.XX% X.XX%. of guidance for a The our our the of NOI are and higher taxes same-store our

midpoint decrease fourth share $X.XX This per Last of per repayment. quarter XXXX from related to full-year the per guidance impact the of FFO night, early the revised debt charge the we $X.XX includes share $X.XX our to share. $X.XX also

this from XX of fourth of share the in $X.XXX other the midpoint miscellaneous business insurance increase higher for anticipated with results, Excluding $X.XXX quarter other communities. share operating primarily per per remainder FFO as from $X.XX increased quarter, by third interruption incurred the during our fourth anticipated and same-store resulting balances recovery this or result of guidance cash period one our non-same-store increase prior the $X.XX from approximately and points charge, share anticipated XXXX full-year our income, quarter basis in corporate $X.XX interest and higher of per income, the

XXXX. for the we night, earnings Last guidance fourth of also quarter provided

within quarter the XXXX be charge fourth We $X.XX share a midpoint $X.XX. debt decrease per share share the of expect per the to per repayment. for $X.XX of $X.XX includes quarter of related to of to in represent reported the FFO FFO $X.XX the fourth impact third quarter the $X.XX range early from and The

contribution expense lease-up, and from non-same-store the share communities increase compared per joint normal from this venture per repair $X.XX the utility, NOI share communities, turnover the our in our NOI, increased by previously per share fourth our FFO increase increase and from corporate per just and maintenance, by $X.XX share business incremental communities per primarily $X.XX various or a fourth and expenses, a third quarter other associated driven quarter with quarter Excluding share in overhead to of per one a timing FFO in development as guidance midpoint of and our due charge, share and quarter expenditures. $X.XX as $X.XX third insurance result communities, a non-same-store recovery to the sequential our in same-store decrease $X.XX in fourth over seasonal a personnel of mentioned X% initiatives declines interruption expected unit to our

million at balance with fixed remains credit line of and at million debt-to-EBITDA coverage ended net our ratio cash $XXX We quarter a no strong on outstanding the X.Xx of Our balances and Xx. unsecured on hand. charge $XXX sheet total with

million XX, At and of mortgage redeeming million the repaying quarter million of October $XXX remaining After $XX on-balance bond to sheet bond million offering end, $XXX XX, we had years. we under have next October now million fund with our X.X $XXX on the $XX October on over $XXX approximately on closing X, construction hand. cash million the developments on

we time, will call questions. this open to At the

Operator

you. Thank

will today Please the Scotiabank. question Our come begin session. ahead. from Instructions] now will We first go with Trujillo Trent [Operator question-and-answer

Trent Trujillo

Hi, good morning.

But for the So I an looking indication pipeline? at some acquisitions you approximate appreciate year for many you're deals can how some give about of value context, comments around the prepared that potential the of end. just and

Richard Campo

guidance, original $X of hitting of $XXX evaluating and we're year, those million would probably of being transactions, or and by $XXX we'll which likely original the talking an the of by of or end It's billion one probably slightly the close end guidance ahead that's basis. the are on We to ongoing be two million kind year. of the our

Trent Trujillo

And on quick a that follow-up topic. same Okay.

guidance – So earlier this at your other removed which funding year, issuance, and guidance of dispositions you now your had high. sources is because you included stock all-time dispo equity an from

how equity your that issue to some cost you're the potential you of opportunities advantage So about these of take of are capital and thinking more to seeing?

Richard Campo

clearly that our our grow, at we're one the well. of stock about think this manage we the have down costs issue REIT to capital issue by lowers as the an price balance order the of this at we gone Ultimately, debt, either Well, said time and virtue to entire to in the equity has our have be of clearly, year best rate – or including fees. did you sheets XX-year of cost sheet a And for sector. going balance to you X.XX% long bond, in all-in level when high –

we match our the that capital to fund need in to fund we ultimately can markets. opportunities So development, be extent or do the acquisition

the February. want billion opportunistic So and really issued area. be at few an issuance equity we've in that we $X of This bonds and over we did year, good a rates, to in worth

now, we need spend So continue use load make before we balance in to of we our the a our that we it. to will sure have and funds and sheet sheet. cash we try balance on have capital up management prudent to Right be

Trent Trujillo

Thanks. Appreciate thoughts. the

Operator

Our Citi. Please next from Joseph question go will ahead. come Nick with

Nicholas Joseph

Thanks.

some provide expected mentioned You then that specifically year, for Can color terms and in in expect of you maybe supply versus peak on Houston? and this DC you that to in XXXX. deliveries XXXX more

Richard Campo

Yeah.

come about going up then is using ticks our numbers. footprint, deliveries down XXXX, this XXXX, So in Nick, to In and back we're year – – Ron to roughly will Camden's XXXX XXX,XXX. in XXXX XXX,XXX in that across we this it get down slightly comes Witton's as about in to mentioned, XXX,XXX, that

So in with XXX,XXX then the back progression is XXX,XXX, XXX,XXX down peak and to XXXX. a

year numbers is big is XX,XXX year, change. XX,XXX average are but is for XX,XXX XXXX. flat big from a about closer Houston long-term this to We In roughly deliveries expected XX,XXX, basically in year next go this wise another percentage is jump, X,XXX to the and in DC, the apartments Houston. which XX,XXX the

trending So we're jump the but we'll – what back like long-term pretty average been, big of a XXXX. it's to looks kind has over

Nicholas Joseph

Thanks.

you And the do little supply next into plays how growth so drag you year? operating going in that a bit How Houston, of overall. portfolio about it's about think of think revenue terms into that year when portfolio a same-store obviously heightened this versus been

Richard Campo

XX,XXX here job better continue is is strong market year Sure. dramatically to it we does. The has be and didn't materialize last would because higher demand have And over on Houston The XX,XXX apartment we that rate what's been. dropped here of be than couple expected way this the growth, going market it thought years, the jobs. Houston to an to unemployment what interesting usually we

gone And primarily happened of function that's sort that being from of of and think historical unemployment and country. around everywhere. generally They've was down rate a what the – migration – indicative low this is rates the numbers, I

can there's somebody their So not can and get they job situation to much their go city. create leave family to if they as to another incentive there for a for a city

of one the that's issues. So

were solution. down, taken unemployment pretty new people were issue that already who housing that a they is who other had is rate existing in The created, went here when which by Houston, jobs interesting, our lived the

and at we flips. you the So lived when in XXXX, into result apartment already, that going they house a XXXX that. start think demand numbers an new create either a as or and we forward And didn't looking of

of formations year, Usually XX% about XX% last by the to jobs, of rate Houston. they household driven apartments got the are capture XX% in getting demand and maybe in

turn turning for we're in being constructive to going that during turn that's apartments next to year see started going think – should which it are online it XXXX, more and we So to period. already, able that and XXXX those lease coming be

Nicholas Joseph

Thanks.

Operator

Shirley go will with America. Bank next Wu Our question come of ahead. Please from

Shirley Wu

guys, thanks morning, and the Good taking Hey. for question.

about Houston So bit. little you talked guys a

So could bit or worse near-term you about and market could potentially happen talk little where in the a Florida you're also make seeing market, to also expected? what of Southeast better that a softer than

Richard Campo

to about a to in XX,XXX in same Fort Shirley, primary moderation job both it's rates, there's like historical about the and which trending XX,XXX There Yes. two issues. for looks in Florida, low of next in jobs XXXX, year, jobs sure, on has XX,XXX Miami, are the running year. growth their of this been trending thing Southeast we're about XX,XXX XXXX, between Lauderdale jobs down from in end

You the overhang still of big of – of condominium inventory the have a market. some pretty up shadow They're demand of the higher end soaking at condominiums.

supply the an So on side. issue that's a of bit little

Fort apartments. in which it less you've looks supply And down X,XXX that's XXXX, Miami, next in like year. be Lauderdale, and help about drops X,XXX total than to XXXX, In completions X,XXX, year X,XXX about then, like It looks some. we going to should this about that got had

our our you Florida in with lot the bottom-up Florida clarity South in on see So feel think of hopefully see. that putting a to XXXX. lot power like that it's looks a view provide it for going while in to call. We're budgets now – we're equilibrium, a we our return guidance process scenario pricing great scenario South and doesn't a together next right and conference certainly in more We'll on like we'll

Shirley Wu

supply, this talk XXXX, topic on occupancy And Got higher into anticipate you you little versus going on as could supply helpful. focus as it. your talking strategy a about that we're bit forward about That's and rates?

Richard Campo

Yes.

Camden's total So – markets XXX,XXX you've about going if across XXX,XXX. look the at up our supply you footprint, from got to is

in X,XXX run us kind that X,XXX of a Houston. in rate So of to footprint. it's Roughly entire Houston Camden's apartments is again, the absorption. for And XX,XXX back over normal gets

it's the a it's in the off sort of us, low about XX,XXX, – doesn't of base of is to seem anomaly that terribly X,XXX rounding markets. error across rest and such and So coming of Houston, troublesome our not is it that a it

XXXX from aggregate, be XXXX, see to you're the but going movement perspective, I going a think, the our around to like in is lot some markets.

moderate else I think Houston. we've got see in we I should Orlando, Dallas, supply. declines mentioned the where in increases, pretty much markets portfolio, supply everywhere and including then And Austin our

this cycle. think off. the So the going trade that's probably maintain maximize we at are just strategy of to to better We our trying of that part occupancy

XX%. plan again, higher something is, our our is but when year in we'll to over that's be my outperform for years, a together that but So the materially, every guess this be portfolio not last for fourth we than will would five occupancy like carry and seen maybe We've average have this the what to planning far, on able over that it on maybe occupancy XX.X% looks so next year, put quarter you quarter little to been year. fortunate

Shirley Wu

Great. Thanks for the color.

Operator

question go from Goldfarb next Please Sandler ahead. Our will O'Neill. come with Alexander

Alexander Goldfarb

Hey. Good morning down there.

questions. two Just

you competition competition? where rent the the or given you're coming last have would that maybe as the past you acquire. and sort have be underwriting the And First, as year seeing your way you of same it's cap just finding markets clear or levels of year curious, been sort regardless guys of tough coastal what of to that you underwrite this your may are the are same IRRs just on market, pretty from are country lower the few guys more the obviously the almost rent years control growth transaction market, converge across just rates that some IRRs you than markets had actually

Richard Campo

the we speaking, – issue, is want think been I capital I the we aggressive IRRs. to when right. get from to you down as acquiring that terminal our spread decent over of on properties generally of long-term issue, the Well, costs haven't our a because reason mean, have

the the same in across Houston. at going-in of now much And And it, at we're so markets, are including most the looking country. yields sub-Xs the pretty for we're type property

is of a idea get point is that tough. have so And over that to capital that cost you have long-term to the starting the a IRR of terminal your spread from decent growth

as many that's bought we Now, haven't why properties.

So bottom it's haystack kind we under build undermanaged, under needle of it's restoration line we're for, what costs. looking could is, a the where in for it so

it's challenge so a And units getting that regard. those in

that sort needs there and there of is is this to that – to a with the is in a be there said, really big match sort a there'll of that two, wall recharge that their own they if to the you sellers placed, out bid or will adjust of a maybe can ask capital develop. will, spread of to there hope the buyers sheet So be have continue to balance year sellers because need want pricing, and yields massive next there's what going-in or convergence so

Alexander Jessett

our the the your and some that are for have On markets question, – all was right only of Belt into footprint it markets, from to there lower the migrating the indications now. the which the is flows coastal of to others, are decent gateway reasons cap second like recently pretty players in that rate there – a cities from Sun part Belt kind other capital we historically and where migration the some of big the is the wanted of Sun that markets play

friendly our the and our and to U.S. certainly continues it the most in of in rest the of growth, of environment outperform states. job The cost is regulatory more business doing markets,

evidence is that's there on So and rates. does put think pressure cap additional it on, some going I that

of that you IRRs, pressed cap about rates On whereas $X.XX, the side that's realistic question kind if be rate of exit cap to IRR, $X.XX the the at poker. exit you're of think hard cap what would we're is as to of chasing flip but even at looking that acquisition rates price a the have underwrite cap And an been before an is. you got rate, about we

And that ago. so is off cap think do when what environment, of rates realistic year have with underwriting exit the current your not the far been we a would IRR based you where are it on

matter cap The pointed from as starting challenge, Ric the math you're if a exit your is what is it out, $X.XX, on rate. doesn't almost

going we all, them hold XX when years. buy of First we're for assets to these probably

that's have Secondly, average forever. to $X.XX weighted get cost sort capital like rate to from to above run of our seems just a

you willing really the time spread a reluctant quit not So the in just below point X. at about we're not say, spread care invest who that money we're our world, lending lend don't lenders floor. in and I'm money way think same it's what is. it the willing some to I X. over below In to

Alexander Goldfarb

It's those certainly in to Sun $X.XX market. talk about sure together. met you've Belt I'm amazing never

question The for Alex is second on tax. the property

You an next expect there's you savings, savings also impact said year another that of year. this but

think So but amount if savings about we run do how the gauge is just standpoint, sort we of third not the year, from anticipate that quarter we still that should already rate? know of a in or qualitative savings next giving you're I guidance,

Alexander Jessett

in And in that it's were an rates to Without XXXX at refunds decreases in XXXX. tax XXXX, amount will gotten we've is, with in. of is $X.XX $X.XX successful XXXX giving that guidance, in then we additional further the see very the offset in what in Texas we obviously

anticipate in XXXX. play And for so the we'll out how we refunds see budgets our

Alexander Goldfarb

you. Thank Okay.

Richard Campo

Thanks.

Operator

from question ahead. Bank. Our next Please will Johnston with Deutsche come Derek go

Derek Johnston

Hi, everyone. Thank you.

declined in shadow let's construction are X%? under and yields expectation robust. given How has development compressing to, environment? end And starts development the the you range remain platform around the of comfortably low to viewing this say, Your yield pipeline continues

Alexander Jessett

are rising $XXX generally where continue annually in we I pipeline that faster down like that definitely X%. gone. million of $XXX book result returns between construction in that have up our rental and of started to Yields on the was we to be absolutely is rate going and business answer than as business We've development a we costs a regard. think our last around we come And come increases sit development have and continuing completed, million return the have average process. we have down,

our returns X%. around are average Now

And assets of than going to suburban change, got higher the be And building, in when the blended those types blended last are you going wood-frame are we're that and properties the rate that stick-built to probably X%s. level urban think of to points our returns the concrete the X% higher suburban so, about some low at higher rates be going building densities, we're the assets different XXX trending basis be and are and are our we on and less cycle. than

has the stayed continues X% other risk are robust. sub getting for people you spread these we're developing On because to when paying be hand, have cap for you're developing, spreads cap at in of rates from the reward kind rates same risk the of the terms of assets qualities or the getting compressed that the look of that actually and spread

project at basis wall And of versus because development bid the need XXX properties. up the in acquisition. rates the cap of compression that point an existing We we're that capital least on and spread positive a get to continues to continuing

Derek Johnston

switching Got And it. to quickly. DC just then Understood. just

Belt outsized in portfolio the contribute course rest other And an So is – the we amount Sun of the make sense. portfolio. metros DC of yet will versus NOI does the in which of

understand market don't do have at you point ongoing or I redevelopment in believe really So there going pipeline this you going the how fitting one project communities any forward on? you forward? So that the development considering DC view do do see how the into going planned mix is DC

Alexander Jessett

Virginia we're assets, got Well, the they – have that in the a a it, and allocated way we've those own Keep affected the individual sort we to by the Metro. have that think still appropriately there's of their DC then we drivers. proper Northern markets all long-term are DC all market mind into – about DC and Yes, Maryland. but all way there's probably is

year. two last We've finished just sizable DC. finished in NoMa pretty We developments

Proper. up lease in DC Our there

to the be constructive certainly at to expectations we to continue in So that's on And time this and that's DC. DC, our happened number growth our portfolio, that's year. It very a X.X% outperformed average. accretive overall relative in the NOI We're of years. first

we the to that we'll we continue So And up DC continue about new last invest. to I just million in $XXX the two said, development wrapped years. as in like Metro area, of area

of – stable with So important a wrong. with improving grade gave it portfolio on probably B more outlook Metro a or based DC maybe it an It far. of portfolio, the and a I continues part a was our to outlook B+ of that stable B be letter or like an was so probably our B performance

Derek Johnston

Thank you.

Operator

We on Please will Capital. move go questioner, KeyBanc Wurschmidt Austin to with the is which next ahead.

Austin Wurschmidt

be that, year? I that you. $XX you of million in revenue to Hi. revenue expect in your completed initiatives working Alex, contributor, a expound more this guess, Good guys are to morning. prepared CapEx growth and do you numerous Thank the that referenced on remarks it you and of you on improve revenue to have enhancing expenses. you Can

Alexander Jessett

working talking on? about the Are you technology that we're initiatives

Austin Wurschmidt

technology These to items I initiatives growth. contribute topline that other or will guess

Alexander Jessett

service we residents. for for certainly, reserved to And willing a our might spent can our where the Yes. parking of year exploring pay of of lot enhanced areas time for etcetera. additional one options to people residents, drive in the opportunities areas last value be where for We're looking we've space, for always new parking is that creating an

area an in the last focus attention months. that's has our that gotten XX So of more probably

mentioned rolled mobile at. a we're of has things looking us. that are that technology, changer of maintenance, terms there already we In out which for been the number I a game real

There we're now proprietary of don't lock on just product the a industry. them we're of “smart that out a is lock smart for multifamily economics that working The other solution, we right but the a thing right work there, are have number and solutions” piloting now.

trail that will in pretty as be condo solution a on hope effective and when we for high-end opposed the entity piloting comes the game up to business, with cost we up multifamily will we be now. that Houston and well The we're business changer comes solution that right are the someone down proprietary a that is

We're piece the perimeter next rolling be rolling quarter, And in out it. the out access already lock we'll component. of smart first the year,

So, up our looking better keep head and and of – have always any residents. keep just we your we opportunities to be that aware serve

Austin Wurschmidt

a Can on from the is of what that what and returns you us the are items? spend those expect give you sense

Alexander Jessett

lock because We a We'll multifamily that point something work that don't available proprietary but it's down to business a product that who in else a that in since smart at have solution nail the wants make yet anybody with we down haven't nailed yet. time. it's economics

Austin Wurschmidt

just Okay. $XXX available you the successfully willingness deals, utilize that kind the extent cash an as acquisition $XXX of sheet future I pipeline to million utilize for your of million close overnight? opportunities versus you what's the on arise. guess And the on balance the to in then to last me referenced question ATM and you're

Alexander Jessett

the versus terms can between quicker the ATM day. obviously do ATM, sell more in limited each balance of you interestingly to cost of and company overnight because a efficient overnight and volume same Well, it's it's the enough, only about is amount to and

as that most that allocation we're But to efficient debt fund, really the determining have investments of use is platform trying we'll do making, and equity factor the the and past. in so for to combination use and our the really capital match the we

Austin Wurschmidt

thoughts. the for Thanks Okay.

Operator

Our next go question with Babin Baird. will Please ahead. come from Drew

Unidentified Analyst

Drew. morning. is This Alex Good on for

reevaluated to curious it get on that how at road? for have expectations underwriting the little fully a expected? leased? you also, your guys was down yield than lower And looking coming then to concessions development Have you Downtown Station, initially McGowen the aggressive right there you get off, First

Richard Campo

and McGowen months Station. going So, on to month sometimes what the free of first two-and-a-half. a what depending was market range anywhere year McGowen on time Station free, kind from upon of question, two

Midtown – you probably – Greenway and Downtown, When most the Houston, are very high where highest end. at properties look that's of at that markets, the and percentage the

it's a perspective. that been there definitely from So slugfest

feeling Now It's yield that originally we're McGowen about projected. than lower Station. definitely a good stabilized, we're pretty

have the the the and new concessionary on of definitely going open Midtown an are to effect good a there's is, Downtown. not we does But market. lot opening project, Downtown news The properties that. doors their do and up same Greenway in The

but next So least positive market we to a place for that to to expect that Downtown that live. at – be to for continues XX months, people confident the very a be we're XX concessionary

In in about And of improve XX,XXX living the and in billion you've there's ability, walk last $X and to gone years, X,XXX been from transit, worth to you. Downtown have people investments living Downtown. what and five people parks,

So, an live. we continue will to Downtown near-term, be people people even and great the alternative in place think for to for a long-term,

good tending to of an in Downtown surprising older seen demographic than are that primarily are You've Houston. the it. demographic, we because buildings living in the that more price feel And densification younger sort be but they're are about folks because the a rather offering, of me, much point downtown

concessionary open and will do for We market there sure.

hand, one Downtown hotel. And on because, out building doing Downtown of units an flow Hotel, generating the occupied have the of will very the the market, of units we that some building, be They by and we'll a interesting are have quickly. the from get test taking tend hotel, will to a we'll Why cash be out XXX which

would have period and to we'll time of lease And property opposed And to what units. continue able property, of to to while be vacant lease up. sort we Hotel up of whole the will that over offset in close sort otherwise the down as we be then able smaller we'll Why a cash flow then a

Unidentified Analyst

expectations guys very and in helpful initial over that if motivating that supply LA has And a growth you rates. the That's your then, year-to-date? does like pushing lastly, factor relative looking have color. Orange result County, occupancy at been come revenue Curious how looks to been

what you've that curious in just seen market. So

Keith Oden

Yes.

we A-minus A-minus Orange improving in had, County, as improving. of LA an the the and rated year, at So beginning

of very California, got So other County based lot footprint different of LA. a public Orange of the the the on do at year, beginning constructive California. we were way a positioned. We've just in than Southern portfolio company its is our brethren our sort on pretty all

within not California, in LA. even Southern And it's concentrated

Orange Greater in our performed they've a apartments apartments Orange XX,XXX LA expectations. in all had Obviously it's of in about increase think line roughly in I LA. X,XXX County, in of moderate – County. had real with So, and total We a new

look So, both year markets. trending down they're in next like those numbers

LA Orange see we job and continues to Decent continue – growth County. in

little it of competitors. So, year I some been our that of have in But both – the don't constructive a bit us disparity beginning that a bit there we would of better certainly has good at results, XXXX. wasn't for our than I know markets between unanticipated little a those of

Unidentified Analyst

Great. Thanks. questions. my Thanks taking for

Richard Campo

bet. You

Operator

Wes question Markets. Capital with ahead. RBC will next Please Our from Golladay come go

Wes Golladay

Hi. Good everyone. morning,

into forecast for does this year? year, year that account in supply that take versus to for time construction delays back next next Going

Richard Campo

our it looking get tell trying they work do say, that of a even of providers dates like because quarterly would delivery lot I aggregate at to terms are data and looking yes, numbers. at monthly in around as or to just doing opposed refined of kind us

Having slippage. the have would years, last said three both every years, say underestimated amount data that, I of all for providers three the

me what they and can't going we're just last XXX,XXX I'm I it versus imagine on estimates the ahead got XXXX, really of materialized. four from So as go of actually – to to calling maybe for years XXX,XXX. skeptical based

So I in when guess there's better see it believe hope that refinement bit but it. I I'll data, that little a I

Wes Golladay

do Got debt? it. coupon looks soon And like, that really looks of out I get then, How there. stand debt does at XXXX. the some it is, The thing sheet, have balance you one piece after it maturing good X% you mean, can in, looking that

Alexander Jessett

extinguishment opportunities. with get is those replaced prepayment And goes take the we closer we'd it have Well, of The million to to we The we charge the expensive. for out. that those bonds the when is bond, the early a $XX challenge obviously. it, maturity are the XX-year lower definitely you we'll XXXX penalties look at very as took like

bonds. the We $XX told of if look that we've XX basis charge, a analysis as spreads the rate breakeven XX or us that sort had million to points GAAP we what sort buying – on did. is between that points, we the which of insurance time maturity versus issued in basis it's the of XX like And October these we basically at went basis points up

look that move and or that's a get buy. points how XX bigger rational much – And at when you – points, when to expensive when more spread to would a how be basis you cost policy. spreads the XX insurance basis today down about and insurance treasuries policy And a move, we think higher

But why decision we and spreads, wouldn't we make take that's today. much get to the as But today, closer, we that in more looking the future. expensive, that and out at happens rates could what

Wes Golladay

you, Great. say. Thank I'd

Alexander Jessett

time at math it so probably the on penalty that about weekly. running on I the all say, now, that we just be million, prepayment compared we're $XX look absolutely, million was would going to we to as and Right this $XX incurred. the

ongoing So an on basis. looking we it are at

Wes Golladay

Thanks a lot, guys Okay.

Operator

come will from question next St. Our Haendel

with Please ahead. go Juste Mizuho.

Zachary Silverberg

guys. Hi, Haendel. Silverberg with is This Zachary

of that you XQ, few moves questions some jumps the the some in and same-store you from the and in talk Just about expenses Florida? Charlotte a Atlanta in core specifically big of Can big saw side. Southeast or cost the in markets

Alexander Jessett

absolutely. Yes,

plan. So, when we were refunds tax some very you. tell I'll in you the at got our look Those in third property Atlanta, quarter. large in fact

there a for really us. there So not surprise was

very keep high Charlotte, look Charlotte mind If at property in really you that taxes. had

of We that the talked beginning the about year. in

reval tax property around our and for driven. matter and this in that remember years, that actually growth Charlotte XX%, be at property is year, of you looking a does Charlotte tax Florida you're as to eight happened fact, the also every Southeast right a total so If if XXXX reval that's

all just said of market years. it So when the that come depends refunds due every property to overall tax with they they're and all Charlotte reval that they're I increase in either fact the or the eight driven in timing really as upon

Zachary Silverberg

from Right. any Thanks. that you anticipate other of or do And of taxes, tailwinds mentioned headwinds but anything benefit reassessment or taxes XXXX? you the guys and sort in

Alexander Jessett

at that revals is that only the we're so Raleigh mean, looking certain year. every also I XXXX in thing Yes.

to and going that's four going a smaller reval XXXX, in is it's for market be years. over Raleigh us. to Obviously So,

So it we as what in saw be shouldn't as incremental Charlotte.

to And what FFO taxes. a per a of we property we're the reduction talked $X.XX talking mill then, We're about rate. in as in rates on reduction clarify about share. When or just percentage is tax talking about not $X.XX Texas, a

if it, you think it, about So, in rate about X,XXX, a rates. standard being, Texas works that be $X.XX is $X.XX per if X.X% the to to call a reduction, have mill you what reduction due in a Texas out

Zachary Silverberg

Thanks for color. the

Alexander Jessett

Absolutely.

Operator

Our next Please Neil with Malkin One from will question Securities. Capital go ahead. come

Neil Malkin

guys. Hey, Yes.

about First Houston the World first, question general, Series. in on sorry

Richard Campo

there game? Was a

Neil Malkin

big maybe and you with energy supply of how so quickly. about is ebb really about it flow you've really but Yes. easy heavily plus wonder, But on energy, sector driver given in one think on presence, market seems the the that just fact given demand sort the I exposure fact paring that it's volatility know is doing, a main the being talked and medical to of just do very bring your I it? market, down the ever that to

Richard Campo

by XXXX, Houston. energy is that a barrel XXXX. some Well, drives because $XXX Houston they if over middle fundamentally, just you $XX that were let's talk and in went and prices jobs million then I change of – think misconception to energy a when about Energy at lost look XX,XXX industry

business, another time, petrochemical business and the that produced the medical businesses. XX,XXX at the other in Houston And ancillary jobs

the a add – flat to the basically So, growth starts from can of by you ability of result job can the good a fast market you supply a that, for add supply. couple and about the supply then responded Houston as as had dropping years cut the is, as news

we maybe it cut have market So like the and a XXXXs. major pretty the supply dramatically, didn't dislocation the in had

from So, more just is oil, there of you diversified happens actually what manufactured relates of airline there. is Channel. part the perspective. it of for all that is third downstream of the in Houston is energy and doing the fuel example, to sort petrochemical XX% the of Houston price economy manufactured of Ship really and A is about – a when was much well. that business than But part the the gasoline, drilling past. in activity And think

more of really lot, do long a and by lot driven as chemicals by So, to primary are well those continuing economic and as – not there's activity. but are energy prices a

recession. from of So, of if one Houston reasons bulletproof – sort then you – a clearly is a less horizon, a on have less recession the the that's

go side. had Houston back it recession, 'XXs upstream on the energy-dependent the was you felt into so when a it never mostly because US If the

said, buying look market you XX% about and we're joint Houston don't our venture that sure a new real for where It's see our at our selling. great now. With of – right haven't we're we of where a estate, at to than and other today. allocations in but definitely make want you we that portfolio our in represents definitely look we're long-term balanced. we Houston been us, And development

the isn't the mean of when because we necessarily doesn't opportunity in that lot of market – in out perform a points stock sort the of badly Houston, situation a here. money a by think, misconceptions flow didn't our and from people the stock because in X,XXX the cash of here threw underperformed because though they basis But lot perspective XXXX of we one to the I of window made energy me, even that

maybe have the never toggle more We'll some beyond back players here but that and this that, like we're CapEx, like needing we're it investments perhaps carrying make stay in growth slowing maybe of long-term market So, assets the here here. but and to Houston. to or leaving going going anything we're or we that, there, are considered

Keith Oden

second Neil, you is largest to our condolences DC for your everybody largest Houston like thank But our Astros. told our Houston I in And, Camden, is market. market,

up teams they Camden of up was is and going game, to to a with the Before is one ever the the teams end going one – of end winner, trophy. a played

Neil Malkin

Good at look to way it.

expense A Okay. companies into and Last how tech been sides. talking me. and of that feeds one both lot various platforms revenue on and have about from integration management

to I'm help doing like but obviously route, smart you're about curious – just You're things proactively thinking not CapEx. home with using spending technology how the

side could your data enhance big expense that that to or those doing sort you're or the Things, leveraging of I platform of lines with? revenue the along be either you're of Internet kind Anything on guess,

Richard Campo

that first their access. lights doing that dispute – are example definitely and thermostats on People, all, not things They want smart smart would not. homes, people of smart systems I that – want we're like we're or do not that Well, we for want. turn the because doing and homes

for. what are do We to lot to a trying customers a what understand time of spend lot want of and and willing they groups focus pay our

And of to customers equation, so of envelope for value pushing the the on and side drive edge create for us. that we're revenue the

to completed putting and system, big our of on the we to and CapEx. is financial is all the are this and our reporting HR data, just able all Cloud-based Oracle we additional big just data, process be have in where to now all going an but completed via is then on access drive expenses it's cloud. about about being lowering And in our that having – On the going that of nodules modules smartphones, data system

I a think thing. real the Internet Things of is

And a in in all and so, a of in data the can smart preventive broken units do that we conditioning able that fixing us which ultimately air maintenance to instead can, long-term. when cloud, you the we'll actually so have our and your same maintenance, devices we as money leverage in the one, would communicating over save can resident, or place, we inconvenience be tenant our a facilities platforms it's across –

you're very effort. a was painful time teams plus working a it of big is our that in did and those that understand to project, amount your So definitely result investment are regular The project. a managing our ultimately though implement big – a definitely of Company as doing big data great great new dramatically a be and involved trying and even analyze our going is nearly teams two-year things thing, a think, was It's of and did ability are ticket what I everyone system, massive enhanced a and tough was in and job it. and how kind projects because to our job, job a to

Neil Malkin

Thank you.

Operator

from John come ahead. Pawlowski Please Our Advisors. next question go will Street Green with

John Pawlowski

Thanks.

be the what properties hoping suburban are Any growth side, rent ahead? would you to XXXX pulling and you're Just quick backdrop comments suburban me. was seeing as versus earth relates are great. down versus still to urban they one there on coming compare one for could XXXX I properties, it versus operating or Keith, urban, or

Keith Oden

was product their That's on the assets. where had definitely bias or build It's an demand result Yes, urban last primarily outperformed where product basis that year XX by John. the of of that's was overwhelmingly, buyers the suburban exit product points. Pretty And got the the – of where has merchant community outperformed to the urban cycle wanted our for toward consistently built. has a it product product was this about basis.

see in and So, supply portfolio have one actually Greenway things up continue Houston yes, Midtown, as really nicely. of dramatically suburban held hasn't our the area. it pretty Plaza the assets that helped that's Downtown challenges, our and us have that, we It's Ric in the been changed. real And mentioned, to

is, guess the So have because core a so always – to is areas do it with see much competition focus but to. trend, suburban – drift the as the there's urban that when community, you're merchant is deal back we'll continued. absolutely assets in that they going and the that My probably a we it's toward by

Alexander Jessett

supply just as portfolio And the other was clear, talking to well. markets Dallas, in be I related Charlotte wide, holds and comment Yes. markets so of that

Richard Campo

– is points Camden's across across XX that's portfolio. the entire Yes, basis

John Pawlowski

Okay. this a last margin And has time year? similar

Richard Campo

was. it Yes,

John Pawlowski

Thank you. Okay.

Richard Campo

bet. You

Operator

Hardik comes Goel with from Please question Zelman go Our Associates. & next ahead.

Hardik Goel

guys. my for Hey, Thanks taking question.

are issuing your today little and you talk of going capital challenge can company Just some the of the peers size about of coming level bit stuff, the back from expanding really out equity company. the there just guys a allocating and

do prudent. this of about out what capital elsewhere? XX this think could it could more it? What keep wall narrative of How see issue? or You is move that five, there change? it And wall you guys have years, shift play longer-term, this How you been capital the will

Alexander Jessett

change cycle. result we and jobs, a happens, I about contraction business of we Well, question in lose next demand people narrative The and that is a reduced right have think what that have when recession, as when happens the is – a will what situation. when there the generally is

effect have And you're and to share. able down. of sort rates – has That prices lease generally go happens you that have that cap rise then is an on and new dramatically what market especially developments pricing, ups in to buy landlords, discount are

and kind was of going rising. and that's year down guess recession the on about was the and was market thing The – side, I talking recession this when at the last Fed everybody time

on of to sort don't major be where sort the – cycle. position a a you We're we bet you sheet upticks. today in easing keep, or for hope where know accommodative on best. what's we're know recessions is trying because our We of where Now it the plan and don't why worst That's going future. balance in for in happen is to the

part live. multifamily, because interesting need to estate the and multifamily to multifamily industrial wants and and of the that's place one go. classes, hands, the where top is space, the of I guess, reason have real multifamily capital investment hot the think real that's people a I In

they're in buying houses in And when of the they they later at apartment. look having life, at life, sort the optionality they want don't of – today, doing where they everything operate kids how millennials, an you the the life, especially live later later you look demographics, and people and are in want

So apartments good. are really

on asset our you if average think month, of rollover up then, then because And day. interest if we're apartment go of X% inflation, every about, leases repricing rates every well,

inflation. for a So you have good backdrop

So that's why capital way. is coming this

a We year $XXX are the put the look capital expanding additional gets of development pipeline, $XXX out. at our well, that million when you million acquisitions, or plus business as

all is we're in this XXXX, more if we If going because a very of – Now more cycle. out aggressive uncertainty we're cycle beginning we're the XXXX but of there, there's and a might the could prudent. be we ultimately those – late fronts, or to be if lot on at we're

Hardik Goel

it. Got

that. Just a on quick follow-up

cap mentioned X.XX%. You of rates

You see significantly historically low that underwritten possible returns base. they recessionary operators for Is not scenario, it guys X%, but a is from because conceivable private they're you out rates for are because underperform strong have underwriting it guys an cap because may like of that such starting exit they sheet, that, in X.X%. a be cap you more have balance that a the

Alexander Jessett

revenue XXX offset growth cap IRR because I in in rates order mean, that a Well, an X.XX% to cap the that's able kind right? of the be if cap you you points, then return. flow to you need and start of rate, and NOI or you're wanting rate and I to make gap XX% basis exit risk, increase at a in a mean, cash if increase have a X% definitely expectation

rents rate you're today. buying if a rates out cap that of a in the inherent – lots the but you ultimately, level scenario as think stay gap have I and folks, for have and worked because that So might be that's risk cap disappointed where at people of continued much. It's if grown in cap have rents rates a very returns don't low, to their grow

I game, just are system that's of a of the whether think the builders of in because think the today all issue in in Even financially, just the way is a equity. trouble system. low equity bank merchant there's probably gets XX% – requiring to development have the – somebody banking XX% lot the risk equity the because you I

in normal hand, lot profit a their the a anticipated. amazingly sticky stress there's margins, will of It their are they for been think more less of – and don't will people high on to their expectation which be margins, to pricing But a levels of having I financial revert or there probably have originally and time. there sell. than long terms other So lot of

Hardik Goel

color. great That's you. Thank

Operator

go John question will Guinee from Our with Please come Stifel. next ahead.

John Guinee

maybe Guinee building about to for and if look of think I overhaul, kind there year, out hits this just second, here. that why a pretty San questions, major is then you. units X,XXX ongoing talk about Diego a project, what XXX-odd as Thank at project unit small that should CapEx? Can redevelopment your Two And units. a it John get an $XXX,XXX okay, it about price? is and summary, people curiosity looks like you you're

Alexander Jessett

location Diego, it's the single the that's sell Hillcrest on $X short bungalows for family little where of is, poker million, $X.X adjacent to an So, A price the million. for homes, San answer plus neighborhood,

mile-and-a-half You're Park. Balboa from

Downtown. from miles two You're

site. generally a I'm a in project. view top this we believer scope estate, block on don't for not I Bay. almost of unique a unique And of and a Mission word It's that scale but with build required It's literally real – of that is up using the really

neighborhood that a that $X to $X.XX in rents comparable pushing about talking square you're foot. again, And are

to returns pay They're neighborhood. the that willing relatively for sure. work small unit it's build premium So, a are a be in because people expensive California But to in footprint. yes, to

rationale thought that annually, is the On process. units I a X,XXX think

but the can make portfolio, It's continue will investment. investment moved We our that through on that our the we to as properties. haven't best board make redeveloping we existing

John Guinee

So, think to what decide a property one year? redevelop do you you

Richard Campo

Yes.

and so than repositions, split I I to a we're into year categories, think which at exterior doing and separate there's all redevelopments, four think about When redevelopment. units have continue. look a it you In pretty repositions is that two safe communities to where They're unique in there that's they the were are was you high-rises communities. renovations they're number all extensive necessary. that probably X,XXX

shallower little is repositions. bit the than you particular I tell pool of that would pool that a

amount expect minus to But basis. X,XXX, said, a for huge repositions, add an redevelopments. the looking of continue keep we'll I a plus I ongoing wouldn't year. see on X,XXX we'll So, think or these about to as

John Guinee

And that's $XX,XXX $XX,XXX a of price more to tag?

Richard Campo

creeping getting reasons. obvious that a It's to It bit price $XX,XXX it on way. just little closer the, $XX,XXX we're repositions. getting those But started to returns up more fantastic it, for to call range still the

John Guinee

Great. Thank you.

Richard Campo

welcome. You're

Operator

the would our Ric for like Mr. closing now question-and-answer concludes conference turn to Campo to remarks. session. any This over I back

Richard Campo

of coming today at see thanks lot up. a on you the will call being Well, for we and NAREIT

lot. So, thanks a

Operator

concluded. now has for may conference disconnect. you and attending Thank you today's presentation now The

Camden Property Trust (CPT) 1 Nov 192019 Q3 Earnings call transcript