Q4 2023 Camden Property Trust Earnings Call

Daniel Santos: Hello friends, my name is Santos Castillo, and I'm the groundskeeper at Camden Royal Oaks. I grew up in the small town of El Carmen, Salvador. I spent the majority of my time with my parents, where I found my love for fishing.

Good morning, and welcome to Camden Property Trust fourth quarter 2023 earnings Conference call.

Kim Callahan senior Vice President of Investor Relations.

Joining me today are Ric Campo Camden's, Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman, and President and Alan Jessup, Chief Financial Officer.

Daniel Santos: Though I had a very limited education, I had a very healthy youth. I moved to Houston 37 years ago, where I met my wife 12 years later. Today, my wife, Magdalena, and I have been married for 23 years. We don't have any children or pets, though having each other is enough. To relax, I like to watch soccer games.

Today's event is being webcast through the investors section of our website at Camden living dotcom.

A replay will be available. This afternoon, we will have a slide presentation in conjunction with our prepared remarks and the slides will also be available on our website later today whereby email upon request.

If you are joining us by phone and need assistance during the call. Please signal a conference specialist by pressing the star key followed by zero.

All participants will be in listen only mode. During this presentation with an opportunity to ask questions afterward, and please note. This event is being recorded.

Daniel Santos: I love Barcelona. After the games, I head to the piano and relax. Prior to Camden, I worked as a cook for two years and cooked Chinese food. After that, I was a porter until I heard about Camden from the wife of a friend of mine. My wife told me about the opportunity, and the same day I went to the interview, I made my application and immediately started working.

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 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 to update or supplement these statements because of subsequent events.

Daniel Santos: I have been happily working for Camden as a groundskeeper for 30 years, and I have been at Camden Royal Oaks for the last 11 years. I'm very proud to know that Camden recognizes their employees and their efforts. I put a lot of value into my work, and you won't find one piece of trash anywhere in my community. I'm proud that Camden sees the work that I do. I enjoy being part of a team and seeing that everyone works together.

As a reminder, camden's complete fourth quarter 2023 earnings release is available in 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 this call.

We would like to respect everyones time and complete our call within one hour. So please limit. Your initial question to one 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 respond to additional questions by phone or email after the call concludes.

Unnamed Speaker: I truly love my job and coming to work every day. It's folks like Santos who make it certain that no matter what's going on in the world, Camden will always honor our nine values to ensure that we improve the lives of our teammates, our residents, and our stakeholders, one experience at a time. Our finance, accounting, legal, and real estate investment teams had a busy year-end and beginning of 2024, closing over $1.2 billion in refinancing and sales transactions. We begin 2024 with a strong balance sheet and are prepared for growth opportunities as they may develop this year. Our operations and support teams finished the year strong and are positioned to outperform our local sub-market competitors again in 2024. 2024 should be a transition year from peak new apartment deliveries to a more constructive market after supply is absorbed. In 2025, starts are projected to plummet to a low in the $200,000 range due to difficult market conditions.

This time I'll turn the call over to Ric Campo.

Richard J. Campo: The theme for our on hold music today was friends and teammates helping each other.

Richard J. Campo: <unk> from the same song of the popular TV show friends sums it up nicely.

Richard J. Campo: And be there for you when the rain starts to poor I'll be there for you.

Richard J. Campo: I've been there before I'll be there for you because you've been there for me too.

Richard J. Campo: All of Camden's nine core values as team players, we recognize our employees, who live camden's values through our annual Ace Awards program each year Camden employees nominate their peers and co workers for an Ace Award and from our 1700 employees 14 are selected to be national Ace.

Richard J. Campo: Winners.

Richard J. Campo: Those 14 individuals are recognized as celebrated at our National leadership meeting being selected as a National Ace Award winner is the highest honor that our Camden associates.

Richard J. Campo: Steve and represents the best of the best from team Camden I want to introduce you to one of our National EISA Award, whereas for 2023 Santos Castillo.

[music].

Speaker Change: Let me list.

Speaker Change: Okay.

Daniel Santos: And I'm Gonna ground cigarettes, there, although I grew up in a small town of El Carmen Salvador I spent the majority of the time with my parents, where I found my love for efficiency. So I had a very limited education at a very healthy use.

Speaker Change: Yeah, Yeah. He was the move to Houston 37 years ago, where I met my wife 12 years later.

Speaker Change: Today, My wife, Magdalena and I have been married for 23 years.

Magdalena: Don't have any children or pets, so having each other's enough.

Unnamed Speaker: In 2024, apartment absorption is projected to be a little over 400,000 units nationwide, with over 200,000 units absorbed in Camden's markets. 2024 apartment demand will be driven more by demographics and migration dynamics than traditional job growth. Apartments will take market share from the single family market. Beginning in 2011 and through 2019, apartments had an average market share of 20% of household formations. Apartments are projected to double that market share to 40% between 2024 and 2026. This is because, first, home affordability is at a 20-year low with rising home prices and current interest rates and no signs of the pressure easing anytime soon, even with rates continuing to fall.

Magdalena: With that I'd love to relax I like to watch soccer game.

Magdalena: Barcelona.

Magdalena: After the games ahead of the P&L and relax.

Magdalena: Prior to Camden I worked as a cook for two years and took Chinese food.

Magdalena: After that I was a quarter until I heard about Camden from the wife of a friend of mine told me about the opportunity in the same day I came through the interview I did my application and immediately started working.

Magdalena: <unk> been happily working for Camden is a groundskeeper for 30 years and have been at Tinder all over the last 11 years.

Magdalena: May was that we knew that that would happen I'm very proud to note that Camden recognizes their employees and their efforts.

Magdalena: I put a lot of value into my work and you won't find one piece of trash anywhere in my community.

Magdalena: I am proud that Camden piece of work that I do.

I enjoy being part of a team and seeing that everyone works together.

Magdalena: Truly loved my job and coming to work every day.

Magdalena: Right.

Magdalena: It's folks like centers, who make it certain that no matter, what's going on in the World Camden will always honor our nine values to ensure.

Magdalena: Sure that we improve the lives of our teammates our residents and our stakeholders one experience at a time.

Magdalena: Our finance accounting legal and real estate investment teams have had a busy year end and beginning of 2024 closing over $1 2 billion and refinancing of sales transactions.

Unnamed Speaker: In-migration to Camden's markets continues to grow. More young adults are in the workforce with solid job growth and wage growth. Additionally, 30% of households choose to live alone, which is at an all-time high.

Magdalena: We begin 2020.

Core with a strong balance sheet and are prepared for the growth opportunities as they may develop this year.

Unnamed Speaker: Camden's markets continue to lead the nation in job growth. We look forward to what looks to be a very interesting year. I know that our Camden team is equipped and ready to excel in 2024 by being great friends and great teammates. Thank you, Team Camden, for all that you do for Camden and our residents. Keith Oden is up next.

Magdalena: Our operations and support teams finished the year strong and are positioned to outperform our local submarket competitors again in 2024.

2024 should be a transition year from peak new apartment deliveries to a more constructive market. After supplies absorbed 2025 starts are projected to plummet to a low.

Magdalena: In the 200000 range due to difficult market conditions 2020 for apartments.

Magdalena: Absorption is projected to be a little over 400000 units nationwide with over 200000 units absorbed in Camden's markets.

Keith Oden: Thanks, Rick. For 2023, same property revenue grew by 5.1%, consistent with our original projections. Six of our markets achieved results within 50 basis points of their original budgets, and another six outperformed their budgets. Of the remaining three, L.A., Orange County, and Atlanta both underperformed, mainly for reasons related to bad debt, skips and evictions, and fraud.

Magdalena: 24 apartment demand will be driven more by demographics and migration dynamics than traditional job growth apartment.

Magdalena: Apartments will take market share from the single family market.

Magdalena: Beginning.

Magdalena: In 2011, and through 2019 apartments had an average market share of 20% of household formations apartments are projected double that market share to 40% between 2024 and 2026. This was because first home affordability is a 20 year low.

Magdalena: Low with rising home prices and current interest rates and no signs of the pressure easing anytime soon even with rates continuing to fall and migration to Camden markets continues to grow more young adults are in the work force with solid job growth and wage growth, 30% of households choose to live alone.

Keith Oden: In Phoenix, the underperformance resulted from market conditions moderating more quickly than we anticipated over the course of 2023. For 2024, we anticipate same property revenue to be in the range of 1.5% to 2.5%, with the majority of our markets falling within that range. The outliers on the positive side are expected to be Southern California markets along with Southeast Florida, while Orlando, Nashville, and Austin will likely underperform given outsized competition from new supply this year. Our top six markets should achieve 2024 revenue growth between 2% and 4% and include San Diego Inland Empire, Southeast Florida, Washington, D.C. Metro, L.A., Orange County, Houston, and Charlotte. Our next five markets are budgeted for revenue growth between 1% and 2% and include Denver, Tampa, Atlanta, Raleigh, and Phoenix.

Magdalena: Which is at an all time high.

Magdalena: Camden's markets continue to lead the nation in job growth, we look forward to what looks to be a very interesting year I know that our Camden team is equipped and ready to excel in 2024 by being great brands and great teammates. Thank you team Camden for all that you do for Camden and our residue.

Magdalena: Keith Oden is up next.

Keith Oden: Thanks, Rick for 2023 same property revenue grew by five 1% consistent with our original projections.

Keith Oden: Some of our markets achieve results within 50 basis points of the original budget and another six outperformed their budgets of the remaining three L. A orange County, and Atlanta, both underperformed mainly for reasons related to bad debt skips and evictions and fraud.

Keith Oden: In Phoenix, the underperformance resulted from market conditions moderating more quickly than we anticipated over the course of 2023.

Keith Oden: For 2024, we anticipate same property revenue to be in the range of one half to two 5% with the majority of our markets falling within that range.

Keith Oden: The outliers on the positive side are expected to be southern California markets, along with southeast, Florida, While Orlando, Nashville, and Austin will likely underperform, given outsized competition from new supply this year.

Keith Oden: Our top six markets should achieve 2020 for revenue growth between 2% and 4% and includes San Diego Inland Empire, Southeast, Florida, Washington, D. C Metro L, a orange County, Houston and Charlotte.

Keith Oden: Our remaining four markets of Dallas, Orlando, Nashville, and Austin are expected to have revenue growth of plus or minus 1%. As many of you know, we have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of each year and ranking our markets generally in order of their expected performance during 2024. We currently grade our overall portfolio as a B with a moderating outlook, as compared to an A-minus with a moderating outlook last year. Our full report card is included as part of our earnings call slide deck, which is incorporated into this webcast and will be available on our website after today's call.

Keith Oden: Our next five markets are budgeted for revenue growth between 1% and 2% and include Denver, Tampa, Atlanta, Raleigh, and Phoenix, our remaining core markets of Dallas, Orlando, Nashville, and Austin are expected to have revenue growth of plus or minus 1%.

Keith Oden: As many of you know we have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of each year and ranking our markets generally in order of their expected performance during 2024.

Keith Oden: We currently great our overall portfolio as a b with a moderating outlook as compared to an a minus with a moderating outlook last year. Our full report card is included as part of our earnings call Slide deck, which is incorporated into this webcast and will be available on our website after today's call.

Keith Oden: While job growth is expected to moderate over the course of 2024, the overall economy remains healthy, and we expect our Sunbelt-focused market footprint will allow us to outperform the U.S. outlook. We expect to see continued migration into Camden's markets and strong demand for apartments and homes in 2024, given the relative unaffordability of buying a single-family home. We reviewed 2024 supply forecasts from several third-party data providers, and their projections range from 230,000 to 330,000 completions across our 15 markets over the course of the year. After analyzing the sub-market locations and price points for these new deliveries, we expect that roughly 20% of those deliveries, or between 50,000 and 70,000 new units, may be competitive with our existing portfolio. Our top three markets for 2024 were the same as our top three markets for revenue growth in the fourth quarter of 2023, and they remain strong entering 2024. However, their growth rates are expected to slow from the 5% to 8% range they achieved in 2023, and thus, they have moderating outlooks. Therefore, we'd rank San Diego's Inland Empire as an A, Southeast Florida as an A-, and Washington, D.C. Metro as a B+.

Keith Oden: While job growth is expected to moderate over the course of 2020 for the overall economy remains healthy and we expect our sunbelt focused market footprint will allow us to outperform the U S outlook.

Keith Oden: We expect to see continued in migration in camden's markets and strong demand for apartments and homes in 2024, given the relative Unaffordably city of buying a single family home.

Keith Oden: We reviewed 2024 supply forecast from several third party data providers.

Keith Oden: And their projections range from 230000 to 330000 completions across our 15 markets over the course of the year.

Keith Oden: After analyzing the submarket locations and price points for these new deliveries, we expect that roughly 20% of those those deliveries are between 50 and 70000, new units may be competitive to our existing portfolio.

Keith Oden: Our top three markets for 2024 were the same as our top three markets for revenue growth in the fourth quarter of 2023, and they remained strong entering 2020 for their growth rates are expected to slow from the 5% to 8% range. They achieved in 2023, and thus have moderating outlook.

Therefore, we would write San Diego inland Empire, as an a southeast Florida as an a minus and Washington D. C. Metro is a b plus.

Keith Oden: L.A. Orange County, Houston, and Charlotte round out the top six, with LA Orange County receiving a B with an improving outlook, and the other two ranking as B with moderating outlooks. We anticipate the improvement in LA Orange County will come primarily from a reduction in bad debt as we repopulate many of our vacant units with residents who actually pay their rent. L.A. Orange County will also see a manageable level of supply this year, which should also serve as a benefit.

Keith Oden: Orange County, Houston, and Charlotte round out the top six with La Orange County, receiving a or b with improving outlook and the other two ranking as a b with moderating outlook.

Keith Oden: We anticipate the improvement in L. A orange County will come primarily from a reduction in bad debt as we repopulate many of our vacant units with residents who actually pay their rent.

L. A orange County will also see a manageable level of supply this year, which should also serve as a benefit.

Keith Oden: Our Houston portfolio had steady growth during 2023 and should continue to perform well in 2024. Supply remains in check, and the number of competitive deliveries in our submarkets should decline over the course of the year. Charlotte ranks as our number six projected market this year versus number five in 2023, so it is still an above-average performer, but revenue growth likely closer to 2% than the almost 7% we reported in 2023. The aggregate level of supply coming into the Charlotte MSA will be elevated this year, and we expect our main competition will fall in the Uptown South End submarket, which is slated to receive 3,000 units this year. Similar to Houston and Charlotte, Denver and Tampa also earned B ratings with moderating outlooks.

Keith Oden: Our Houston portfolio had steady growth during 2023 and should continue to perform well in 2024.

Keith Oden: Supply remains in check and the number of competitive deliveries in our submarkets to decline over the course of the year.

Keith Oden: Charlotte ranks as our number six projected market this year versus over 5% in 2023. So it is still an above average performer with revenue growth likely closer to 2% than the almost 7% we reported in 2023.

Keith Oden: The aggregate level of supply coming into the Charlotte MSA will be elevated this year and we expect our main competition will fall in the Uptown South end Submarket, which is slated to receive 3000 units this year.

Keith Oden: Similar to Houston, and Charlotte, Denver, and Tampa also RMB ratings with moderating outlook.

Keith Oden: Denver's revenue growth has been above average in our portfolio for the past three years and should continue that trend in 2024. Deliveries will tick up slightly this year, primarily in one or two of our submarkets, but should be met with solid demand. Tampa has been our number one market over the last three years, averaging over 11% annual revenue growth. However, the growth will slow to the low single-digit range this year.

Keith Oden: <unk> revenue growth has been above average in our portfolio for the past three years and should continue that trend in 2024.

Keith Oden: Deliveries will tick up slightly this year, primarily in one on one or two of our submarkets, but should be met with solid demand.

Keith Oden: Tampa has been our number one market over the last three years, averaging over 11% annual revenue growth the growth will slow to low single digit range. This year, new supply looks to be manageable and most of our submarkets there, but we are actively monitoring our two recently built high rise assets in the St. Petersburg sub market.

Keith Oden: New supply looks to be manageable in most of our submarkets there, but we are actively monitoring our two recently built high-rise assets in the St. Petersburg submarket for competition with the new product being delivered there. In Atlanta, our current assessment of market conditions rates a B- with an improving outlook. Similar to L.A. Orange County, we expect to see a reduction in bad debt during 2024, which should boost our revenue growth from the less than 1% achieved in 2023. On the new supply front, the Atlanta MSA will continue to add new units in 2024, and we anticipate the most competition from deliveries in our Midtown submarket. Next up are Raleigh and Phoenix, both receiving grades of B- but with stable outlooks.

Keith Oden: For competition with the new product being delivered there.

Keith Oden: In Atlanta, our current assessment of market conditions rates, a b minus with an improving outlook.

Keith Oden: Or to L. A orange County, we expect to see a reduction in bad debt during 2024, which should boost our revenue growth from the less than 1% achieved in 2023.

On the new supply front, the Atlanta, MSA will continue to add new units in 2024, and we anticipate that most competition from deliveries in our Midtown Submarket.

Next up our Raleigh, and Phoenix, both receiving grades of B minus but with stable outlooks in the aggregate. These markets perform just under our portfolio average in 2023 for revenue growth and they should remain in that area for 2024, with 1% to 2% growth and once again, while both of these markets space elevated levels of supply versus.

Keith Oden: In the aggregate, these markets performed just under our portfolio average in 2023 for revenue growth, and they should remain in that area for 2024 with 1-2% growth. And once again, while both of these markets face elevated levels of supply versus historical averages, we expect that only a handful of assets in each market will face head-to-head competition from 2024 delivery. Dallas would also rate as a B- with a stable outlook, but its revenue growth may fall just under the 1% mark this year. While Dallas still ranks as one of the nation's top metros for job growth and in-migration, the outsized level of supplies set to deliver this year will keep pricing power and rent growth muted there. Orlando delivered outsized levels of revenue growth for the past few years, but it has dropped from above average to below average in recent quarters, thus earning a C-plus grade with a moderating outlook.

Keith Oden: Rickel averages, we expect that only a handful of assets in each market will face head to head competition from 2024 deliveries.

Dallas would also rate as a b minus with a stable outlook, but it's revenue growth may fall just under the 1% Mark this year, while that was still ranks as one of the nation's top metros for job growth and in migration the outsized level of supply that to deliver this year will keep pricing power in rent growth muted there.

Keith Oden: Orlando delivered outsized levels of revenue growth for the past few years, but it has dropped from.

Keith Oden: From above average to below average in recent quarters.

Keith Oden: Thats, earning a C plus grade with a moderating outlook the economy in Orlando remains strong, but above average completion slated for 2024 will likely result in minimal revenue growth for the market. This year.

Keith Oden: The economy in Orlando remains strong, but above-average completions slated for 2024 will likely result in minimal revenue growth for the market this year. Our last two markets, Nashville and Austin, consistently rank as top markets for multifamily construction and scheduled delivery of new apartments in recent quarters, while they also rank as two of the top U.S. markets for job growth, in-migration, quality of life, etc. The sheer amount of new supply coming in 2024 will likely result in flat to slightly negative revenue growth for both of those markets, and we believe 30-40% of the new supply in those markets may compete directly with Camden's assets. We assign both markets a stable outlook for the remainder of 2024, with ratings of C and C-, respectively, given current market conditions.

Keith Oden: Our last few markets Nashville, and Austin consistently ranked as top markets for multifamily construction and scheduled delivery of new apartments in recent quarters.

Keith Oden: While they also ranked as two of the top U S markets for job growth and migration quality of lives et cetera, the sheer amount of new supply coming in 2024 will likely result in flat to slightly negative revenue growth for both of those markets in.

Keith Oden: And we believe 30% to 40% of the new supply.

Keith Oden: Those markets may compete directly with Camden's assets, we assigned both markets are stable outlook for the remainder of 2024 with ratings of C and D minus respectively, given current market conditions.

Keith Oden: Now a few more details on our 2023 operating results and January 2024 trends. Rental rates for the fourth quarter were signed new leases down 4.3% and renewals up 3.9% for a blended rate of negative six-tenths of a percent. Our preliminary January results indicate a slight improvement in signed new leases and moderation in renewals for a slightly better blended rate on our January signed leases to date. February and March renewal offers were sent out with an average increase of 4.1%. Occupancy averaged 94.9% during the fourth quarter of 2023. In January 2024, occupancy is trending in the same range. And, as expected, move-outs to purchase homes remained very low at 10.4% for the fourth quarter of 2023 and 10.7% for the full year of 2023.

Keith Oden: Now a few more details on our 2023 operating results in January 2024 trends.

Keith Oden: Rental rates for the fourth quarter had signed new leases down four 3% and renewals up three 9% for a blended rate of negative six tenths of a percent.

Our preliminary January results indicate a slight improvement and signed new leases and moderation in renewables for a slightly better blended rate on our January signed leases to date.

Keith Oden: We're in March renewal offers were sent out with an average increase of four 1%.

Keith Oden: Occupancy averaged 94, 9% during the fourth quarter of 2003 in January 2020 for occupancy is trending in the same range.

Keith Oden: And as expected move outs to purchase homes remained very low at 10, 4% for the fourth quarter of 2310, 7% for the full year of 23.

Alexander J. K. Jessett: January move-outs will likely remain in the same range. I'll now turn the call over to Alex Jessett, Camden's Chief Financial Officer. Thanks, Keith.

Keith Oden: January move outs will likely remain in the same range.

I'll now turn the call over to Alex just that Camden's Chief Financial Officer.

Keith Oden: Yeah.

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

Alexander J. K. Jessett: Before I move on to our financial results and guidance, a brief update on our recent real estate and capital markets activity. During the fourth quarter of 2023, we completed construction on Camden Noda, a 387-unit, $108 million community in Charlotte, which is now approximately 90% leased. We began leasing at Camden Woodmill Creek, a 189 unit, $75 million single-family rental community located in The Woodlands, Texas, and we continued leasing at Camden Durham, a 420 unit, $145 million new development in Durham, North Carolina.

Alex: During the fourth quarter of 2023, we completed construction on Camden Noda, a 387 unit $108 million community in Charlotte, which is now approximately 90% leased.

Alex: We began leasing at Camden with Mill Creek, a 189 unit $75 million single family rental community located in the Woodlands, Texas.

And we continue leasing at Camden Zero E.

Alex: 420 unit $145 million, New development in Durham, North Carolina.

Alex: Additionally, at the end of the quarter, we sold Camden, Martinique, a 714 unit.

Alexander J. K. Jessett: Additionally, at the end of the quarter, we sold Camden Martinique, a 714-unit, 38-year-old community in Costa Mesa, California, for $232 million. The community was sold at an approximate 5.5% yield after management fees and actual capex and generated a 10.6% unleveraged return over our almost 26-year hold period. Additionally, during the quarter, we issued $500 million of three-year senior unsecured notes with a fixed coupon of 5.85%.

Alex: <unk> 38 year old community in Costa Mesa, California for $232 million.

The community was sold at an approximate five 5% yield after management fee and actual capex.

Alex: And generated a 10, 6% unleveraged return over our almost 2006 year hold period.

Alex: Additionally, during the quarter, we issued $500 million.

Alex: Of three year senior unsecured notes with a fixed coupon of 585%.

Alex: We subsequently swapped the entire amount of the offerings of floating rate at <unk>, plus 112 basis points.

Alex: After quarter end, we issued $400 million.

Alexander J. K. Jessett: We subsequently swapped the entire amount of the offering to a floating rate at SOFR plus 112 basis points. After quarter end, we issued $400 million of 10-year senior unsecured notes with a fixed coupon of 4.9% and a yield of 4.94%. Also, after quarter end, we prepaid our $300 million floating rate term loan. And on January 16th, we repaid at maturity a $250 million, 4.4% senior unsecured note. In conjunction with the term loan prepayment, we will recognize a non-core charge of approximately $900,000 associated with unamortized loan costs.

Alex: A 10 year senior unsecured notes with a fixed coupon of four 9% and a yield of 494%.

Alex: Also after quarter end, we prepaid our $300 million floating rate term loan.

Alex: On January 16, we repaid at maturity a $250 million four 4% senior unsecured note.

Alex: In conjunction with the term loan prepayment, we will recognize a non core charge of approximately $900000.

Located with unamortized loan costs.

Alex: As of today, approximately 85% of our debt is fixed rate.

Alex: We have almost full availability under our $1 $2 billion credit facility, and we have less than $300 million of maturities over the next 24 months.

Alex: With only $138 million left to fund under our existing development pipeline.

Alex: Our balance sheet remains strong with net debt to EBITDA at four times.

Alex: Turning to financial results last night, we reported core funds from operations for the fourth quarter of 2023 of $195 million or.

Alexander J. K. Jessett: As of today, approximately 85% of our debt is fixed rate, we have almost full availability under our $1.2 billion credit facility, and we have less than $300 million of maturities over the next 24 months with only $138 million left to fund under our existing development pipeline. Our balance sheet remains strong with net debt to EBITDA at four times. Turning to financial results, last night, we reported core funds from operations for the fourth quarter of 2023 of $190.5 million, or $1.73 per share, one cent ahead of the midpoint of our prior quarterly guidance. This outperformance resulted almost entirely from lower than anticipated levels of bad debt.

Alex: Or $1 73 per share.

Alex: <unk> ahead of the midpoint of our prior quarterly guidance.

Alex: This outperformance resulted almost entirely from lower than anticipated levels of bad debt.

Alex: As previously reported in September we experienced an unusual spike in bad debt, which we forecasted to extend through the fourth quarter.

Alex: Fortunately September appears to have been an anomaly and bad debt for the fourth quarter averaged one 1% as compared to our forecast of one 5%.

Alex: Additionally, we delivered same store occupancy for the fourth quarter of 94, 9%.

Alex: 10 basis points ahead of our forecast.

Alex: Yes.

Alex: For 2023, we delivered same store revenue growth of five 1%.

Expense growth of six 7% and NOI growth of four 3%.

Alex: You can refer to page 24 of our fourth quarter supplemental package for details on the key assumptions driving our 2024 financial outlook.

Alexander J. K. Jessett: As previously reported, in September, we experienced an unusual spike in bad debt, which we forecasted to extend through the fourth quarter. Fortunately, September appears to have been an anomaly, and bad debt for the fourth quarter averaged 1.1% as compared to our forecast of 1.5%. Additionally, we delivered same store occupancy for the fourth quarter of 94.9%, 10 basis points ahead of our forecast. For 2023, we delivered same store revenue growth of 5.1%, expense growth of 6.7%, and NOI growth of 4.3%. You can refer to page 24 of our fourth quarter supplemental package for details on the key assumptions driving our 2024 financial outlook. We expect our 2024 core FFO per share to be in the range of $6.59 to $6.89 with a midpoint of $6.74, representing an eight cent per share decrease from our 2023 results.

Alex: We expect our 2024 core <unk> per share to be in the range of $6 59.

Alex: To $6 89.

With a midpoint of $6 74, representing an eight <unk> per share decrease from our 2023 results.

Alex: This decrease is anticipated to result, primarily from.

Alex: An approximate <unk> <unk> per share increase in core <unk> related to the growth in operating income from our development non same store and retail communities, resulting primarily from the incremental contribution from our seven development communities in lease up during.

Alex: Either 2023 <unk> 2024.

Alex: <unk> per share decrease in interest expense attributable to approximately $185 million of lower average anticipated debt balances outstanding in 2024 as compared to 2023.

Alex: Partially offset by lower levels of capitalized interest as we complete certain development communities.

Alex: The lower debt balances result from the previously mentioned Camden, Martinique disposition, and an additional $115 million disposition of an Atlanta community scheduled for next week.

Alex: For 2024, we are anticipating $41 million on average outstanding under our line of credit with an average rate of approximately five 5%.

Alex: And an average rate of approximately five 8% on our $500 million floating rate unsecured bonds.

Alex: We are not anticipating any additional unsecured bond offering in 2024.

Alex: A three and a half cent per share increase in fee and asset management and interest and other income, resulting from increased third party general contracting fees and interest earned on cash balances.

Alexander J. K. Jessett: This decrease is anticipated to result primarily from an approximate seven cents per share increase in core FFO related to the growth and operating income from our development, non-same store, and retail communities, resulting primarily from the incremental contribution from our seven development communities in LEASUP during either 2023 or 2024. A seven cents per share decrease in interest expense attributable to approximately $185 million of lower average anticipated debt balances outstanding in 2024 as compared to 2023, partially offset by lower levels of capitalized interest as we complete certain development communities. The lower debt balances result from the previously mentioned Camden-Martinique disposition and an additional $115 million disposition of an Atlanta community scheduled for next week. For 2024, we are anticipating $41 million on average outstanding under our line of credit with an average rate of approximately 5.5% and an average rate of approximately 5.8% on our $500 million floating rate unsecured bond. We are not anticipating any additional unsecured bond offerings in 2024.

Alex: We are assuming an average cash balances of $60 million in 2020 for earning approximately four 6%.

Alex: This 17 and I have spent a cumulative increase anticipated core <unk> per share is entirely offset by an.

Alex: An approximate 15 and a half cent per share decrease in core <unk> from the $293 million of 2023 completed dispositions.

Alex: An approximate <unk> <unk> per share decrease from the disposition anticipated next week and an approximate <unk> <unk> per share decrease.

Alex: <unk>, primarily from the combination of higher general and administrative and property management expenses.

Alex: At the midpoint, we are expecting flat same store net operating income with revenue growth of one 5% and expense growth of four 5% each.

Alex: Each 1% increase in same store NOI is approximately eight and a half cents per share and core <unk>.

Our 2020 for same store revenue growth midpoint of one 5% is based upon an approximate 0.5% earn in at the end of 2023, and an effectively flat loss to lease.

Alex: We also expect a one 4% increase in market rental rates from December 31, 2023 to December 31 2024.

Recognizing half of this annual market rental rate increase combined with our embedded growth results in a budgeted one 2% increase in 2024 net market rent.

Alex: We are assuming that bad debt continues to moderate through the year, reaching 1% by the fourth quarter and averaging one 1% for the full year, a 30 basis point improvement over 2023.

Alex: When combining our one 2% increase in net market rents.

Alex: With our 30 basis point decline in bad debt, we are budgeting 2020 for rental income growth of one 5%.

Alexander J. K. Jessett: A three and a half cent per share increase in fee and asset management and interest in other income resulting from increased third-party general contracting fees and interest earned on cash balances. We are assuming average cash balances of $60 million in 2024 and earning approximately 4.6%. This 17 and a half cent cumulative increase in anticipated core FFO per share is entirely offset by an approximate 15 and a half cent per share decrease in core FFO from the $293 million of 2023 completed dispositions.

Alex: Rental income encompasses 89% of our total rental revenues.

Alex: The remaining 11% of our property revenues is primarily comprised of utility rebuilding and other fees and is anticipated to grow at a similar level to our rental income due to decreased pricing power and increased regulatory constraints.

Our 2020 for same store expense growth midpoint of four 5% results primarily from anticipated above average insurance increases.

Alex: Insurance represents seven 5% of our total operating expenses and is anticipated to increase by 18% as insurance providers continue to face large global losses, and resulting financial pressures.

Alex: Our remaining operating expenses are anticipated to grow at approximately three 4% in the aggregate, including property taxes, which represented approximately 36% of our total operating expenses and are projected to increase approximately 3% in 2024.

Alexander J. K. Jessett: An approximate six cents per share decrease from the disposition anticipated next week and an approximate four cents per share decrease resulting primarily from the combination of higher general and administrative and property management expenses. At the midpoint, we are expecting flat same-store net operating income with revenue growth of one and a half percent and expense growth of four and a half percent. Each one percent increase in same store NOI is approximately eight and a half cents per share in core FFO.

Alex: Excluding our planned disposition next week, the midpoint of our guidance range assumes $250 million of acquisition.

Alex: All set by an additional $250 million of disposition with no net accretion or dilution from these matching transactions.

Alex: Page 24 of our supplemental package also details other assumptions for 2024, including the plan for up to $300 million of development starts in the second half of the year and approximately $175 million of total 2020 for development spend we expect core <unk> per share for the.

Alex: First quarter of 2024 to be within the range of $1 65 to $1 69.

Alex: The midpoint of $1 67 represents a six <unk> per share decrease from the fourth quarter of 2023, which is primarily the result of.

Alexander J. K. Jessett: Our 2024 same store revenue growth midpoint of one and a half percent is based upon an approximate 0.5% earnings per share at the end of 2023 and an effectively flat loss to lease. We also expect a 1.4% increase in market rental rates from December 31st, 2023 to December 31st, 2024. Recognizing half of this annual market rental rate increase combined with our embedded growth results in a budgeted 1.2% increase in 2024 net market rents. Additionally, we are assuming that bad debt continues to moderate through the year, reaching 1% by the fourth quarter and averaging 1.1% for the full year, a 30 basis point improvement over 2023. When combining our 1.2% increase in net market rents with our 30 basis point decline in bad debt, we are budgeting 2024 rental income growth of one and a half percent. Rental income encompasses 89% of our total rental revenues.

Alex: At approximate $3.05 per share a sequential decline in same store NOI drill.

Alex: Driven by an approximate <unk> <unk> per share increase in sequential same store expenses, resulting from the timing of quarterly tax refunds. The reset of our annual property tax accrual on January the first of each year and other expense increases primarily attributable to typical seasonal trends, including the <unk>.

Alex: Timing of onsite salary increases.

Alex: This is partially offset by a half cent per share increase in sequential same store revenue primarily from higher levels of fee and other income.

Alex: We are anticipating occupancy will remain effectively flat quarter to quarter.

Alex: At approximate $3.05 per share decrease attributable to our December 28, 2023 $232 million disposition of Camden Martinique.

Alex: An approximate <unk> <unk> per share decrease attributable to our plan $115 million disposition next week and an approximate a half cent per share decrease resulting primarily from the timing of various other corporate accrual.

Alex: This eight and a half cent per share cumulative decrease in quarterly sequential core <unk> is partially offset by <unk>.

Alex: An approximate one five cents per share decrease in interest expense, resulting from the lower debt balances as a result of the disposition proceeds.

Alex: And an approximate <unk> <unk> per share increase in core SSO related to additional interest income earned on cash balances.

Alex: Anticipated non core adjustments for the first quarter include a combined three sets from freeze damage related to winter storm Jerry.

Alexander J. K. Jessett: The remaining 11% of our property revenues is primarily comprised of utility rebilling and other fees and is anticipated to grow at a similar level to our rental income due to decreased pricing power and increased regulatory constraints. Our 2024 same store expense growth midpoint of four and a half percent results primarily from anticipated above average insurance increases. Insurance represents 7.5% of our total operating expenses and is anticipated to increase by 18% as insurance providers continue to face large global losses and resulting financial pressures.

Alex: The previously mentioned charge associated with unamortized loan costs from our term loan and costs associated with litigation matters.

Speaker Change: At this time, we will open the call up to questions.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your touch tone phone, if you're using a speakerphone. Please pick up your handset before pressing the keys. If at any time. Your question has been addressed you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we'll pause momentarily to assemble our roster.

And the first question will come from Michael Goldsmith with UBS. Please go ahead.

Good morning, Thanks, a lot for taking my question.

Michael Goldsmith: Can you just talk a little bit about the macro assumptions that you have built into your guidance today, we're seeing 353000 jobs added.

Michael Goldsmith: No.

Michael Goldsmith: How much elasticity is there in your guidance that could be influenced by the job market and then along those lines also.

Alexander J. K. Jessett: Our remaining operating expenses are anticipated to grow at approximately 3.4% in the aggregate, including property taxes, which represent approximately 36% of our total operating expenses and are projected to increase approximately 3% in 2024. Excluding our planned disposition next week, the midpoint of our guidance range assumes $250 million of acquisitions offset by an additional $250 million of dispositions with no net accretion or dilution from these matching transactions. Page 24 of our supplemental package also details other assumptions for 2024, including the plan for up to $300 million of development starts in the second half of the year and approximately $175 million of total 2024 development spend. We expect core FFO per share for the first quarter of 2024 to be within the range of $1.65 to $1.69.

Michael Goldsmith: There continue can you provide an update a little bit on the migration trips to the sunbelt.

Michael Goldsmith: Sure.

Speaker Change: As part of your response thank you.

Speaker Change: Sure.

Speaker Change: The job numbers today and the revision for December was definitely I think the market is putting into this and calling it a blow.

Speaker Change: Blowout right.

Speaker Change: It certainly is.

Speaker Change: And our overall economic backdrop for our for what we think demand is going to be.

Speaker Change: In our in our markets.

Speaker Change: It's definitely not based on.

Speaker Change: Blowout numbers.

Speaker Change: Clearly, we thought and I think most of the market and believe this is just us its slow dramatically in 2024 so.

Obviously more job growth helps helps us when you look at where the job growth is it's in our markets.

Speaker Change: Texas, and Florida have led the nation in job growth post Covid and we'll continue to do that obviously is very good for us and it's not.

Speaker Change: That kind of drop growth is definitely not baked into our into our numbers when you think about.

What's really driving demand in 2024 and 2025.

Speaker Change: We don't think it was.

Speaker Change: Increased job growth driving that demand.

Speaker Change: What's been happening is multifamily has been taking market share from single family as I said in my.

In the beginning of the call.

We've gone from a historic historic average of 20% multifamily demand.

Speaker Change: Total household formations to 40% and that's driven by everything we know right. The single family market is really really hard.

Alexander J. K. Jessett: The midpoint of $1.67 represents a $0.06 per share decrease from the fourth quarter of 2023, which is primarily the result of an approximate $0.05 per share sequential decline in same-store NOI, driven by an approximate $0.04 per share increase in sequential same-store expenses resulting from the timing of quarterly tax refunds, the reset of our annual property tax accrual on January 1st of each year, and other expense increases primarily attributable to typical This is partially offset by a half-cent per share increase in sequential same-store revenue, primarily from higher levels of fee and other income.

Speaker Change: For somebody to buy a house today I mean, we had we had.

Speaker Change: I think it.

Speaker Change: Total of 10, 7% of people moved out to buy houses at Camden in 2023, and so when you think about those dynamics and there is other.

Speaker Change: Broader dynamics too, which is 30% of Americans today are living alone and that that.

Speaker Change: Benefits departments and that number is way up from from the past.

Speaker Change: Past timeframe so.

Speaker Change: The the blowout job numbers, obviously help our numbers and if we continue at this level it would be pretty interesting as far as in migration. Alex you can talk about in migration.

When you look at the demand side for example.

Alex: We expect over 200000 units of demand in 2024, and Thats on a 220 units supply right plus or minus for completions and so it's pretty balanced.

Alex: Two it but ultimately when you look out for example, their projections showing 380000.

Alexander J. K. Jessett: We are anticipating occupancy will remain effectively flat quarter to quarter. An approximate three and a half cent per share decrease attributable to our December 28, 2023, 232 million dollar disposition of Camden Martinique, an approximate one cent per share decrease attributable to our planned 115 million dollar disposition next week, and an approximate half cent per share decrease resulting primarily from the timing of various other corporate accruals. This eight and a half cent per share accumulative decrease in quarterly sequential core FFO is partially offset by an approximate one and a half cent per share decrease in interest expense resulting from the lower debt balances as a result of the disposition proceeds and an approximate one cent per share increase in core FFO related to additional interest income related to additional interest income earned on cash balances. Anticipated non-core adjustments for the first quarter include a combined three cents from freeze damage related to winter storm Jerry, the previously mentioned charge associated with unamortized loan costs from our term loan, and costs associated with litigation matters.

Alex: Total demand for the U S from 400000 and.

24, and $25. So demand is being driven by different drivers today, not just the old adage of.

Alex: One department for every five jobs that just doesn't work anymore because of the in migration. The other thing also is not just in migration from other other.

Alex: Other cities its actually.

Total Mike total immigration because immigration was weighed down during Covid announced wave it's back to more normal and those immigrants tend to tend to in this legal immigration I'm opining on board or anything like that but it's not.

Alex: So that's helped US to Sox you might hit the in migration of it yes.

Speaker Change: Yeah, absolutely. So we continue to have really strong.

Speaker Change: And migration to our apartment. So if you look at those who have moved from non sunbelt to sunbelt for us in the fourth quarter. It was about 17, 5% of our total move ins by.

Speaker Change: By the way that's fairly consistent with what we've seen over the past couple of years. So that remains really strong and one of the other things that we track is that we track Google searches for people in New York, where people in California looking for apartments to rent in our markets and just to give you a really interesting to me New York searches for Teck.

Operator: At this time, we will open the call up to questions. Thank you. We will now begin the question and answer session. If you have a question, you may press star then 1 on your touch screen. Thank you for using.

Speaker Change: Apartments were up 72% in the fourth quarter of 23% as compared to the fourth quarter of 'twenty two.

Operator: Please pick up your handset before pressing. If at any time your question has been answered and you would like to withdraw your... Trust Store. At this time, we'll pause momentarily to assemble our... And the first question will come from Michael Gold... CBS, please go ahead. Good morning.

Speaker Change: California's searches for Texas departments were up 52% in the fourth quarter of 23 to the gas compared to the fourth quarter 'twenty. Two so still very strong demand for folks coming out of New York out of California to our markets.

Speaker Change: Yeah.

Speaker Change: Thank you very much.

Speaker Change: Okay.

Speaker Change: The next question will come from Steve <unk> with Evercore ISI. Please go ahead, yes.

Yes. Thanks, good morning, Thanks for all the detail, but I guess I had a question on what your implicit.

Michael Gold: Thanks a lot for taking my question. Um, can you just talk a little bit about the macro? Today, we're seeing 353,000 jobs added. So, how much elasticity is there in your guidance that could be influenced by the job market? And then, along those lines, also, can you provide an update a little bit on the migration? All right, as part of your response. Thank you. Service for the when you do the job. Blowout, right?

Steve: Did new and renewal kind of leasing spreads were and maybe how that tied into your occupancy assumptions I guess, what I'm really asking is are you guys really solving more for occupancy here and we will give up on the new rate side or are you willing to let occupancy drift lower and sort of key pricing firmer.

Speaker Change: Yes, so we're assuming that occupancy is going to be flat in 2024 as compared to 2023 and that number is 95, 3%.

Unnamed Speaker: certainly is, and our overall economic backdrop for what we think demand is going to be is definitely not based on a low number. Clearly, we thought, and I think most of the market believed, that job growth had slowed dramatically in 2024, so obviously, more job growth helps us. When you look at where the job growth is, it's in our market. Texas and Florida have led the nation in job growth post-COVID, and we'll continue to do that. So, obviously, it's very good for us, and it's not... That kind of decline growth is definitely not baked into our numbers when you think about what's really driving demand in 2024 and 2025. We don't think so.

Speaker Change: And we are driving towards that number when we look at new lease and renewals and they try it out for the full year, what we're anticipating as new leases to be down 6% renewals up three 6% for blended increase of one 2% and that is going to sort of follow what you would think be typical seasonal patterns.

Okay.

Speaker Change: Yeah.

Speaker Change: Thanks, that's it.

Speaker Change: Thanks.

Speaker Change: The next question will come from Brad Heffern with RBC capital markets.

Hi, everyone. Thanks can you just talk about how your assumptions for rent growth in 'twenty four compare to how you would guide in a normal year without all these supply headwinds I think you said, one 4% market rent growth, So where would you normally start the year and I guess why is that the right differential to that given the supply backdrop.

Speaker Change: Yes, we would typically I mean, obviously every year is different and every year has its own unique parameters around supply and demand in.

Speaker Change: In our business a typical year as 3%.

Unnamed Speaker: Increased job growth is driving that demand. What's been happening is multifamily has been taking market share from single family homes, as I said, my in the in the. We've gone from a historic average of 20% multifamily demand in total household formations to 40%, driven by everything we know, right? The single family market's really hard for somebody to buy a house today.

Speaker Change: And you can see that we're at one 4% and that's obviously driven by by the supply factors are there as we talked about on the prepared remarks, we think demand is still incredibly strong, but but we are cognitive of the supply issues and thats why youre coming up with a one 4% for the full year.

So Brad put it in context.

Speaker Change: <unk>.

Speaker Change: The issue of.

Speaker Change: Demand in the job number that came out today, we used two primary data providers. They had very different views about employment growth for 2024.

Unnamed Speaker: I mean, we had, I think a total of 10.7% of people moved out to buy houses in Camden in 2023. And so when you think about those dynamics, and there's other broader dynamics too, we, 30% of Americans today are living alone, and that benefits departments, and that number is way up. Past.

Speaker Change: Basically ended up taking the mid point.

Speaker Change: The two of them because they both had their own stores, if they can sell around it but the midpoint of our two data providers.

Speaker Change: Our cast for total employment growth across Camden's markets.

Four.

For 2024 was about 300000.

Unnamed Speaker: Time frame So the job the blowout job numbers obviously help our numbers in, if we continue at this level, it would be pretty. As far as in-migration is concerned, Alex, you can talk about in-migration. When you look at the demand side, for example, we expect over 200,000 units of demand in 2024, and that's on a 220-unit supply. Plus For more information, call 1-800-434-7000.

And we just got that in the month of January so.

Speaker Change: <unk>.

Speaker Change: I think I think we.

Sure.

Speaker Change: We tried to build in some realism around the numbers in the forecast, but clearly our forecast did not anticipate anything like.

Speaker Change: Having the entire job growth projected for the year in the first month so.

Okay. Thank you.

Speaker Change: Yes.

Speaker Change: The next question will come from Austin, <unk> with Keybanc capital markets. Please go ahead.

Austin: Yeah. Thanks.

Austin: Wondering I know you guys don't offer concessions across the stabilized portfolio, but just wondering what kind of has changed.

Austin: On concessions as far as what you're seeing across those markets that are most exposed to some of the new supply.

Austin: Thanks.

Unnamed Speaker: But ultimately, when you look out, for example, their projections showing 380,000. Total Demand for the U.S. from $400,000 in 2024 to $380,000 in 2025. So demand is being driven by different drivers today, not just the old attitude of one apartment for every five jobs. The other thing is not just in-migration from other cities; it's actually.

Speaker Change: It's very typical of what we've seen the toughest markets like.

Speaker Change: Would be Austin, Texas, and national and there.

Speaker Change: The.

Speaker Change: Concessions are significant as anywhere from two to three months free generally.

Speaker Change: Merchant builders.

Speaker Change: Beyond three months free, but youre seeing that in the in the most supply.

Speaker Change: Constraint supply markets, when you get to more markets that arent as pressured than compared to.

Unnamed Speaker: Total Immigration, because immigration was way down during COVID, and now it's back to more normal, and those immigrants... 10-2. Porter, that but, but it's so that's helped us to, you might hit the end my great, Yeah, absolutely. So we continue to have really strong migration into our apartment. So if you look at those who have moved from non-Sunbelt to Sunbelt.

Speaker Change: As to your.

Speaker Change: Anywhere from from.

Speaker Change: One month to six weeks two months, Max and and that's kind of kind of what we are seeing in some of the other markets.

Speaker Change: The next question will come from Rich Anderson with Wedbush. Please go ahead.

Richard Anderson: Hey, good morning folks.

So.

Richard Anderson: I Wonder if we could talk a little bit about the longer term view.

Richard Anderson: Avalon and any QR said well.

Unnamed Speaker: The fourth quarter was about 17.5% of our total move-ins. By the way, that's fairly consistent with what we've seen over the past couple of years, so that remains really strong. And one of the other things that we track is that we track Google searches for people in New York or people in California looking for apartments to rent in our markets.

Richard Anderson: Peak supply in 'twenty four means peak revenue declines in 2025 or in theory, no one knows for sure.

Richard Anderson: Do you do you feel like that is at least in the wheelhouse of a possibility and that what.

Richard Anderson: What we're seeing today in terms of your outlook, which I think most people think looks better than it.

Unnamed Speaker: And just to give you a really interesting to me, New York searches for Texas apartments were up 72% in the fourth quarter of 23 as compared to the fourth quarter of 22. California searches for Texas apartments were up 52% in the fourth quarter of 23 as compared to the fourth quarter of 22.

Richard Anderson: Expectations going and could actually sort of see a downdraft next.

Richard Anderson: Next year as you know the full lot of the supply is absorbed into your portfolio.

Based on some of the providers, we use show an uptick in 'twenty five and our market is not a down two downtick and if you think about the supply discussion that I had a minute ago.

Unnamed Speaker: So there is still very strong demand for folks coming out of New York and out of California. Thank you very much. Next question. Sachwal, with Evercore ISI, please go ahead. Yeah, thanks. I guess I had a question about what. I guess what I'm really asking is what the blended new and renewal kind of leasing spreads were and maybe how that tied into your occupancy. Are you guys really solving more for occupancy here and will give up on the new rate side, or are you willing to let occupancy drift lower? Price

Richard Anderson: The supply of this project.

Richard Anderson: The supply we know about the demand is for real issue right. So when you look at the demand projections for for this year. It's there.

Richard Anderson: Nationwide over 400000 units and then the projection for the following year, even with a slow or very low job growth Mark is something like 380000 units of demand. So the demand drivers interestingly enough or are just not usual demand drivers in multifamily.

Richard Anderson: It's always been about job growth right and today, it's about taking market share from single families singles.

Richard Anderson: Single family market because it's.

Unnamed Speaker: Yes, so we're assuming that Occamcy is going to be flat in 2024 as compared to 2023, and that number is 95.3%. And we are driving towards that number. When we look at new leases and renewals and the trade-out for the full year, what we're anticipating is new leases to be down 0.6%, and renewals up 3.6% for blended increases. And that is going to sort of follow what you would think would be typical seasonal fluctuations. Thanks, that's it. The next question will come from Brad Heffern with RBC Capital. Hey, everyone.

So upside down on a on a cost to rent perspective, and lack of inventory in the resale market and whats happened.

Richard Anderson: It was really interesting is that if you want to buy a new house in America today, you pretty much have to buy or do you want to buy a house.

Pretty much have to buy a new house and when you look at the debt.

Usually when interest rates go up as high.

Richard Anderson: Single family Homebuilders, all crash and lay people off well they had about a five or six month hiatus, and then went back to hard core building analysis, because there was no inventory for single family buyers to buy and that's continuing so I think that these demand drivers that are actually that are driving this.

Brad Heffern: Thanks. Can you talk about how your assumptions for rent growth in 24 compared to how you would guide in a normal year without all these supply headwinds? I think you said 1.4% market rent growth. So where would you normally start the year?

Really positive outlook for demand in 2024 are going to be in place in 2025, as well and especially if you have a backdrop of job growth that looks like it's.

Richard Anderson: I'm not sure you can say January is going to be up.

Richard Anderson: Print every month this year, but clearly the job market is a lot stronger than people thought it might be and that could help with the absorption in 2025 as well. So I haven't seen very many projections show 2025, where rents are going down the bottom most of the numbers that we see from folks or their bottom.

Unnamed Speaker: And I guess, why is that the right differential to that given the supply backdrop? Yeah, we would typically, I mean, obviously, every year is different. And every year has its own unique parameters around supply and demand. In our business, a typical year is 3%. And you can see that we're at 1.4%, and that's obviously driven by supply factors being there. As we've talked about in the prepared remarks, we think demand is still incredibly strong, but we are conscious of the supply issues. And that's why you're coming up with a 1.4% So Brad, let's put it in context. Good job. Sue Primary Data Providers, is one of our two data providers. I tried to build it. Hart.

Richard Anderson: In 2024, and then they start an uptick in 2025, because you absorbed a lot. So many units in 2024.

Speaker Change: Okay fair enough. Thank you.

Speaker Change: The next question will come from Eric Wolfe with Citi. Please go ahead.

Eric Wolfe: Hey, Thanks, So correct me if this is wrong, but I assume that youre at a gain to lease today. So I was just wondering based on your history. If there is a certain gain to lease level. We are no longer able to pass through like three 5% to 4% type renewal increases and then for that four 1% renewals you sent out for February and March.

Just wondering what the right sort of achieve rate to think about would be on that thanks.

Unnamed Speaker: Okay, thank you. The next question will come from Austin, from Bank Capital Markets. Please go ahead. Yeah, thanks.

Speaker Change: So first of all we're actually not at a gain to lease. So we have basically a flat no loss lease or gain to lease.

Unnamed Speaker: I was just wondering, I know you guys don't offer concessions across the stabilized portfolio, but just wondering what kind of changes have you seen just on concessions as far as what you're seeing across those markets that are, you know, most exposed to some of the new supply. It's very typical of what we've seen. The toughest markets like would be Austin, Texas, and Nashville. And they're, you know, the concessions are significant, you know, anywhere from two to three months free. Generally, merchant builders don't go beyond three months without payment. But you're seeing that in.

When you think about renewals, we're anticipating the fourth excuse me the first quarter that we're going to get at right around three 9% so fairly close to what we're sending out and then and then the other question, which I think is sort of really around the differential between new leases and renewals.

Speaker Change: When we look at our math.

Speaker Change: The differential for the full year actual percentage wise between somebody with a sign a new lease for in our renewal is really only about one 5% differential so it's not that significant and not something that we think is problematic.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: The next question will come from Hendel, St. Just with Mizuho. Please go ahead.

Speaker Change: Hey, guys good morning.

Unnamed Speaker: Supply. When you get to markets that aren't as pressured as those two, you're anywhere from one month to six weeks to two months max. And that's kind of what we were seeing in some of the other markets.

Speaker Change: Hoping you could talk about development.

Speaker Change: For a moment here honestly, you have up to $300 million of new starts, including the guide so curious.

Speaker Change: When we could see those start how they're penciling today from a yield or IRR perspective, and which markets. We can see those then thanks.

Speaker Change: The developments that we.

Speaker Change: Having that in that model or in the model or in Charlotte and their suburban three story walk up type product and we would we would start those depending on how the year unfolds in the back half of the year. So that we can deliver into 'twenty six 'twenty seven.

Richard Anderson: The next question will come from Rich Anderson with Wedbush. Hey, good morning, folks. So I wonder if we could talk a little bit about the longer term view, what Avalon and EQR said, well, supply 24 means revenue declines in 2025 or, in theory, do you feel like that is at least in the wheelhouse of a possibility and that what we're seeing today in terms of your outlook, which I think most people would say is better than expectations going in. We could actually sort of see a down draft next year as the full lot of the supply is absorbed.

Speaker Change: And.

And the yields are anywhere from in the mid fives to low sixes.

Speaker Change: In terms of stabilized yields and when you look at IRR.

Speaker Change: Really kind of complicated to figure in IRR today, given what we know.

Speaker Change: What are you going to expect cap rates to be but but ultimately we think theres going be a pretty constructive market 2006 and 2007 when.

Speaker Change: Win win.

Speaker Change: When these properties deliver we have another a number of them in the pipeline as well as in other markets but.

Unnamed Speaker: Based on some of the providers we use, they show an uptick of 25% in our markets, not a downtick. If you think about the supply discussion that I had a minute ago, you're the supply for this project or the, supply we know about, demand is the real issue, right? So when you look at the demand projections for this year, nationwide, over 400,000 units. And then the projection for the following year, even with a slow, very low job growth mark, it's something like 380,000 units of demand. So the demand drivers, interestingly enough, are just not usual demand drivers in multifamily. It's always been about job growth, right? And today, it's about taking market share from single families. The Single-Family Market because it's so upside down on a cost to rent perspective and a lack of inventory in the resale market. And what's happened is If you want to buy a new house in America today, you pretty much have to buy a new house. And when you look at the, usually when interest rates go up this high, single-family home builders all crash and lay people off.

Speaker Change: These two because they are pretty simple.

Speaker Change: And.

Speaker Change: They come in at a price point, that's very affordable relative to urban high rise in the same markets.

Speaker Change: The attractive.

Speaker Change: Okay.

Speaker Change: And then maybe on the real estate tax guidance.

Speaker Change: I think you mentioned, Alex 3.35% I think it was embedded in your same store expense.

Speaker Change: Guy there.

Speaker Change: A little bit lower but I think a lot of us were thinking.

Speaker Change: Certainly given what we've seen recently I'm curious if we're kind of past the peak headwinds there for real estate taxes and selling into a new norm here or maybe you're perhaps benefiting from something else that's less obviously.

Speaker Change: Yeah, absolutely said that property tax number that that we have in our guidance was 3%.

Speaker Change: And if you think about it is really the same number that we experienced in 2023 and so it seems that we are reverting back to the long term mean, which isn't that sort of three to three 5% range.

Speaker Change: Really the big driver that you have is Texas and is as we've discussed in prior earnings calls.

Unnamed Speaker: Well, they had about a five or six month hiatus and then went back to hardcore building houses because there was no inventory for single family buyers to buy. And that's continuing. So I think that these demand drivers that are actually driving this really positive outlook for demand in 2024 are gonna be in place in 2025 as well. And especially if you have a backdrop of job growth, that looks like I'm not sure you can say January is going to be a print every month this year, but clearly, the job market is a lot stronger than people thought it might be and that could help with the absorption in 2025 as well.

Speaker Change: Texas is very favorable when it comes to property taxes, especially with a new.

Speaker Change: Bill that was passed last year and so we're receiving the benefit of that for a second year in a row and we actually think that our total property taxes in Texas are going to be up about.

Speaker Change: Two 2%, which are which is really a pretty low number and that makes up about 40% of all of our property taxes. So that that's the primary driver there.

Speaker Change: Thanks.

Speaker Change: The next question will come from Alexander Goldfarb with Piper Sandler. Please go ahead.

Speaker Change: Hey.

Alexander Goldfarb: Good morning down there.

Just wanted to go back I think Ric or Keith I think at the beginning of the call you mentioned the expectation for nationally 400000 unit absorption. This year 200000 of which would be in the Camden markets.

Unnamed Speaker: So I haven't seen very many projections that show 2025 where rents are going down. They bottom, most of the numbers that we see from folks are bottoming in 2024, and then they start an uptick in 2025 because you've absorbed a lot, so many units in 2025. Okay, fair enough.

Alexander Goldfarb: They are like.

Close to 700000 or 650000 units expected to be delivered this year. So just wanted to better understand the comments around absorption and then also as part of that.

Eric Wolfe: The next question will come from Eric Wolfe with Citi, please go ahead. Hey, thanks. So, correct me if this is wrong, but I assume that you're at a gain to lease today. So I was just wondering, based on your history, if there's a certain gain to lease level where you're no longer able to pass through, like three and a half to 4% type renewal increases. And then for that 4.1% renewal rate you sent out for February and March, I was wondering what the right sort of achieve rate to think about would be. So first of all, we're actually not at a gain-to-lease. We're basically a flat, no-loss lease or gain-to-lease. When you think about renewals, we're anticipating for the first quarter that we're going to get right around 3.9%, so fairly close to what we're sending out. And then the other question, which I think is sort of really around the differential between new leases and renewals. When we look at our math, the differential for the full year, actual percentage-wise, between somebody with a signed new lease and a renewal is really only about 1.5%.

Alexander Goldfarb: We all understand what's going on with the supply but are you suggesting that the.

Alexander Goldfarb: The share of housing going to apartments versus single family will obviously continue to sustain and therefore versus historically, where jobs would be more of a factor. It's really more household formation thats really the factor now into next year.

Speaker Change: It sounds like you answered the question.

Yeah.

Speaker Change: That's what's going on I mean, we are.

Speaker Change: Without.

Speaker Change: Amazing job growth, we're still we're still.

Able to.

Speaker Change: To produce a lot of demand and it's all a function of different demand drivers and jobs right.

Speaker Change: Today, if you look at the.

Speaker Change: The.

Speaker Change: Sure that would take that apartments are taking from the household formation. So you look at historically double what it has been for a long time and so that's a it's almost the same as whats happening in the single family for sale market.

Speaker Change: Is there market share has doubled at least and maybe even tripled from the norm because of the lack of inventory of single family homes to buy because of lock in effect. So.

Unnamed Speaker: So it's not that significant and not something that we're going to see. Problems. Thank you. The next question will come from Haendel, with Mizzouho, please go ahead. Hey, guys. Good morning.

Speaker Change: You have a <unk>.

Speaker Change: Kristin situation here, where we are continuing to benefit from.

Speaker Change: From the high cost of homeownership in and continuing to benefit from the in migration both international.

Haendel: I was hoping to talk about development for a moment here, but I see you have up to 300 million new starts, including the guide. So curious when we could see those start, how they're today from a yield or IR perspective, and which markets we can see those in. The developments that we have in that in that model or in the model are in Charlotte, and they're suburban three-story walk-up type products, and we would pay based on how the year unfolds, the back half of the year so that we could deliver into 26 and 27, and the yields are you know anywhere What are you going to expect CapRITS to be? But ultimately, we think there's gonna be a pretty constructive 7 when when you know when these properties, We have a number of them in the pipeline as well in other markets, these two because they're pretty simple. And they come in at a price point that's very affordable relative to urban high-rises in the same markets.

Speaker Change: Our immigration and migration from others other cities so.

Speaker Change: Yes, there's a lot of our units under construction, we know that but the demand seems to be it seems demand numbers or any close to being close to being right.

Speaker Change: Is going to create if you will a soft landing for the supply and that's that's kind of the <unk>.

Speaker Change: Model that we've put forth there.

Speaker Change: Rick are you sound like exact clarified.

Speaker Change: 400 versus the <unk> 70.

Speaker Change: Our 670 is not what the absorptions are going to be Keith you have those absorption numbers.

Speaker Change: Yes.

In Camden's markets.

Keith Oden: Yes, the completions that we have.

Modeling, our 230000 apartments across.

Keith Oden: Camden's platform in 2024 and that number drops to about 202025.

Speaker Change: And just make sure we're talking apples and apples and apples versus.

Speaker Change: National numbers, it's $2 30 in Camden's markets.

Speaker Change: Okay. Thank you on that.

Speaker Change: 600, that's coming and coming in the pipeline doesn't all get delivered in 2024 part of that is into 2025 as well.

Speaker Change: The next question will come from Jamie Feldman with Wells Fargo. Please go ahead.

Jamie Feldman: Great. Thanks for taking the question I just wanted to get your thoughts on timing.

Jamie Feldman: Our fundamentals so just thinking about your guidance for new leases.

Unnamed Speaker: It's pretty, and then maybe on the real estate tax you offer, I think you mentioned Alex, 3.3 and a half percent, I think, was embedded in your expenses guide there. A little bit lower than I think a lot of us were thinking, and certainly given what we've seen recently. I'm curious if we're kind of past the peak headwinds there for real estate taxes and settling into a new normal here, or maybe you're perhaps benefiting from something else that's less obvious. Thanks.

Jamie Feldman: Slightly negative.

Jamie Feldman: But they were much worse in January on both effective and signed.

Jamie Feldman: If you look at your current occupancy versus your projected occupancy it seems like an uptick so do you think that.

Speaker Change: When you think about the first half versus the back half.

Speaker Change: I think it gets better into the back half and that's where the pickup is or do you think that that.

Speaker Change: January was January is kind of an anomaly and the numbers are just going to look better off the bat.

Unnamed Speaker: Yeah, absolutely. So the property tax number that we have in our guidance is three. And if you think about it, it is really the same number that we experienced in 2023. And so it seems that we are reverting back to the long-term mean, which is in that sort of three to three and a half percent range. Really, the big driver that you have is Texas. And as we discussed in prior earnings calls, Texas is very favorable when it comes to property taxes, especially with a new bill that was passed last year.

Speaker Change: So the first thing I would tell you is if you look our signed new leases in January excuse me our sign blended leases in January are better than our effective which is a which is a leading indicator of.

Speaker Change: Improvement.

Speaker Change: What we are anticipating that we're going to a blended trade outs in the first quarter of about 2%. So a slight uptick from where we are today, but we are anticipating the occupancy is going to remain flat in the first quarter at 95%.

Speaker Change: And then the improvement comes throughout the year.

Speaker Change: Number one we have.

Speaker Change: Better comps, which are very helpful for us and then we also sort of hit our seasonal strong period, because we've moved from the second quarter into the third quarter.

Alexander Goldfarb: And so we're receiving the benefit of that for a second year in a row. And we actually think that our total property taxes in Texas are going to be up, you know, about 2.2%, which is really a pretty low number, and that makes up about 40% of all of our property taxes. So that's the primary driver. This question will come from Alexander Goldfarb with Piper Sandler. Please go ahead. Hey, uh, uh, morning. I want to go back. I think Rick or Keith would like it.

Speaker Change: And then you think it stays strong in <unk>.

Speaker Change: Or do you think you see a pullback yeah. So we're still in it.

Speaker Change: We've got a <unk> blended trade out of one 6% and occupancy of about $95 two.

Speaker Change: So I think that sort of follows the normal seasonal patterns that you would see.

Okay alright, thank you.

Speaker Change: The next question will come from Adam Kramer with Morgan Stanley. Please go ahead.

Adam Kramer: Hey, guys just wanted to ask about external growth and acquisitions specifically.

Unnamed Speaker: At the beginning of the call, you mentioned the expectation for NASA... 400,000 units of absorption this year, 200,000 of which would be in the Camden markets. But I think they're close to 700,000, www.larryweaver.com to be delivered this year. So just wanted to better understand the comments around absorption.

Adam Kramer: Given where the balance sheet is net debt to EBITDA at <unk>.

Adam Kramer: Four times at quarter end.

Adam Kramer: What would kind of be needed to happen for there to be upside to the acquisition number and you're kind of stepping to step into that under levered balance sheet.

Adam Kramer: Keith.

Keith Oden: The primary thing that would have to happen on acquisitions as we see better going in yields.

Keith Oden: Lynn.

Keith Oden: Even though there's been a lot of.

Keith Oden: Transaction volumes are way down there is still a huge bid ask spread between buyers and sellers.

Unnamed Speaker: And then also as part of that, are you suggesting that The share of housing, www.larryweaver.com, Coca-Cola. Sounds like you answered the question. You know, yeah, that's what's going on. I mean, we're without.

Keith Oden: There.

Keith Oden: We just don't see we don't see value right now in the acquisition market versus other uses of capital now that's not to say that at some point that doesn't change I mean, obviously there is with all of this new supply that's been built primarily by the merchant merchant build community at some point they need to move move.

Keith Oden: Past the current crop of.

Keith Oden: They're <unk>.

Keith Oden: Development pipeline.

Keith Oden: Kind of recharge their organizations that you're in the business of building apartments, and so they're all I think they all have way too much way more than they would nor.

Unnamed Speaker: Amazing Job Growth We're still, we're still able to produce a lot of demand, and it's all a function of different demand drivers and jobs. Today, if you look at the.

Keith Oden: Normally care to have in terms of there.

Keith Oden: Sure.

Keith Oden: Development pipeline and holding so.

At some point, there's going to be a rationalization not just in the rental supply market between.

Unnamed Speaker: & Associates, their market share has doubled, at least, and maybe even tripled from the norm because of the lack of inventory of single family homes to buy because of the lock-in. You know, we have an interesting situation here where we are continuing to benefit from the high cost of home ownership and continuing to benefit from migration, both international. So, yeah, there's a lot of units under construction, we know that, but the demand, it seems to be, if these demand numbers are any close to being right, is going to create, if you will, a soft landing for the supply. Channel, the model that we use. Rick, are you suspecting that... Yeah, the 400 versus the six, seven. Yeah, well, 670 is not what the absorption is going to be, Keith. You have those absorption numbers on you.

Keith Oden: <unk> demand, but in the transaction market between product that needs to find a permanent home.

Keith Oden: In the merchant build community and people that are willing to provide that and have the capital to do it. So we are in the latter group. We just don't think we're there yet.

Keith Oden: Being patient right now is the right.

Keith Oden: Is the right strategy for the acquisition.

Keith Oden: <unk> just completed this week.

We had of course are huge team out there and this is kind of a startup.

The sort of acquisition disposition dams.

Keith Oden: And people were.

Keith Oden: Compared to last year that lateral I would categorize as deer in the headlights.

Keith Oden: And this year is a little less deer in the headlights, and more cautious optimism because ratio come down some and thats.

Keith Oden: Keeping some of the pressure off of people having to sell but there is still a just a massive bid ask spread between people who want to buy versus people, who want to sell and so the question will be how does the operating fundamentals look going forward and what how do people feel about the world what happens to rates.

Unnamed Speaker: Event organized by The Systems Division, Hardin, Rob. Okay. And that 600 that's coming in, coming in the pipeline doesn't all get delivered in 2024. Part of that is in it. The next question will come from Jamie Selzman with Wells Fargo. Please go ahead.

Keith Oden: And I think people are more optimistic now that they can.

Keith Oden: After the acquisition market because.

Last year was I don't want to make a mistake what if the fed does all these things now we're on a trajectory it looks like to lower rates some day and therefore.

Jamie Selzman: Great, thanks for taking the question. I just wanted to get your thoughts on timing of fundamentals, so just thinking about your guidance for new leases. Slightly negative, but they were much worse in January on both effective and signed. And then, you know, if you look at your current occupancy versus your projected occupancy, it seems like an uptick. So do you think that it is? when you think about the first half versus the second half.

Keith Oden: These are the two sort of.

Create a model that works financially today.

With a with a falling rate scenario in the next two or three years.

Keith Oden: But we're not there yet for sure in terms of that inflection point.

Speaker Change: Great. Thanks.

Speaker Change: The next question will come from John Kim with BMO capital markets. Please go ahead.

John P. Kim: Thank you I wanted to ask about dispositions.

John P. Kim: I guess this month youre going to be selling Camden vantage in Atlanta.

Unnamed Speaker: Do you think it gets better in the back half? And that's where the pickup is, or do you think that... January was, or January is, kind of an anomaly? I'm just going to look better off the bat. So the first thing I would tell you is, if you look, our signed new leases in January, excuse me, our signed blended leases in January are better than our effective, which is a leading indicator. What we are anticipating is that we're going to have blended tradeouts in the first quarter of about 0.2%, so a slight uptick from where we are today, but we are anticipating that occupancy is going to remain flat in the first quarter at 95%, and then the improvement comes throughout the year as, number one, we have better comps, which are very helpful for us.

Why this particular asset it's not all it's been one of your core sunbelt market.

We calculated the cap rate north of 7%. So it didn't seem like pricing was that great.

John P. Kim: But going forward where else do you see.

John P. Kim: Since this is an activity would be in California or.

John P. Kim: Focused on more of your older products.

Speaker Change: So I'll take the cap rate question for US and then I think maybe Keith can opine on the disposition choice but.

Keith Oden: For Camden Vantage, we are showing this at using actual capex and a management fee out of 575% cap rate.

Tax adjusted $5, six 5% cap rate and an <unk> yield before management fees of 6.19% so.

Keith Oden: Definitely a lower yield than you're calculating.

Keith Oden: And on the dispose side I mean, we keep list.

And have ongoing conversations with our operating groups about.

Unnamed Speaker: And then we also sort of hit our seasonal strong periods as we move from the second quarter into the, And then you think it stays strong in 4-2, you think you see a pullback. Yeah, so we're going, Yeah, we've got a 4Q blended trade out of 1.6% and an occupancy of about 95%. So I think that sort of follows the normal seasonal patterns that you see.

Keith Oden: If if there were to be a sale out of one of your markets or submarkets.

Keith Oden: Which assets would.

Keith Oden: It would be in that conversation and vantage almost always claim came up as one that would.

Keith Oden: It would be on the list of managements.

Keith Oden: List of assets that they.

Speaker Change: I would rather someone else take care of so I'll just leave it at that.

Speaker Change: Can I just follow up what was the Capex assumption on the.

Adam Kramer: Okay, all right, thank you. This next question will come from Adam Kramer with Morgan Stanley. Please go ahead.

Speaker Change: On vantage.

Speaker Change: Yeah, the capex on that one.

I think it's probably around 1800, a door, but I'll have to get back to you with exact.

Speaker Change: Okay, great. Thank you.

Unnamed Speaker: Hey guys, I just wanted to ask about external growth and acquisitions specifically. I'm coming, you know, given where the balance sheet is meant that you would already be at four times a quarter, and I mean, what would kind of be needed to happen for there to be upside to the acquisition number, and you kind of step into step into that until everybody, feet, has so what? The primary thing that would have to happen on,............ Cap. I look forward to observing you. We'll see you next time. Thanks a lot.

Speaker Change: The next question will come from Rob Stevenson with Janney. Please go ahead.

Hey, good morning, guys just on the dispositions given how low your leverages the sizable free cash flow and the minimal development spending remaining how aggressive are you willing to be and sell more assets without corresponding acquisitions, because it seems like given Keith acquisition market commentary.

Rob Stevenson: Acquisitions at best would be back half end loaded it may not come at all if the duress doesn't come.

Speaker Change: Yes so.

Speaker Change: Our guidance assumes that we basically match dispositions and acquisitions. So we would we would look to be kind of <unk>.

Unnamed Speaker: Trump. Ass. Crop. They're all, I think they all.

Unnamed Speaker: Slide. Product. We are on the ladder. You know, NMHC just completed this week, and we had, of course, our huge team out there, and this is kind of the start of the sort of acquisition disposition, and people were Compared to last year, last year I would categorize as deer in the headlights, and this year is a little less deer in the headlights and more cautious optimism because rates have come down some, keep, and enter the Acquisition Market because last year it was. I don't want to make a mistake. What if the Fed does all these things?

Speaker Change: Net.

Speaker Change: Zero on the year and the.

Speaker Change: The answer on the on the acquisitions really dispositions kind of gets back to.

Speaker Change: When we find value and we believe that there is a real opportunity on acquisitions and then we would we would.

Speaker Change: Those clearly would be assets that we wanted to newer assets that we want to add to the portfolio and we're always willing to improve the portfolio by selling.

Speaker Change: A corresponding number of that number and dollar amount of assets that.

Speaker Change: To fund that R. R.

Speaker Change: Working assumption and what's reflected in the guidance is is that we are willing to be pretty aggressive when we see value in acquisitions, but not before then.

Unnamed Speaker: Now we're on a trajectory, it looks like, to lower rates someday, and therefore, it's easier to sort of create a model that works financially today with a falling rate scenario in the next. But we're not there yet, in terms of that. Great for

Speaker Change: Okay. That's helpful. And then just appointed clarity the mid fives to low sixes that you guys talked about on development yields on a stabilized basis was that for the two Charlotte ones that you might start this year or was that the stabilized yields on the four properties in the current development pipeline.

John P. Kim: The next question will come from John Kim with BMO Capital Markets. Please go ahead. Thank you. I wanted to ask about dispositions. I guess this month you're going to be selling Camden Vantage in Atlanta. Why this particular asset? It's not old.

Speaker Change: Actually the numbers are the same.

Speaker Change: The current development pipeline with some of the.

Speaker Change: So the low to mid sixes and some in the sort of low low fives.

Unnamed Speaker: It's in one of your core Sunbelt markets. We calculated the cap rate at north of 7%, so it didn't seem like pricing was that great. But going forward, where else do you see disposition activity? Will it be in California or, you know, focused on more of your older properties? So I'll take the cap rate question first, and then I think maybe Keith can comment on the disposition choice. But for Camden Vantage, we are showing this at using actual CapEx and a management fee at a 5.75% cap rate. Tax adjusted 5.65% cap rate and an AFFO yield before management fees of 6.09%. So definitely a lower yield than your calculation, and on the Dispo side. I would rather someone else... Bureau. Can I just follow up?

Speaker Change: The.

Speaker Change: The new developments in Charlotte, we are still working on.

Speaker Change: What the model looks like but we wouldnt start them if they weren't in that zone.

Speaker Change: Okay and are you seeing any real relief on.

Speaker Change: Materials or labor on the development side, given this sort of pullback in other areas of development or is it still competitively priced versus the last couple of years.

Speaker Change: Not yet we havent seen a big any big drops in costs. What's happened is that costs haven't been going up as much I mean, if you go back a couple of years, we were having like 1% one 5% inflation every single month and so today. That's a level you don't have that part of the equation, but there hasn't been a material material.

Speaker Change: Shifting and in pricing.

Speaker Change: And so and that's one of it one of the challenges you have.

Speaker Change: Every merchant builder and Camden has is that if costs arent coming down but rents are flat.

Unnamed Speaker: What was the CapEx assumption on the Vantage project? Yeah, the CapEx on that one. I think it's probably around 1,800 a door, but I'll have to get back to you on that.

Speaker Change: And it's a very competitive market.

Speaker Change: Really hard to justify new construction. That's why the starts are projected to fall to low 200, thousands in 2020 and 2025, it's just a math doesn't really work well when rents are flat and construction costs haven't fallen.

Unnamed Speaker: All right, thank you. My next question will come from Rob Stevenson with JANI. Please go ahead.

Rob Stevenson: Good morning, guys. Just on the dispositions, given how low your leverage is, the sizable free cash flow, and the minimal development spending remaining, how aggressive are you willing to be and sell more assets without corresponding acquisitions? Because it seems like, given Keith's acquisition market commentary, that acquisitions would at best be back half unloaded and may not come at all if the rest doesn't come. Yeah, so. Our, our, our guy.

Speaker Change: Okay. That's helpful. Thanks, guys appreciate the time.

Speaker Change: Sure.

Speaker Change: The next question will come from Wes Golladay with Baird. Please go ahead.

Wes Golladay: Everyone. That's a question on the development delivery forecast do you think this year is going to be more at risk to delays versus prior years.

Wes Golladay: Are you seeing any developers going bust yet.

Speaker Change: We haven't seen anybody going bust yet.

Thanks.

Banks are definitely we hear a lot of anecdotal.

Information about banks, working very well with their borrowers today the banks are much more.

Speaker Change: Well capitalized and the.

It's pretty pretty common knowledge that that.

Unnamed Speaker: Director. Fund. Number of dollars, that. So our, our, our work. Gov.

Speaker Change: In the next couple of years.

Speaker Change: Economic drop backdrop ups.

Unnamed Speaker: Progress. Okay, that's helpful. And then just a point of clarification, the mid five to low sixes that you guys talked about on development yields on a stabilized basis, was that for the two Charlotte ones that you might start this year? Or was that to stabilize yields on the four properties in the current development pipeline?

Speaker Change: Operating fundamentals and lower interest rates are all going to help that's going to help get some of these deals.

Speaker Change: Through that system.

Speaker Change: So in terms of that perspective, I don't think that.

Speaker Change: You can have any does that can be any major bankruptcies of a major default with merchant builders they might be stressed to sell but but that doesn't mean I think theres still equity in their deals most of them anyway.

Unnamed Speaker: Actually, the numbers are the same, you know, the current development pipeline; we have some in the, you know, sort of the low to mid sixes and some in the, you know, sort of the low, low five. The new developments in Charlotte, we're still working on what the model looks like, but we wouldn't start them. Okay, and are you seeing any real relief on materials or labor on the development side given this sort of pullback in other areas of development? Or is it still competitively priced compared to the last couple of years? Not yet,

In terms of <unk>.

Speaker Change: <unk>, it's still hard to get a project to be delivered when you expect it to because so many people left the labor for US we don't have excess labor supply and so theres still a fair amount of risk.

Speaker Change: Deliveries and when the delivery is going to come and so.

Speaker Change: That could actually be beneficial to the backdrop of our supply and demand equation.

Speaker Change: If starts to plummet or I think they will but when it start when you actually start seeing more and more of that.

Speaker Change: If we delay some of the 'twenty four supply into 'twenty, five and some of the 25% to 26 that could be a lot smoother.

Unnamed Speaker: We haven't seen any big drops in costs. What's happened is the costs haven't been going up as much. If you go back a couple of years, we were having like one to one and a half percent inflation every single month. So today, you don't have that part of the equation, but there hasn't been a material shift.

Speaker Change: Softer landing for those markets given the demand side.

Speaker Change: Thanks for the time.

Speaker Change: The next question will come from Anthony Powell loan with Jpmorgan. Please go ahead.

Anthony Franklin Powell: Yeah. Thanks, so it sounds like those stressors in the system just isn't there to create a lot of opportunities right now so I'm wondering what it might take for you to use some capacity to buy back stock.

Anthony Franklin Powell: Okay.

Anthony Franklin Powell: Yes.

Anthony Franklin Powell: This is something that we look at constantly in terms of the opportunity set for allocation of capital and then in the past we haven't been bashful about buying back stock.

Unnamed Speaker: So, and that's one of the challenges you have. Merchant Builder, and you know Camden has. Costs aren't coming down, but rents are flat, and it's a very competitive market. It's really hard to justify new construction. That's why the starts are projected to fall. Low $200,000 in 2020.

Anthony Franklin Powell: When it when it made sense to do so it's always a little bit of a challenge because of the rules.

Anthony Franklin Powell: Trap trappings around buying stock in size and doing it in the windows that are available, but yes, it's something we've talked about we've discussed and that we would.

Unnamed Speaker: 2025. The math doesn't really work well when rents are flat. Class, Hammond Farms. Okay, that's helpful. Thanks guys, appreciate the time. The next question will come from Wes Golladay with Beard.

Anthony Franklin Powell: It would.

Anthony Franklin Powell: Pursue when the opportunity when we think the opportunity makes sense.

Speaker Change: Okay. Thanks.

Speaker Change: The next question will come from Matteo Okusanya with Deutsche Bank. Please go ahead.

Matteo Okusanya: Yes, good morning, Thanks for taking the call.

Wes Golladay: Please go ahead. Hi, everyone. Next question on the development delivery forecast. Do you think this year is going to be more at risk for delays versus, you know, prior years? And are you seeing any of the developers going bust yet? We haven't seen anybody going bust yet. And I think that banks are definitely, we hear a lot of anecdotal information about banks working very well with their borrowers today.

Matteo Okusanya: On bad debt expense the forecast was 24.

Matteo Okusanya: One 1% of total revenues doesn't really change that much from where you have more queue. So just wondering why we're not seeing incremental improvements.

Matteo Okusanya: Kind of post all the moratoriums and improvements on the fraud management side.

Speaker Change: So I think we're sort of in an unprecedented times right now where we're trying to figure out what is the new normal and so at this point what we're assuming is that the first and second quarter look a lot like the fourth quarter and then we have some slight improvements as we go into the latter part of the year.

Unnamed Speaker: The banks are much more well capitalized, and it's pretty common knowledge that in the next couple of years. The Economic Backdrop of Operating Fundamentals and Lower Interest Rates are all going to help. It's going to help get some of these deals through that system. So in terms of that perspective, I don't think that there's not going to be any major changes. Major defaults. Merchant Builders. They might be stressed to sell, but that doesn't mean they're, I think there's still equity in their deals. In terms of delays, it's still hard to get a project to be delivered when you expect it to because, you know, so many people have left the labor force.

Speaker Change: Clearly if we return to 50 basis points, which is what our historic norm had been before before all of this.

Speaker Change: Then we got some potential upsides sort running through that ran through the math, but.

Speaker Change: At this point, we're just being patient and see how it plays out.

Speaker Change: Fair enough. Thank you.

Speaker Change: The next question will come from Robin Lu with Green Street. Please go ahead.

Hi, Good morning, Alex just a question for you.

Unnamed Speaker: We don't have an excess labor supply, and so there's still a fair amount of risk in, you know, deliveries and when the delivery is going to come. And so, you know, that could actually be beneficial to the backdrop of our, you know, supply and demand equation. You know, if starts do plummet, or I think they will, but when you actually start seeing more and more of that, if we delay some of the 24 supply into 25 and some of the 25 into 26, that could be a lot smoother, you know, softer landing for those markets, given the demand for the Yeah, thanks. So it sounds like the stress isn't in the system just yet to create a lot of opportunities right now.

Rob Stevenson: Step up in Capex budgeted for the year.

Rob Stevenson: In nonrecurring Capex can you provide more details as to what's driving the high spend.

Alex: Yeah, absolutely. So we've got a couple of things that are running through running through the nonrecurring side.

Alex: Hi.

They're mainly focused around.

Alex: A couple of communities, we have that have some large exterior projects in foundational projects that we need to we need to do.

Alex: So that's what you've got going through the math.

Speaker Change: That's it.

Speaker Change: So at a property in like 25, which means because well.

Speaker Change: No I don't think so.

Speaker Change: We go through when we look at all of our communities really do a deep dive every year as you would expect and so these were a couple of communities that had been identified.

Anthony Franklin Powell: So wondering what it might take for you to use some capacity to buy back stock. Yeah, we have. This is something that we look at constantly for Allocation of Capital and Bass Pro. Bye. Bye. Bye.

Speaker Change: As I said that didn't have the foundational and exterior challenges that we knew we needed to fix and so our intention is to get it done in 2024 and <unk>.

Speaker Change: I wouldn't expect to see a number like this in 25.

Unnamed Speaker: Buying Stock Inside. Okay, thanks. The next question will come from Omoteo Okasanya with Deutsche Bank. Please go ahead. Yes, good morning. Thanks for taking the call. Just thoughts on bad debt expense, the forecast was 24, 1.1% of total revenues doesn't really change that much from where you were in 4Q. So just wondering why we're not seeing incremental improvements, kind of post all the moratoriums and improvements in fraud management. So I think we're sort of in unprecedented times right now where we're trying to figure out what the new normal is. And so at this point, what we're assuming is that the first and second quarters look a lot like the 4th quarter, and then we have some slight improvements as we go into the latter part of the year.

Speaker Change: Great. Thank you.

Moderator: Absolutely. So this concludes our question and answer session I would like to turn the conference back over to Mr. Rick Campo for any closing remarks. Please go ahead Sir.

Moderator: Yes.

Richard J. Campo: Great well, thank you for being on the call today, we appreciate it.

The opportunity to.

Richard J. Campo: To go through 2024, it looks like to be an interesting year. So we will see you in the conference Circle and circuit here in the next month or two so take care and thank you.

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

Speaker Change: Yes.

Speaker Change: [music].

Omoteo Okasanya: Clearly, if we return to 50 basis points, which is what our historic norm had been before all of this, then we've got some potential upside sort of running through the math. But at this point, we're just being patient and seeing how it plays out. Fair enough. Thank you. The next question will come from Robin Liu. Go ahead. Hi, good morning. Alex, I just have a question for you. There was a decent step up in CapEx budgeted for the year, particularly in non-recurring CapEx.

Unnamed Speaker: Can you provide more details as to what's driving the high spend? Yeah, absolutely. So we've got a couple of things that are running through, running through the non-recurring side, and they're mainly focused on a couple of communities we have that have some large exterior projects and foundational projects that we need to do. So that's what you've got going. If you did, click that to extend it to other properties in like 25 or 26 as well.

Unnamed Speaker: No, I don't think so. You know, we go through and we look at all of our communities, really do a deep dive every year, as you would expect. And so these were a couple of communities that had been identified, as I said, that did have the foundational and external challenges that we knew we needed to fix.

Unnamed Speaker: And so our intention is to get it done in 2024. And I wouldn't expect to see a number like, Great, thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Rick Campo for any closing remarks. Please go ahead.

Richard J. Campo: Great, well, thank you for being on the call today. We appreciate the, the opportunity to. We'll see you in the conference circle and circuit here in the next month or two, so take care. The conference is now concluded. Thank you for attending today's presentation. You may now, Copyright © 2021 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. Subs by www.zeoranger.co.uk, Office Word Title Microsoft Office Word 97-2003 Document MSWordDoc Word. Document.8 www.larryweaver.com , , , , , , Goodwin Distribution Company,

Speaker Change: [music].