Q1 2020 Earnings Call
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Okay and welcome to the camp and properties first quarter 2000, and plenty earnings conference call.
Participants well being listened only mad.
So they need assistance place second I want conference specialist by pressing the star K. followed by zero.
After today's presentation there'll be an opportunity to ask questions.
Please note to see that as being recorded.
I would now like to turn the conflicts over to Ken Callahan Senior Vice President up Investor Relations.
Please go ahead.
Good morning, and thank you for joining Camdens first quarter 2020 earnings conference call.
Before we begin are prepared remarks, I would like to advise everyone that we will be making forward looking statements based on our current expectations and believe these statements are not guarantees of feature performance and involve risks and uncertainties that could cause actual results to devote materially from expectations.
Further information about these risks can be found that are falling for the S.P.C. and we encourage you to review them.
Any forward looking statements made on today's call represent management's current opinion and the company assumes no obligation to update were supplement these statements because of subsequent events.
As a reminder, camdens complete first quarter 2020 earnings really is available in the investors section of our website Camden living Dot com and it includes reconciliations to non get financial measures, which will be discussed on this call.
Joining me today or Rick Campo, Camdens, Chairman and Chief Executive Officer, Keith Odin Executive Vice Chairman and Alex just the Chief Financial Officer.
Will attempt to complete our call within one hour, we ask that you live at your questions to too and rejoined the queue up you have additional items to discuss.
If we are unable to speak with everyone in the queue today would be happy to respond to additional questions by phone or email after the call conclude.
This time I'll turn the call over to Rick Camper.
Thanks, Kim in good morning, or on hold music today was unsurprisingly pandemic famed have included a couple of selections from Michael <unk> personal cope with 19 play lists.
The five songs for probably familiar to many of you and the fifth song was a unique cover over led Zeppelin classic.
Even that song has a covert 19 connection resident of cabins high rise community in Saint Petersburg, Florida wanting to do something for that special for his wife Sports day, and despite the out homestay or.
Yes, if you could use the roof of the committee's parking garage to stage a concert for his wife of course, we agreed not only did he surprise and delight her but all the other residents whose homes overlook the garage rooftop they got to enjoy what incredible performance by Sean Hopper and Chris Barbosa from.
They're perfectly socially just <unk> <unk> balconies.
Just one example of the many ways that we in our residents are working together to help ensure we make the best of this complicated journey, where on I want to give a big shout out to team Camden for their resilient their commitment to improving the lives of teammates customers and shareholders <unk>.
Or on site property teams of really stepped up to help our residents. During this unprecedent time to make their homes are true place <unk> refuge.
Or corporate original support teams have continued to be highly productive adapting to telecommuting without missing the beep.
Times like this it brings the importance of our homes to the forefront I'm proud of team captain. Thank you.
You use most of the call today answering questions about what we're seeing in our business in real time, we don't spend much time talking about the distant first quarter and will not provide guidance for the rest of 2020, yeah. This uncertain on certain environment.
We are more prepared for this recession than than any other thanks lessons learned in the financial crisis. We know that we will come out of this recession and a great position with financial strength in a focused motivated team chief.
Psychiatric someday someone will write a novel titled a tale of two quarters and it will begin like this it was the best of quarters. It was the worst of course.
Handled just arguably had the best quarter in our 28 year history, we had the highest f. <unk> per share or the dollar 35, we had the biggest quarterly outperformance relative to our established guidance, we had a sector leading same store in a lot growth rate a 5.7%.
And yet in the last two weeks or the core everything changed.
Fortunately our leadership team has been together for decades, and we've dealt with our share of <unk> disasters in disruptions our experience with previous dislocations provided us with the road map for now but navigating this pandemic.
First take care of the candidate teen make sure that they were operating in the safest possible environment also make sure that we address their financial wellbeing.
Employees that are under personal financial distress will never be able to do their best work to accomplish this we did two things first we added $1 billion to our long standing employee emergency relief fund 750000 or that came from Camden and 250000 came from Camdens executives.
Provided grants of up to $3000 to were made available to our employees, whose family's income had been impaired or who's living expenses at increase due to the code with 19 EM.
Today, we have provided 350 employees with with total grants exceeding $1 million.
Second last week, we announced a bonus exclusively for our frontline employees. Both on site operations on on site construction teams of $2000 for each full time employee totaling approximately $3 million.
The best way for us to ensure that our residents are afforded living excellence is to ensure that are candid team remains physically mentally and financially healthy.
Our next priority was to assist our residents who lost jobs are substantial income from the code with 19 impact.
At April when out stay 5 million dollar resident relief fund for Camdens residents, but who were experiencing financial losses caused by the <unk> pandemic.
A resident really fun was intended to help impacted residents by providing financial assistance for living expenses, such as food utilities medical expenses insurance childcare transportation.
The objective was to provide residents with a bridge to get to other forms of assistance such as unemployment insurance stimulus checks or P.P.P. loans, many of which had been delayed beyond their expectations.
We subsequently approved and delivered really funding to nearly 2400 Camden residents totaling over $4.5 million. We didn't we were didn't give out the entire 5 million. Some people ask for less than the maximum amount of the grant and some of the applications on your the in the initial group we're not qualified.
So in order to fulfill our commitment to distribute the entire $5 million a funding we allowed additional residents to submit applications on April 20th all residents, who submitted a qualified application demonstrating loss of income due to cope with 19 were eligible to split the remaining $460000 between the date.
The resident really fond of the date, we reopened the fund which was only nine days an additional 12 million Americans filed unemployment claims we knew the need for relief had increased but we really had no idea how much in the second round a resident relief, we reviewed and approved over 5800 additional applications which were.
Amounted to $79 per person, if we had stuck to the original plan to split it among the remaining $460000. As a result, we decided to increase our initial commitment $5 million to $10.4 million, allowing all the approved applications to receive grants for $1000. Each this brought the total number.
Camden residents receiving resident relief part assistants to approximately 8200, we're very proud of the way that we have been able to support our resident as well as our candidate team members. During this complicated times at this point I'll turn the call over to Alex Jessica Camden C.F.. Thanks case, eight weeks ago, our corporate and regional teams.
And to work remotely in two months so much has changed.
Teams continued to adapt and responded to each new situation.
The technology investments, we have made in the recent past are paying dividends.
We just completed our first ever virtual quarterly close tasks that would've been so much harder without or investment in a cloud based financial system.
Are on site teams are having great success with virtually scenery and we are preparing for our first ever virtual annual meeting of shareholders.
Understandably, taking a back seat the discussion of current operational trends.
Hand, and had a great first quarter, helping to position as well for the covert 19 related environment, we now face.
Details about our first quarter performance are included in the earnings release and supplement published last night and available on our website.
Right now I will focused primarily on operating trends, we've seen in the second quarter.
But first rental rate trends for the first quarter, where as expected until mid March when our leasing offices were close to the public and we began offering existing residents zero percent increases on renewals.
For the first quarter of 2020, new leases were up 0.5%.
Renewals rough 4.2% for blended growth rate of two and a half per cent.
Or April results indicate a 2.5% decline for new leases.
In a 0.1% growth for renewables.
Blended decrease of 0.8%, which is approximately 500 basis points below the blended growth a 4.1% achieved in April 2000, a 19, when we were clearly operating under more normal circumstances in a pre covered environment.
As a reminder.
New Lisa renewal gross data is based on one leases are sign versus many of our peers that report based if I'm gonna least becomes effective.
We believe our methodology represents a more real time view of what is happening on the ground.
However, if we use the same methodology is our peers and look at least is that became effective in April.
New leases would have declined 1.2% and I've renewals would have increased 4.5% for blended increase of 2%.
I can see average 96.1% during the first quarter and 95.6 per cent in April compared to 96% in April 2000, a 19.
<unk> occupancy rate is 95%.
Although current situations are certainly affecting people's living decisions. We continued have great success in conducting alternative method property tours for perspective residents and retaining many of our existing residents.
In April 2020, we signed 3870 places in our same property portfolio.
It's a 1322, new leases and 2485 renewal.
As compared to 2000, a 19, when we signed 3756 places comprised of 2025, new leases and 1731 renewal.
For April 2020, we collected 94.3% of are scheduled rent.
With two and a half per cent of our residents entering it into a <unk> arrangement and 3.2 per cent becoming delinquent in.
In a typical month delinquency would be approximately 2%.
So our April collections were 96 per cent of typical.
Markets experiencing higher than normal delinquency rate include southern California, nine per cent in southeast, Florida at 4%.
Markets with delinquencies at or below two per cent include each of our Texas market, Austin, Dallas and yes Houston.
Wrong with Phoenix Tampa in Orlando.
So far rent collections and they are trendy slightly ahead of April.
Regardless of our current collections Red it's still contractually due to Camden from each of our residents. According to gap certain uncollected rent is recognized by us as income in the carton month.
Any rent recognizes income in the card month without corresponding cash receipts will be reevaluated in subsequent months, depending upon future payment history.
The resident relief funds that Keith mention also as according to gap will be recognized as a separate offset to property revenues in the quarter.
The 750000 dollar contribution to the employee relief fund will be expense to cabins corporate level G.N.A.
And the approximate 3 million dollar bonus to our front might employees will be predominantly book to property level expenses.
In addition, Rick Campo Keith node and have each agreed to voluntarily reduce the amount of his annual bonuses, which may be awarded in the future by $500000.
The aggregate 1 million dollar reduction in compensation will serve as a contribution to the just mentioned payments.
And now a brief update on our real estate activities.
During the first quarter of 2020, we stabilize Camden Grand view Phase 222, and a half million dollar 28 hometown him development in Charlotte.
And we began leasing at Camden downtown like 271 home New development in Houston.
Also during the quarter, we acquired five acres of land in Raleigh for the future development of approximately 355 apartment homes and we sold approximately five acres of land adjacent to one of our operating properties also in Raleigh to facilitate a public right of way.
This disposition created and budgeted gain on sale of land.
Me $400000 recognize efforts so in the first quarter.
We decided to temporarily suspend construction activity on our recently announced candid Atlantic development Implantation, Florida.
Only very minor site work had been completed to date and do the impacts of various local ordinances combined with current market conditions. We have delayed the expected dates for initial I can see construction completion and project stabilization by one to two quarters and almost all of our new developments.
We will continue to update these dates as we gain more clarity.
Tardy to liquidity.
Subsequent to quarter, and we issued $750 million of senior on secured notes.
With a coupon a 2.8%.
All in yield a 2.9%.
We receive net proceeds of approximately $743 million net of underwriting discounts and other estimated offering expenses.
As of today, we have approximately one and a half a billion dollars of liquidity comprised of almost $600 million, a cash and cashing quick cash equipment.
No amounts outstanding indoor 900 million dollar unsecured credit facility and we have no schedule debt maturities until 2022.
At quarter N., we had $235 million left to spend over the next two and a half years under our existing development pipeline.
Balance sheet is strong with net debt to either die at 4.2 times a total fix charge covers race you at 6.4 times and 100 per cent of our assets unencumbered.
Are 2022 debt maturities include $100 million in January and $350 million in December and we have not yet made any decisions about pre paying those or any other feature debt maturities.
<unk> excess cash is invested with various banks, earning approximately 30 basis points.
Turning the financial results last night, we reported funds from operations for the first quarter of 2020 of $136.3 million or dollar 35 per share exceeding the midpoint of our guidance range by four cents.
This four cents per share outperformance for the first quarter, primarily resulted from approximately half a cent in higher same store net operating income, resulting from higher rental income and general expense control measures.
Approximately three quarters of a scent in better than anticipated results from our Nonsame store and development communities, including our recent acquisitions.
Approximately one cent in lower interest expense as our original guidance anticipated a 300 million dollar.
Your issue in mid February at 3.4%.
Actually half a cent from the previously discussed gain on sales land in Raleigh.
At approximately three quarters were sent in a combination of lower overhead costs and higher fee income.
Given the uncertainty surrounding the social and economic impact from covered 19, we withdrew our previous 2020 or he's guidance and we will not provide an update to our financial outlook this quarter.
At this time will open to call it the questions.
Thank you and we will now be getting a question and answer the question to.
I ask a question you may pressed star and then one on your touch 10 cents.
If you're using a speaker pen please pick up your handset before pressing the keys.
Probably your question. Please press Star then too.
I first question today.
Johnston outdoor to bank. Please go ahead.
Hi, everybody effective in some of your peers have focused on maintaining occupancy overpriced. Some have pause quite saying I'm lost occupancy no while others have temporarily putting in place and sections to kind of bridge. The gap quite that's the question is how are you buy one.
Some of these scenarios at this point to what level could occupy sweet declined to where you're still comfortable if you want to maintain price.
S.R. long term, but average occupancy is in the 90, 595.5% range.
Been running above that for Oh about the last year and a half.
And at this at the same time part of what was driving that was we had really great traffic and we had the ability to push rats.
Without without having any impact on occupancy. So if you think about where we came from at the end of the first quarter. We were at 96% that was about in line with our plan for the quarter. We dropped to 95 six by the end of April and as we sit here today, we're about 95% so yeah.
We have seen a decline in our occupancy. It's it's not anything that were overly concerned about at this point, we would like to maintain our occupancy somewhere around the 95% range and we'll adjust our metrics to make sure that that happens.
With regard to your question about concessions, we we don't we used that affected pricing.
We have not offered concessions. So it's it's all based on our revenue management model and we think our customers are smart enough to to make that determination on their own about up front concessions vs net effect of risk.
The other thing is that in this environment. We just think it's your unnecessarily taking unnecessary risk and complication. When you start consisting in an environment, where you got tenets that are residents that are under potential financial distress going forward. So that's something that you that is not not something that we had done in not likely to do.
So yeah, I think <unk>, we'll make sure that we.
Based on the traffic that we're seeing and the pricing trends that we're seeing we'll do we need to do to try to maintain or occupancy somewhere around the 95% level.
Okay I'm just a quick follow up is you know how has leasing demand evolved from let's say April and <unk> and how do you see it unfolding you know, it's pretty important spring and summer season.
Yeah. So if you think about it in three time frames for the first would be something that's relatively normal in our world and that would be from the beginning of January through March 15th one kind of the world changed.
That in that time frame it over the prior you're our traffic our gas cards visits new leases. We're all almost exactly in line with where we would have been in the <unk> in a in 2900. So it was clearly business as usual good a steady heavy traffic.
Converting roughly.
Nine eight or 9% of all of the gas cards in about 20% of all the traffic. So the next period of time is kind of the M- March 16th through April 12th that four week period, where it was the maximum you know kind of the shock effect of people being told to stay at home. Obviously, we had a huge impact on our our guest cards and that timeframe dropped.
45%.
Up normal our visits are physical visits dropped about 84% of normal so you.
You know huge change in in a consumer behavior and our new leases during that time frame were roughly 50 per cent of what they would've normally been the next time frame that annex relevant for you to think about would be sort of from the April the the April 13th timeframe through this week and we're getting closer back to something.
Looks and feels a little bit more normal on guess cards were down about 13% over where we were this time last year for that time for that three week timeframe.
Well, we're still way down on visits and that's not necessarily concern not concerning to us we're still 62% on physical visits from where we have been it but that's because we've completely changed our business practice to virtual leasing and that's you know there's some actual some interesting benefits to that that our residents who pointed out about.
Being able to lease an apartment that way so that when it's not particularly concerning new leases are definitely down over the prior period.
No doubt about 21% on the Leasers from where we work for that three week period in a in 2019, the offset to that has been our our renewal rate. His his increase pretty substantially we had the lowest a turnover rate that we've ever had at our company's history at about 37% I I didn't think I would ever live long enough to see <unk>.
Apartment portfolio with the 37 per cent turnover rate, but that's kind of where we are so I hope that gives I mean, so so you know big shock for the first four weeks and then a recovery through this week, that's getting you know getting within.
Hailing distance of looking like normal.
[noise]. Thank you.
Hi next question today I won't come from my call their learning how to study. Please go ahead.
Hey, I'm glad you enjoy music actually have that during this time.
I I want to sort of get your perspective on how you think about the $10 million.
No relief that you provided two year resident.
You know, it's wouldn't have per cent of annual and why 6% on a quarterly basis and.
18% of sort of <unk> <unk>.
Yeah, I guess is this going to be a recurring you know should tend to be able or need more assistance in the future do shortage view. This as a concessionary tactic of being able to provide additional funds oh for them to be able to you know ultimately caches spongy bone right. They can pay their rent or they can pay their normal expenses.
So how should.
<unk> be thinking about future.
Programs like that.
Yeah. So so the way I think the easiest way to think of it isn't a in a couple of different pieces. One one piece was.
The immediate financial impact to 8000 of our residents and while it was a lot of talk about stimulus checks and there's a lot of talk about P.P.P. money and then possibly even.
A stimulus checks that we're going to be sent out.
The reality is is that in in state unemployment that people were kind of get through the q. and the reality is is that it the impact to this was so sudden it. So many of our residents were caught off guard and didn't have the financial resources. It wasn't really about paying rent. It was about paying you know groceries and medical bills and and transportation expenses child care and.
Those kinds of things that that were completely unexpected to a lot of people. So we just felt like that because we were getting anecdotal evidence and feedback from our frontline teams about the financial difficulty in the urgency of the situation that that we felt like we could do something quicker for most people that that.
<unk> was intended to be a bridge to get to something that's more durable whether it's state unemployment, whether it's a stimulus check or or ultimately one of the <unk>. The P.P.P. grants. So it part of it was an an immediacy part of it for financial need part of it was the ability to assist our residents.
At a time live there maximum financial stress now we so if you think about our our resident base. We have roughly 80000 adult you know least folks that are science signatories on a lease and about one in 10 ended up getting <unk> resident relief funding from us and.
So so it was it was to address and immediate need to get people to a bridge to a more permanent in in durable situation and then you know the issue of what they do with their money. It. It is from caches fungible and we we might know requirement whatsoever that you apply it to read some people.
<unk> that but that's their choice that they're going to make but it's really more about the long term brand issue for what Camden stands for and I think is this month olds, we're gonna get to we'll we'll see a positive effect of the actions that we took on behalf of our residents and our employees and we're willing to play the long.
Game.
The all of the financial impact as as you walk through those numbers are correct it'll all be it'll happen in the second quarter and then we'll be back to <unk> more normal run rate in the to the third question, which is do you anticipate doing this in the future. We have no current plans to do any other any other resident relief.
Plans with it's possible that if our that we did up our employees continue to have financial needs and we you know at some point, we may want to look at replacing our emergency rate really fun, but that's a program that's been in place for over a decade. So it you know immediacy assistance.
Brand long-term about how we conducted ourselves in the in the at a time of maximum financial suppressed for our residents were all the things we had in our mind Yeah. Let me just add to that a little little color too because to me you know there's been a lot of discussion these days about how companies ought to be more so.
Irresponsible how they it's not about the bottom line only it's about taking care of customers. It's about taking care of communities taken care of employees and so we just thought that that that the benefit of immediacy very quickly getting getting the folks the money when when it was hard to get money from the.
<unk> it created put us zip in the step of our employees and even residents that didn't apply for the for the for the grant actually communicated with us and set US just you know thousands of of congratulatory emails, saying.
No I don't need the money, but I I understand him now why I really live at camp and then you know as long as I'm, a renter I'll be with you. So to me. This is a our way to service say to the to the industry and to the corporate World. In General. These are the right things you should do I will tell you that multiple company.
He's followed our lead and I I spoke with probably you know 10 different companies on on on how we didn't why we did it around the country and and and that and that was a good thing. So to me. It's it's it really is about the long game minutes about being a good corporate citizen.
To your community and your customer.
But yeah, how did you wait providing capitol and check to people versus simply entering into deferral agreements for a period of time for their rent until the government assistance comes into play well, we did that as well you know <unk> over 2% of our people have payment plans now or.
Have something like that and so so we did both but but ultimately when when you think about when we started thinking about what could we do that was a major statement that that was that was going big if you want to call. It that that that would be that would be a an amazing thing for for not only our employees, but rather.
[noise] and resident said didn't didn't didn't no need the money right and so that's why we we sort of did what we did as opposed to saying Hey, we'll defer your red and and you know the idea was look bridge people from point a to point b because one of the things I think it's really fast.
Canadian is is you know the government, obviously stepped up in a major way with increasing on employment insurance benefits by $600 extending them beyond what the states had as well so a person if we had a two income household and each person made $40000 each our average households about a hunch.
For it in five or 10, something like that but but the math that that I've seen are based on a $40000. A person there take home pay was roughly $6500 a month no rent say is $1500 and <unk> once they once they apply for unemployment insurance if they both watcher jobs then you.
Have a situation, where where where they actually get an increase in their income roughly 1500 Bucks and so the amazing so for our perspective, we thought you know it's gonna be hard for people because there's so many people applying all the same time for people to get this this money, but ultimately when you bridge that gap.
They will have funds available that if if they lost their jobs and then the other part of the equation or the is the the whole gig economy, we have tons of gig economy people that work for us or that about that but not work for us, but our residents and and they they were having just a tough time navigating you know legacy systems.
That that states have a with respect to unemployment and it's really hard for those guys to get right to get wind up. So that's kind of that that was the longer thought process mind it rather than just yeah said, okay well there for your rent.
That's really helpful and just last question. So out of that 8000 residents who took the money what percentage of those paid their full rent what percentage of those paid no rent and what percentage or on deferrals.
Yeah. The exact numbers I don't have right here, but the vast majority of the folks that receive money from us paid their full rat.
Okay. Thank you and I think in in Alex's opening comments he gave.
Indications that are may collections are actually running slightly ahead of April collections, and that's that's an certainly to me a little bit unexpected given the what's happened in the world in the last three days.
Yeah.
Greg will say Oh, so much alright.
[noise]. My next question today will come from Chats factor Bank of America. Please.
Good morning, Thank you and thanks for all you're doing for what it's worth be these industry strategists continues to point to how's it growing importance of E.S.G. So thanks again for your efforts.
My question today is on Houston.
If you could just talk about they used to market. It seems to be you know more resilient and then we were expecting possibly even you in your team in terms of collections occupancy. It looks like was up you every year 40, Bips and then if you could also discuss your your downtown.
Project that you're you're leasing out please.
Sure. So Houston is definitely very interesting market.
The you know when you look at what's happening in Houston, There were 343000 people file for unemployment three discard period by the end of the month, it'll probably be more like 400000.
And you know I know people sort of connect Houston with energy and they should because had or G. is a big part of the but the economy here, but it's also abroad economy 7.2 million people fourth largest city in America.
There's a lot of other things to go on besides besides energy and so energy is definitely top of mind energy. Obviously has had a a real real rough road that they that autumn and probably will be a rough road yeah going forward. The to give you a sense of the last cycle and energy here.
In 2014 through 2016, Houston lost a net 5000 jobs went and what energy did as they lost 95000 jobs and then other the economy was doing well in the other parts of the Houston economy that are more related to the U.S. economy, we're doing well.
Petrochemical businesses were doing well because a low oil prices are there feedstock and that tend to give them higher margins as long as overall economy is doing well then the the the the sort of downstream part of energy does well in this situation we have the U.S. economy going down and at the same time that energy is going down the <unk>.
85000 jobs that were lost and energy, where they've added back about 30000 those jobs. So what what's going on with energy prior to the pandemic, what's that energy was actually start for capital during during the 18 months prior to the the pandemic and they really didn't.
Add all the 95000 jobs they lost and the interesting thing is they almost doubled their production in the Permian between between 2014 or 2016 to 2019 as a result of of just you know more efficiency and better technology, and and and things like that so the.
Good news is energy doesn't have 95000 jobs to lose because they only brought back 30 of those 95, so well energy will you know <unk> places like middling and the Permian are definitely getting hammered for blue collar workers that are that are working on rigs and what have you and they are starting some of the the <unk>.
Service providers are starting to lay people off you know the energy shit, it's probably going to be a lot less than it was in the in the 2015 to 2016 cycle because they just don't have as many people left two two you know to take out if you will so that's the one hand, if you look at generally the.
The we we we we listen to to Big players here, Patrick trained Koski, Bill Gilmer from new of H. Patrick's with it <unk> partnership and they've been caught him instead of following Houston forever and so both of them think that Houston, we'll have net job losses in 2020 between 75000.
Thousand jobs, and I and so even though you had foreigner you'll ever have roughly 400000 people file. The question ultimately is how fast you those do the consumers get out of their bunkers and do they start you know getting back to just sort of normal Texas is is phasing in a in opening.
Opening a program with a retail is open now with 25% sort of occupancy levels by the middle of the by the 18th they're talking about going to 50 per cent. So yeah. There. There is an opening faced by the end of the month there in theory going to be open we'll see how whether <unk>.
Rumors actually come out of their bunkers or not and that's the you know the big question I think we have we have nationally the the other thing I think it's really interesting this could be a real benefit for Houston longer term is that even before the pandemic Houston energy executives were calling for it for for.
Energy transition plans, meaning that that if you look out in the future oil oil demand was supposed to peek in 2030 or something like that and and so all the major oil companies are focusing on how did they transition I think this pandemic and the Saudi Russia issue when oil want negative <unk>.
It it a massive wakeup call for these energy folks and so people don't realize that Texas is number one and wind generation or and in the next two years, it'll probably become number one in solar and so I think we have a real opportunity in Houston to actually lead the energy transition with all the the brain power and enjoy.
Nearing power that we have with energy I think the energy companies thinking of themselves is that's maybe the Kodaks you know in the film business and they don't want to be the you know go the same way that that Kodak or polaroid wet and I've I've talked a lot of senior energy executives and and I think that's kinda happening and and I think it's amazing.
Major happening right now so that could be a positive for used it over the long term. The downtown project. We are you know in the early stages a lease up it it's definitely tough sledding right now we've been been yeah absorbing about 10 units a month, which is pretty slow the but we we are making laces.
<unk> made leases in the last couple of weeks <unk> I think 16% at least at this point, we did have a part of the building was structured S.A.Y. hotel and in the.
Prior to the pandemic they had the highest number a pre bookings <unk> of any why hotel that they've ever done of course.
We know what happened to that now and the pandemic. So we're not sure exactly how that's gonna play out over time, but you know, it's it's a great piece of real estate it'll be great long term, but in the in the near term you know, it's gonna be definitely tough sledding or at least in that project up.
Thank you comments were very helpful. One follow up on previous question to confirm or are you, saying that you're applications our back to normal your recent applications, let's say as if this past week or two.
No they're not back to normal in terms of gas cards, which would be kind of the what you think of as the starting process for leading to Elise, we're about 13% below where we were this time last year and that's that's for the period between April 13th and May six or about.
13% below what we would normally see or what we saw last year in terms of guess parts.
Okay. Thanks for clarifying thank you be.
Hi next question today, well kind of.
Smith Keybank. Please go ahead.
Hi morning, everybody you guys have indicated that that you're offering flat renewals, but I don't believe you specified you know a time horizon, where some of your peers instead 90 days or maybe through jerk June 30th. So curious you know how you're thinking about when you might start to take more of.
Market based approach or let the revenue management system takeover as it relates to renewal.
Yeah, Yeah, what are your thoughts on on kind of changing your stance there at this point.
Well I think what we all have to do in this environment is sort of play it by ear and see how the markets responding right. So we we have put out guidance that that that that we were going to a whole thing slap for 60 days and 60 days would have been you know sort of I guess expiring in mid June perhaps but maybe.
To the end of June, but I didn't get it <unk>. We really have to do is is kind of feel out the market try to understand how our customers are feeling at our employees are feeling because if you think about a renewal, let's say you know if you're getting a 4% increase in a rural renewal, we're talking about $45 for $50 a month to residents and.
And we're not when we're in the reason, we're we froze and and the reason we get all the other things we already talked about doing this we wanted our employees focus on one thing and one thing on land that was taking care of those people in real time right now with their issues I don't want to have those employees, having to knock on the door and say hey by the way I know this is really a tough time, but can you.
Give me 45 Bucks more because you know we need it and so for our view. Our view is is that we're <unk>. We we stayed at the 60 day, but we will we will planet, we will make changes as the market dictates once we get back to a more normal situation you know our <unk> our customers know that.
That that were like any other business and they <unk> they need to pay their rent and be you know ultimately they they they they we provide value to them through all of the the packages that we have and part of the issue of today is you know they can't even use the pool or the barbecue girls for the Germans or things like that and so so.
I I hate tasks somebody to pay higher rent when they're not even getting the full you know complement of amenities and packages like that so so we will 60 days for now and then we will you know at Valuate as we go forward and and ultimately I think it'd be better for our customers better for our employees two two.
Evaluated in that way.
Static no that's helpful. But just to understand it then is that renewal you know the flat renewal offer then ended June is that for renewables Ben into kind of July August, but those are getting offered yeah or renewals. We generally go 60 days out but right now we're going 90 days out.
<unk>. Thank you and then.
Just last one kind of following up on the Houston commentary helpful. Comparison, you know from kind of 2016 2017, when things turn negative certainly a delay from when oil rolled over from late 2014, but curious how the supply set up looks differently than than last time, I think I recall supply ramping.
Pretty significantly into 16, and 17 and today you know things are are fairly shut down. So how would you compare and contrast that side of the equation.
I would say that supply all the Houston supply a is actually peaking right now we had when you think three the supply it actually fell off and 15 16 17 and then.
When hurricane Harvey hit in 17, we ended up with you know very high occupancy and so Houston was the only market in America that where you could tell a story that had a recovering economy at a declining supplied picture. So what what productive developers did was state ramped up development in Houston.
So today, we have you know 21000 units that that were permitted in in 2019 in the the projections for 2020 work 14, 15000 that that up we'll probably fall off some but Houston, we'll have more supply to deal.
With than it did during the during the 17 18, 19 kind of <unk> timeframe and so ultimately, though however, when you look at some of the projections on supply everywhere you know the the the peak supply with somewhere around 400000 units and and most of the of the analysis.
That we see around the country or or a supply dropping to barely over 100000 units net and that generally is what you see in economic situation. Like this is equity for new development and and construction loans from new development are very very very difficult to get today and if you didn't have it already.
Lined up you're probably not getting that done and and it'll be interesting to see how that all place out, but but Houston does have a supply issued has to work through in this environment. That's why shut our downtown project is going to be tough sledding.
You know you're and a half.
<unk> appreciate the thoughts of helpful be well, thank you mm mm.
Hi, next class 10 minutes from Nick you know like Oh, I should bank. Please go ahead.
Hi, everyone.
<unk>, it's one day she back to balance sheet I mean, clearly are in a very good position low leverage lot of cash <unk>, how should we think about.
You know you're deployment of the balance sheet over the next year and and are you seeing any you know interesting acquisition opportunities opening up yeah, I realize you're gonna maybe early I'm also thinking along the lines or maybe partnering with you know private developers are gonna need capital I mean, how how're you how you kinda envisioning.
Yeah opportunity sat here.
Well clearly the our balance sheet is the strongest sector were sitting on you know over half a billion dollars a cash with an unfunded 900 million dollar line of credit and this is exactly where we want to be you know over the last two years in every single conference that Keith and I had Kim and Alex attend.
People pound the table going why you so under leverage why are you. So under leverage why you wish you mean equity you know those kinds of issues and and what what our answer was was that we're in the longest economic recovery in American history, and Something's going to come along that's going to change that I don't know what it is.
But but I when that happens I want to be positioned to have the best balance sheet in the sector, because there should be opportunities that come up over that now all of a sudden now we know what happened right and that could have we have all predicted this.
We didn't predict the why it happened, but we did predict that it could happen then what happened to did so that's that's the positioning we're in now about opportunity you know opportunity will happen. There's no question because if you look at the at the merchant builder model they have high prefs or.
Perhaps that that eat at their cat their their profits in their capital every single month and as you have when you have an environment like this where you know the futures uncertain and and you have you have capital issues are much more leverage than we are so are they going to be amazing opportunity.
<unk> you know like during that that that presented themselves and in 20, you know 2009 and 10 you know Unfortunately, we were positioned to be able to deal with what majoring opportunities. We saw then I think there will be some but but it's very early to tell what they're going to look like I think that.
Most people or or pucker down and if you didn't have a transaction that was wasn't completed was wasn't a hard earnest money or or finance and ready to go you're probably not getting that deal done. So it'll take a few months for the market to kinda settle there's really not a lot of transactions going on to the to the.
Private developer question, we have been fielding lots of calls from private developers, who want you know who had thought they had their equity in their data now they don't and they're either trying to sell us their plans and and get out of the trap you know hole with their chase money, we we fundamentally well not.
Dinner with private developers or do mezzanine financing or anything like that one of the other big things. We we want to do during the you know.
After the financial crisis, we wanted to have a very simple structure or caches or cash and we're going to be 100 per cent in <unk>. When when we invest we'll invest 100 per cent of our assets in that you know we do have a joint venture relationship with Texas teachers, which is very good but fundamentally we won't we won't be doing private if.
Clipper equity transactions.
And in your experience, how how long does it could take before you can become more comfortable with you know hung the writing rents for the future development pipeline.
Well I think this I I don't know how long it is yet because we're only been in it for a month and a half right, but I do think that <unk>. There are some fundamental things then that that you can count on you.
You can count on people needed a place to live you you know what the forward supplied picture looks like and you you can also sort of plan.
Stan than than than others, I think so I saw I think that it will become more clear probably in the next three to.
Six months or and and then you'll start seeing you know activity and people, making decisions on what they're gonna do you know going forward and so you know I don't think it's going to be years, but it's definitely be you know few months.
Okay. Thanks appreciate it.
Okay.
The next question will come from Neil Malkin up capital one. Please go ahead.
Hey, Thanks, guys I guess, just kind of maybe digging into that the previous question.
What is your view on development within your portfolio and your markets over the next 12 months I mean, you know like you said it starts are expected to be close to nothing but you're in a position balance sheet wise, where you would behoove you to take to start.
Now and really in reap the benefits in 2022 any thoughts there.
Yeah. We have you know we've got a decent development pipeline, we think its appropriately size given kind of the you know the opportunity set out there right now as far as additional starts we had original guidance. We had a couple of starts for 2020.
We'll wait and see on those the one in it in a and Florida Atlantic We had really literally just where in the process of finalizing our pull in permits for construction, we really hadn't.
Doing some site work et cetera. So we just we put that on hold out of an abundance of caution.
But at some point my guess is is that that when we see a little bit more clarity on what the the job and the reemployment situation is going to look like in some of these markets that yeah, We'll we'll probably forge ahead with our plan to developments, whether it gets done this year or whether it bleeds over into the first quarter next.
Year.
We still think fundamentally there's a lot of value to be a derived and.
From from doing what we do with our construction and development team. So.
Little little as Rick said, it's too early to kind of even start speculating on on that because we need we need to see a few more cards. It's still really early but we're clearly going to use our balance sheet strength to do two things.
We have 235 million left to fund on our existing pipeline, it's a great development pipelines being delivered in a very geographically diverse.
In a in a diverse way so thats one thing Thats a priority for us is to complete that and not have to have any stress at all about funding $235 million to complete that pipeline and then secondly will turn to opportunities for capital allocation, whether it will look at what is new development look like in the new.
New Arena, and then compare and contrast that to potential acquisition opportunities that inevitably are going to come our way.
Makes sense other one for me is.
Can you just you know juxtapose or compare and contrast.
You are kind of course sunbelt.
Markets with your southern California markets, just in terms of delinquencies people, who content could you bought payment plans.
And then how things are performing on a.
Submarket and price point on.
Spectrum.
Absolutely and as I said in the prepared remarks, if you look at California for Us.
For the month of April, California was 9% delinquent.
If you sort of break that into two categories, La Orange County being one.
That was around 11% in San Diego Inland Empire was around 6%. If you compare that to see obviously to our sunbelt markets are sunbelt markets are are considerably considerably lower.
And in fact, if you look at our at our total delinquency, which we reported at 3.2%. If you were just a backout, California alone that number would that number will drop at 2.4%. So so California is definitely is definitely putting a is put a drag on our numbers.
So just one of the things it's interesting that we that we data that we got from the resident relief fund.
Is we really didnt see.
A disproportionate number of residents applying for the rest resident refund from California would just kind of interesting you think about it. It was it's about what you would expect it to be in about it was pretty equivalent across our entire footprint of our portfolio, So plus or minus we have 80000 adult lease signatories with there.
8000 people who.
Applied and verify that they lost their jobs lost significant income and we didn't really see a big there wasn't a disproportion amount in California, and yet were 10% delinquent so what.
So one conclusion from that is is that while kalthoff, our California portfolio is not under any disproportionate financial stress, it's under disproportionate behavior stress and those are very different things and more.
And as long as long as policymakers continue to kind of accommodate.
That behavior.
It's going to remain under stress I, just don't I don't see any anywhere around it but that's very different than saying can they pay a do they have the ability to pay if they were financially impaired they would have applied for the resident relief fund and.
So we know that there's there's a chunk of residents.
In California, who IRT behaviorally acting.
Not appropriately.
Yep Yep huge moral hazard out there.
Thanks, guys with the questions.
Okay.
Our next question today is from Alexander Goldfarb of Piper Sandler. Please go ahead.
Hey, good morning morning down there and that I would echo I mean, I think you guys have been great for your residents employees I mean remember back with Harvey you guys help your employees rebuilds. So I think it's good that you guys help out interesting the moral hazard comment.
Keith on the on southern Cal.
Not to lead just that Alex Jessett out of the conversation but.
[laughter] double question for him one it just you know in full disclosure the accounting treatment for the for the 10 million.
Sorry, I guess 11 million, but 10 million, we when you net out the senior comp.
You know how that will hit the PNM and then as a separate but included in the question for you have you seen the rating agencies change their tune. This time it seems like we've seen very few re downgrades.
Clearly apartments are better than retail, but still everyone's been affected are you if you're sensing the rating agencies like you guys. Just did your issuance last week that the agencies are giving the company's more time to settle out what the run rate and Hawaii impact will be before taking action or what's your sense.
Yeah, absolutely. So the first question when you look at the resident really funds. The way we will account for it is as an offset to revenue that we're not going to run it through same store.
But it will be in revenue and if you think about our components of into why page in our supplement it'll be its own separate a separate category. So we'll take the entire amount in the second quarter as an offset to revenue.
When you think about the rating agencies, yeah, obviously as I've spoken to all the rating agencies over the past a past couple of weeks as we got ready for bond issuance and as we completed a bond issuance.
The first thing I would tell you is that right by and large are somewhat stronger today than they were leading up to the last downturn and I think that is given the rate agency. Some comfort I think the other thing that you have to look at its one of the big issues that rating agencies look at is access to capital.
And when it Camden is able to go out and and start with what was originally issued originally sir whispered as a $300 million bond transaction and really quickly grew to over $8 billion of demand, which led us to upsize it to 750 million I think it.
Inc. events like that give the rating agencies, a great deal of comfort about the access to capital that most of us have and I think thats why you're going to see them.
Obviously be much slower in making rating decisions than they were in the past and then I'll add to that that if you. If you think about what did happen during the last downturn.
There were a couple of rate and she's in particular that were very reactionary and sort of moving people down two steps and one in one one action and I think they really quickly realized that that was that wasn't over reaction and I think I think they have been sort of learned on that side as well.
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Okay and then the second is I don't think you address the hospitality markets.
In a question, but you did say that Orlando Tampa and I think Phoenix were all some of your best rent collection market. So can you just comment on what's going on there may be your residents aren't as into the hospitality is as other people in those markets, but what the impact is.
Yeah, I wouldn't have included Orlando and the less than impacted we are seeing.
Outsized impact in our Orlando Tampa not at all it is performing better than most and so as soon as Phoenix. So those three markets that you mentioned I think that the weakest of those three would be Orlando and it would probably be in our bottom three or four.
What is that Keith.
Orlando, 10%, 10% collection, 8% no no. So so Orlando so what Keith was talking to is pricing power and Orlando. If you actually look at that delinquent in Orlando Orlando is only 2% delinquent.
You know, maybe it's a matter of time and we'll see we'll see how may results May result end up but but it is holding on remarkably well in April.
Thank you.
Our next question today is from Rob Stevenson Janney. Please go ahead.
Thank you and good morning.
You guys have given April occupancy rent numbers, but how should we be thinking about operating expenses I mean, you're saving on turnover cost there's probably some other expense lines that you're also saving on but then you probably have higher insurance and maybe utility cost with everyone staying at home and then there is some extra cobot expenses, how this all offset or operating expenses higher or lower.
Today, how should we be thinking about that.
Ultimately you've got a couple of things that are going on there. So so first of all the $3 million bonus that we discussed that is going to be booked operating expenses, so well I mean I'm talking about the normalized excluding the yes. This stuff that's the that's not recurring so so once you pull out the $3 million than you and you look at the salary side.
We should expect to have some general salary savings associated with open positions that are going to stay open a little bit longer. The other thing that that everybody is seeing really sort of across the board are is that benefit costs are coming down ultimately in this sort of covert 19 environment people are just not going to the doctor unless they apps.
Absolutely have to and in fact, the fact that will tell you that most of the.
Most of the hospitals and doctors that we know personally are really seen a downturn in the amount of sort of cases, they're saying today. So I think you're going to see savings on the salary side ex the bonus.
When you come to utilities, obviously were the trash is going to be a little bit higher but keep in mind that we rebuilt almost all the utilities back to our residents and then where you really are going to have savings is on aren't m. So as as we retain more of our resident obviously, our turn costs go down and that's.
That's a reasonable number for us.
Property taxes for US right now we started the year thinking we're going to be at 3%. We don't have any reason to believe that's any different.
We just went through our insurance renewal, we thought our insurance for the full year was going to be up somewhere around 20%. That's exactly where we ended up so I think I think by and large once you sort of that and sort of strip out. The nonrecurring events. You should have you should have some minor savings on expenses.
Okay, and hoping doesn't overwhelm that yeah, and then last thing to add and I know you wanted to sort of strip out expenses that were that were sort of nonrecurring, but we do have property level covered 19 expenses.
Yeah, when we look at a number for April that's right around $300000 and that's that's associated with additional cleaning masks.
The fact that we were having special services come out to enter into a enter into units to due to the repair work. So you you absolutely are going to have some coven 19 related costs.
Okay and the second one for me is when you look back at the global financial crisis, which I guess is probably the best example that we have at this point what was the final collectability rate at the end on those tenants that deferred rent got put on payment plans made promises to pay those sort of the noncash.
Payers at that point in time, what did you wind up collecting at the end, yes. So if you go back to that point in time, we really didnt have deferred the deferred programs I think the probably the better way to look at it is to look at what did bad debt do and so bad that started off the right around 50 basis points and it actually increased to about 100 basis points during that during the call.
Basis.
Okay. Thanks, guys appreciate it absolutely.
Our next question today will come from Richard Anderson of S&P, saying. Please go ahead.
Thanks. Good morning, everyone morning, appreciate as always on hold music W. CPT used.
[laughter].
So question first question is you get you get good good results relative to perhaps some expectations in terms of rent collection April looking even a little bit better in may and what point do you do you say boy. This is.
Pretty resilient.
We might actually be able to provide some guidance and the second quarter, how many tests on.
Of proof that you've got you've got a good flow of rent coverage by your residence that we'll get you too.
Comfort, even if we're not pass this and we're still sort of in qualified locked down around the country.
I need to see a couple of weeks, where we don't have another $3 million 3 million unemployment claims filed.
Okay.
I mean, if you know its.
It's I guess, it's better that it's not 6 million, but 3 million as they just a staggering number so until that until we kind of get to maybe a on inflection point or somewhere where you kind of say everybody that's going to be unemployed by this by and large already is.
Then I think you can start making some more rational.
Estimates of what is the next 60 or 90 days look like but to me. It feels like there's still it's kinda still moving away now I guess there some of the good I guess, there's good news as in the sense that that the as it turns out all these are the state unemployment claims turn out to be lagging numbers because people have been.
In the queue for the Bonnie unemployed for longer than they've been able to get their claim file. So it's it's entirely possible that what we're seeing now it's kind of in the rearview mirror, but I don't think we'll know the answer to that for another month or two.
But but I can I I think I can speak for everybody here to by saying rich as soon as we get.
To a point, where we think we can give you some meaningful guidance, we'll do it.
Okay.
Okay and then.
Nothing is all of you are you in your peers. You know we're ahead of the curve in terms of tech investments and that's obviously, helping you.
Now through the the leasing process I'm curious, though.
If you were somewhat concerned going into it.
Maybe not ready for primetime yet as they were not fully rolled out.
If that was something that has proven itself out so far there has been any hiccups in the process and a corollary to that question is do you see any scenario, where you can have.
More robust leasing activity.
In this environment when you consider elevated close rates and sort of people just sort of processing and coming to grips with this new normal in terms of the the leasing you know.
Process in today's environment could we actually get to a point, where it's almost just like it for different reasons.
Yes, rich we had we had.
Several different pilots underway for doing some version of virtual leasing and self guided tour. So we we were.
We had put in a lot of time and effort on it but we had not yet convinced ourselves that our customers would would except in large numbers that not having the one on one interaction personal touch Camden carriers approach to the leasing experience I think we've put that went to risk.
Yes.
In the sense that the feedback from our customers regarding the virtual leasing expressed hope so number one we ramped up we went from.
Our toes or in the water and maybe are up to our ankles too we just dove off and I mean, we're just you know in and it had deep and and so we we were able to quickly do that because of our.
Our history of rolling things out and technology initiatives and getting buying very quickly so that that all that getting that process in place and just taking the plunge and saying you don't have an option now and we're not going to talk about it anymore. We get we're gonna do it.
So that was that was good in the sense that that are our folks quickly adapted to the flip side of it is is that the feedback from the residents is has been incredibly positive I mean, it to the point, where there are a lot of people who have indicated I like this better than whatever process we had in.
Place previously that involves a personal visit in a tour and the rest. So I think that I think that there are permanent changes that are coming out of this that's just one of them theyre going to be a bunch of others, but that's probably the most immediate in terms of business practices that when we come out of this even if somebody waived.
Bond and we were back to January type conditions.
We're not going back to that from the standpoint of how we operate on site. There's too many do many clear advantages and also cut consumer behavior is probably ahead of where we were.
Yeah, let me add to on on just on the on the work side of the equation, our corporate office and our regional offices.
We have been out of the office for a long time now and I think Alex had his fastest close.
In terms of closing our quarter all done virtually all done in the cloud.
And that we took we spent a fair amount of money and it took us two years to implement a cloud based technology and we complained about it forever until we had to actually use it and now people are going Wow. That's amazing. So I think there I think there's going be dramatic changes in how people think about the workplace.
How they think about about.
How do you start your your workplace back you know do you start at 25% people, 50% people and and I think we have a fair number of people that really like.
Zoom and like a telecommuting the way they did I I drove in the Anup and it usually takes me from my I'm I'm sheltering them in between houses here in Houston, So I have a place out in Columbus, Texas, which is about an hour and in a normal commute day, it's an hour and a half yes, sure our 45 minutes.
It took me less and almost on a about an hour to get end today.
So lot of I think they're going to a lot of fundamental changes in how we all do business not just on site, but on but in our corporate offices as well on it and companies that haven't invested in the technology and don't have that ability to immediately plug and play at their homes that are going to be real really disadvantaged and.
I think it's kind of make us think more about the homes and and when what are people need to have high speed Internet. They have you know price.
It needs to be secure and all those things and and I.
I I'm sort of excited about that a bit because it could deal with a lot of a really you could end up with a lot of really cool and more flexible workplaces than we've had in the past I I'm enjoying a for second commute myself, though [laughter].
Alright, thanks, guys and gals like Everest.
And our next question today, well come from Zach Silberberg Mizuho. Please go ahead.
Hi, Thanks for taking my questions I'm, just curious on some comments you made about turnover of them. How low do you think they can actually end up in are you seeing any extra benefits on the revenues and expenses side.
Well I never thought we would get the 37% so I'm I'm not I'm, probably not a good wanted to ask but can it go lower yeah, I think so because the.
For a couple of reasons.
The people who are.
Who are enjoying the living experience that they and it's not everybody understands is it's not optimal to be sheltering in place.
But the companies who have taken extraordinary care not just trying to not keeping the place open and keeping the lots on the company's it would take an extraordinary care, which are by and large the.
Our public competitors and probably a dozen or so really really well run private companies are going to differentiate themselves as a place to live.
For the next five years.
Out of this out of this kind of mess that we're in and so I think it's I think it's actually.
I've been a time, where.
If you love the place that you live in and you're being cared for and you're being.
In extraordinary ways being taken care of.
You know you got to question why would you leave why would you leave that because the call the.
Pain associated with not being cared for correctly and properly in this kind of environment is probably a not a risk that a lot of people going to want to take so that's not going away anytime soon so could the 37 become 33 I suppose it good but we'll see.
On revenue expenses generally.
You know low turn lower turnover lowers expenses you don't have to re let you don't have to have commissions on them on the on it you don't have to redo carpet stuff like that.
On revenue.
I'd always rather have a renewal at a at a maybe a lower rate than a new lease because you're you're saving all the other other costs. So you know low turnover is a real good thing long term for this business and for Canada.
Great appreciate the color and just on your press release, you outlined last April or more typical months about one of the half percent delinquency what percentage of this 1.5% deal.
And ultimately collecting and did you or what is sort of the timeframe behind that.
Yeah, absolutely. So it usually takes as sort of a month or so and we'll work that 1.5% down to what is typical which is about 50 basis points.
Great. Thank you.
Our next question is from Artico, Alex Salmond and Associates. Please go ahead.
Hi, This is Alex calendars on for hearted. Thank you taking my question.
On the expense from property taxes are obviously, we are thrilled when this quarter.
Can you walk into the market level build up.
The decline in what you expect on going ahead. This all from Texas.
Yes. So if you think about what we had for property taxes. It was predominantly driven by by some select a slight refunds that became that we got in and those were all refunds that we knew were going to come our way on you've got you had Dallas was represented a as as was a as was the last.
On a.
And so that was all very typical if you think about property taxes in general.
I started the year, believing that property taxes were going to be up right around 3%.
I still and I still think that is going to be the case.
You know if you think about the markets for us that better sort of a little bit of an outlier on on the property tax side.
You've got you've got Houston currently which is.
Which is sort of about 7% and you've got Orlando, which is up about up about 9%, but you know you've got that offset by by some of our markets that are actually having negative growth. When you. When you think about refund so.
Where we are today, we think 3% probably a pretty good number what I will tell you is what typically happens.
When you go through cycles like this the great thing about property taxes as is the one large expense item. They actually can turn negative and in fact, it didn't turn negative during the last downturn and and and I assure you that all of us that have very good tax consultants and I know that Camden has some of the best tax consultants out there and I know that because our peer.
There's often collison ask us who we use.
Our tax consultants are out there and they are ready to the ready to fight and so.
Maybe we don't get the benefit in 2020, but I'd expect to see benefits in 2021.
Thank you further color and just a quick follow up.
Regardless of the renewals that you're offering.
A lot of these.
There are some of these under 12 months or are we thinking mostly.
12 month lease renewals.
The print the vast majority of them are taking 12 month renewals we offer the.
Terms, depending on it.
Anywhere from nine months to 15 months, but the purpose predominantly 12 months.
No it too much because if your question is short term renewals and no. We're not seeing that people are I think people are wanting certainty of their living conditions for the next year.
Got it thank you.
Ladies and gentlemen, this will conclude the question and answer session and at this time I'd like to turn the conference back over to Ric Campo for closing remarks.
Great well. Thanks, we appreciate taking the time to visit with US today and we will.
Talk to you soon take care.
The conference has now concluded we thank you for attending today's presentation.
And you may now disconnect.
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Sure.
No.
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And then.