Q2 2024 Camden Property Trust Earnings Call
Kimberly Callahan: Good morning, and welcome to Camden Property Trust's second quarter 2024 earnings conference call. I'm Kim Callahan, Senior Vice President of Investor Relations. Joining me today are Rick Campo, Camden's Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman, and Alex Jessett, President and Chief Financial Officer.
Good morning, and welcome to Camden Property Trust second quarter 2024 earnings Conference call I Am 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 Alex <unk>, President and Chief financial.
Kimberly Callahan: Today's event is being webcast through the investors section of our website at camdenliving.com, and a replay will be available this afternoon. We will have a slide presentation in conjunction with our prepared remarks, and those slides will also be available on our website later today or by 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 the presentation, with an opportunity to ask questions afterward.
Officer.
Today's event is being webcast through the investors section of our website at Camden living Dot com and 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 assist.
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 the presentation with an opportunity to ask questions afterward, and please note. This event is being recorded.
Kimberly Callahan: And please note, this event is being recorded. 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.
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 <unk>.
Our filings with the SEC and we encourage you to review them.
Kimberly Callahan: 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. As a reminder, Camden's complete second quarter 2024 earnings release is available in the Investors section of our website at CamdenLiving.com, and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call. We would like to respect everyone's 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.
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.
Speaker Change: As a reminder, camden's complete second quarter 2024 earnings release is available on 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.
Speaker Change: 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 at this time I'll turn the call over to Ric Campo.
Kimberly Callahan: 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. At this time, I'll turn the call over to Rick Campo.
Richard Campo: Thanks, Kim. The theme of our on-hold music today is waiting. During our meetings with multifamily stakeholders in recent months, the consensus view seems to be that everyone in multifamily is waiting for something. Operations teams are waiting for the pace of multifamily completions to reach a peak and begin to come down, and for bad debts to return to pre-pandemic levels. CFOs are waiting for the long-anticipated first interest rate cut by the Fed, as well as relief in property insurance and property tax expenses.
Ric Campo: Thanks, Kim the theme of our on hold music today is waiting.
Ric Campo: During our meetings with multifamily stakeholders in recent months the consensus view they seem to be that everyone in multifamily is waiting for something.
Speaker Change: Operations teams are waiting for the pace of multifamily completions to reach a peak and begin to come down and for bad debts to return to pre pandemic levels Cfos, who are waiting for the long anticipated first interest rate cut by the fed as well as a REIT relief and property insurance and property tax expenses Transat.
Richard Campo: Transaction teams are waiting for the standoff between buyers and sellers to end. Sellers are waiting for buyers to throw in the towel and start buying, while buyers are waiting for the towels to go on sale. While we are certain that the waiting will end eventually, the timing is the debate. In the meantime, as the late, great Tom Petty reminds us, the waiting is the hardest part.
Speaker Change: Teams are waiting for the standoff between buyers and sellers.
Ric Campo: Sellers are waiting for buyers to throwing the towel and start buying while buyers are waiting for the talents to go on sale.
Speaker Change: <unk>.
Speaker Change: While we are certain that the waiting will and eventually the timing is the debate in the meantime.
Speaker Change: Late great Tom Petty reminds us the waiting is the hardest part with.
Richard Campo: With the second quarter behind us, I'm going to reprise most of my comments from last quarter since the markets are playing out as we have expected. We spent most of our time talking about supply in our markets. Yes, we are at a 30 year high for apartment deliveries, and yes, this is limiting rent growth in most of our markets now. The good news is that our markets are adjusting quickly to the post-pandemic low interest rate development frenzy, but starts are still projected to fall to just over 200,000 apartments in 2025. New deliveries should peak in 2024, falling 21% in 2025 and another 54% in 2026, which would be a 13-year supply low.
Speaker Change: With the second quarter behind us and going to reprice. Most of my comments from last quarter. Since the markets are playing out as we have expected. We spent most of our time talking about <unk>.
Speaker Change: Supply in our markets, Yes, we heard a 30 year high for apartment deliveries and yes. This is limiting rent growth in most of our markets now the good news is that our markets.
Speaker Change: Our adjusting quickly to the post pandemic low interest rate development frenzy.
Speaker Change: Starts are still projected to fall to just over 200000 apartments in 2025, new deliveries should peak in 2020 for slide 21% in 2025, and another 54% in 2026, which would be a 13 year.
Speaker Change: Fly low points.
Richard Campo: Apartment demand continues to be strong. During the first half of the year, net apartment demand was over 200,000 units, matching 2018 and 2019. Witt Advisors projects 2024 apartment demand to be in the 400,000 range. The main driver of apartment demand is household formation, driven by population and employment growth, apartment affordability, and positive demographic trends. The most recent 2022-2023 census data reported that the top 10 cities increased their population by 710,000. Nine Camden markets are in the top 10. The bottom 10 cities reported a loss of 200,000 people.
Speaker Change: Apartment demand continues to be strong during the first half of the year net apartment demand was over 200000 apartments matching 2018 in 2019 with advisors projects 2024 apartment demand to be in the 400000 range. The main driver of apartment demand as household formation.
Speaker Change: Driven by population and employment growth apartment affordability and positive demographic trends.
Richard Campo: These are major cities on the west and east coasts where Camden has limited exposure. Employment growth has been robust in all of our markets except Los Angeles, which continues to struggle. Ten of our markets have had job growth greater than 10% compared to the pre-pandemic level. Apartment affordability continues to improve as resident wage growth has been over 5%, while rents have been relatively flat. Consumers are spending less of their take-home pay on apartments.
Speaker Change: The most recent 2022 2023 census data reported that the top 10 cities increased their population by 710009 Camden markets are in the top 10, the bottom 10 cities reported a loss of 200000 people. These were major cities on the West and East Coast were cabinet has limited exposure.
Speaker Change: Employment growth has been robust in all of our markets, except Los Angeles, which continues to struggle 10 of our of our markets have had job growth greater than 10% compared to the pre pandemic levels.
Speaker Change: Apartment affordability continues to improve as resident wage growth has been over 5% while rents have been relatively flat.
Speaker Change: Tumors are spending less on their take home pay for apartments, New Camden residents pay 19% of their income towards rent.
Richard Campo: New Camden residents pay 19% of their income towards rent. Mortgage rates and rising home prices have kept move-outs to buy homes near historic lows. 10.3% of Camden residents moved out to buy a home in the second quarter. The monthly cost of owning a home today is about 60% more than leasing an apartment, and this is not going to change any time soon.
Speaker Change: Mortgage rates and rising home prices have kept move outs to buy homes near historic lows 10, 3% of Camden residents moved out to buy a home in the.
Speaker Change: <unk> quarter.
Speaker Change: The monthly cost of owning a home today, it's about 60% more than leasing department.
Speaker Change: This is not going to change anytime soon demographic.
Richard Campo: Demographic trends continue to be a tailwind, supporting demand for high-propensity-to-rent groups, including young adults aged 35 and under. Apartments should take a larger share of household formations, given these demand drivers. In 2024, demand should be sufficient despite supply concerns to set up accelerating rent growth in 2025 and 2026, assuming that the overall economy continues its current trajectory. To take advantage of what we believe will be a robust multifamily leasing environment beginning in 2025 and beyond, we are starting construction on Camden South Charlotte and Camden Blakeney, 769 suburban apartment homes located in the Ballantyne Submarket of Charlotte, North Carolina.
Speaker Change: <unk> continue to be a tailwind supporting demand for high propensity to rent groups, including young adults, aged 35 and under apartments should take a larger share of household formations given these demand drivers.
Speaker Change: 24 demand should be sufficient despite.
Speaker Change: Fly concerns to setup.
Speaker Change: Celebrating rent growth in 2025, and 2026, assuming that the overall economy.
Speaker Change: <unk> the current trajectory.
Speaker Change: Take advantage of what we believe will be a robust multifamily wishes environment beginning in 2025 and beyond we are starting construction on Camden, South Charlotte and cabinet Blakeney 769 suburban apartment homes located in the Ballantyne Submarket of Charlotte North Carolina, I want to give a big.
Richard Campo: I want to give a big shout out to our Camden team members for their hard work and their commitment to providing living excellence to our residents, which they never wait to do. Keith Oden is up next.
Speaker Change: Shout out to our Camden team members for their hard work and their commitment to providing living excellence to our residents, which they never wait to do Keystone is up next.
Keith Oden: Thanks, Rick. Operating conditions across our portfolio are generally playing out as we expected. Our second quarter 2024 same property performance exceeded our forecast, primarily due to continued lower insurance costs and property taxes, which we discussed a bit on last quarter's call. Our top markets for same property revenue growth were San Diego Inland Empire, Washington, D.C. Metro, LA Orange County, Southeast Florida, Houston, and Denver, all posting revenue growth above our portfolio average of 1.4% and ranging from 1.7% to 6.1% for the quarter. Austin and Nashville remain our most challenged markets, with revenue declines of approximately 2% and 4%, respectively, for the quarter.
Speaker Change: Thanks, Rick operating conditions across our portfolio are generally playing out as we expected our second quarter 2020 for same property performance exceeded our forecast primarily due to continued lower insurance costs and property taxes, which we discussed a bit on last quarter's call our.
Speaker Change: Top markets for same property revenue growth, where San Diego Inland Empire, Washington D. C Metro L. A orange County, South East, Florida, Houston, and Denver, all posting revenue growth above our portfolio average of one 4% and ranging from one 7% to six 1% for the quarter.
Speaker Change: Austin and Nashville remain our most challenged markets with revenue declines of approximately 2% and 4% respectively for the quarter.
Keith Oden: Rental rates for the second quarter showed signed leases down 1.8% and renewals up 3.7%, for a blended rate of a positive 8 tenths of a percent, with an average occupancy of 95.3%. Preliminary results for July indicate slightly better levels of rate growth, with occupancy averaging 95.6%. Renewal offers for August and September were sent out with an average increase of 4.6%. And finally, turnover rates across our portfolio remain very low, driven by fewer residents moving out to buy homes. Net turnover for the second quarter of 2024 was 42 percent, compared to 45 percent in the second quarter of 2023.
Speaker Change: Rental rates for the second quarter showed sign leases down one 8% renewals up three 7% for a blended rate of a positive eight tenths of a percent with an average occupancy of 95, 3% preliminary.
Speaker Change: Preliminary results for July indicate slightly better levels of rate growth with occupancy averaging 95, 6%.
Speaker Change: Renewal offers for August and September were sent out with an average increase of four 6%.
Speaker Change: And finally turnover rates across our portfolio remained very low driven by fewer residents moving out to buy homes net turnover for the second quarter of 24 was 42% compared to 45% in the second quarter of 2023.
Speaker Change: I'll now turn the call over to Alex Jessop, Camden's, President and Chief Financial Officer.
Keith Oden: I'll now turn the call over to Alex Jessett, Camden's President and Chief Financial Officer. Thanks, Keith. Before I move on to our...
Keith Oden: Thanks Keith. Before I move on to our financial results and guidance, a brief update on our recent real estate activity. During the second quarter of 2024, we completed construction on Camden Woodmill Creek, a $189 unit, $71 million single-family rental community located in The Woodlands, Texas. And we began construction on Camden South Charlotte, a 420-unit, $163 million, four-story garden-style new development, and Camden Blakeney, a 349-unit, $154 million, three-story garden-style new development, both located in the Ballantyne Submarket of Charlotte.
Alex Jessop: Thanks, Keith before I move on to our financial results and guidance a brief update on our recent real estate activity.
Alex Jessop: During the second quarter of 2024, we completed construction on Camden Wood Mill Creek, a 189 unit $71 million single family rental community located in the Woodlands, Texas.
Speaker Change: And we began construction on Camden, South Charlotte, a 420 unit $163 million.
Alex Jessop: Four storey garden style, new development in Camden, Blakeney, a 349 unit $154 million three story Garden style, New development, both located in the Ballantyne Submarket of Charlotte.
Alexander Jessett: Turning to our financial results, for the second quarter, we reported a poor FFO of $1.71 per share, four cents ahead of the midpoint of our prior quarterly guidance. This outperformance was driven in large part by $0.02 per share and lower than anticipated operating expenses. Resulting from lower core insurance expense and lower property taxes. However, approximately half of this expense outperformance was timing-related as property tax refunds we expected in the third quarter were actually received in the second quarter.
Speaker Change: Turning to our financial results for the second quarter, we reported core <unk> of $1 71 per share four cents ahead of the midpoint of our prior quarterly guidance.
Speaker Change: This outperformance was driven in large part by <unk> <unk> per share and lower than anticipated operating expenses, resulting from lower core insurance expense and lower property taxes.
Speaker Change: Approximately half of this expense outperformance was timing related as property tax refunds, we expected in the third quarter were actually received in the second quarter.
Alexander Jessett: Additionally, during the second quarter, we had $0.02 per share in higher fee and asset management and interest and other income, driven by the combination of cost savings and additional fee income from our third-party construction business and higher interest income from our cash balance. Property revenues for the quarter, including bad debt expense, were in line with our expectations.
Speaker Change: Additionally, during the second quarter, we had <unk> <unk> per share and higher fee and asset management and interest and other income driven by the combination of cost savings and additional fee income from our third party construction business and higher interest income from our cash balances.
Speaker Change: Property revenues for the quarter, including bad debt expense were in line with our expectations.
Alexander Jessett: Last night, we maintained the midpoint of our full-year revenue guidance at 1.5%. We also lowered our full-year expense guidance from 3.25% to 2.85%, driven primarily by the assumption of continued lower-than-anticipated insurance and property taxes. Insurance represents 7.5% of our operating expenses and was previously anticipated to be flat year over year. We now anticipate it to be down approximately 3%, or one cent per share, favorable to our prior guidance, with the entire amount of the savings occurring in the second quarter. Although we hope the second quarter trend of lower core insurance claims continues, we are not assuming it will in our forecast.
Speaker Change: Last night, we maintained the midpoint of our full year revenue guidance at one 5%.
Speaker Change: We also lowered our full year expense guidance from $3, two 5% to $2, 85% driven primarily by the assumption of continued lower than anticipated insurance and property taxes.
Speaker Change: Insurance represents seven 5% of our operating expenses and was previously anticipated to be flat year over year, we now anticipate it to be down approximately 3% or <unk> <unk> per share favorable to our prior guidance.
Alex Jessop: The entire amount of the savings occurring in the second quarter.
Speaker Change: Although we hope the second quarter trend of lower core insurance claims continues we are not assuming that will in our forecast.
Alexander Jessett: Property taxes, which represent approximately 36% of our total operating expenses, were previously projected to increase 1.5% year-over-year. However, based on lower Texas property assessments and higher refunds, we are now anticipating that property taxes will be up approximately 1%, a favorable variance of approximately 1 cent per share. After taking into account the decreases in expenses, we have increased the midpoint of our 2024 Same Store NOI growth guidance from 50 basis points to 75 basis points.
Speaker Change: Property taxes, which represent approximately 36% of our total operating expenses were previously projected to increase one 5% year over year based on lower Texas property assessments and higher refunds. We are now anticipating that property taxes will be up approximately 1%.
Speaker Change: Favorability of approximately 1% per share.
Speaker Change: After taking into effect the decreases in expenses, we have increased the midpoint of our 2020 for same store NOI growth guidance from 50 basis points to 75 basis points.
Alexander Jessett: We are also increasing the midpoint of our full year core FFO from $6.74 to $6.79, a five cent per share increase. $0.02 is from the increase in our same store NOI, of which $0.01 was non-timing related in the second quarter from lower core insurance costs, and $0.01 is spread throughout the latter part of the year from anticipated lower tax rates. Two cents are from higher fees and asset management and interest and other income in the second quarter, which is not anticipated to be repeated. And one cent is from lower anticipated property taxes on our development and non-same-store communities.
Speaker Change: We are also increasing the midpoint of our full year core <unk> from $6 74 to.
Speaker Change: To $6 79.
Speaker Change: A <unk> <unk> per share increase.
Speaker Change: <unk> is from the increase to our same store NOI of which <unk> was non timing related in the second quarter from lower core insurance costs and one centers spread throughout the latter part of the year from anticipated lower taxes.
Speaker Change: <unk> just from the higher fee and asset management and interest and other income in the second quarter, which is not anticipated to be repeated.
Speaker Change: <unk> <unk> is from lower anticipated property taxes on our development and non same store communities.
Alexander Jessett: At the midpoint of our guidance range, we are still assuming $250 million of acquisitions offset by an additional $250 million of dispositions with no net accretion or dilution from these matching transactions. Our development starts for the year total $317 million, in line with the top end of our initial four-year guidance, and we are not anticipating any further 2024 starts. We have approximately $55 million of remaining 2024 development spend.
Alex Jessop: At the midpoint of our guidance range, we are still assuming $250 million of acquisitions offset by an additional $250 million of dispositions with no net accretion or dilution from these matching transactions.
Alex Jessop: Our development starts for the year totaled $317 million in line with the top end of our initial full year guidance and we are not anticipating any further 2024 start.
Speaker Change: We have approximately $55 million of remaining 2020 for development spend.
Unknown Executive: We also provided earnings guidance for the third quarter of 2024. We expect core FFO per share for the third quarter to be within the range of $1.66 to $1.70, representing a 3 cent per share sequential decline at the midpoint, primarily resulting from an approximate 3 cent sequential increase in same-store operating expenses, resulting from the second quarter lower insurance expenses, and the seasonality of utility and repair and maintenance expenses, partially offset by sequential reduction in property taxes due to additional property tax refunds in the third quarter, and a 2 cent decrease in fee and asset management and interest and other income due to the non-recurring components of the second quarter outperformance.
Speaker Change: We also provided earnings guidance for the third quarter 2024, we expect core <unk> per share for the third quarter to be within the range of $1 66 to $1 71.
Speaker Change: Presenting a <unk> <unk> per share sequential decline at the midpoint, primarily resulting from an approximate 3% sequential increase in same store operating expenses, resulting from the second quarter lower insurance expenses, and the seasonality of utility and repair and maintenance expenses, partially offset by a sequential reduction in property taxes due to <unk>.
Speaker Change: Additional property tax refunds in the third quarter and a two <unk> decrease in CNS at management and interest and other income due to the nonrecurring components in the second quarter outperformance.
Unknown Executive: This $0.05 per share cumulative decrease in sequential core FFO per share is partially offset by a $0.01 per share increase in same-store revenue as we continue through our peak leasing season and a $0.01 decline in net overhead expenses primarily associated with the timing of certain public company and compensation costs. As of today, approximately 85% of our debt is fixed rate, we have no amounts outstanding on our $1.2 billion credit facility, only $300 million in maturities over the next 24 months, and less than $300 million left to fund under our existing development pipeline. Our balance sheet remains incredibly strong, with net debt to EBITDA at 3.9 times. At this time, we will open the call up to questions.
Speaker Change: This five cents per share cumulative decrease in sequential core <unk> per share is partially offset by a <unk> <unk> per share increase in same store revenue as we continue through our peak leasing season, and a 1% decline in net overhead expenses, primarily associated with the timing of certain public company and compensation costs.
Speaker Change: As of today, approximately 85% of our debt is fixed rate, we have no amounts outstanding on our $1 $2 billion credit facility only $300 million of maturities over the next 24 months and less than $300 million left to fund under our existing development pipeline, our balance sheet remains incredibly strong with net debt to EBITDA.
Speaker Change: At three nine times.
Speaker Change: At this time, we will open the call up to questions.
Unknown Executive: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touchtone telephone. To withdraw your question, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality.
Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session.
Speaker Change: To ask a question you May press Star and then one using a touchtone telephone.
Speaker Change: All your questions you May press star two.
Speaker Change: If you are using a speaker phone, we do ask that you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.
Bradley Heffern: Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. And our first question today comes from Brad Heffern from RBC Capital Markets. Please go ahead with your question.
Speaker Change: Once again that is star and then one to join the question queue.
Speaker Change: We will pause momentarily to assemble the roster.
Speaker Change: And our first question today comes from Brad Heffern from RBC capital markets. Please go ahead with your question.
Brad Heffern: Yeah. Thanks, Hi, everybody. It seems like July was a really strong month for you in a way that it wasn't for your peers can you talk about what you would attribute that too did you get more aggressive just based on the demand that you were seeing was there some sort of comps impact or anything else that you'd like to call out.
Richard Campo: Yeah, July was a good month. And the only thing that we have done, just from the sort of at the 10,000 foot level, is that we have, you know, increased our marketing support to make sure that our track accounts remained kind of where we need them to be. And we, so we had a little bit of additional spend and marketing. But, you know, overall, if you think about where our strength in our portfolio has been really and impactful for us, it has been Washington, D.C. Metro and Houston.
Speaker Change: Yes July was a good month and the only thing that we have done.
Speaker Change: Just from sort of at the 10000 foot level is that we have increased our marketing support to make sure that our traffic counts remained kind of where we need them to be weak. So we had a little bit of additional spend in marketing, but overall, if you just think about where the.
Speaker Change: Our strength in our portfolio has been.
Speaker Change: Really.
Speaker Change: Impactful for US has been Washington D C Metro in Houston.
Richard Campo: And that, you know, there are two largest markets, and although in the last year or so, they've lagged behind the portfolio right now, they're leading the portfolio. So the strength in those two markets, some of which, you know, we anticipated a good year. But we certainly didn't anticipate as good a year as what we're having in D.C. Metro this year. And it's, you know, it's enough to move the needle on our portfolio. I mean, the other part of the equation is that
Speaker Change: There are two largest markets and although in the last year or so they've lagged the portfolio right now they are leading the portfolio. So the strength in those two markets some of which we.
Speaker Change: We anticipated a good year, we certainly didn't anticipate as good a year is what we're having in D. C Metro this year.
Speaker Change: It's enough to move the needle on our portfolio.
Richard Campo: I mean, the other part of the equation is that July, if you think about last year, July and August, we saw seasonality earlier in the year last year, and it was in the seasonality, I think, was caused by sort of consumers running out of their, you know, money, and they moved out, you know, quicker. And so we had more apartments to fill in July and August. And if you think about sort of that setup for the third and fourth quarters of the prior year, it was probably one of the weakest that we've had in a long time.
Speaker Change: I think the other part of the equation is that.
Speaker Change: July if you think about last year July and August.
Speaker Change: We saw seasonality earlier in the year last year and it was in.
Speaker Change: And the seasonality I think it was caused by sort of consumers writing out of their of their pandemic money.
Speaker Change: Money and they moved out quicker and that's where we had more apartments that skill and and.
Speaker Change: July and August.
Speaker Change: Think about sort of the.
Speaker Change: Set up for the third and fourth quarter of the prior year. It was probably one of the weakest that we've had in a long time and it was primarily driven by that this year.
Richard Campo: And it was primarily driven by that. This year, you know, the COVID money has been gone for a while, probably, and people are not just moving out because they don't have their COVID money anymore. So, and with strong job growth, even though the weak print today was expected, but business continues to be really robust in our markets, and we continue to take market share from the single-family home market because of the cost associated with, you know, interest rates and home prices going up.
Speaker Change: Covid money has been gone for a while probably end and people are not just moving out because they don't have recovered money anymore, so and with strong job growth, even though the weak print today was what was expected, but but continues to be really robust in our markets.
Speaker Change: And we continue to take market share from single family single family home market, because the cost associated with interest rates and home prices going up so it just sets up for a for a pretty good high demand market and I think our teams did a great job building occupancy through the through the.
Richard Campo: So it just sets up for a pretty good, high-demand market, and I think our teams did a great job building occupancy through the peak leasing season. It just gave us a little bit more pricing power.
Speaker Change: Through the peak leasing season, and it just gave us a little bit more pricing power.
Speaker Change: Okay I'll stick to the one question request.
Speaker Change: Okay.
Austin Wurschmidt: Our next question comes from Austin Wurschmidt from KeyBank Capital Markets. Please go ahead with your question. Hi, thanks.
Austin <unk>: Our next question comes from Austin <unk> from Keybanc capital markets. Please go ahead with your question.
Richard Campo: Hi, thanks. So, Rick, you touched on employment growth as a driver of household formation in your prepared remarks, and we've seen some slowdown in the employment reports of late, and just curious what your thoughts are on that slowdown versus the strong gains we saw, you know, last year, early this year, and how that's coincided with near-record absorption, and just curious if we do see a continued slowdown in the employment market, how that kind of impacts, you know, the acceleration in pricing power and, you know, getting back to maybe a more historic market rent growth environment.
Austin: Hi, Thanks.
Austin: Rick you touched on employment growth as a driver of household formation in your prepared remarks, and we've seen some slowdown in the employment reports of late and just curious what your thoughts are on that slow down versus the strong gains. We saw last year early this year and how that's coincided with with near record absorption.
Speaker Change: And just curious if we do see a continued slowdown in the employment market, how that kind of impacts.
Austin: Acceleration in pricing power and you know getting back to maybe a more historic market rent growth environment. Thanks.
Austin: Thanks.
Austin: Sure.
Richard Campo: I think the slowdown is clearly a good thing, and it's a good thing because if you think about the dynamics that affect our business, high interest rates are one part of the equation. So I think the Fed's sort of sticking the landing, so to speak, with maybe an Olympic comment.
Speaker Change: The slowdown is clearly a good thing and a.
Austin: Good thing because if you think about the dynamics that.
Speaker Change: Affect our business.
Austin: High interest rates.
Austin: And.
Austin: When part of the equation, so I think the fed.
Austin: Sort of picking the landing so to speak with a maybe.
Austin: Olympic.
Richard Campo: They seem to be going for the gold, and I'm good with a slower economy or a slower job growth market. You saw the unemployment rate went up to 4.3 with the print this morning, and the good news, from our perspective, is that our markets are where the jobs are. And even when they're slowing, there's still enough job growth, and there's still enough migration to continue to take market share from the household formation from single families.
Austin: Comment there seemed to be.
Austin: Going for the gold and.
Speaker Change: I'm good with that.
Speaker Change: Lower economy or slower job growth market you saw the unemployment rate went up from.
Speaker Change: Four three was it print this morning.
Speaker Change: The good news about from our perspective is that is that.
Austin: Our markets are where the jobs.
Austin: And even when they are slowing there is still enough job growth and its small enough and migration to continue.
Austin: To take market share from from the household formation from single family and so with that said.
Richard Campo: And so with that said, the key is having reasonable job growth and not crashing the economy. Obviously, if you have, if the Fed doesn't stick the landing and we end up with a recession in 2025, then all bets are off on what happens then. We think what's going to happen is the Fed is going to stick the landing, you're going to have moderate employment growth, and that employment growth is going to be in the markets where it happens best, which is in our markets.
Austin: The key is is having reasonable job growth and not crashing the economy, obviously, if you have it.
Austin: The fed doesn't suggest the landing and we ended up with a with a recession. In 2025, then all bets are off on on what happens then we think what's going to happen is fantastic landing youre going to have moderate.
Austin: Employment growth and that employment Roche is going to be in the markets, where employment growth happens the best which is our market. So I feel pretty good about where we are in.
Richard Campo: So I feel pretty good about where we are, and I like the idea that slower employment growth gives the Fed some headroom to be able to start cutting rates, which would be really good for our long-term business.
Speaker Change: I like the idea of that.
Austin: The slower.
Austin: Slower employment growth gives us headroom to be able to start cutting rates, which is which would be really good for our long term business.
Austin Wurschmidt: Understood. Let's hope they take home the gold.
Speaker Change: Let's hope they take home thanks for the time.
Speaker Change: For sure.
Jamie Feldman: Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead with your question. Great, thanks for taking the question.
Richard Campo: Thanks for your time. For sure. Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead with your question. Great, thanks for taking the question.
Austin: Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead with your question.
Jamie Feldman: Okay, great. Thanks for taking the question so.
Speaker Change: So yeah.
Jamie Feldman: Your comment about not starting any more new development for the rest of the year.
Jamie Feldman: Can you just talk more about that I mean, it seems like theres going to be a really good window in 'twenty six 'twenty seven to be delivering so how are you thinking about.
Speaker Change: Ill talk more about that comment and then maybe as we think ahead to 'twenty five.
Speaker Change: It could be a bigger development here. Thank you.
Richard Campo: So our development starts, you know; we were prepared. These are really shovel ready, and we had delayed them.
Speaker Change: Sure. So our development starts we were prepared these are really shovel ready when we had delayed them and so we went ahead and started to ensure that we announced and we have.
Richard Campo: And so we went ahead and started the two in Charlotte that we announced. And we have a decent pipeline that we can start. It's just hard to get positioned and start those other properties that we have between now and the end of the year. They'll likely be 2025 starts.
Austin: A decent pipeline that we can start it's just hard to get positioned in to start those those other properties that we have between now and the end of the year. They will likely be 2025 starts and I also think we'll be able to expand the pipeline by helping other developers out who can't get financing.
Richard Campo: And I also think we'll be able to expand the pipeline by helping other developers out who can't get financing, who have shovel-ready land deals that they're willing to part with. If you look at our history in cycles like this, we've always been able to ramp up our development pipeline. You know, even though the 2026-2027 looks pretty amazing from an apartment perspective, private developers still can't get capital. We were chatting with the largest provider of debt and equity capital to the multifamily industry, and their business for new development, equity, and debt is down 85% this year, and it's not rising.
Austin: Shovel ready land deals that they are willing to part with if you look at our history.
Speaker Change: Michael look like this we've always been able to ramp up our development pipeline.
Michael: Even though the 2026 2027, what's pretty amazing from an apartment.
Speaker Change: Perspective.
Michael: Are you still.
Speaker Change: Private developers still can't get capital I mean.
Speaker Change: We were chatting with the largest provider of.
Speaker Change: Of debt and equity capital to the multifamily industry and their business for four new development equity and debt is down 85% this year and it's not moving up at the same time.
Richard Campo: At the same time, the same group said that their interest in acquisitions or in the sellers out there who are merchant builders who really need to recapitalize, their DOBs and listings are up 60% year over year, and it looks like there'll be a pretty robust transaction market coming up in the fall and early next year. So when the sort of clouds clear a little bit more, we will be more active in development for sure.
Michael: <unk> group.
Speaker Change: They are in their interest in and acquisitions are in the sellers out there who are merchant builders.
Speaker Change: You really need to recapitalize.
Speaker Change: They are.
Speaker Change: <unk> and <unk>.
Speaker Change: Listings were up 60% year over year, and it looks like it'll be a pretty robust.
Speaker Change: Transaction market.
Speaker Change: Coming up in the fall and early next year or so.
Speaker Change: When the when the serve.
Speaker Change: Clouds clear a little bit more we will be more active in development for sure.
Speaker Change: Yes.
Speaker Change: Okay. Thank you.
Speaker Change: Mhm.
John Kim: Our next question comes from John Kim from BMO Capital Markets. Please go ahead with your question.
Speaker Change: Our next question comes from John Kim from BMO Capital markets. Please go ahead with your question.
John Kim: Thanks and good morning. I wanted to ask about your... and also for the new leases where you think new lease rates will go.
John Kim: Thanks, and good morning, I wanted to ask about your.
John Kim: Your views on blended lease growth in the second half of the year.
Keith: Keith I know you mentioned that you are sending out renewals at four 6%. If you could just remind us where you think you typically would sign those at <unk>.
Speaker Change: And also for the new leases, where do you think new lease rates go.
Keith Oden: Yes, our renewals are generally within 50 basis points of the average of what we send out. So, you know, the four, six probably turns into something a little just above four. Alex on the new lease, new lease numbers. Yeah, absolutely. Yeah, John. So for the third quarter,
Alex Jessop: Yes, our renewals are generally within 50 basis points of the average of what we send out the $4 six probably turns into something a little just to vote for Alex on the new lease nearly numbers, yes, absolutely yeah, John So for the third quarter were assuming blended about one point.
Keith Oden: Yeah, absolutely. Yeah, John, so for the third quarter, we're assuming a blended rate of about 1.6% and the fourth quarter a blended rate of about 1.3%. And by the way, that's exactly what we thought last quarter.
Speaker Change: 6% in the fourth quarter blended about one 3% and by the way that's exactly what we thought last quarter as well.
Speaker Change: Great. Thank you.
Speaker Change: Yes.
John Kim: Great, thank you... Our next question comes from Connor Mitchell of Piper Sandler. Please go ahead with your question. Hey, good morning. Thanks for joining us.
Speaker Change: Our next question comes from Connor Mitchell from Piper Sandler. Please go ahead with your question.
Connor Mitchell: Our next question comes from Connor Mitchell from Piper Sandler. Please go ahead with your question. Hey, good morning. Thanks for taking my call.
Connor Mitchell: Hey, good morning, Thanks for taking my question.
Connor Mitchell: So you guys saw a pretty nice improvement in bad debt in the second quarter year over year.
Speaker Change: I'm just wondering if you could provide.
Speaker Change: Some insight to how this might be trending in July and what you guys just thinking about for the rest of the year and then maybe what markets are causes.
Speaker Change: Improvements and if youre seeing anything on the other side with <unk>.
Speaker Change: When you slipping in bad debt in certain markets.
Connor Mitchell: Yeah, absolutely. So bad debt is really getting under control now. What we had in the second quarter was about 80 basis points. We just closed out July, so it's a little bit early for us to have our July numbers, but we think that they're going to be in line with our expectations for the rest of the year, which is right at 75 basis points. And where we're seeing the biggest improvements is where we need to see them.
Speaker Change: Yeah, absolutely so bad debt is really getting under control now what we had in the second quarter was about 80 basis points.
Speaker Change: We just closed out July shows a little bit early for us to have our July numbers, but we think that theyre going to be in line with our expectations for the rest of the year, which is right at 75 basis points and where we're seeing the biggest improvement is where we needed to see them. So for instance, California.
Speaker Change: In the second quarter was two 1% bad debt in the first quarter. It was two 6% bad debt. So those that market was obviously one that we're focused on quite a bit as was Atlanta, which in the first quarter was one 8%. It is now one 4%. So the markets that were being a little bit problematic for us are starting to get under control.
Connor Mitchell: So for instance, California had 2.1% bad debt in the second quarter. In the first quarter, it had 2.6% bad debt. So that market was obviously one that we were focused on quite a bit, as was Atlanta, which in the first quarter was 1.8%, and it's now 1.4%. So the markets that were being a little bit problematic for us are starting to get under control. And we do think that we're getting pretty close to getting back to a normal level, which for us is about 50 basis points. Thank you. Our next question comes from Josh Dennerlein from BOA.
Speaker Change: And we do think that we're getting pretty close to getting back to a normal level, which for us is about 50 basis points.
Speaker Change: Thank you.
Speaker Change: Okay.
Josh Dennerlein: Our next question comes from Josh Dennerlein from BLA. Please go ahead with your question. Hi, this is Stephen Song. I'm on behalf of Josh.
Speaker Change: Our next question comes from Josh dinner lines from BLA. Please go ahead with your question.
Speaker Change: Hi, This is Steven on for Josh. Thanks.
Steven: Thanks for the time. So my question is on the <unk>.
Speaker Change: Over so if I look at the number correctly it looks like there's a little bit pickup from July from June to July. So I Wonder if you have any color on that on the turnover.
Keith Oden: So we'll always see an increase in turnover in the third quarter, so that's very typical. But I think the thing that I'd be focusing on more is that our July 2023 turnover number was 53%, and our July 2024 turnover number was 47%. That's a 600 basis point improvement year over year. So although we typically do see higher turnover in the third quarter, it's trending a lot better than usual right now. Okay
Speaker Change: So we will always see an increase in turnover in the third quarter. So thats very typical I think the thing that I'll be focusing on more is that our July 2023 turnover number was 53% and our July 2024 turnover number is 47% that's a 600 basis point improvement year over.
Speaker Change: Year, so, although we typically do see higher turnover in the third quarter, it's trending a lot better than typical right now.
Speaker Change: Okay. Thank you.
Speaker Change: Mhm.
Speaker Change: Okay.
Rob Stevenson: Our next question comes from Rob Stevenson from JANI. Please go ahead with your question. Good morning, guys.
Speaker Change: Our next question comes from Rob Stevenson from Janney. Please go ahead with your question.
Rob Stevenson: What's the current expected stabilized yield on the development pipeline?
Rob Stevenson: Morning, guys.
Rob Stevenson: What's the current expected stabilized yield on the development pipeline and what have you been seeing in terms of material labor cost as you start those two Charlotte projects.
Keith Oden: Sure, so the Charlotte projects are in the six-figure yield range with IRs in the eights. And the development pipelines, our general development pipeline, if you look at the last couple of years, have been suburban deals in the 6% maybe range and actually in Phoenix, we're like in the 7% range. And then the more urban deals are in the mid-fives to high-fives.
Rob Stevenson: Sure.
Speaker Change: Charlotte projects are in the six point and yields with fires in the eights.
Speaker Change: The development.
Speaker Change: Pipelines are general development pipeline. If you look at the last couple of years have been suburban deals in the 6% maybe in actually in Phoenix or like in the 7% range and then the more urban deals in the mid fives to high fives.
Keith Oden: And in terms of costs, costs are coming down in some areas, but very, very slowly. Lumber costs have come down, for example, but the good news is we're not having 1% inflation a month like we were a year and a half ago. But I don't think that we've seen much cost compression. It would be really interesting to see as starts fall, and we will peak in construction this year, and next year, it falls substantially the year after that, and generally, when you see construction starts fall like that, what happens is that subcontractor margins compress.
Speaker Change: And in terms of cost.
Rob Stevenson: Costs are coming down in some areas, but very very slowly lumber costs have come down for example, but.
Rob Stevenson: The good news is we're not having 1% a month inflation like we were.
Speaker Change: Year, and a half ago, but I don't think that.
Speaker Change: That we've seen much.
Speaker Change: Much.
Speaker Change: Cost compression it'll be really interesting to see.
Speaker Change: As a start fall and we will peak in construction this year and next year fall substantially in the year after that.
Speaker Change: Generally when you see construction start fall like that what happens is that the.
Speaker Change: Subcontractor margins compressed.
Keith Oden: And if you go back to the financial crisis, prices dropped dramatically because people were just working for food at the time, and there was no margin. I don't know that that's going to happen this time because there is a lot of other development going on. And when you think about commodity prices, those are driven by the global market, not just multifamily. And so with the bipartisan infrastructure bill and the...
Speaker Change: And if you go back to the financial crisis people were.
Speaker Change: Prices dropped dramatically because people were just working for food at the time. There was no margin I don't know that thats going to happen. This time, because there is a lot of other development going on and when you think about commodity prices.
Speaker Change: Those are driven by the global market, not just multifamily and so with the bipartisan infrastructure Bill and.
Speaker Change: <unk>.
Keith Oden: The government spending that's going on in infrastructure, concrete, and steel, some of those other products likely aren't going to come down. So as the labor market tightens, I think you will see labor prices come down, and margins come down. And how much that is, really, it's hard to say today.
Speaker Change: This is the government spend that's going on in infrastructure concrete and steel and those other products are likely aren't going to come down so as the labor market tightened I think we will see labor labor prices come down and margins come down and how much that is really hard to say today.
Keith Oden: It's not going to crater the way it did during the financial crisis because that was a whole different animal compared to what we have today. And if the Fed does hit the landing, it'll still be a decent economy for builders. What about land costs? Are you starting to see any relief there in terms of being able to buy at a cheaper rate or any of these office sites that are gonna get bulldozed and converted?
Speaker Change: It's not going to crater the way it did during the financial crisis because.
Speaker Change: That was a whole different animal compared to what we have today and if we have a.
Speaker Change: Fed does hit the landing.
Speaker Change: It will be.
Speaker Change: A decent economy still for builders and labor.
Speaker Change: What about the land costs are you starting to see any relief there.
Speaker Change: So being able to buy at a cheaper rate or any of these office sites that are going to get bulldozed and converted.
Keith Oden: You know, land, land's an interesting thing because it doesn't move as fast as you would think because sellers, you know, just like the sellers of existing multifamily are unwilling to drop their prices; land people tend to be the same. What I think the opportunity could be, and we've generally seen this in past cycles, is that you have developers who own land, who have been positioning to, you know, start the development, and they can't start the development because the debt and equity markets won't allow it today. And so they end up, end up taking, you know, they write off their, their sort of soft costs, and then they sell the land for, you know, what it was. [inaudible]
Speaker Change: Land land is an interesting thing because it doesn't move as fast as you would think because sellers just like the sellers are existing multifamily are unwilling to drop their prices land people tend to be the same.
Speaker Change: What what I think the where the opportunity it can be.
Speaker Change: Generally seen this in the past cycles is that you have developers who own land, who are who have been positioning to.
Speaker Change: To start the development and they can't start the development because of the debt and equity markets won't allow it today and so they end up end up taking.
Speaker Change: They write off your sort of soft costs and then they sell.
Speaker Change: The land for what it was worth.
Speaker Change: Beginning, perhaps and that's generally where the opportunity yes, I think sellers are definitely understanding that the market is different today because of the cost of capital rise in construction costs coming down so land prices tend to be stickier than you would think but I.
Speaker Change: I do think there'll be opportunity in making deals both on the land side and the.
Speaker Change: Buying from developers that can't get their dealer finance.
Speaker Change: Okay. Thanks, guys have a great weekend.
Speaker Change: Sure.
Steve Sakwa: Our next question comes from Steve Sakwa from Evercore ISI. Please go ahead with your question.
Speaker Change: Our next question comes from Steve Aqua from Evercore ISI. Please go ahead with your question.
Steve Sakwa: Thanks. Good morning.
Steve Aqua: Thanks, Good morning.
Steve Aqua: Rick I guess I, just wanted to get a little bit more color around the two development starts you know what kind of yields are you penciling I assume.
Richard Campo: Rick, I guess I just wanted to get a little bit more color around the co-development starts. What kind of yields are you penciling, I assume, on untrended rents? And then, to the extent that you do trend, or you look out on a stabilized basis, where do you see those heading? Sure, we do both. We, you know, we
Speaker Change: Trended rents.
Speaker Change: And then to the extent that you do trend or you look out on a stabilized basis, you know where do you see those having.
Richard Campo: Sure, we do both. You know, we look at untrended yields, and then we also look at trended yields. We are generally pretty conservative in our trended yields. And when we look at the untrended yields, they're in the, you know, sort of mid to high fives. And then when you look at the trended yields, they're in the sixes.
Speaker Change: Sure we do both.
Speaker Change: We look at and trended yields and then we also look at trend yields.
Generally pretty conservative in our trended.
Speaker Change: And when you when we look at the untreated yields during the sort of mid to high Fives and then when you look at trends are in the sector.
Speaker Change: I think that the.
Speaker Change: That's the.
Speaker Change: That's a.
Richard Campo: I think that the – and that's a – those are going to yield yields or stabilized yields. And we look mainly at IRRs because the long-term – we're in this business, you know, for the long-term. You want accretion as you go, but you also want long-term – you know, long-term – capital placement that has a positive spread to your weighted average long-term cost of capital. So with that said, you know, we're in, you know, high or mid-low eights, and one of them's a low eight, and the other one's a higher eight from an IRR perspective. So that's the way we look at it.
Speaker Change: Going in yields are stabilized yields and we look mainly at IRR. So I guess the long term and we're in this business for the long term you want you want accretion.
Speaker Change: As you go but you also want long term.
Speaker Change: Long term.
Speaker Change: Capital placement that has a positive spread to our weighted average long term cost of capital so with that said.
Speaker Change: Hi.
Speaker Change: Low eights.
Speaker Change: One one of them one of them is a low weight and the other one is a higher rate from an IRR perspective.
Richard Campo: But I think there's substantial upside in those yields just because of what the market looks like in 2026 and 2027. If you have a reasonable economy and no new supply coming to the market, you should get better than normal rent growth. If you look at long-term rent growth, you know, for our business, it's roughly a little over 3%. And if you, but the cycle during the cycles today were, you know, what is our revenue growth today?
Speaker Change: So that's the way we look at it but I think there is substantial upside in those yields just because of what what the market looks like in 2026 and 2027, if you have a reasonable economy and no new supply come into the market you could get better than normal rent growth. If you look at.
Speaker Change: At long term rent growth for our business is roughly a little over 3%.
Speaker Change: And if you if you.
Richard Campo: It's like 0.7. And to get to a long-term average of three from today, you have to have a whole lot better than three, you know, in those uptick market years, which would be, you know, in 2026 and 2027. So I think there's a fair amount of upside in those developments that you start today. Okay, thanks.
Speaker Change: The site during the cycles today were.
Speaker Change: What is our revenue growth today is like 7%.
Speaker Change: To get to a long term average of three from today you have to have a whole lot better than three.
Speaker Change: And the uptick market years would you be.
Speaker Change: 26, 2007, so I can just throw them out of upside in this development we start today.
Speaker Change: Okay. Thanks.
Eric Wolfe: Our next question comes from Eric Wolfe from Citi. Please go ahead with your question. Hey, thanks. You mentioned where you're from.
Andrew: Sure Andrew.
Andrew: Our next question comes from Eric Wolfe from Citi. Please go ahead with your question.
Eric Wolfe: Hey, Thanks, you mentioned, where you're sending renewals out today. So I was curious based on what Youre seeing with yield star and any other sort of forward indicators do you think occupancy will stay at this high level because it looks like it came up in.
Speaker Change: June and July or would you expect it to start coming down seasonally.
Keith Oden: Yeah, so we're, you know, we're at 95.5 now, and I think in the back half of the year, I think we'll have that basically flat. Maybe it comes down a little bit in the fourth quarter, but there's always a trade-off between rate and occupancy, and it's something that our professionals in our revenue management department deal with literally daily, making adjustments to make sure that we're maximizing revenues, but the key to being able to push rents and have any pricing power at all is to maintain occupancy at or above 95%.
Speaker Change: Yes.
Speaker Change: We're at 95 five now.
Andrew: And I think in the back half of the year I think.
Speaker Change: We have that basically flat maybe it comes down a little bit in the fourth quarter, but it's always a tradeoff between rate and occupancy and it's something that our professionals.
Speaker Change: And our revenue management Department deal with literally daily, making adjustments to make sure that we're maximizing revenues, but but.
Keith Oden: We started the year at 95.3. We've actually ticked up a little bit during peak leasing season. Seasonality will probably, I'm pretty comfortable with our forecast between now and the end of the year with regard to our guidance. Thank you. Our next question...
Speaker Change: Started the year at 95, three was actually ticked up a little bit during peak leasing season.
Speaker Change: Seasonality will probably.
Speaker Change: Cause it to drift a little bit below 95, five but.
Speaker Change: Pretty comfortable with our forecast between now and the end of it ended the year with regard to our guidance.
Speaker Change: Thank you.
Speaker Change: You bet.
Eric Wolfe: Our next question comes from Adam Kramer from Morgan Stanley. Please go ahead with your question. Great. Thanks. Good morning, guys.
Speaker Change: Our next question comes from Adam Kramer from Morgan Stanley. Please go ahead with your question.
Adam Kramer: Great. Thanks, Good morning, guys just wanted to know across the portfolio today.
Adam Kramer: Where does it kind of a loss to lease for gain to lease stand and if you could even give maybe a few of the markets in particular I'd be interested to hear.
Adam Kramer: Yeah, so right now, we are in a loss to lease position, and so it's right around 1%. And obviously, that is spread across the markets as you would imagine they would be based upon the revenue growth that we've had year to date. And so think about it. DC or San Diego has got a much larger loss to lease, and obviously, we've gained leases in markets like Nashville and Austin.
Speaker Change: Yes, so right now we are in a loss to lease position and so it's right around a 1% and obviously that is that is spread across the market that you would imagine they would be based upon the revenue growth that we've had year to date and so.
Speaker Change: Think about D C or San Diego has got a much larger loss to lease and obviously, we've got gains of leases in markets like Nashville and Austin.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Michael Goldsmith: Our next question comes from Michael Goldsmith from UBS. Please go ahead with your question.
Speaker Change: Our next question comes from Michael Goldsmith from UBS. Please go ahead with your question.
Ami Probandt: Hi, this is Ami Probandt. Some of the higher supply markets seem like they might be reaching a bottom, and maybe Phoenix is in this category. So are you seeing any signs of this happening, or, you know, are we potentially reaching the bottom in some of these markets? Thanks.
Amy: Hi, This is Amy.
Amy: Some of the higher supply markets seem like they might be reaching a bottom and maybe Phoenix isn't this category. So are you seeing any.
Speaker Change: Signs of this happening or you know are we potentially reaching the bottom in some of these markets. Thanks.
Richard Campo: Yeah, so the markets that jump off the page to me still are Nashville and Austin in terms of oversupply, and you know, I still think we're in the middle of the, you know, I don't know whether it's the fourth inning or fifth inning of the baseball game, but I don't think we're anywhere near the end in either of those markets. It's probably going to drift over into mid-2025, just based on if you look at the forward, the completions that are still outstanding, that we've still got to grind through.
Speaker Change: Yes, so the <unk>.
Speaker Change: Markets that jump off the page to me still our Nashville, and Austin in terms of in terms of.
Speaker Change: Oversupply in that.
Speaker Change: I still think we're in the middle of the I don't know, whether it's the fourth inning or fifth.
Speaker Change: Fifth inning of the baseball game, but I don't think were anywhere near the end and either of those markets.
Speaker Change: It's probably going to drift over into mid 2025, just based on if you just look at the forward.
Speaker Change: The completions that are still that we still got to grind through it. The good news is is that despite these historic levels of new supply. There has also been up pretty historic level of absorption.
Richard Campo: The good news is that despite these historic levels of new supply, there's also been a jobs created and net absorption rate that doesn't seem to make a whole lot of sense. But when you look at it in the broader context of not just employment growth but migration, in domestic migration, and to markets like Nashville and Austin, that's been the game changer. And because, I mean, by historical standards, the amount of supply versus the kind of printed job growth would bode much worse for rental rate performance in both of those markets, and it just hadn't happened.
Speaker Change: Cities like Austin, where you kind of do the math.
Speaker Change: Around.
Speaker Change: <unk> created in <unk>.
Speaker Change: Net absorption.
Speaker Change: <unk> don't seem to make a whole lot of sense, but when you look at it in the broader context of not just employment growth but.
Speaker Change: In migration and domestic migration into markets like Nashville, and Austin.
Speaker Change: That's been the game changer and because by historical.
Speaker Change: Standards.
Speaker Change: The amount of supply versus the kind of printed job growth.
Speaker Change: Boat much worse for rental rate performance in both of those markets and it just hasn't happened, but in terms of being at the bottom.
Richard Campo: But in terms of being at the bottom, you know, I don't know, we're probably kicking around the bottom because we're kicking around the peak monthly deliveries in those markets. But clearly, we're going to continue to fight the supply challenge into 2025. The good news is, our markets have remained robust, and we're still growing jobs, and people are still moving here, and we're still leasing lots of apartments.
Speaker Change: I don't know where probably kicking around the bottom because we're kicking around.
Speaker Change: Peak monthly deliveries.
Speaker Change: Markets, but clearly we're going to continue to fight the supply challenge into 2025. The good news is our markets have remained robust and we are still growing jobs and people are still moving here and we're still at least in lots of apartments.
Speaker Change: You bet.
Rich Anderson: And our next question comes from Rich Anderson from Wedbush. Please go ahead with your question. Thanks.
Rich Anderson: Thanks, good morning out there. So, can you hear me? Yes. Okay. Sorry.
Speaker Change: Thanks, Good morning out there.
Bob: So Bob.
Bob: Can you hear me.
Richard Campo: So you bought back stock during the quarter and in the $96 range; your stock is now $119 or something like that. And the consensus NAV is, I don't know if you believe it, 120-ish. I wonder under what scenario you could start thinking about reversing course from an equity standpoint, not that your balance sheet needs it, but are you at all having any sort of thought about raising equity at some point, particularly if something of significance comes along and you could deploy the capital and protect your balance sheet at the same time? Just curious what your thoughts are there.
Bob: Yes, okay sorry.
Speaker Change: You bought back stock during the quarter and $96 range. Your stock is now $119 or something like that and consensus NAV.
Speaker Change: I don't know if you believe at 100 Twentyish.
Speaker Change: It's what I wonder what under what scenario could you start thinking about reversing course from an equity standpoint, not that your balance sheet needs. It but would you are you at all having sort of a.
Speaker Change: Thought about raising equity at some point, particularly if something of significance comes along and.
Speaker Change: You could deploy the capital and protect your balance sheet at the same time just curious what your thoughts are there.
Speaker Change: Well, we clearly are.
Richard Campo: Clearly, our focus is on, you know, where we can make the best returns and how we fund that. And so I will tell you just the basics. The stock's at 119 today, but in the last, it was 110 just a little while ago, and below that. And so we don't think of it that way, but I would say that the way I think about capital allocation, if we could acquire a portfolio that improves the quality of our portfolio, and it is part of our strategic plan, and it can be done on a creative basis, using equity and our debt to fund that, and keeping our balance sheet strong, sure, that'd be an interesting thing to do.
Speaker Change: On what.
Speaker Change: Where we can make the best returns and how do we fund that and so I will tell you.
Speaker Change: Of course.
Speaker Change: The stocks at 119 today, but.
Below that so.
Speaker Change: We don't think of it that way, but I would say that the way I think about capital allocation if we could.
Speaker Change: Could acquire a portfolio of that improves the quality of our portfolio as part of our strategic plan.
And it can be done on an accretive basis and then.
Speaker Change: And using equity.
Speaker Change: Our debt to on that and keeping our balance sheet strong sure that'd be.
Speaker Change: Interesting thing to do.
Richard Campo: We haven't found portfolios like that. I think that today, I think that the transaction market is going to be very robust over the next 18 months, and that should give us an opportunity to play in the acquisition game significantly. And if it works out where the math works, then sure, you use all sorts of equity.
Speaker Change: Haven't found portfolios like that I think that today.
Speaker Change: I think that the transaction market is going to be very robust over the next 18 months.
Speaker Change: It gives us an opportunity to.
Speaker Change: To play in the acquisition game significantly in and if it works out where the math works.
Speaker Change: Sure you use all sources of capital including equity.
Rich Anderson: What do you think about the 120 as a NAV estimate? Any thoughts on that?
What do you think about the 120.
Speaker Change: We estimate any thoughts on that.
With the consensus number well at $1 20, I think that's an implied cap rate of cabinet of about 565.
Richard Campo: Well, at 120, I think that's an implied cap rate at Camden of about 565, you know, six or five, seven. And let's see the Katerra transaction; the CFO for KTR came out and said it was a little four.
Speaker Change: Six to $5 seven and.
Speaker Change: A strategic a terror transaction the CFO for KKR came out and said it was a low four.
Richard Campo: So, you know, where are cap rates today? And most of the transactions that are going on today are in the low fives. So, you know, I think that the public markets are slow to bring cap rates down to where the real market is today. And, ultimately, maybe the public markets are right, and there's gonna be a flood of properties that have to come to the market between now and, you know, the end of 2025.
Speaker Change: So we're.
Speaker Change: What are cap rates today.
Speaker Change: Most of the.
Speaker Change: Transactions that are going off today or in the low fives.
Speaker Change: So.
Speaker Change: I think that.
Speaker Change: That the public markets are slow to bring cap rates down.
Navy: Where the real market is today and ultimately Navy the public markets are right and theres going to be a flood of properties that have to come to the market between now and the end of 2025 and so there you could argue that cap rates could say.
Richard Campo: And so there you could argue that cap rates could stay, you know, higher or go higher because of that. But on the other hand, there's a massive wall of capital out there, as evidenced by Blackstone taking out AIMCO and KTR acquiring, you know, a couple of billion dollars of the Katerra portfolio. So, you know, we'll see, right? The street tends to, or at least Wall Street tends to, the pendulum moves way, you know, one way versus the other. And is it gonna get back to the middle today? You know, if it got back to the middle of where cap rates are trading today, 120 would be low.
Rich Anderson: Okay, sounds good. Thank you.
Higher or go higher because of that but on the other hand, there is a <unk>.
Mason Guell: Once again, if you would like to ask a question or have a follow-up, please press star and then one to withdraw your questions. Or, you may press star and two. Our next question comes from Mason Guell from Baird. Please go ahead with your question.
Navy: A wall of capital out there as evidenced by Blackstone, taking out inco in and KKR acquiring a couple billion dollars of the tariff portfolio. So we'll see right.
Navy: It's.
Speaker Change: The street tends to or at least the wall Street tends to be the pinch.
Speaker Change: Pendulum moves way.
One way versus the other and is it going to get back to the middle.
Speaker Change: Back to the middle of where cap rates are trading today 120 would be low.
Speaker Change: Okay sounds good thank you.
Okay.
Once again, if you would like to ask a question or have a follow up. Please press star and then one to withdraw your question you May Press Star two.
Nathan <unk>: Our next question comes from Nathan <unk> from Baird. Please go ahead with your question.
Mason Guell: Hey, good morning. Can you provide some insight on how you expect DC and Houston to perform in the second half of the year?
Nathan <unk>: Hey, good morning can you provide some insight on how you expect D C and Houston to perform in the second half of the year.
Richard Campo: Yeah, I think DC and Houston are going to continue to be in the top. I think clearly DC is going to end up the year Eagle one or two in our portfolio from where we are today.
Speaker Change: Yes, I think I think DC and Houston are going to continue to be in the top.
Nathan <unk>: I think clearly DC is going to end up the year.
Nathan <unk>: One or two in our portfolio just from where we are today.
Richard Campo: Houston is, you know, continues to be really robust in terms of growth. I thought this morning I saw an announcement that Chevron was finally going to move their real-life corporate headquarters from California to Houston. They've been saying they weren't going to do it for 15 years, and yet their chairman and vice chairman are expected to move, actually move to Houston by the end of this year. So, I think that's 2,000 jobs, you know, that probably isn't a huge thing in the scheme of Houston's overall employment picture, but it sends a really important message that Houston is the energy capital of the world, and it's not going away anytime soon.
Nathan <unk>: It continues to be really robust and in terms of growth.
Nathan <unk>: So this morning I think.
Nathan <unk>: I saw an announcement that Chevron was finally going to move their actions or the real life corporate headquarters from California to Houston, they've been saying, they werent going to do it for 15 years.
Nathan <unk>: And yet their chairman and Vice Chairman and are expected to move actually move to Houston by the end of this year. So.
Speaker Change: Houston is the energy capital of the World and it's not going away anytime soon I think it's only going to continue to be to get stronger in the near term. So I'm really I'm very constructive on Houston with what's going on here and clearly D. C Metro is having.
Richard Campo: I think it's only going to continue to get stronger in the near term. So, I'm really, I'm very constructive about Houston with what's going on here, and clearly, DC Metro is having a year that is better than what we would have thought it would be, and I think they've got great occupancy right now and really good momentum, and our teams are doing a great job of taking advantage of the opportunity. So, I think both those markets are very positive about between now and the end of the year. I would add to Houston that
Speaker Change: Year that is better than what we would've thought it would be.
Speaker Change: They've got great occupancy right now and really good momentum and our teams are doing a great job of taking advantage of the opportunity. So I think both of those markets I'm very positive on between now and the end of the year.
Richard Campo: I would add to Houston that Keith mentions the energy capital of the world, but it's also the energy transition capital of the world. If you look at the government's spending on energy, I mean, there was roughly a $2 billion hydrogen hub that was granted to Houston, and these energy companies are all investing major dollars in clean technology and into the transition. Ultimately, the thing that's really interesting about the whole debate about energy transition and global warming and going green is that you have to have a transition plan that works for people, and a transition plan that includes oil and gas, traditional oil and gas, but the oil and gas companies are the ones who understand how to change, how to get a transition into hydrogen and other fuels. So I think long-term, Houston is going to continue to do well as a result of both traditional energy and transition.
Speaker Change: I would add to Houston that that Keith mentioned to energy capital of the world, but it's also the energy transition capital of the World and if you look at the the government spend on on energy I mean, there was a.
Keith: Roughly a $2 billion hydrogen hub that was granted to Houston.
Keith: And these energy companies are are are all invest.
Keith: Investing major dollars.
Keith: Clean technology and into the transition.
Keith: And that ultimately the thing that's really interesting about the whole debate about energy transition in global warming and going Green.
Keith: You have to have a transition plan that works for people and the transition plan that includes.
Keith: It has to include oil and gas traditional oil and gas, but oil and gas companies are the ones, who understand how to how to.
Keith: Change how to get transitioned into hydrogen and other fuels, but so I think long term Houston is going to continue to do well as a result of both traditional energy and transition.
Keith: Great. Thank you.
Keith: Mhm.
David Seagal: Great, thank you. Our next question comes from David Seagal from Green Street. Please go ahead with your question. All right, thank you.
David Seagal: Our next question comes from David Seagal from Green Street. Please go ahead with your question. Hi, thank you.
Keith: Our next question comes from David Seagull from Green Street. Please go ahead with your question.
David Seagull: Alright, thank you.
If you could talk about how comfortable you feel about the development spread on the recent Charlotte starts considering that.
David Seagull: It's exciting assets trading in the low five range NB untraded yields for those starts if I heard correctly.
Speaker Change: Below below six times of uncertainty.
Speaker Change: On that basis. Thank you.
Richard Campo: Sure, so we look at it from a long-term cost of capital perspective, and we want 150 basis points spread from our long-term cost of capital for development. For acquisitions, we want 50 to 75, and we can get that with developments. The going-in yields, if you use going-in yields as your benchmark, then that is always dangerous, in my opinion, because where you start is important, but where you finish is the key.
Speaker Change: Sure so.
Speaker Change: We look at it from a long term cost of capital perspective, and we want 150 basis points.
Speaker Change: Spread from our long term cost of capital for development and acquisitions, we want 50% to 75, and we can get that with development of the going in yield.
Speaker Change: If you use going in yields as your benchmark. Then then that that always is a.
As dangerous in my opinion because.
Speaker Change: Where you start is important but where you finish is the key and so long term value creation through development, we created billions of dollars of value at Camden through our development program over the years and this part of the cycle is.
Richard Campo: And so long-term value creation through development. We've created billions of dollars of value at Camden through our development program over the years. And this part of the cycle is when there's going to be limited competition coming in at 26 and 27, building today. Those developments will create value long-term for Camden. When you look at it, if we only had $1 to invest, that'd be one thing, right? But we have one of the best balance sheets in the sector; it's an unfunded line of credit.
Speaker Change: When theres going to be limited competition coming in at $26 27 billion today.
Speaker Change: Those developments will be will be.
Speaker Change: Create value long term for Camden.
Speaker Change: When you look at.
Speaker Change: If we were if we only had $1 to invest.
Speaker Change: The one thing right, but we have one of the best balance sheets in the sector.
Speaker Change: Unfunded line of credit.
Richard Campo: We could invest $1.3 billion without doing any equity offerings and keeping our debt at the right level to keep our A rating. And so, $300 million, and development. Great acquisitions come along; we'll play in that game as well. But it's a long-term bet for a long-term business. And we think it makes sense to allocate that amount of capital to those transactions are great suburban, really simple, and no offense to my construction folks, but they're, you know, stick construction in the suburbs. And that's where we've made the most or created the most value in our development business over a long period of time. So that's what we do.
Speaker Change: We could we could invest without doing any equity offerings and keeping our debt in the right level to keep our a rating we could invest $1 three and so the.
Speaker Change: $300 million.
Speaker Change: And development, Great acquisitions come along we'll play in that game as well, but it's a long term debt for a long term business and we think it makes sense to allocate that that amount of capital to those transactions are great suburban.
Speaker Change: Really simple no offense to my construction folks but.
Speaker Change: There.
Speaker Change: Construction in the suburbs and that's where we've made the most are created the most value in our development business over a long time long period of time. So that's way we think about it.
Speaker Change: Great. Thank you.
Speaker Change: Mhm.
Steve Sakwa: Our next question is a follow-up from Steve Sakwa from Evercore ISI. Please go ahead with your follow-up.
Speaker Change: Our next question is a follow up from Steve Sawka from Evercore ISI. Please go ahead with your follow up.
Alexander Jessett: Yeah, great, thanks. You know, just thinking about the expense growth this year, it's obviously come in a lot better than you guys expected. Taxes are only up, you know, 0.2%. I know the Houston or Texas refunds and property tax changes have helped. I'm just trying to think through, you know, maybe some of the one-time benefits that you're getting this year as we think about expense growth into 2025.
Steve Sawka: Yeah, great. Thanks, Yeah.
Steve Sawka: Just thinking about the expense growth. This year, it's obviously come in a lot better than you guys expected.
Speaker Change: Texas are only up 2% I know the Houston, Texas, the Texas refunds and property tax changes have helped I'm just trying to think through maybe some of the one time benefits that youre getting this year as we think about expense growth into 'twenty five.
Alexander Jessett: Yeah, so I'll hit the items that seem to have the most variability first. So if you think about property taxes, obviously, we're having a fantastic year in 2024. My gut feeling is that as we move on, we will return to a more normal level, which is about 3%. If you think about insurance, insurance was really a case of a pendulum that swung. If you remember last year, our insurance was up 40%. And when we started this year, we thought it was going to be up 18%. And now we think it's going to be down 3%.
Speaker Change: Yeah, So I'll hit the items that seem to have the most variability one. So if you think about property taxes, obviously, we're having a fantastic year in 2024 my gut is as we move on we returned to a more normal level, which is about 3%. If you think about insurance insurance.
Speaker Change: It was really a case of the pendulum has swung if you remember last year insurance was up 40% and when we started this year, we thought insurance was going to be up 18% and now we think it's going to be down 3%.
Alexander Jessett: Right now, this is still a great business for the insurance providers, and every insurance provider that we spoke to when we did our last renewal was trying to find out how they could have more of this business. And the simple way that they can get more of this business is to keep the rates low. And so, what I would anticipate is that insurance follows the normal cycle of rates being low for a couple of years, and then all of a sudden you have some accumulation of global losses that causes rates to rise, and then it's a rinse and repeat cycle.
Speaker Change: Right now this is still a great business for the insurance providers and every insurance provider that we spoke to when we did our last renewal with trying to find out how they can have more of this business and the simple way that they can get more of this business is to keep the rates low and so what I would anticipate is that insurance follows the normal cycle.
Speaker Change: Rates are low.
Speaker Change: Couple of years, and then all of a sudden you had some accumulation of global losses that causes rates to rise and then it's a rinse and repeat cycle.
Alexander Jessett: When I think about the rest of our line items, salaries are obviously something that is very closely tied to inflation, and we think that's going to be typical. The same thing for utilities and repair and maintenance. Probably the one line item that I think there's some variability, the good news is that it's our smallest line item is marketing. And marketing really is a function of how much we want to spend to create the traffic that we want.
Speaker Change: When I think about the rest of the rest of our line items.
Speaker Change: Salaries is obviously something that is very closely tied to it to inflation and we think thats going to be typical of the same thing for utilities and repair and maintenance.
Speaker Change: Probably the one line item that I think there is some variability. The good news is is that it's our smallest line item is marketing and.
Speaker Change: In marketing really is a function of how much we want to spend to create the traffic that we want and as we have more supply.
Alexander Jessett: And as we have more supply, we'll spend more on marketing dollars. But all that being said, I think if you look at where we are today at 2.85%, and you think about the long-term average for our business is 3%, so I think we're in pretty good shape.
Speaker Change: More on the marketing dollars, but all that being said I think if you look at where we are today at 285%. When you think about the long term average for our business at 3%. So I think we're in pretty good pretty good shape.
Steve Sakwa: Great, thanks. That's it for me.
Speaker Change: Great. Thanks, that's it for me.
Michael Goldsmith: Once again, if you would like to ask a question, please press... Our next question comes from Michael Goldsmith from UBS. Please go ahead with your question.
Speaker Change: Once again, if you would like to ask a question. Please press <unk>.
Speaker Change: Our next question comes from Michael Goldsmith from UBS. Please go ahead with your question.
Michael Goldsmith: Hi, another quick one from me. Amy's on the line. How is the hurricane impact factored into the guide, and how should we think about that as we are modeling out that third quarter?
Michael Goldsmith: Another quick one from from.
Michael Goldsmith: My name is on the line.
Michael Goldsmith: Does that hurricane impact.
Speaker Change: Factored into the guide and how should we be.
Speaker Change: About that is as we are modeling out that third quarter.
Alexander Jessett: Yeah, so it's a non-core expense for us. And you'll notice that we increased our core FFO by $0.05 per share but our non-core FFO by $0.03 per share. The delta is the $0.02 that we are anticipating for the impact of the barrel. And obviously, that's a net expense line after taking into effect insurance proceeds and additional dollars that may be capitalized.
Alexander Jessett: Yeah, so it
Speaker Change: Yes, so its a non core expense for us and if youll notice that we increased our core <unk> by <unk> <unk> per share, but our non core <unk> by <unk> <unk> per share the delta is.
Speaker Change: Is the <unk> that we are anticipating for the impact of barrel.
Speaker Change: Obviously, that's a net.
Speaker Change: Fence line after taking into effect insurance proceeds in additional dollars that may be capitalized.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
John Kim: And our next question comes from John Kim from BMO Capital Markets. Please go ahead with your question.
Speaker Change: And our next question comes from John Kim from BMO Capital markets. Please go ahead with your question.
John Kim: Thanks. I wanted to follow up on the blended lease assumptions for the back half of the year.
Unknown Executive: [inaudible]
John Kim: Thanks, I wanted to follow up on the blended lease assumptions for the back half of the year. So in July you signed.
John Kim: And blended at 90 basis points, yet you're expecting that to I guess accelerate or improve in the second half of the year is that based on easier year over year comps or.
Speaker Change: Or are there other factors.
Alexander Jessett: No, absolutely not. So a component of that is easier comps, but you have to think about our effectiveness. So our effective for July is up 1.2%. And so what I'm saying is that our effective for the third quarter is up 1.6. So 1.2 to 1.6 is not that much of a jump. And then when you look at what was signed, ignore the blend because in July, we sort of had a little bit of an unusual situation where a larger percentage of what were new leases versus renewals.
Speaker Change: No absolutely. So a component of that is easier comps that you have to think about.
Speaker Change: Our effective so our effective for July is up one 2% and so what I'm, saying is that our effective for the third quarter is up one six to $1. Two to 1.6 does not is not that much of a jump and then when you. When you look at what was signed.
Speaker Change: Ignore ignore the blend because in July we sort of had a little bit of a.
Speaker Change: Unusual where a larger percentage of.
Speaker Change: With the new leases versus renewals.
Alexander Jessett: If you look at that renewal number, which is up 4%, that's a really good renewal number for us. And if you think about turnover that's dropping, with renewal numbers staying that high, that should be a really good driver for us to get to 1.6%.
Speaker Change: If you look at that renewal number which is up 4%. That's a really good renewal number for us and if you think about turnover, that's dropping with renewal number saying that high that should be a really good driver for us to get to the one 6%.
John Kim: Can you confirm what you signed in June? I think May was at 1%.
Speaker Change: Can you confirm what you signed in June I think may was up 1%.
Unknown Executive: I do not have the June number right in front of me, but yeah, we'll get back to you.
Speaker Change #100: I do not have the June number right in front of me, but yeah, we'll get back to you in that okay. Thank.
John Kim: Yeah, we'll get back to you on that. Okay, yeah, no problem. Thank you.
Speaker Change #100: Thank you.
Speaker Change #100: Okay.
Richard Campo: And ladies and gentlemen, if there are no additional questions, I'd like to turn the floor back over to Rick Campo for any closing remarks.
Speaker Change #100: And ladies and gentlemen, and showing no additional questions I'd like to turn the floor back over to Ric Campo for any closing remarks.
Richard Campo: Great. Well, thank you for being on the call today. And this is probably one of the, given that we're the last to report and call, I know people will probably have their questions answered.
Ric Campo: Great well, thank you for beyond the call today.
Speaker Change #102: And this is probably one of the given over the last three or four Nicole I know people will probably have their questions answered I wanted to make sure everybody recognized that we had the red white and blue shirts going to support the U S.
Richard Campo: I want to make sure everybody recognizes that we have the red, white, and blue shirts going to support the U.S., and I want to give a great shout out to Simone Biles, a Houston native, who made history yesterday by being the most decorated gymnast in history. So with that, we'll let you enjoy the rest of your day and the rest of the Olympics. So take care. Thanks.
Speaker Change #103: And I want to get a great shout out to Simone Biles, Houston Native who who made history yesterday by <unk>.
Speaker Change #104: By being the most decorated.
Speaker Change #104: Jim This in history, so with that we'll let you enjoy the rest of your day and the rest of the Olympics take care. Thanks.
Speaker Change #104: Bye bye.
Speaker Change #104: Yes.
Unknown Executive: And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining us. You may now disconnect your lines.
Speaker Change #105: And ladies and gentlemen, with that we'll conclude today's conference call and presentation. We do thank you for joining you may now disconnect your lines.