Q2 2021 Camden Property Trust Earnings Call
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Good morning, and welcome to Camden property Trust second quarter 2020.
'twenty 1 earnings conference call on them.
Kim Callahan senior Vice President of Investor Relations and joining me today are Ric Campo Camden's, Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman and Alex <unk> Chief Financial Officer.
You have and logged and yet you can do so now through.
Of the investors section of our website at Camden living Dot Com, all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero. After today's presentation, there will be and opportunity to ask questions and please note. This event is being recorded.
Webcast will be available for replay of this afternoon, and we are happy to share copies of our slides upon request.
Before we begin our prepared remarks, I would like to advise everyone that we will be making forward looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and.
And involve risks and uncertainties that could cause actual results to differ materially from expectations.
Further information about these risks can be found in our filings with the SEC and we encourage you to review them.
Any forward looking statements made on today's call represent management's current opinions and the company assumes no obligation.
Today date or supplement these statements because of subsequent events.
As a reminder, camden's complete second quarter 2021 earnings release is available and the investors section of our website at Camden living Dot Com and it includes reconciliations to non-GAAP financial measures, which will be discussed on the call.
We hope to complete our call within 1 hour as we know that today is another very busy day for earnings calls and other multifamily companies are holding their calls right. After us.
We ask that you limit your questions to 2 then rejoin the queue. If you have additional items to discuss.
If we are unable to speak with everyone in the queue today, we'd be happy to.
And respond to additional questions by phone or email after the call concludes at this time I'll turn the call over to Ric Campo.
Good morning.
And for on hold music today, and coping with the chaos.
Last year when the pandemic began we hold the companywide conference call to share some of the lessons learned from.
And the great financial crisis.
Sort of recall with the first 1 of the same as Rajiv typically and poem.
It was quite good.
If you can keep your head when all of that you are losing theirs and blaming it on mute.
We went on to lay out of this is true.
Adjusted and should help cope with the Kols that.
We knew and kind of all the way along.
The other ideas of you suggestions were included and are on hold as of today.
We knew the Queen and David Bowie, and our teams, we're going to find themselves under pressure.
And we.
New and when that happened with gold and just to take the.
The advice from the Eagles.
And take it easy.
We encourage them to embrace of innovation.
<unk> passed and the Boston reminded us don't look back.
And we said, we rely on Camden values and culture, and do things our way because why Bon Jovi, we work for and follow and finally.
Some of them to get on board the army of those speedway again and role of the changes.
And at the end of the call. We showed a video that was produced by our Dallas, Texas operations group during the great financial crisis.
The same just as appropriate for what we faced at the beginning of the pandemic the crop you might find that and interesting today.
And we incurred go ahead and roll the video.
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When we held on.
First quarter earnings call, we're beginning to see an acceleration and both occupancy and pricing power across our markets. The <unk>.
Actual rate of acceleration that occurred since the call the store exceeded our estimates and resulted in the improved earnings guidance, we released last month.
Has the board, we're seeing very strong performance and continued improvement.
And our operating fundamentals and and almost all cases were current rental rental rates and see the pandemic levels. The outlook for my third party of economists and data provides the providers is also quite positive and they expect the apartment business and continue to thrive as we move into the second half of 2021 and.
And into 2020 the.
Despite the on going levels of high supply and any markets demand has been greater than anticipated, allowing positive absorption of newly delivered apartment homes.
Our occupancy is currently 97% leasing activity is strong and turnover remains low and so overall I.
Prudent today, our outlook for Camden, and the multifamily industry is very good.
We are excited to have entered the national market with the acquisition of 2 high quality apartment property, our acquisition and development teams continue to work hard and smart defined opportunities and a very competitive environment.
And I wanted to give a share.
Through our amazing Camden team members for doing a great job and taking advantage of the strong market.
Great customer service and sales of the cube is very important in the market like this we must deliver great customer service and support the Camden and value proposition when asking for and getting double digit rental increases.
Kris and from our customers. Thank you team Camden for everything you do every day to improve the lives of our teammates and our customers and our stakeholders 1 experience and the time next up of our co founder Keith.
Thanks, Rick now for a few details on our second quarter.
Operating results same property revenue growth was 4.1% for the quarter and was positive and all markets both year over year and sequentially.
We have remarkable growth and Phoenix and Tampa, both at 9.1% Southeast, Florida at 8.6% Atlanta at $5.7 and Raleigh.
Really it for 6.
We thought the April new lease and renewal numbers, we reported on last quarter's call, we're pretty good at nearly 5%.
But as Rick mentioned pricing power continues to accelerate for the second quarter of 'twenty, 1 signed new leases were 9.3% and renewals were 6.7.
And for a blended rate of 8% for leases, which were signed earlier and became effective during the and during the second quarter, New lease growth was 5.4% with renewals at 4% for a blended rate of 4.7%.
July of 2021 looks to be 1 of the best months, we've ever had.
Percent, new sign the lease signed new leases trending at 18, 7% renewals at 10, 5% and of blended rate of 14, 6% renewal offers for August and September were sent out with an average increase of around 11%.
Occupancy has also continued to improve.
And going from 96% and the first quarter of this year to 96, 9% and the second quarter and is currently at 97, 1% for July.
Net turnover ticked up slightly and the second quarter to 45% versus 41% last year due to the aggressive.
The pricing increases we instituted.
But it remains well below long term historical levels.
Move outs to home purchases also ticked up slightly from 16, 9% and the first quarter of this year to 17, 7% and the second quarter, which reflects normal seasonal patterns and our markets.
So <unk>.
<unk> the cost of the headlines regarding increased number of single family home sales. It really has not had on effect on our portfolio performance as the move outs to purchase homes are still slightly below our long term average of about 18%.
Rick mentioned Camden's y and his opening remarks.
We discuss internally often.
Our purpose or why is to improve the lives of our teammates customers and shareholders 1 experience at a time.
And our companywide meeting at the beginning of the pandemic, we share the Star Wars video and we emphasize that the chaotic months ahead will provide an extraordinary number of opportunities to improve.
As 1 experience at a time, we focused our efforts on improving our teammates lives and likewise focused their attention on improving our residents' lives. The results have been truly amazing and we could not be more proud of how team Camden has performed throughout the COVID-19 months, improving the lives of our team and customers.
<unk> has in turn improved the lives of the shareholders, including the approximately 500 Camden employees, who participated in the employee share purchase plan this year.
I'll now turn the call over to Alex adjusted Camden's Chief Financial Officer.
Thanks Keith.
Before I move on to our financial results and guidance.
A brief update on our recent real estate activities.
During the second quarter of 2021 as previously mentioned, we entered the Nashville market with the $186 million purchase of Camden Music row, a recently constructed 430 unit 18 storey community and the.
<unk> and $5 million purchase of Camden Franklin Park, a recently constructed 328 unit 5 storey community.
Both assets were purchased at just under a 4% yield.
Also during the quarter, we stabilized both Camden right now a 233 unit 79.
The 100, our new development and Denver, generating an approximate 6% yield and Camden Cypress Creek II, a 230 for unit joint venture and Houston, Texas, generating and an approximate 775% yield clear.
Clearly our development program continues to create significant value for our.
Millions of additionally, during the quarter, we began leasing of Camden, Hillcrest, a 132 unit $95 million, new development and San Diego.
On the financing side during the quarter, we issued approximately $360 million of shares under our existing ATM program.
We used the proceeds of the issuance to fund our entrance into Nashville.
Our existing ATM program is now fully utilized and.
And in line with best corporate practices, we will file a new ATM program next week.
In the quarter, we collected 98, 7% of our scheduled rents.
Holders with only 1.3% delinquent.
Turning to bad debt.
In accordance with GAAP certain uncollected revenue is recognized by US as income and the current month. We then evaluate this uncollected revenue and the established what we believe to be an appropriate reserve, which serves as the corresponding offset.
Net to property revenues and the same period.
When a resident moves out owing us money, we typically of previously reserved all past due amounts and there'll be no future impact to the income statement.
We reevaluate our reserves monthly for Collectability.
For multifamily residents we have currently reserved 11.
<unk> billion dollars as uncollectible revenue against the receivable of $12 million.
Turning to financial results, what a difference of year or quarter can make last night, we reported funds from operations for the second quarter of 2021 of $131.2 million or $1.20.
The 8 per share exceeding the midpoint of our guidance range by <unk> <unk> per share.
This <unk> <unk> per share outperformance for the second quarter resulted primarily from approximately <unk> <unk> and higher same store NOI, resulting from $2.05 of higher revenue driven by higher.
Rental rates higher occupancy and lower bad debt and a half percent of lower operating expenses driven by a combination of lower water expense and lower salaries due to open positions on site and.
And approximately <unk> and better than anticipated results from our non same store and development communities.
This 5 aggregate outperformance was partially offset by 1 set of higher overhead costs, primarily associated with our employee stock purchase plan combined with the <unk> impact from a higher share count, resulting from our recent ATM activity.
Last night basis.
For our year to date operating performance and our expectations for the remainder of the year. We also updated and revised our 2021 full year same store guidance.
Taking into consideration the previously mentioned significant improvements and new leases renewals and occupancy and a resulting expectations for the remainder.
Upon the year, we have increased the midpoint of our full year revenue growth from 1.6% to 375%. Additionally.
As a result of our slightly better than expected second quarter same store expense performance and our anticipation of the trend continuing throughout the year we decrease.
Decrease the midpoint of our full year expense growth from 3.9% to 375%.
The result of both of these changes is a 350 basis point increase to the midpoint of our 2021 same store NOI guidance from 2.5% to 3 points.
75%.
Our 375% same store revenue growth assumptions are based upon the occupancy averaging approximately 97% for the remainder of the year with the blend of new lease and renewals averaging approximately 11%.
Last night, we also increased the midpoint of our full year 2021.
<unk> guidance by <unk> 18 per share.
Our new 2021, <unk> guidance is $5.17 to.
The $5.37.
With the midpoint of $5.27 per share.
This 18 <unk> per share increase results from our anticipated 300.
250 basis point for 'twenty, 1 increase and 2021 same store operating results.
And <unk> of this increase occurred in the second quarter with the remainder of anticipated over the third and fourth quarters and and approximate <unk> increase from our non same store and development communities.
This 27 and aggregate.
The increase and <unk> is partially offset by an approximate <unk> <unk> impact from our second quarter ATM activity.
We have made no changes to our full year guidance of $450 million of acquisitions and $450 million of dispositions.
Last night, we also provided earnings guidance.
Third quarter of 2021, we expect <unk> per share for the third quarter to be within the range of $1.32.36.
The mid point of $1.33 represents a 5 cent per share improvement from the second quarter, which is anticipated to result from a <unk> <unk> per.
Share or approximate 2.5% expected sequential increase and same store NOI, driven primarily by higher rental rates, partially offset by our normal second to third quarter seasonal increase and utility repair and maintenance unit turnover and personnel expenses.
A 1.5 cents per share.
For the <unk> and NOI from our development communities and lease up our other non same store communities and the incremental contributions from our joint venture communities and a <unk> <unk> per share increase and the <unk>, resulting from the full quarter contributions of our recent acquisitions.
This aggregate 7.5 cent increase as.
Partially offset by 2 and half cent incremental impact from our second quarter ATM activity.
Our balance sheet remains strong with net debt to EBITDA at 4.6 times and a total fixed charge coverage ratio at 5.4 times as.
As of today, we have approximately $1.2 billion of.
And liquidity comprised of approximately $300 million and cash and cash equivalents and no amounts outstanding under our $900 million unsecured facility.
At quarter, and we had $302 million left to spend over the next 3 years and our existing development pipeline and we have no scheduled debt maturities.
Until 2022.
Our current excess cash is invested with various banks, earning approximately 25 basis points. At this time, we will open the call up for questions.
And I will now begin the question and answer session to ask a question you May Press Star then 1 on your touched on balance.
And are using a speaker phone please pick up your handset before pressing the keys.
The withdraw your question. Please press Star then 2.
Our first question today comes from John Kim with BMO capital markets.
Thank you, Rick and Keith and I know you mentioned that.
July is on track to be 1 of the best months, you've ever seen and I thought it would have been clearly the best.
But I'm wondering if what peer.
Period. This is the most comparable to the 2 and what May concern, you and whether its affordability rent income ratios or suppliers or something else.
Matt.
If you would say.
And we've never seen this kind of demand.
And of the market and our business leaders.
And you can go to the financial crisis, you can go to the.
And the big question of the eighties and.
We've never seen this kind of snapback in demand and the share.
The free.
Yes.
It really is unprecedented.
What what I guess, what sort of slow at all down or stop it or whatever is what's going on with the pandemic today.
And the uncertainty and the market today about how the massive fish.
Fiscal and monetary stimulus and just going to happen.
The wind overtime.
It's probably the biggest thing that concerns me.
The supply it's always been the issue right people worry about and supply and the demand is so high the day that supply.
And we're at 1 billion enough.
Today, if you can imagine that same math.
The 2.
And take up of this demand.
So it's definitely unprecedented and we're going to enjoy it while while each year and hopefully.
Looks like 2021, and Cynthia really really strong year end and when you sort of look at the backdrop of it looks like next year and do the same rocky for myeloma.
All of that yes. So that is just the the last question the John asked.
And the concerns and.
Mentioned affordability and on our portfolio were still running of about 19% of <unk>.
Household income that goes to rent payments so.
It's been on the 18% for the last couple of years, So maybe ticked up a little bit but the reality is is that are on.
Was it.
And the ones that have not.
Impacted by <unk>.
Directly from the job standpoint, COVID-19 their wages are increasing as everyone else's or so.
The other rents youre going to go up but my guess is is that we're going to see some pretty significant and.
Increases and household income as well.
And we start from a place of great affordability.
Okay and my second question is on developments.
You quoted the yields are trending higher and some of the projects completed but I was wondering where the development yield stands today on your current and $907 million pipeline.
And how much bigger you envision.
<unk> the developments going forward as far as far as the overall.
Pipeline.
Sure the and the $900 million of our pipeline our yields ranging from 5 to 6 and 3 quarters and so it's pushing up on an average of roughly 5 and 3 quarters of the 6 and so and that's the initial yields all of the Irr's are in the.
And yet.
The 7.5 to 8.5% range and that.
And that's really instructive when you think about what extent drawing on the capital markets are our weighted average cost of capital given everything thats going on its been driven down of the mid force and we're delivering development yields and the mid <unk>, right and where credit spreads between our weighted average cost of capital on and development.
Today, it's been the widest that I've ever seen it.
And maybe after the the.
And for crisis, we did some transactions right. After the financial crisis were making 10 and <unk>.
Today.
And our weighted average cost of capital is obviously much higher than 2000 <unk>.
11 and 12.
And we.
And of the roughly $720 million and our pipeline today and the.
Those.
Yields weren't.
Not protecting mid sixes or high <unk> like we have now, but you never know given the current.
Current.
Revenue revenue.
Line that we have going up high and of the right.
So the the other challenge of those yields will be.
Cost and and getting getting the right.
Workers, we do.
Have a worker shortage and construction.
Supply chain disruptions for the show the biggest free you up here.
For most of our developments and that $720 million of pipeline or and the mid.
And that's 5 and a half.
IR is there and the 7.5 to 8 range in terms of.
We also are adding to the pipeline and we would like to development is of great business right now, obviously and the margins have been widened dramatically by the low interest rates and low cost of capital. So we.
We are trying to add to that pipeline as we speak as well.
Great. Thank you.
Yeah.
Our next question comes from Neil Malkin with capital 1 securities.
Okay.
Hey, everyone.
Good morning, and congratulations on the 100.
Third and 50 dollar share.
Share price.
Unbelievable.
Uh huh.
First question can you talk about really I think the thing that's driving some of this is in migration trends.
And clearly people are voting with their feet.
And just can you just discussed.
And if you've seen any changes acceleration in terms of.
The percentage of new leases that are from odd state of from higher cost dates et cetera.
We heard this on.
And this earning season and that Youre seeing an uptick from already elevated levels to sort of new highs in terms.
Of incremental demand from out of state so any any color would be great.
So if you look at a year ago about 15, 6% of our new leases came from folks moving to the sunbelt from other areas today that number is about.
Teen percentage, that's the 350 basis point increase and folks moving from non sunbelt markets to the Sun belt markets and renting with Camden for it.
And really fairly dramatic increase on that side.
Yes, I would add to it and when you look at and I.
I'll take Houston.
And as an example.
Houston was our slowest market and our most difficult market because during the pandemic and after the pandemic because of the oil and gas influence of Houston.
And when you look at the number of jobs for them and add it back and Houston are relative to Austin, or Dallas or Atlanta, or some of your other markets.
At the bottom and.
And in spite of of those jobs are a lot of jobs on the United back at the same radio the other markets. The Houston market is bouncing back and not as strong and some of the other markets, but in the amazing way and part of it is the migration people believe fundamentally that that market.
And we have.
The pro business governments that are that have decent weather and job growth of opportunities, they're moving there even if the job for us and today there is still moving into those markets and I think.
And that's 1 of the things Thats really pushed up all of the demand side of the equation and all.
All of our markets, including Houston.
Yeah.
Great.
And maybe just talking about the AD.
Acquisitions are recycling.
Obviously cap rates are very low sub for but your <unk> cost of equity and he is also in the in the.
The mid to high threes your leverage is.
You know low and the industry and just wondering given the.
Our expectations for outsized growth in Sunbelt markets and I'm sure your conviction and in that piece of it as well.
Would you would you look to.
Dive a little bit more into the the acquisition market.
You know kind of using your currency I'm picking up some some leverage which you have clearly the capacity to do and.
And just kind of the increase your growth.
The answer is yes and.
We sort of.
And that in the in the and the.
The second quarter, when we issued and 3.
$360 million on the ATM and bought $300 million of property for Nashville sort.
The the best match funding and we can see with with the.
With the numbers and you used to put out.
And they used to discuss when we look at and we look at the incremental.
Sort of dilution.
And right, if you issue equity or bring up the towards acquisitions and development and the national and the ultimate arm for what we really do is we look at the most important measure from my perspective, and our management team for the effectiveness of our weighted average cost of capital relative to our terminal Unlevered IRR and those.
<unk>, our Unlevered IRR of today, when you look at our weighted average cost of capital and it's been driven down obviously true rally and the stock price to the.
10 year Treasury unit, 1 and 2.4% per day and bond price upon the opening of where they are so when you look at a mid force.
The weighted average cash cost of capital and we can acquire a.
Properties like of Nashville, and even though they're lower go in and cap rates when.
And when you look at it on a on an unlevered IRR over a 7 to 10 year period.
The 6.5% Unlevered IRR.
And these kind of rent growth that we're having and sewing and.
I'd tell you the 150 basis.
The positive spread on the acquisition is rare and REIT land and so that shows I think it for.
And the Green line for growth and both on the acquisition side and the development side as long as we manager our balance sheet appropriately and you've heard me.
Our management and Keith and mountain and.
And I'll talk about this or our targeted range for range from debt to EBITDA of 5 to flow.
For time.
And during sort of during good times.
And strong capital markets, you drive your debt to EBITDA down and you get closer to the floor during tougher times for bad times, recessions, Pandemics and and capital market hiccups.
Got it drive it.
For naturally goes up when cash flows decline or interest rates rise and what have you and that's where it kind of go mostly of hot. So today. We're in good times, obviously strong capital markets very very strong operating fundamentals and.
And if this is a strong spreads between.
We are weighted average cost of capital and R and R and.
And our Unlevered IRR.
So we're going to methodically grow our company in this way and today, we are already than we ever of millions of acquisitions, we have more to come.
I said earlier on $720 million development, hopefully and get.
Get a law.
Starting next year and.
This is the time, we're pretty good times, so we're going to make hay, while the Sunshine.
Yes, that's great congrats on a good quarter and.
Keep up the great work.
Thanks Neil.
Our next question comes from Rich Anderson with NBC.
Hey, good morning.
So.
Hey, I guess, 15% increase and rents is improving lives of people but.
I am curious is that market or is that Camden plus market because.
Lot of that all the bells and whistles that you can offer people that youre of competition can just wondering.
And I'm, referring to the July renewal activity of releasing activity.
Yeah.
The EPS.
That's total revenue.
That includes R. R.
Technology.
Cause of <unk> and all of the other amenities that we provide our residents so yes.
It's all in revenue and it.
And sort of looking back to.
And the beginning of the year and then looking at it.
Asking rents currently.
So and as to whether it is improving.
Pack on.
Not really.
It's a 3 legged stool, we are going to improve the lives of our residents are.
Our shareholders and.
Our our employees and so clearly we're improving the lives of our shareholders we've done.
We've done so much over the last.
And a lot of years to improve the lives of our residents with our resident relief program and all of the other things that we did obviously some of that some of that growth is reflects the fact that early on and the pandemic.
We were the first company to across the board for east rents on renewals and the leases and so obviously there are some.
Last.
Some take back of what what kind of sort of occurred had we not had we not made the conscious decision to allow.
Our residents some flat and the midst of the early days of the pandemic. So yes, the real numbers and.
It's strong and.
If you look out as you look at it Youll star and all of these.
Recommendations are being driven by our revenue management systems and.
And Youll start as forward looking out to the 90 to 120 day so.
The trends likely to continue yeah, I would do and.
And add.
You made the comment about.
The improving their lives and we are there is of Camden advantage No question and people you don't get people to increase their rents snapshot of essentially.
And smile at the same time.
Without providing value of value proposition to that customer and you have to have clean ground for you have to have well maintained property is you have to.
And well located all of those those value propositions.
The port driving rents and the way we are driving them today, because our customers understand that we are a business and we need to improve our bottom of our topline and our bottom line and are for them to create value for themselves and if you look at the apartment industry and go down the list.
Scale of.
The 1 of <unk>.
For more of affordable housing, where where you have I say more affordable, meaning less cost, but the quality of the housing as you go download with owners that don't understand the you should reinvest and your properties and that should make sure that they are clean and their safe and and all of those things that day.
Does really improving.
And the lives of those customers and the good news is of our customers are all doing really really well when you think about the.
Our average income of about 100 Grand but the challenge with that number is we don't update it and show you renewed their leases and when you think about the the.
On the wages for people that are they are growing over.
100 brand and are actually growing pretty substantially and the folks all got got stimulus money. So they don't have money and there are pockets and they understand that that the price of things go up and as long as the value proposition is there and you procure of and during the pandemic and you and you have to take care of them on on an ongoing basis, and you do well and that they're willing to pay a higher.
Higher price just like anything else. The brand proposition is about is this price worth of this brand and you can always part of something cheaper and goodwill to a low.
The quality of apartment and get the less rent.
But you don't get the Camden and experience and I didn't mean to put you on the defense of.
Half joking, but I mean, thats again, I'm not the potential of that.
The show on the merger of the <unk>.
<unk> thousand 14, 6 how much of that is rent and I. The reason why I ask is.
When Alex mentioned, the 11% blended expected for the rest of this year is that is that also fully baked in with fees and all and everything else or is that just pure rent and I'm just trying to get of direct.
Directionally off of that $14.6 that you started with in July.
Yes, so the 11% that is pure rent and the $14.6 blended rate that we're talking about that that is on a rental rate basis. We.
We do pick up other fees and those other fees are growing.
Slightly north of 3%.
Okay. Thanks very much.
Sure.
Our next question comes from Rob Stevenson with Janney.
Hey, good morning, guys, Keith I mean, it's hard to have underperformers, when you're up 15% in July but when you take a look at the markets. If you force.
The rank order them what are the markets that are sort of towards the bottom on a relative basis performance wise and what differentiates them from the guys that are sort of a step up from them. These days.
Well the rash.
We rank them on the.
And.
And just looking at the.
Of the 14, 6 blended rate and you go down and stand out of the bottom Houston is probably still at the bottom, but you're you're talking about.
Instead of.
Where it was and the FERC quarter of fourth quarter of last year, we're still basically flat.
And for some of maybe 2% from the beginning of from the beginning of 2020.
Houston now has the substantial positive and youre somewhere around 7% or 8% up and Houston. So it's.
If it werent for of the fact that the rest of the portfolio is producing as high as 20%.
Trade out.
And everybody will be applauding. The fact, our we would be applauding. The fact that Houston is it 7 or 8 so yes.
If you force it to be relative to there's always going to somebody at the bottom, but these are extraordinary growth.
Growth rates and in every single market that we're in.
And I guess.
Today on the worst.
D C and D C proper, where there is a ban on any rental increase.
Okay.
And then I mean.
And in terms of that when you look at it I mean, how much of the of the big jumps here are the removal of concessions versus.
So on and it's effective.
Vs.
At the end of the day, pushing rental rate like where are the markets deteriorate.
The 2 are pushing the market rate the most and it's not.
And part of it's the removal of concessions and or the jump and occupancy that's driving the market performance.
Rob we don't use the lessons and the only time that we ever use any concessions is on new developments and that's part of it is just part of the marketing process and the expectation of residents, but outside of our development pipeline.
We don't have any concessions across camden's portfolio. So it is pure rental increases.
And then Alex.
Did you push a bunch of operating costs into the first half of the year of curious as to how you go from 5.8 same store expense growth and the first half to sort of the $3.7 and 5 implied at the midpoint of guidance.
For the back half sort of folds out for you.
Yeah, absolutely it's.
Okay, and finally based upon tax refund so to get to give you. The numbers in 2020, we had about $2.3 million of tax refunds. They entirely came in the first half of 2020 in 2021, we are anticipating the exact same number $2.3 million of tax refunds entirely coming.
And the second half of the year. So it is just the timing issue around tax refunds.
Okay. Thanks, guys I appreciate the time.
Sure.
Our next question comes from Nick Joseph with Citi.
Thanks.
Curious on the acquisition pipeline and how large do you expect.
And cash flow to be in the near term.
Uh huh.
We'd like to get Nashville up to 3 or 4% and the near term and when you start looking at economies of scale and efficiencies.
And we need we really need to have 502000 apartments to actually.
And to get to that efficiency level and so.
We definitely are going and going to be aggressive and Nashville and continue to push there.
Thanks, and then.
Are there any other new markets that you may be entering over the next year or 2.
Right now we.
The markets and and.
And the interest for Nashville has been good so far so.
We're pretty good with where we are today.
So no.
Thanks.
Hum.
Yeah.
Our next question comes from Amanda Sweitzer with Baird.
Thanks. Good morning can you provide a bit more of an update on your disposition timing and where are you seeing buyer interest and pricing and a market like Houston relative to your prior expectation.
Now, let's go and talk about timing.
Yes, so and in our model we are assuming the disposition.
Mike what happened on November the first.
We have 2 assets in Houston that just hit the market. We've got another 2 assets and PG County.
And what Youre going to hit the market next week, so it's a little bit a little bit early to sort of give any updates on pricing. Although we certainly expect that we're going to do much better.
Better.
Than the original strike prices, we had when we first went out.
And our conversations with the the brokerage community.
And specifically around Houston.
And the last.
The 60 to 90 days I think it's clear that the the <unk>.
Word is out that.
Houston rents.
And we're really really accelerating hard and and so I think the split.
They're telling us is a whole lot more interest just generally and Houston.
And as Alex said, we will have to wait and see how the at all plays out but yes.
Literally the improvement in Houston, and overall is going to be a real positive for selling.
Net assets.
Yes, that's helpful.
And then apologies if I missed it but where do you stand in terms of receiving payment on there. The rent relief programs do you expect any payments and how meaningful could potential of addiction in California for you. What's your kind of all of them across all of them at this point.
Yes.
So I'll sort of hit the Iraq, which is just the payments that we're receiving.
<unk> total for us as well.
We're right around $4.1 million year to date.
And and obviously most of that came and the second quarter. So we're starting to get a we're starting to get some track.
Traction.
And finally, starting to get some reasonable traction and California.
Although california's making up about 20% of our E wrap payments and is about 70% of our delinquency.
So we said, we certainly have a ways to go there and then the number 2 market.
For us which is in.
Trust me because it has 1 of the lowest delinquency levels of Houston, which is also right around 20% of our collections. So what.
What we don't have any assumptions any significant and assumptions for a rap payments.
Coming in throughout the rest of the year, but but you know as we've talked about we've got sort of and $11 million.
So obviously.
Obviously, we're going to keep working working the process and hope to get some additional payments on.
And of course of that $11 million receivable I think we of reserve by $10 million of the 11 range, Alex That's correct yes.
We get payments and it'll be upside not downside net to your question around evictions.
And California.
And the thing that's really interesting to me about the whole.
The debate over evictions and.
Watching.
CNBC or CNN or someone last night talking about 12 million residents and America are going to get evicted 1 of the CDC moratorium.
It comes off and.
And I think that that.
There is a risk of massive the actions, but that the risk is not in camden's portfolio or any of the public companies portfolios.
If you look at our 70% of our receivables and the.
And California.
<unk> symbol for rent strikers and those receivables for people, who know that you don't get there is no penalty for not paying Camden or anybody else for rent and the zero P. I don't think there is no. There is no late fees and there's no interest there's nothing.
And what and I also saw Gavin Newsome on the on the news last night as well, making the statement that if.
Those of you ran for 12 months and you haven't.
And you have a quote unquote COVID-19 reason the <unk>.
Net of California's going to pay the rent.
And so when people hear that there's this confusion that that if you oh rent for more than 12 months and California, the government's gonna pay on but the bottom line.
You Havent pages that the $45 billion of.
On U S. The.
Government <unk>.
Allocation of money for renters has restrictions on and has means testing in house.
A lot of a lot of a lot of restrictions and and those restrictions by the way.
As.
Why is the only about 10% of a little less than 10 per cent of that money and he never reached a resident and America. So are our people driving cash flows leasing for thousands of dollars per month of apartments, and and Hollywood who have.
$1000 and cash in the bank account.
Arent.
Going to get a rep money and the question of will will be ultimately what happens for them right and we've reserved against it.
And ultimately those people are going to destroy their credit and when they figure that out and maybe they'll take some of that money out of their bank account that they have and pay their rent it will be interesting to see but at least for us it's not going to.
Moving the needle 1 way or another maybe all of the sudden everybody and California pays the rent we will have a $5.6 million for $7 million benefit, but it's not enough to move the needle and and we don't think E. Wrap is going to be a big thing for for us and overall because of our residents don't need the money the money needs to go to people.
We're making.
$50000 or less and needs to go to the people that that are paying 500 and $900 a month of the apartments not 504000, and so that's my little of soap box for government.
Or at this point, yet and I am.
And I would just add to that because I think it's an interesting always look these numbers perspective.
We get pretty good probably more agitated.
And probably it's a moral agitation not of financial AD agitation, that's certainly I'm speaking for myself, but in our portfolio we have out of.
Out of our total.
70000 lots of the amount of apartments.
We have 600 high delinquency residents and our definition of that is the.
3 of more months of behind on the rent. So it's it's 1%.
Little bit less of 1% of our total resident base.
Not a huge.
Terms of the numbers that you kind of it's kind of a big in terms.
Of the irritation, but.
And as Rick said of that 600, and high delinquency or high balance delinquencies, we've written it all off anyway, so anyway.
And keep working the work and the process.
And for the residents and our portfolio of who are eligible and we're going to make sure that.
They get taken care of.
Thanks that perspective is helpful. I appreciate all the commentary.
Mhm.
Our next question comes from Rich Hightower with Evercore.
Hey, good morning out there guys.
Good morning I.
I wanted to get your.
Your take on the fact that a lot of your competitors are starting to expand into markets.
And that are new for them not so new Camden.
And and you know what are the methods that you can employ the sort of maintain camden's edge.
In owning and operating or even developing and those markets.
Well the good news is the if you are vast markets right the big markets multibillion dollar market. So.
I would just say for years and years and years, we had to go to of conferences and talk about how we thought the.
The flyover parts of America are really good places to be and that the coasts, where not not necessarily the the.
Our cup of tea and.
And I would tell you our experienced and southern California, which is the best part of California, when it comes to pro business and what have you.
Shows that that.
And during tough pandemic times the.
The.
It was moved from our perspective and you say.
And the flyover states so with that said the <unk>.
The big market, and we love competition and just.
It will be able will be able to then show just how good Camden.
And just again for other public company.
Here is when they start reporting numbers and our markets.
So we welcome to the market than the market for straight friendly competition and and come on down.
Yeah, I I would just I would add to that.
That the public companies.
<unk>, where we compete with them they're there they make we all make the market better I mean, they're all they all use revenue management. They are all smart they raised rents when they should the lowest common the dominator and our business is still no third party managed assets that frankly, probably arent vantage very well so.
The more high quality competition, we have in the marketplace. The better we tend to do and the evidence of that is and then what the key Metro area, where we've had we have significant presence among and with a lot of competition and the other is in California. So.
Steel sharpen and.
The steel and bring it on.
Alright, thanks for the thoughts.
Okay.
Our next question comes from Brad Heffern with RBC capital markets.
Hey, everyone the.
For the $450 million and dispositions can you just talk for the use of proceeds there just given.
Obviously, the Nashville acquisition of already funded with the ATM.
Yeah, absolutely. So we will use those proceeds for additional acquisitions, because if you think about the midpoint of our acquisitions of $450 million.
And we've done $296 million plus.
Additionally, we will use those for our development pipeline so.
At this point and time, we're spending a couple of hundred million dollars of year to fund development.
And as well as Repositions, which refunding and another couple of 50 million Bucks a year. So so we've got plenty of really sort of accretive uses of the of the capital.
Okay got it and then just thinking about these 14 and 15% rent increases and July like why do you think that looks like and and.
2022, like you know next year, if we still see the same supply demand imbalance or are we going to see.
Still significantly higher than normal.
And rent increases are.
Capital and I know you just.
And my rent and 15% last year I can't do it again kind of thing.
Well, if you were not going to get into 2020.2 guidance, obviously, but if you. If you look at some of our data providers like Ron Whitten. He shows very strong 2022, as well just the backdrop of of.
The reopening.
And continue and continuing demand and the multifamily sector. So.
The trees don't grow to the Sky, obviously, and if you look at the long term history of the multifamily usually you have when you have when you come out of.
<unk>.
The big downturn or a recession of pandemic you have multiyear.
So I think in 2010, we told the market was that we would have the best the next 3 years would be the cash revenue growth and operating fundamentals that we've had and our business history.
And that came true that was true 11, and 12 and 13 were the best operating fundamentals.
And we've never seen and our business career because of was it was a snapback for them, but not as big of a snapback and the pandemic has been but it was definitely a snapback so and I.
And would expect based on the.
History and.
And the unless something dramatic happens to be of a black Swan and Delta virus.
All of them.
On the malware it sounds like that the 2022 and a pretty good year and he said earlier, our residents and not or not.
Revpar of 8.
And 19% of their income for rent so on average and if you go back to pre financial crisis European and the 'twenty and so we're and affordable.
Mary and her still and if you look at our average rent of 1500 Bucks and so for 15.15 for $300. So with that said this.
A 15% increase sounds a lot like a lot and it is but on a relative basis to the income growth and we're seeing.
And as long as you're giving the value.
Mark.
2 of 2 the the rest of that they accept it.
Okay. Thank you.
Our next question comes from Alexander Goldfarb with Piper Sandler.
Oh, Hey, good morning.
And so 2 questions.
Good morning, good morning down there so 2 questions first.
If we hear you correctly. There is you didn't really have.
And any concessions and the portfolio. So it's not like you're topping rents off of a really low base of last year, yes, there is more.
The population moving it down to the to the sunbelt or to the free states whichever terminology of that people want to use but that continues but still the.
The mid teens rent spreads that you guys are getting and the acceleration.
Is that and and it of just trying to understand that better is that just something that.
That there's a ton of jobs or suddenly everyone, who doubled up last year just wants to be back. It just seems like everything is great but at the same time the magnitude of that demand just seems incredible. So I'm just trying to understand because again, it's not coming off of a really weak comp. It's like you guys were going.
On 80 miles an hour and now you bumped up to 120 miles an hour and which is a pretty strong increase for a rate that was already going on at a good rate down the highway.
Yes, the way I look at it is this and we've.
Had this debate in the house and talk to data providers like Ron Ron and others and.
And the.
What we kind of settle in on the ship is that you have you had if you think about what happened pre pandemic, we were having the best quarter that we've ever happened that we had a long time, we have positive second derivatives and on most of our markets except for Houston in terms of revenue growth and we were looking at 2020 as being a kind of a.
And growth year from a sort of a.
And also ran the years and 18.19, so with that said that demand just shut down right and it was really good demand coming in the door and that shutdown and during that period to look at some of the demographic numbers, we still had a million people that were missing.
That should of been in the rental market that were not on the rental market.
And when you look at the.
The the millennials that are either of doubled up for living at home or whatever and that was and at the beginning of 2020. So all of that demand shutdown and then if you think about demand in 2020, any new demand that would've come.
And like.
And migration or even even the.
People, graduating from college or or just coming into the marketplace. In 2020 didn't happen and then all of a sudden you look in 2021, you have vaccines come into play.
I'm asking.
It goes way up.
The places open up do you now have 19.2019 demand coming to the market 2020 demand coming into the market and 2021 demand coming into the market all of the same time when the light switch went off of the beginning of the.
Or maybe the middle to the end of May.
And so with that you've got you.
You just have people who are.
Probably parted up with people and they didn't necessarily want to be with and they have plenty of money in their pocket through stimulus and drive increases in all of that and.
They are all hitting the the <unk>.
Entrance at the same time, causing occupancies to the spike and and.
And therefore rents the spike as well.
Okay.
Yes, Rick so Alex and the only thing of it is I think you are.
And I wouldn't think of it as trying to explain and 16% and how that.
How that works and the first 6 months of 2012.
And in 'twenty, 1 because if you think about it and in 2020, we were we.
We're on track when Covid hit we were going to blow our budgets the way and we were budgeting up 5 or 6% on topline revenue growth and we're going to kill those and then Covid hit and it goes to zero, we froze rents we froze renewals. So we missed the entire year of rental increases and some of our residents and so I think.
And I think we've probably with the ended at 67% and and.
2020 ex Covid. So some of the some of the 16 is just the clawback of of.
The rental increases that we didn't achieve and 2020, specifically because of Covid and if you lift the other way now you are trying to explain.
We were on 9 and 10% were just still a crazy number but we've seen that before we've seen 9 and 10% top line rental growth coming out of the great financial crisis and and the.
And going back to the tech.
Tech rack so.
With that that level is not unprecedented and our world but.
I think its probably.
Better way to look at it.
And so what you were saying earlier about the spilling into next year, just means that with basically 3 years' worth of demand. This year, it's going to take into next year or 2 at least satisfy that.
I think that's what our data providers of saying yeah.
Okay second question of history.
That's the math.
You've heard.
And on a 1 time shot usually at the.
And methodical.
Process.
Okay second question is.
Obviously, a lot of new competition, a lot of new entrants coming down to the Sun belt to your markets of.
But it was sort of curious you said the development spreads are at the widest they've been yes, we do.
Do hear that and industrial but apartments.
Surprised just given land costs shortage of labor and materials appliances, all of the fun stuff. So do you believe that going forward, you're still going to maintain.
And that really wide spread to development and the 5 and 3 quarters yields on new stuff or those comments were more on.
I'm, a little of existing projects, but on a go forward basis, those yields are likely to temper and maybe to 5 or something like that.
Well I think I said on our $720 million and we have and our pipeline that are that are developments.
Yields are in the and the low.
And the time and I think we're going to maintain the.
On and we might even do better because of revenue.
Revenue growth was the strongest in these market share.
Our revenue projections for probably more than offset cost increases.
In terms of spreads the reason of the development spread is so high the day.
It's not that the yields have gone up.
The.
The weighted average cost of capital has gone down and cap rates have gone down right.
If you're a merchant builder and Europe, you are budgeting 150 basis point positive spread on your development and which is on more of a normal spread on development and then.
And you look at it today and Youre selling you're selling.
And the pay up 5.5 out of.
Our free and a half cap rate or a free and a quarter cap rate you've increased your spread and it's primarily been driven down by the compression of cap rates and when I talk about our spread being being wide.
And are.
Partially we are doing better on some of our developments for me Youll perspective.
The mostly it's being driven down by our and lower weighted average cost of capital and so that's where the the spread.
It has been going down I think that it is still difficult to buy land today and to make the numbers work.
But but.
And when.
And you look at them.
The trial.
And Brian numbers I mean, there is at least 400000 units or $3.50 to 400000 units that are getting.
Sort of permanent and every year that are making the numbers work.
Okay. Okay listen thank you. Thank you Richard.
Sure.
Our next question comes from Austin, where Smith with.
Keybanc capital markets.
Great. Thanks, guys, you've historically talked about jobs to completions as a barometer of strength and fundamentals I'm curious what your revised outlook for this year is and certainly it sounds like jobs alone isn't really enough to explain some of the strength but.
Can you give us that figure.
And then also what ratio of kind of a third party forecasts are projecting for next year.
Yes, so the.
In terms of the total supply deliveries in Camden's markets.
Over the next.
In 2021, it's going to be about.
And 60000 apartments over the entire footprint.
And that's roughly in line with what it was last year and then if you look at Ron Witten work and 2022, we still end up with something around the $160.565000 unit range in terms of deliveries job growth is.
100, if you look at the numbers this year.
It makes complete sense in terms of the ratio and fact that looked pretty bullish.
And you get numbers like 7 to 1 on the on the 165 deliveries, but the thing that the.
I think it doesn't make a lot of sense to think of it.
And that way just for 2021, you almost have to go back and look at match and 22020, where the job losses occurred and then add to it the recovery, we're still and many of our markets. We are still not back to the employment levels that we were going into the pandemic and yet here we are.
With the kind of demand that we've seen and I think it's all of the all the reasons that Rick talked about earlier in terms of just Richard.
Releasing a lot of pent up demand, but if you'd like to traditional numbers. You can you would look at 2000.
21, and 2022 and say these numbers look really bullish overall I think you've got to temper that.
And our losses and 2020.
That's helpful and then with everything that you guys are talking about on.
On the development side, and the spreads and attractive cost of capital I mean, it seems like developers might be like and their lips of bit so really where you see and the most activity from a permitting perspective.
That battery of shovels and the ground that could move that supply and demand more towards equilibrium as you look maybe 2 to 3 years out.
I guess the head of its complicated.
Looking at 2 or 3 years out because of.
For the last 5 years, we look out a year or 2.
Active and well supply the gain and because of either cost pressure or banking pressure or whatever and.
And.
It's never peaked right.
And he used to make its way up.
And so I think that.
And the last numbers I saw the branches, sorry, it's coming down in 2020 through.
And for 24.
And I think that this is the.
The timing of the world, where it's really hard to figure out what's going to happen on a year for now or 2 years from now.
I know that.
The ultimate tapering and the great experiment of massive fiscal and monetary policy.
And turns around what's going to happen and how is that going to affect everything and I don't think of any of the snow.
That's why we wanted to be conservative and our business going forward, but.
And at least from now every market and the peak supply.
And it doesn't seem to matter from a from a occupancy or a.
Revenue growth perspective.
It will matter at some point win win.
And if we go into the other jobs slowed down or or another recession, obviously, that's when the world National and things change and we'll just have to see but right now but at least for the next.
18 months 24 months things.
It looks like the supply is not going to abate, it's going to continue to be pretty much high and every market you have some markets that are higher than others like Nashville, and Austin and you look at at the rent trade out and the Austin and Nashville today and at the <unk>.
Some of the highest rent tradeoffs, we have on the market.
And I don't know the answer of ultimately, but we'll obviously have to cut the wait and see.
Austin real page.
And as our provider for permanent data of the permit data is the most.
So I would say the least.
On.
Precise and reliable of this because you're sort of forecasting.
<unk> behavior into the future, but they're on their numbers, they've got permitting activity of 170000 apartments and higher market for this year and 169000 next year. So.
And again elevated activity, but I don't think I don't think these numbers reflect the most recent.
Compression on cap rates and they probably don't reflect the.
Updated thoughts none of it so we're still on the race between cap rate compression and cost to build.
Got it I appreciate the thoughts guys. Thank you.
Our next question comes from John.
And lastly, with Green Street.
Yeah.
Hey, Thank you for keeping the call going just 1 quick question for me.
Few months ago, obviously your cost of capital was a little bit different and so just curious how you thought through and share.
And equity versus selling a building or 2.
Sure so.
And as I said earlier, the cost of capital has come down and.
And when we think about our capital structure.
Think about our debt to EBITDA being between 5 and 5 times and for time.
And it seemed the opportune, we're going to issue equity when the all time high prices and the west.
At the time that we issued.
And the challenge with issuing equity oftentimes with the and.
When you decide to do it.
Rates to blackout periods and those kinds of things.
Yes.
And we don't have the flexibility of that most of the regular.
Regular investors do in terms of buying and selling because of the best blackouts and so.
And we are blacked out 42% of the time and are in order.
Other to cash.
The <unk> transactions like that we will continue to recycle capital. So it's on up to me, it's not a binary 1 choice to either issue stock or you issued debt or you sell assets. If the combination of those 3 things that.
And that produce capital and.
And ultimately over the long term you have to layer in all 3 of those activities. We all know we of $100 million roughly of free cash flow and on a 16 billion of our company. It's hard to grow the company with a $100 million of year. So the only way you can grow the asset base and future equity or debt issuance.
And on balance the.
The the.
The question of whether we sell assets or issue equity relates to what is the what is the weighted average cost of capital and what does that look like on a long term basis and when your weighted average cost of capital is the mid fours.
And you can put acquisitions on your on your books at 6 for better.
And you should do that.
We're going to continue to.
To reset.
Recycle capital through sales of properties and acquiring of the properties, but when the when the capital markets are conducive.
And putting long term accretive transactions on the books like we have done and Nashville.
That's the time that we issue equity.
And now I understand putting assets on the Bakken and developing given the cost of capital, but for the better part of last year the transaction market color.
And <unk> been sharing the signaling and a pretty pretty sizable discount and not today, but several months ago. So just felt like selling assets or for a cheaper source of funds and then your common stock.
Yeah.
And I think and with cap rate compression and the way it.
It is and that's why we're selling the assets, we put out of $450 million a day.
All of our budget together at the beginning of the year to sell and and a $450 million to acquire and that's 1 of our stock price of $95 a share of the beginning of the year and the weighted average cost of capital was north of 5 so.
Things changed in the in the the World capital mortgage.
And of exchange between the first of the year and now and we are.
The decision to issue equity along with that existing program. So.
I mean, it's all of it.
The hindsight's always perfect right and.
Sure.
The last last year when the stock was 62, if we could have executed a massive sale of assets.
And on a low cap rate and bought the stock that would of been opportune, but unfortunately, it didnt stay there that long and this complication of of.
And not being able to execute.
100 per cent of the time makes it more difficult to do both of those kinds of transactions both on the buy and sell.
Okay.
Understood. Thank you.
Sure.
Our next question comes from Joshua <unk> with Bank of America.
Yeah, Hey, guys hope everyone is doing well and just kind of curious on how you're thinking about.
Kind of leasing season, as we head into the fall. It just seems like it's going on.
On for longer and unexpected and.
And whether or not that influences your decision to kind of push rate a lot harder than you normally would at this time of year.
And I think that the.
If you think about our revenue management system yield stars of forward looking tool and it's.
Got it.
Really basing its most of the calculations on using the levers which is primarily price.
And looking out and 90 to 120 day so the.
The pricing that is being recommended by Youll start both on renewals and new leases and where we are.
We're very disciplined.
And the found our revenue management system, the 95% of the recommendations.
And.
And it's rare that we have an exception to the recommended youll start rates, though the.
And what that tells me is 6.
Youll start seeing the market clearing price that will maintain.
And our occupancy rates north of 96% is 16% increases looking out of 120 days. So that's.
<unk>.
Youll store will continue to push for as long as the conditions on the ground per minute.
Okay.
And just.
Just curious there kind of any tweaks you have to make for for next year, just given just the change in seasonality or does the revenue management system, just kind of automatically adjust for that.
And.
No the revenue management system is the.
The tweaks that we make are around sustainable.
Occupancy levels.
And occasionally we tweak it up or down.
And then and then Youll start of the price to make that happen over a period of time very small adjustments, but over and over at looking out of 120 day. So.
The all the good thing about Youll start as you don't have to be able to do that calculus or have your property managers do any calculus.
And it was around.
What's the market clearing price of 120 days out and that's what you'll start up.
Got it thanks guys.
Yep.
Our next question comes from Handel, St Juste with Mizuho.
Hey, Thank you for taking my question I know, it's been a very long call.
Just to follow up on the last question I wanted to better understand the lease expiration schedule I guess, the next couple of quarters and how that's been impacted by all of the leasing that's been done and the Covid disruption and how that's playing into your thinking about the the sustained.
On.
Strength.
Revenue growth near term.
Yes, Theres always seasonality are on our rent role, but it's not dramatic but it's.
So fourth quarter and first quarter are always we have fewer transactions and fewer occupants vacancies come available just because there's less traffic and the most of our markets, but it's not it's not dramatically for a couple of percent.
Flip flop between the first half first and fourth and the second and third quarters.
And that's the.
Within the yield store model.
Calculate that and maintain those exposure levels.
The optimized rates.
No I understand that but just wanted to better understand if there's anything about the.
The number of units coming available that was different and the next couple of quarters than the prior years during the the same periods.
Yes.
Okay. Thank you and then the other question I had was I guess, you've been pushing rate and carrying a bit more turnover of curious of your sensitivity there on incurring a bit more turnover how much would you be willing.
Willing and get comfortable to incur and and you also pushing renewals more and more aggressively and wondering how much more you think you can can push renewals here and any municipalities or regions like say D. C, California was a bit more sensitivity of that pushing as aggressively and other parts of your portfolio.
Well in D C proper.
We can't we can't increase around so we were effectively frozen.
For rental increases and D C proper and California.
And there's some recent legislation around.
Rent rent control, but it's.
When you dig into it at CPI, plus 6% plus or minus.
Or are we.
And most cases out there and we're not we're not impacted by that so.
And again.
All of the the math around.
Recommended middle of rental increases, it's not like it's not like we sit around and and.
Do what we think the youll likely should be.
And for our rental increases its all driven by the metrics within the Neil Star and we take those recommendations.
Okay Fair enough. Thank you I appreciate the time.
Yes.
This concludes our question and answer session I would like to turn the call back over to Ric Campo for.
Doing the Mark.
Okay, great well, we appreciate you being on the call today are those of you who are left the sorry went so long, but we try to answer all questions. If we didn't get gives us something on your best where available. So please give us call or email Kim or call came and we will get back to you. Thank you very much.
Craig will talk to you next.
The next quarter or when the.
When the conference season starts after labor day sort of take care. Thanks.
Take care of the conference is now concluded. Thank you for attending today's presentation you may now disconnect.
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