Camden Property Trust Q4 2025 Camden Property Trust Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Camden Property Trust Earnings Call
[Analyst 1]: The future's uncertain, and the end is always near.
Speaker #4: And the end is to Camden Property Trust's fourth.
Speaker #4: near. Good morning and welcome
Kim Callahan: Good morning and welcome to Camden Property Trust's fourth Quarter 2025 Earnings Conference Call. I'm Kim Callahan, Senior Vice President of Investor Relations. Joining me today for our prepared remarks are Ric Campo, Camden's Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman, and Alex Jessett, President and Chief Financial Officer. We also have Laurie Baker, Chief Operating Officer, and Stanley Jones, Senior Vice President of Real Estate Investments, available for the Q&A portion of our call. Today's event is being webcast through the Investors section of our website at camdenliving.com, and a replay will be available shortly after the call ends. 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.
Kim Callahan: Good morning and welcome to Camden Property Trust's fourth Quarter 2025 Earnings Conference Call. I'm Kim Callahan, Senior Vice President of Investor Relations. Joining me today for our prepared remarks are Ric Campo, Camden's Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman, and Alex Jessett, President and Chief Financial Officer. We also have Laurie Baker, Chief Operating Officer, and Stanley Jones, Senior Vice President of Real Estate Investments, available for the Q&A portion of our call. Today's event is being webcast through the Investors section of our website at camdenliving.com, and a replay will be available shortly after the call ends. 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.
Speaker #2: Quarter 2025 earnings conference call. I'm Kim Callahan, Senior Vice President of Investor Relations. Joining me today for our prepared remarks are Rick Campo, Camden's Chairman and Chief Executive Officer; Keith Oden, Executive Vice Chairman; and Alexander Jessett, Chief Financial Officer.
Speaker #2: We also have Alex Jessett, President and Chief, Lori Baker, Chief Operating Officer, and Stanley Jones, Senior Vice President of Real Estate Investments, available for the Q&A portion of our call.
Speaker #2: Today's event is being webcast through the Investors section of our website at camdenliving.com, and a replay will be available shortly after the call ends.
Speaker #2: And please note this event. 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, and this event is being recorded.
Speaker #2: 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 this event is being recorded.
Kim Callahan: These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations. Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to update or supplement these statements because of subsequent events. As a reminder, Camden's complete 4th Quarter 2025 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 a follow-up question, or additional items to discuss.
Kim Callahan: These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations. Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to update or supplement these statements because of subsequent events. As a reminder, Camden's complete 4th Quarter 2025 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 a follow-up question, or additional items to discuss.
Speaker #2: Guarantees of future performance and involve cause actual results to differ materially from expectations. Further risks and uncertainties that could, in our filings with the SEC, and we, information about these risks can be found, encourage you to review them.
Speaker #2: Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to supplement these statements because of subsequent events. As a reminder, Camden's complete fourth quarter 2025 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.
Speaker #2: 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 a follow-up question or additional items to discuss.
Speaker #2: 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.
Kim 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 Ric Campo.
Kim 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 Ric Campo.
Speaker #2: At this time, I'll turn the call over to Rick.
Speaker #2: Campo. Good
Ric Campo: Good morning. The theme for today's on-hold music, "Uncertainty," could not be more fitting for the state of the multifamily REIT sector. It's no exaggeration to say that the words "uncertain" or "uncertainty" have echoed through the conference call transcripts during 2025. And why wouldn't they? The operating environment last year was uncertain, and every sign suggests that the first half of 2026 will be marked by the same cautious tone as last year. The songs that you've heard this morning reference uncertain times. However, the song verse that best captures the current uncertain vibe for us is from The Doors' classic Roadhouse Blues. "While I woke up this morning, and I got myself a beer, the future's uncertain, and the end is always near." The end of uncertainty, that is. Here's what we are certain about.
Richard Campo: Good morning. The theme for today's on-hold music, "Uncertainty," could not be more fitting for the state of the multifamily REIT sector. It's no exaggeration to say that the words "uncertain" or "uncertainty" have echoed through the conference call transcripts during 2025. And why wouldn't they? The operating environment last year was uncertain, and every sign suggests that the first half of 2026 will be marked by the same cautious tone as last year. The songs that you've heard this morning reference uncertain times. However, the song verse that best captures the current uncertain vibe for us is from The Doors' classic Roadhouse Blues. "While I woke up this morning, and I got myself a beer, the future's uncertain, and the end is always near." The end of uncertainty, that is. Here's what we are certain about.
Speaker #3: Morning. The theme for today's on-hold music, 'uncertainty,' could not be more fitting for the state of the multifamily REIT sector. It's no exaggeration to say that the words 'uncertain' or 'uncertainty' have echoed through the conference call transcripts during 2025.
Speaker #3: And why wouldn't they? The operating environment last year—every sign suggests that the first half of 2026 will be marked by the same cautious tone as last year.
Speaker #3: The songs that you've heard this morning reference uncertain times. However, the song verse that best captures the current uncertain vibe for us is from The Doors' classic 'Roadhouse Blues.'
Speaker #3: While I woke up this morning and I got myself a beer, the future's uncertain and the end is always near. The end of uncertainty, that is.
Speaker #3: Here's what we're certain about: we are certain that we finished 2025 strong, exceeding our original guidance for core FFO by $0.13 per share.
Ric Campo: We are certain that we finish 2025 strong, exceeding our original guidance for Core FFO by $0.13 a share. We're certain that people need a great place to live, and we provide that. We are certain that new supply has peaked and is falling like a knife in our markets. We are certain that 2025 had one of the highest levels of apartment absorption in the last 20 years. We are certain that our Sunbelt markets will continue to grow faster than the rest of the country, prompting us to market our California properties for sale. The sale allows us to expand our Sunbelt footprint, simplify our operating platform, and buy our shares at a significant discount to net asset value. We are certain that our residents are resilient and their financial prospects are strong, with rent payments at only 19% of their income.
Richard Campo: We are certain that we finish 2025 strong, exceeding our original guidance for Core FFO by $0.13 a share. We're certain that people need a great place to live, and we provide that. We are certain that new supply has peaked and is falling like a knife in our markets. We are certain that 2025 had one of the highest levels of apartment absorption in the last 20 years. We are certain that our Sunbelt markets will continue to grow faster than the rest of the country, prompting us to market our California properties for sale. The sale allows us to expand our Sunbelt footprint, simplify our operating platform, and buy our shares at a significant discount to net asset value. We are certain that our residents are resilient and their financial prospects are strong, with rent payments at only 19% of their income.
Speaker #3: We're certain that people need a great place to live, and we provide that. We are certain that new supply has peaked and is falling like a knife in our markets.
Speaker #3: We are certain that 2025 had one of the highest levels of apartment absorption in the last 20 years. We are certain that our Sunbelt markets will continue to grow faster than the rest of the country, prompting us to market our California properties for sale.
Speaker #3: The sale allows us to expand our Sunbelt footprint, simplify our operating platform, and buy our shares at a significant discount to net asset value.
Speaker #3: We are certain that our residents are resilient and the financial prospects are strong, with rent payments at only 19% of their income. We are certain that apartments are significantly more affordable than owning a home and will be for the foreseeable future.
Ric Campo: We are certain that apartments are significantly more affordable than owning a home and will be for the foreseeable future. We are certain that new lease rates and net operating income will grow in the future. We are certain that Camden has one of the strongest balance sheets in REIT land. We are certain that we have one of the best teams in the business providing living excellence to our residents. And finally, I'm certain that Keith Oden is up next.
Richard Campo: We are certain that apartments are significantly more affordable than owning a home and will be for the foreseeable future. We are certain that new lease rates and net operating income will grow in the future. We are certain that Camden has one of the strongest balance sheets in REIT land. We are certain that we have one of the best teams in the business providing living excellence to our residents. And finally, I'm certain that Keith Oden is up next.
Speaker #3: We are certain that new lease rates and net operating income will grow in the future. We are certain that Camden has one of the strongest balance sheets in REIT land.
Speaker #3: We are certain that we have one of the best teams in the business, providing living excellence to our residents. And finally, I'm certain that Keith Oden is up.
Speaker #3: next. Thanks, Rick.
Keith Oden: Thanks, Ric. As we reported last night, Camden's same property revenue growth for 2025 came in at 76 basis points, which represents a one basis point beat to the midpoint of our most recent guidance. Our operations teams are celebrating like they've just won the Super Bowl. In putting together our projections for 2026, we reviewed supply forecasts and job growth estimates from several third-party data providers. We budgeted from the individual property level up, taking into account each community's historical performance, current submarket dynamics, and other relevant factors. On the supply front, it is clear that deliveries in almost all of our markets peaked during 2024 and continued to decline in 2025, setting up 2026 and 2027 to be below average years for new supply.
Keith Oden: Thanks, Ric. As we reported last night, Camden's same property revenue growth for 2025 came in at 76 basis points, which represents a one basis point beat to the midpoint of our most recent guidance. Our operations teams are celebrating like they've just won the Super Bowl. In putting together our projections for 2026, we reviewed supply forecasts and job growth estimates from several third-party data providers. We budgeted from the individual property level up, taking into account each community's historical performance, current submarket dynamics, and other relevant factors. On the supply front, it is clear that deliveries in almost all of our markets peaked during 2024 and continued to decline in 2025, setting up 2026 and 2027 to be below average years for new supply.
Speaker #4: As we reported last night, Camden's same property revenue growth for 2025 came in at 76 basis points, which represents a one basis point beat to the midpoint of our most recent guidance.
Speaker #4: And our operations teams are celebrating like they just won the Super Bowl. In putting together our projections for 2026, we reviewed supply forecasts and job growth estimates from several third-party data providers.
Speaker #4: And we budgeted from the individual property level up, taking into account each community's historical performance, current submarket dynamics, and other relevant factors. On the supply front, it is clear that deliveries in almost all of our markets peaked during 2024 and continued to decline in 2025, setting up 2026 and 2027 to be below-average years for new supply.
Speaker #4: Completions as a percentage of inventory peaked in 2024 and are expected to be less than 2% this year, and closer to 1.5%. In nearly 4% for our portfolio in 2027.
Keith Oden: Completions as a percentage of inventory peaked at nearly 4% for our portfolio in 2024 and are expected to be less than 2% this year and closer to 1.5% in 2027. Regarding 2026 job growth, I'll echo Rick's comments that uncertainty is still a key theme in the markets this year. But we are certain also that whatever jobs are created this year will predominantly be in Camden's Sunbelt markets, which continue to attract corporate relocations and growth as a result of their affordable, business-friendly environments. In 2026, we expect operating conditions will improve over the course of the year, with modest acceleration in the second half of 2026. The midpoint of our 2026 same property revenue guidance range is 75 basis points, basically the same that we achieved last year, with half of our markets falling between 1% and 2% revenue growth, and most others flat to up 1%.
Keith Oden: Completions as a percentage of inventory peaked at nearly 4% for our portfolio in 2024 and are expected to be less than 2% this year and closer to 1.5% in 2027. Regarding 2026 job growth, I'll echo Rick's comments that uncertainty is still a key theme in the markets this year. But we are certain also that whatever jobs are created this year will predominantly be in Camden's Sunbelt markets, which continue to attract corporate relocations and growth as a result of their affordable, business-friendly environments. In 2026, we expect operating conditions will improve over the course of the year, with modest acceleration in the second half of 2026. The midpoint of our 2026 same property revenue guidance range is 75 basis points, basically the same that we achieved last year, with half of our markets falling between 1% and 2% revenue growth, and most others flat to up 1%.
Speaker #4: Regarding 2026 job growth, I'll echo Rick's comments that uncertainty is still a key theme in the markets this year. But we are also certain that whatever jobs are created this year will predominantly be in CAMDEN's Sunbelt markets.
Speaker #4: Which continue to attract corporate relocations and growth as a result of their affordable, business-friendly environments. In 2026, we expect operating conditions will improve over the course of the year, with modest acceleration in the second half of 2026.
Speaker #4: The midpoint of our 2026 same property revenue guidance range is 75 basis points—basically the same that we achieved last year, with half of our markets falling between 1% and 2% revenue growth, and most others flat to up 1%.
Speaker #4: The two outliers, with slight revenue declines, will likely be Austin, due to continued supply pressure, and Denver, due to recent regulatory changes affecting income from utility rebuilding.
Keith Oden: The two outliers with slight revenue declines will likely be Austin due to continued supply pressure and Denver due to recent regulatory changes affecting income from utility rebuilding. As many of you know, we have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of each year and providing outlooks of improving, stable, or moderating for their expected performance during 2026. We currently grade our overall portfolio as a B with a stable but improving outlook. Our first three markets are rated either A- or B+ and should achieve revenue growth in the 1% to 2% range this year. Washington, D.C. Metro ranks as an A- with a moderating outlook. Despite all of the conversations around D.C., DOGE, and politics last year, D.C. Metro clearly outperformed our expectations with 3.5% revenue growth in 2025 and heads into 2026 well-positioned with 96% occupancy.
Keith Oden: The two outliers with slight revenue declines will likely be Austin due to continued supply pressure and Denver due to recent regulatory changes affecting income from utility rebuilding. As many of you know, we have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of each year and providing outlooks of improving, stable, or moderating for their expected performance during 2026. We currently grade our overall portfolio as a B with a stable but improving outlook. Our first three markets are rated either A- or B+ and should achieve revenue growth in the 1% to 2% range this year. Washington, D.C. Metro ranks as an A- with a moderating outlook. Despite all of the conversations around D.C., DOGE, and politics last year, D.C. Metro clearly outperformed our expectations with 3.5% revenue growth in 2025 and heads into 2026 well-positioned with 96% occupancy.
Speaker #4: As many of you know, we have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of each year.
Speaker #4: And providing outlooks of improving, stable, or moderating for their expected performance during 2026. We currently grade our overall portfolio as a B, with a stable but improving outlook.
Speaker #4: Our first three markets are rated either A- or B+, and should achieve revenue growth in the 1% to 2% range this year. Washington, D.C.
Speaker #4: Metro ranks as an A- with a moderating outlook. Despite all of the conversations around D.C., DOGE, and politics last year, D.C. Metro clearly outperformed our expectations with 3.5% revenue growth in 2025 and heads into 2026 well-positioned with 96% occupancy.
Speaker #4: Houston is next with a B+ rating and a stable outlook—the same grade as last year. Supply has been quite limited in Houston for the past couple of years, allowing it to place number four for revenue growth in 2025.
Keith Oden: Houston is next with a B+ rating and a stable outlook, the same grade as last year. Supply has been quite limited in Houston for the past couple of years, allowing it to place fourth for revenue growth in 2025. We expect Houston to exceed our average portfolio growth again in 2026. Our Southern California markets earn a B+ grade with a moderating outlook for 2026. Like DC Metro, Southern California outperformed our original expectations, posting mid-3% revenue growth in 2025, in large part due to declining levels of bad debt. Supply has not really been an issue in most of our California markets, but we do expect less of a tailwind from reducing bad debt as we move through 2026. Denver was our third revenue growth market in 2025 and receives a grade of B+ with a moderating outlook.
Keith Oden: Houston is next with a B+ rating and a stable outlook, the same grade as last year. Supply has been quite limited in Houston for the past couple of years, allowing it to place fourth for revenue growth in 2025. We expect Houston to exceed our average portfolio growth again in 2026. Our Southern California markets earn a B+ grade with a moderating outlook for 2026. Like DC Metro, Southern California outperformed our original expectations, posting mid-3% revenue growth in 2025, in large part due to declining levels of bad debt. Supply has not really been an issue in most of our California markets, but we do expect less of a tailwind from reducing bad debt as we move through 2026. Denver was our third revenue growth market in 2025 and receives a grade of B+ with a moderating outlook.
Speaker #4: Exceed our average portfolio growth, and we expect Houston to do so again in 2026. Our Southern California markets earn a B+ grade, with a moderating outlook for 2026.
Speaker #4: Like D.C. Metro, Southern California outperformed our original expectations, posting mid-3% revenue growth in 2025, in large part due to declining levels of bad debt.
Speaker #4: Supply has not really been an issue in most of our California markets, but we do expect less of a tailwind from reducing bad debt as we move through 2026.
Speaker #4: Denver was our number three revenue growth market in 2025, and conditions in Denver are fairly stable, though slightly more challenging in a few of its urban submarkets. Denver receives a grade of B+.
Keith Oden: Market conditions in Denver are fairly stable, though slightly more challenging in a few of its urban submarkets. But as I mentioned earlier, revenue growth is expected to decline year-over-year due to lower levels of utility rebuilding and other income anticipated in 2026. Our next four markets earned a B letter grade with improving outlooks. Nashville, Atlanta, Dallas, and Southeast Florida are all expected to improve over the course of 2026 as existing supply is absorbed. We have begun to see the proverbial green shoots in some of these markets and have budgeted between 1% and 2% revenue growth for each market this year. Orlando, Raleigh, and Charlotte received B ratings this year with stable outlooks and budgeted revenue growth of 0% to 1% compared to relatively flat growth last year.
Keith Oden: Market conditions in Denver are fairly stable, though slightly more challenging in a few of its urban submarkets. But as I mentioned earlier, revenue growth is expected to decline year-over-year due to lower levels of utility rebuilding and other income anticipated in 2026. Our next four markets earned a B letter grade with improving outlooks. Nashville, Atlanta, Dallas, and Southeast Florida are all expected to improve over the course of 2026 as existing supply is absorbed. We have begun to see the proverbial green shoots in some of these markets and have budgeted between 1% and 2% revenue growth for each market this year. Orlando, Raleigh, and Charlotte received B ratings this year with stable outlooks and budgeted revenue growth of 0% to 1% compared to relatively flat growth last year.
Speaker #4: But as I mentioned earlier, revenue growth is expected to decline for utility rebilling and other income—anticipated in 2026. Our next four markets earned a B-letter grade, with improving outlooks.
Speaker #4: Nashville, Atlanta, Dallas, and Southeast Florida are all expected to improve over the course of 2026 as existing supply is absorbed. We have begun to see the proverbial green shoots in some of these markets, and have budgeted between 1% and 2% revenue growth for each market this year.
Speaker #4: Orlando, Raleigh, and Charlotte received B ratings this year, with stable outlooks and budgeted revenue growth of 0% to 1%, compared to relatively flat growth last year.
Speaker #4: Demand has been solid in all of these markets. But it will take a few more quarters to see any meaningful improvements, given the higher-than-average supply delivered, particularly in the two North Carolina markets.
Keith Oden: Demand has been solid in all of these markets, but it will take a few more quarters to see any meaningful improvements given the higher-than-average supply delivered, particularly in the two North Carolina markets. We'd grade Tampa a B with a moderating outlook and Phoenix a B- with a stable outlook and expect relatively flat revenue growth in both markets this year. Tampa benefited from above-average occupancy in 2024 and much of 2025 but has since returned to more normalized levels around 95%, tending to slow the revenue growth there. Phoenix still faces elevated levels of supply, mainly on the western side, so we expect pricing power to be limited for most of 2026. And finally, Austin earns a C+ this year with an improving outlook after being stuck for a C- for the past two years.
Keith Oden: Demand has been solid in all of these markets, but it will take a few more quarters to see any meaningful improvements given the higher-than-average supply delivered, particularly in the two North Carolina markets. We'd grade Tampa a B with a moderating outlook and Phoenix a B- with a stable outlook and expect relatively flat revenue growth in both markets this year. Tampa benefited from above-average occupancy in 2024 and much of 2025 but has since returned to more normalized levels around 95%, tending to slow the revenue growth there. Phoenix still faces elevated levels of supply, mainly on the western side, so we expect pricing power to be limited for most of 2026. And finally, Austin earns a C+ this year with an improving outlook after being stuck for a C- for the past two years.
Speaker #4: We'd grade Tampa a B with a moderating outlook and Phoenix a B- with a stable outlook. We expect relatively flat revenue growth in both markets, benefited by above-average occupancy this year.
Speaker #4: Tampa 2024 and much of 2025, but has since returned to more normalized levels around 95%. Tending to slow the revenue growth there. Phoenix still faces elevated levels of supply, mainly on the western side.
Speaker #4: So we expect pricing power to be limited for most of 2026. And finally, Austin earns a C+ this year with an improving outlook. After being stuck at a C- for the past two years, new supply is finally slowing, and there is light on the horizon. But given the overwhelming amount in 2024 and 2025, it will take a little while longer for market-wide occupancy to improve and concessions to burn off.
Keith Oden: New supply is finally slowing, and there is light on the horizon, but given the overwhelming amount of new apartment homes delivered in 2024 and 2025, it will take a little while longer for market-wide occupancy to improve and concessions to burn off. Stay tuned as we're fully expecting Austin to receive a B or better in 2027. And now a few details on our Q4 2025 operating results. Rental rates for the Q4 had new leases down 5.3% and renewals up 2.8% for a blended rate of -1.6%, which is fairly in line with what we saw in the Q4 of 2024 and what we expect for the Q4 of 2025.
Keith Oden: New supply is finally slowing, and there is light on the horizon, but given the overwhelming amount of new apartment homes delivered in 2024 and 2025, it will take a little while longer for market-wide occupancy to improve and concessions to burn off. Stay tuned as we're fully expecting Austin to receive a B or better in 2027. And now a few details on our Q4 2025 operating results. Rental rates for the Q4 had new leases down 5.3% and renewals up 2.8% for a blended rate of -1.6%, which is fairly in line with what we saw in the Q4 of 2024 and what we expect for the Q4 of 2025.
Speaker #4: Stay tuned, as we're fully expecting Austin to receive a B or better in 2027. And now, a few details on our 24th quarter: the 25 operating quarter had new leases down 5.3% and renewals up 2.8%, for a blended rate of negative 1.6%, which is fairly in line with what we saw in the fourth quarter of '24.
Speaker #4: And what we expect for the results. Fourth expected for the fourth quarter of '25. Renewal offers—rental rates for the fourth and for first quarter expirations—were sent out with an average increase of 3 to 3.5%.
Keith Oden: Renewal offers for Q1 expirations were sent out with an average increase of 3% to 3.5%, and as expected, move-outs to purchase homes remain extremely low at 9.6% for Q4 and 9.8% for the full year of 2025. I'll now turn the call over to Alex Jessett, Camden's President and Chief Financial Officer.
Keith Oden: Renewal offers for Q1 expirations were sent out with an average increase of 3% to 3.5%, and as expected, move-outs to purchase homes remain extremely low at 9.6% for Q4 and 9.8% for the full year of 2025. I'll now turn the call over to Alex Jessett, Camden's President and Chief Financial Officer.
Speaker #4: And as expected, move-outs to purchase homes remain extremely low at 9.6% for the fourth quarter and 9.8% for the full year of 2025. I'll now turn the call over to Alex Jessett, Camden's President and Chief Financial Officer.
Speaker #2: Thanks, Keith, and good morning. I'll begin today with an update on our recent real estate and financial activities, then move on to our fourth quarter results and our guidance for 2026.
Alex Jessett: Thanks, Keith, and good morning. I'll begin today with an update on our recent real estate and financial activities, then move on to our Q4 results and our guidance for 2026. During the Q4, we disposed of 3 communities located in Houston and Phoenix for a total of $201 million, acquired 1 community in Orlando for $85 million, and stabilized Camden Longmeadow Farms, one of our two build-to-rent communities located in suburban Houston. Our transaction activity for full year 2025 included the sale of 7 older, higher-CapEx communities with an average age of 22 years for $375 million, and the acquisition of 4 newer assets with an average age of 5 years for $423 million. We recently began marketing for sale our 11 California operating communities. Obviously, the market will dictate final pricing, but preliminary indications of value and market chatter range from $1.5 to 2 billion.
Alex Jessett: Thanks, Keith, and good morning. I'll begin today with an update on our recent real estate and financial activities, then move on to our Q4 results and our guidance for 2026. During the Q4, we disposed of 3 communities located in Houston and Phoenix for a total of $201 million, acquired 1 community in Orlando for $85 million, and stabilized Camden Longmeadow Farms, one of our two build-to-rent communities located in suburban Houston. Our transaction activity for full year 2025 included the sale of 7 older, higher-CapEx communities with an average age of 22 years for $375 million, and the acquisition of 4 newer assets with an average age of 5 years for $423 million. We recently began marketing for sale our 11 California operating communities. Obviously, the market will dictate final pricing, but preliminary indications of value and market chatter range from $1.5 to 2 billion.
Speaker #2: We disposed of three communities located during the fourth quarter in Houston and Phoenix for a total of $201 million, acquired one community in Orlando for $85 million, and stabilized Camden Longmeadow Farms, one of our two build-to-rent communities located in suburban Houston.
Speaker #2: Our transaction activity for full year 2025 included the sale of seven older, higher CapEx communities with an average age of 22 years, and the acquisition of four newer assets with an average age of five years for $423 million.
Speaker #2: We've recently begun marketing for sale our 11 California operating communities. Obviously, the market will dictate final pricing. But preliminary indications of value and market chatter range from $1.5 to $2 billion.
Speaker #2: We are assuming this transaction closes mid-year. Additionally, we are assuming that approximately 60% of the sales proceeds will be reinvested through 1031 exchanges into our existing high-demand, high-growth Sunbelt markets.
Alex Jessett: We are assuming this transaction closes mid-year. Additionally, we are assuming that approximately 60% of the sales proceeds will be reinvested through 1031 exchanges into our existing high-demand, high-growth Sunbelt markets. The remainder of the proceeds, modeled at $650 million, will be used for share repurchases. We have already completed nearly $400 million of the $650 million of share repurchases associated with the planned asset sales, and we expect to complete the remaining buybacks in early 2026. In anticipation of this additional buyback activity, our board recently approved a new $600 million share repurchase authorization. The just over $1 billion of 2026 acquisitions from the California sales proceeds are projected to occur during the summer months. Based upon this timing of asset sales, asset purchases, and share repurchases, we are assuming no accretion or dilution in 2026 from this strategic transaction.
Alex Jessett: We are assuming this transaction closes mid-year. Additionally, we are assuming that approximately 60% of the sales proceeds will be reinvested through 1031 exchanges into our existing high-demand, high-growth Sunbelt markets. The remainder of the proceeds, modeled at $650 million, will be used for share repurchases. We have already completed nearly $400 million of the $650 million of share repurchases associated with the planned asset sales, and we expect to complete the remaining buybacks in early 2026. In anticipation of this additional buyback activity, our board recently approved a new $600 million share repurchase authorization. The just over $1 billion of 2026 acquisitions from the California sales proceeds are projected to occur during the summer months. Based upon this timing of asset sales, asset purchases, and share repurchases, we are assuming no accretion or dilution in 2026 from this strategic transaction.
Speaker #2: And the remainder of the proceeds, modeled at $650 million, will be used for share repurchases. We have already completed nearly $400 million of the $650 million of share repurchases associated with the planned asset sales.
Speaker #2: And we expect to complete the remaining buybacks in early 2026. In anticipation of this additional buyback activity, our board recently approved a new $600 million share repurchase authorization.
Speaker #2: The just over $1 billion of 2026 acquisitions from the California sales proceeds are projected to occur during the summer months. Based upon this timing of asset sales, asset purchases, and share repurchases, we are assuming no accretion or dilution in 2026 from this strategic transaction.
Speaker #2: Variability in transaction timing is considered in our core FFO guidance ranges. Turning to financial results, last night we reported core funds from operations for the fourth quarter of $193.1 million, or $1.73 per share.
Alex Jessett: Variability in transaction timing is considered in our core FFO guidance ranges. Turning to financial results, last night we reported core funds from operations for the fourth quarter of $193.1 million or $1.73 per share, $0.03 ahead of the midpoint of our prior quarterly guidance, driven entirely by higher fee and asset management income from our third-party construction business as we favorably closed out several jobs which came in well under budget. Property revenues, expenses, and NOI were exactly in line with expectations. Turning to guidance, you can refer to page 24 of our fourth quarter supplemental package for details on the key assumptions driving our 2026 financial outlook. We expect our 2026 core FFO per share to be in the range of $6.60 to $6.90, with the midpoint of $6.75 representing a $0.13-per-share decrease from our 2025 results.
Alex Jessett: Variability in transaction timing is considered in our core FFO guidance ranges. Turning to financial results, last night we reported core funds from operations for the fourth quarter of $193.1 million or $1.73 per share, $0.03 ahead of the midpoint of our prior quarterly guidance, driven entirely by higher fee and asset management income from our third-party construction business as we favorably closed out several jobs which came in well under budget. Property revenues, expenses, and NOI were exactly in line with expectations. Turning to guidance, you can refer to page 24 of our fourth quarter supplemental package for details on the key assumptions driving our 2026 financial outlook. We expect our 2026 core FFO per share to be in the range of $6.60 to $6.90, with the midpoint of $6.75 representing a $0.13-per-share decrease from our 2025 results.
Speaker #2: Three cents ahead of the midpoint of our prior quarterly guidance, driven entirely by higher fee and asset management income from our third-party construction business, as we favorably closed out several jobs which came in well under budget.
Speaker #2: Property revenues, expenses, and NOI were exactly in line with expectations. Turning to guidance, you can refer to page 24 of our fourth quarter supplemental package for details on the key assumptions driving our 2026 financial outlook.
Speaker #2: We expect our 2026 core FFO per share to be in the range of $6.60 to $6.90, with the midpoint of $6.75 representing a 13-cent per share decrease from our 2025 results.
Alex Jessett: This decrease is anticipated to result primarily from an approximate $0.04 per share decrease in fee and asset management income, as the outperformance we experienced in this category, particularly in the fourth quarter of 2025, is not anticipated in 2026. An approximate $0.045 per share, or 3%, increase in general overhead and other corporate expenses, and an approximate $0.045 per share decrease in same-store net operating income. The growth in operating income from our development, non-same-store, and retail communities is entirely offset by the impact of our disposition of older, higher FFO-yielding communities in 2025. At the midpoint, we are expecting same-store net operating income of -50 basis points, with revenue growth of 75 basis points in line with 2025, and expense growth of 3% versus 1.7% in 2025. Each 1% increase in same-store NOI is approximately $0.09 per share in Core FFO.
Alex Jessett: This decrease is anticipated to result primarily from an approximate $0.04 per share decrease in fee and asset management income, as the outperformance we experienced in this category, particularly in the fourth quarter of 2025, is not anticipated in 2026. An approximate $0.045 per share, or 3%, increase in general overhead and other corporate expenses, and an approximate $0.045 per share decrease in same-store net operating income. The growth in operating income from our development, non-same-store, and retail communities is entirely offset by the impact of our disposition of older, higher FFO-yielding communities in 2025. At the midpoint, we are expecting same-store net operating income of -50 basis points, with revenue growth of 75 basis points in line with 2025, and expense growth of 3% versus 1.7% in 2025. Each 1% increase in same-store NOI is approximately $0.09 per share in Core FFO.
Speaker #1: It’s a result from an approximate four-cent per share decrease in fee management income.
Speaker #1: . As the outperformance and asset avengement income This decrease is anticipated to as the outperformance we experienced in , particularly in the fourth quarter category of 2025 , is not anticipated this in 2026 , an cent approximate four and a half per share , or 3% increase .
Speaker #1: In general and other overhead corporate expenses, and a cent approximate four and a half per share decrease in same store net operating income.
Speaker #1: The growth in income from our operating development, primarily same-store communities, is entirely offset by the impact of our disposition of older, higher FFO communities yielding in 2025.
Speaker #1: At the expected same-store midpoint, we are net operating income of -50 basis points, with revenue growth of 75 basis points, in line with 2025, and expense of 1.7% in 2025.
Speaker #1: Each 1% increase in same store NOI is approximately $0.09 per share in core FFO. Our same store guidance includes California for the full year and is accretive to our by numbers.
Alex Jessett: Our same-store guidance includes California for the full year, and California is accretive to our numbers by approximately 25 basis points on revenue and 40 basis points on NOI. The midpoint of our 2026 same-store revenue growth of 75 basis points assumes 55 basis points of growth attributed to rental income and 20 basis points of growth from other income. We expect market rent growth of approximately 2% for our portfolio over the course of the year, with most of that growth occurring in the second half of the year. Recognizing a portion of this rental rate growth with our slightly negative earnings, flat occupancy, and a slight improvement in bad debt results in expected growth of approximately 55 basis points for rental income.
Alex Jessett: Our same-store guidance includes California for the full year, and California is accretive to our numbers by approximately 25 basis points on revenue and 40 basis points on NOI. The midpoint of our 2026 same-store revenue growth of 75 basis points assumes 55 basis points of growth attributed to rental income and 20 basis points of growth from other income. We expect market rent growth of approximately 2% for our portfolio over the course of the year, with most of that growth occurring in the second half of the year. Recognizing a portion of this rental rate growth with our slightly negative earnings, flat occupancy, and a slight improvement in bad debt results in expected growth of approximately 55 basis points for rental income.
Speaker #1: Approximately 25 basis points in California are on revenue and 40 basis points on NOI. The midpoint of our 2026 same-store revenue growth of 75 basis points assumes 55 basis points of growth attributed to rental income and 20 basis points of growth from other income.
Speaker #1: We expect market rent growth of approximately 2% for our portfolio over the course of the year, with most of that growth occurring in the second half of the year.
Speaker #1: Portion of this rental rate growth with our recognizing a slightly negative earning, flat occupancy, and an improvement in bad debt, slightly results in expected growth of approximately 55 basis points for rental income. Other income, which...
Alex Jessett: Other income, which is primarily comprised of utility rebuilding and fee income, represents 10% of our total property revenues and is expected to grow around 2% in 2026, adding approximately 20 basis points to same-store revenue growth. Page 24 of our supplemental package also details other guidance assumptions, including the plan for up to $335 million of development starts at the end of the year and approximately $200 million of total 2026 development spend. Non-Core FFO adjustments for the year are anticipated to be approximately $0.14 per share and are primarily legal expenses and expense transaction pursuit costs. We expect Core FFO per share for Q1 2026 to be within the range of $1.64 to $1.68.
Alex Jessett: Other income, which is primarily comprised of utility rebuilding and fee income, represents 10% of our total property revenues and is expected to grow around 2% in 2026, adding approximately 20 basis points to same-store revenue growth. Page 24 of our supplemental package also details other guidance assumptions, including the plan for up to $335 million of development starts at the end of the year and approximately $200 million of total 2026 development spend. Non-Core FFO adjustments for the year are anticipated to be approximately $0.14 per share and are primarily legal expenses and expense transaction pursuit costs. We expect Core FFO per share for Q1 2026 to be within the range of $1.64 to $1.68.
Speaker #1: is primarily of income , represents comprised rebuilding and utility 10% of our total fee revenues and is expected to grow around in 2026 , adding 2% approximately 20 basis points to same store revenue growth .
Speaker #1: Page 24 of our supplemental also details other assumptions, including the plan package for up to $335 million of development starts at the end of the year, and approximately $200 million total spend for 2026 development.
Speaker #1: Non-core FFO adjustments for the year are anticipated to be approximately $0.14 per share, primarily legal and other expenses, and transaction pursuit costs.
Speaker #1: We expect core FFO per share for the quarter first of 2026 to be within the range of $1.64 to $1.68 , the midpoint of $1.66 represents a $0.10 per share decrease from the fourth quarter which is of 2025 , result of five cent per share an primarily the approximate decline in sequential same , driven by an sequential same store expenses resulting from the increase in quarterly tax refunds .
Alex Jessett: The midpoint of $1.66 represents a $0.10 per share decrease from Q4 2025, which is primarily the result of an approximate $0.05 per share sequential decline in same-store NOI driven by an increase in sequential same-store expenses resulting from the timing of quarterly tax refunds, the reset of our annual property tax accrual on 1 January of each year, and other expense increases primarily attributable to typical seasonal trends, including the timing of on-site salary increases. An approximate $0.04 per share decrease in fee and asset management income from the large outperformance we recorded in the fourth quarter. An approximate $0.04 per share increase in interest expense from higher debt balances resulting in part from our actual and anticipated share repurchases. An approximate $0.02 per share decrease in non-same-store NOI due to our late 2025 and anticipated Q1 2026 disposition activity.
Alex Jessett: The midpoint of $1.66 represents a $0.10 per share decrease from Q4 2025, which is primarily the result of an approximate $0.05 per share sequential decline in same-store NOI driven by an increase in sequential same-store expenses resulting from the timing of quarterly tax refunds, the reset of our annual property tax accrual on 1 January of each year, and other expense increases primarily attributable to typical seasonal trends, including the timing of on-site salary increases. An approximate $0.04 per share decrease in fee and asset management income from the large outperformance we recorded in the fourth quarter. An approximate $0.04 per share increase in interest expense from higher debt balances resulting in part from our actual and anticipated share repurchases. An approximate $0.02 per share decrease in non-same-store NOI due to our late 2025 and anticipated Q1 2026 disposition activity.
Speaker #1: The NOI reset of our annual property tax accrual on January 1st of each year, and other expense increases, are primarily attributable to typical seasonal trends, including the timing of on-site salary increases, and an approximate $0.04 per share decrease in fee and asset management income from the large outperformance we recorded in the fourth quarter.
Speaker #1: An approximate $0.04 per share increase from higher debt balances, resulting in part from our actual and anticipated share repurchases, and an approximate two cent per share non-same store decrease in NOI due to our late 2025 and anticipated first quarter 2026 disposition activity.
Alex Jessett: This $0.15-per-share cumulative decrease in quarterly sequential Core FFO is partially offset by an approximate $0.05-per-share increase in Core FFO related to our share repurchase activity. And finally, we plan on launching a new $400 to $500 million bond transaction later this quarter. At this time, we will open the call up to questions.
Alex Jessett: This $0.15-per-share cumulative decrease in quarterly sequential Core FFO is partially offset by an approximate $0.05-per-share increase in Core FFO related to our share repurchase activity. And finally, we plan on launching a new $400 to $500 million bond transaction later this quarter. At this time, we will open the call up to questions.
Speaker #1: This does share $0.15 per cumulative decrease in quarterly sequential Core partial FFO, which is offset by an approximate $0.05 per share increase in Core FFO related to our share repurchase activity.
Speaker #1: And finally, we plan on launching a $400 to $500 million bond transaction later this new time. We open the call up to questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question comes from Eric Wolfe with Citi. Please go ahead.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question comes from Eric Wolfe with Citi. Please go ahead.
Speaker #2: We will now begin the question and answer session. To ask a question, you may press star, then one, on your touchtone phone.
Speaker #2: If you are using a speakerphone, please lift your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.
Speaker #2: Our next question comes from Wolfe. Please go ahead with your question.
[Analyst] (Citi): Thanks. It's Nick Joseph here with Eric. Just on the Southern California portfolio sale, can you talk about why now is the right time to do that, just given, obviously, the considerations of California right now? I think over the past few years, you've thought about kind of that portfolio exposure relative to the rest, and so essentially why now?
Nick Joseph: Thanks. It's Nick Joseph here with Eric. Just on the Southern California portfolio sale, can you talk about why now is the right time to do that, just given, obviously, the considerations of California right now? I think over the past few years, you've thought about kind of that portfolio exposure relative to the rest, and so essentially why now?
Speaker #3: Thanks. It's Nick Joseph here with Eric. Just on the Southern California portfolio sale, can you talk about why now is the right time to do that?
Speaker #3: ? You know , given just obviously the considerations of California right now . Eric Obviously , I think over the past few years , you've thought about kind of that portfolio exposure relative to the rest .
Speaker #3: And so, essentially, why now?
Ric Campo: I would say why now is because we think there's going to be a pivot point in the Sunbelt growth story, and we want to be in front of that rather than behind that. That's number one. So we think Sunbelt's going to grow, and when it turns, it's going to turn, and it's going to turn pretty strong and pretty hard, I believe. So that's number one. Number two is if you look at the transaction volume across America, the coasts have been the most vibrant transaction environment. When you think about if you're a developer and you need to sell your development deal you did, you'd rather not sell it in Austin today.
Richard Campo: I would say why now is because we think there's going to be a pivot point in the Sunbelt growth story, and we want to be in front of that rather than behind that. That's number one. So we think Sunbelt's going to grow, and when it turns, it's going to turn, and it's going to turn pretty strong and pretty hard, I believe. So that's number one. Number two is if you look at the transaction volume across America, the coasts have been the most vibrant transaction environment. When you think about if you're a developer and you need to sell your development deal you did, you'd rather not sell it in Austin today.
Speaker #4: I would say, why now is because we think there's going to be a pivot point in the Sun growth story, and we want to be in front of that rather than behind it.
Speaker #4: That's number one. So, we think it's going to — Sunbelt will grow. And when it turns, it's going to turn—turn strong and pretty, pretty hard, I believe.
Speaker #4: It's going. So that's number one. Number two is, if you look at volume transaction across America, the coasts have been the most vibrant transaction environment.
Speaker #4: When you think about if you're you're if a developer and you want to you need to sell , you know , development deal , you your did .
Ric Campo: But in fact, California has had really decent revenue growth, so you don't have to. Buyers are not having to kind of pick the point when they think the market is going to turn and go up. It continues to be a pretty vibrant market. So those are the two main reasons. And I guess the last would be when we think about the ability to execute the transaction in a very buoyant buyer market, we also look at the opportunity to redeploy the capital not only in the Sunbelt but also to buy the shares. And so when we can sell the California portfolio at a cap rate that's substantially less than our implied cap rate in our, that's implied in our stock, that's what kind of drove the decision, those three things.
Richard Campo: But in fact, California has had really decent revenue growth, so you don't have to. Buyers are not having to kind of pick the point when they think the market is going to turn and go up. It continues to be a pretty vibrant market. So those are the two main reasons. And I guess the last would be when we think about the ability to execute the transaction in a very buoyant buyer market, we also look at the opportunity to redeploy the capital not only in the Sunbelt but also to buy the shares. And so when we can sell the California portfolio at a cap rate that's substantially less than our implied cap rate in our, that's implied in our stock, that's what kind of drove the decision, those three things.
Speaker #4: You'd rather not sell it in Austin today , but in fact , California has had , you really decent revenue So you don't have to growth .
Speaker #4: You know, buyers are not having to kind of pick the point when they think the market is going to continue to be up.
Speaker #4: vibrant to It pretty turn and go So market . those two main are the reasons . And I guess the last would be when when we think about the to execute the to ability transaction in a very , you buoyant buyer know , market .
Speaker #4: We also look look at opportunity to redeploy the capital , not only in the Sunbelt , but also to buy the shares . And so when we can sell the the California portfolio at a cap rate that's substantially less than our implied cap our in that that's implied in our stock .
Speaker #4: That's what kind of drove the decision—those three things.
[Analyst] (Citi): Thanks. And then you're marketing in that portfolio, but how are you thinking about either splitting it up into smaller portfolios or individual assets, or is the goal really to sell it all at once?
Nick Joseph: Thanks. And then you're marketing in that portfolio, but how are you thinking about either splitting it up into smaller portfolios or individual assets, or is the goal really to sell it all at once?
Speaker #3: And thanks. Then, you're marketing it as a portfolio. You're thinking about, but how are you either splitting it up into smaller portfolios or individual assets?
Speaker #3: Is the goal, or really, to sell it all at once?
Ric Campo: Well, the good news is that there's lots of buyers, and there are lots of different permutations of the portfolio and how it can be either done in a portfolio deal or individually. What we're going to do is maximize the purchase price, whether it's individually or separate or combinations of thereof.
Richard Campo: Well, the good news is that there's lots of buyers, and there are lots of different permutations of the portfolio and how it can be either done in a portfolio deal or individually. What we're going to do is maximize the purchase price, whether it's individually or separate or combinations of thereof.
Speaker #4: that there's news is , the good lots of is Well , lots of different portfolio permutations of the and how it can be done at portfolio or in a deal individually .
Speaker #4: either is And what we're maximize going to do purchase price , the whether it's or individually separate or combinations of , of , of thereof there are .
[Analyst] (Citi): Thank you. And the next question comes from Jamie Feldman with Wells Fargo. Please go ahead.
Operator: Thank you. And the next question comes from Jamie Feldman with Wells Fargo. Please go ahead.
Speaker #3: Thank you .
Speaker #2: And the next question comes from Jamie Feldman with Wells Fargo. Please go ahead.
[Analyst] (Wells Fargo): Great. Thank you. I guess just going back to some of your guidance and the thoughts on a pickup in the second half, can you just walk us through your thoughts on new and renewal rents and plans as you go throughout the year? And are there any markets that are more or less concerning as you think about hitting your numbers? Thank you.
Jamie Feldman: Great. Thank you. I guess just going back to some of your guidance and the thoughts on a pickup in the second half, can you just walk us through your thoughts on new and renewal rents and plans as you go throughout the year? And are there any markets that are more or less concerning as you think about hitting your numbers? Thank you.
Speaker #5: Great . Thank you . I guess just going back to some of your guidance and , you know , the thoughts on a half .
Speaker #5: Can you just walk us through your thoughts on new and renewal rents and blends as you go throughout the year? And are there any markets that you are more concerned about hitting your numbers as you think through them?
Alex Jessett: Yeah, absolutely. So what we're expecting in Q1 is slight improvements versus Q4 2025 in both terms of new leases and renewals, which obviously will translate to slight improvement on blended rates for Q1 2026. As we go through Q2 and beyond, we're going to have a lot more visibility because we'll start to get into our peak leasing seasons. And at that point in time, we'll give you some more color on exactly what we assume for new lease renewals and blends for the rest of the year. But I will tell you, obviously, included in our numbers is an improvement and is an improvement at the back half of the year, which is what I said in the prepared remarks.
Alex Jessett: Yeah, absolutely. So what we're expecting in Q1 is slight improvements versus Q4 2025 in both terms of new leases and renewals, which obviously will translate to slight improvement on blended rates for Q1 2026. As we go through Q2 and beyond, we're going to have a lot more visibility because we'll start to get into our peak leasing seasons. And at that point in time, we'll give you some more color on exactly what we assume for new lease renewals and blends for the rest of the year. But I will tell you, obviously, included in our numbers is an improvement and is an improvement at the back half of the year, which is what I said in the prepared remarks.
Speaker #5: Thank you .
Speaker #6: Yeah , absolutely . So what we're in the expecting first quarter is slight versus the fourth quarter of 25 . And new both in improvements leases and renewals , which obviously will to a slight improvement on blended translate a blended rates for the first quarter of 26 .
Speaker #6: As we go through the second quarter and beyond, we're going to have a lot more visibility because we'll start to get into our peak leasing seasons.
Speaker #6: And at that point, in more color on what we exactly forecast for assumed new lease renewals and blends for the rest of the year.
Speaker #6: But I you , obviously will tell included in our numbers is an improvement and is an the back year , which is half of the what I what I said in prepared remarks the in the , when I look at individual markets , you know , as walked as , through when he gave his Keith letter grades , certainly we've got quite a few markets that are improving .
Alex Jessett: When I look at individual markets, as Keith walked through when he gave his letter grades, certainly, we've got quite a few markets that are improving. Really, we don't have any markets that are declining. Based upon that, there's nothing that really sort of jumps out to us as a big concern. We're absolutely seeing green shoots in some of our markets that have been a little more challenged throughout last year and the year prior. We feel like we're in good shape, but obviously, we need to get into the peak leasing seasons and see how the rest of this year unfolds.
Alex Jessett: When I look at individual markets, as Keith walked through when he gave his letter grades, certainly, we've got quite a few markets that are improving. Really, we don't have any markets that are declining. Based upon that, there's nothing that really sort of jumps out to us as a big concern. We're absolutely seeing green shoots in some of our markets that have been a little more challenged throughout last year and the year prior. We feel like we're in good shape, but obviously, we need to get into the peak leasing seasons and see how the rest of this year unfolds.
Speaker #6: And really we don't have any markets that are So based upon that , there's give you some nothing declining . that really jumps out to sort of as , as a big concern .
Speaker #6: We're seeing green, absolutely, in some of our US markets that have been a little more challenged year-to-date and throughout last year prior.
Speaker #6: So we feel like we're in good shape . obviously we need to we need to But the peak leasing seasons and see how this year the rest of our .
[Analyst] (Citi): And the next question comes from Jana Galan with Bank of America. Please go ahead.
Operator: And the next question comes from Jana Galan with Bank of America. Please go ahead.
Speaker #2: In the next question comes John Galen with Bank.
Speaker #2: Of America. Please go ahead. Get into
[Analyst] (Bank of America Securities): Thank you. Good morning. Question on the guidance, and thank you for covering some of this in your prepared remarks, but can you clarify how to think about the timing of the 1031 exchange acquisitions? And I think some of the myths relative to the street may be that you're a net seller this year, but it does also sound like some of the share buyback activity is front-end loaded. So if you could kind of help me kind of walk through that.
Jana Galan: Thank you. Good morning. Question on the guidance, and thank you for covering some of this in your prepared remarks, but can you clarify how to think about the timing of the 1031 exchange acquisitions? And I think some of the myths relative to the street may be that you're a net seller this year, but it does also sound like some of the share buyback activity is front-end loaded. So if you could kind of help me kind of walk through that.
Speaker #7: Good morning . Question on the guidance and for covering thank you some of this Thank you . prepared remarks . can in your you But clarify how to about the timing of the acquisitions ?
Speaker #7: And, you know, I think some of the 1031 exchange myths relative to the street may be that you're net a seller.
Speaker #7: year, but it does. This sounds also like some of the share buyback activity.
Speaker #7: Is front end—if you could kind of help me kind of walk, loaded...through. So, unfolds that.
Alex Jessett: Yeah, absolutely. So for the full year, when we look at California and when I say California, I'm picking up the California sale, the redeployment of about $1.1 billion of capital into the Sunbelt, the redeployment of about $650 million of capital into share repurchases. When we look at all of that combined, effectively, we're saying it has no net impact whatsoever to 2026 guidance. When you think about timing, the anticipation is that California closes mid-year. The anticipation also is that the $1.1 billion of redeployment happens in the summer months, so call that mid-year as well. So there may be some slight little delays where we may sell before we buy, but we're trying to get as efficient as we possibly can on that entire process. And then when you look at share repurchases, at our stock price today, we think we're a screaming buy.
Alex Jessett: Yeah, absolutely. So for the full year, when we look at California and when I say California, I'm picking up the California sale, the redeployment of about $1.1 billion of capital into the Sunbelt, the redeployment of about $650 million of capital into share repurchases. When we look at all of that combined, effectively, we're saying it has no net impact whatsoever to 2026 guidance. When you think about timing, the anticipation is that California closes mid-year. The anticipation also is that the $1.1 billion of redeployment happens in the summer months, so call that mid-year as well. So there may be some slight little delays where we may sell before we buy, but we're trying to get as efficient as we possibly can on that entire process. And then when you look at share repurchases, at our stock price today, we think we're a screaming buy.
Speaker #6: Yeah , absolutely . So for the full year , at when we look California and when I say I'm California , picking up the California sale .
Speaker #6: The redeployment of about $1.1 billion of capital into Sunbelt, the redeployment of about $650 million of capital into share repurchases, and to.
Speaker #6: all of look at that When we combined we're effectively , saying it has no no net impact whatsoever to 2026 guidance . you think When about timing , the anticipation is , is that California closes midyear .
Speaker #6: The anticipation also is, is that the $1.1 billion of redeployment happens in the summer months. So, call that mid-year as well.
Speaker #6: So there may be some , slight little slight delays where we may sell before we But we're buy . trying to we're trying to get efficient as we possibly can on on that entire And then when process .
Speaker #6: At share repurchases, stock—you look at our price today, where we think it's a screaming buy. And so we're certainly going to be doing the share repurchases earlier, as soon as we get them done.
Alex Jessett: So we're certainly going to be doing the share prices earlier as soon as we can get them done. That's how it lays out for the full year. As it comes to differential between our numbers and the street, I really don't think a part of it is California because, as I said, it's a net neutral.
Alex Jessett: So we're certainly going to be doing the share prices earlier as soon as we can get them done. That's how it lays out for the full year. As it comes to differential between our numbers and the street, I really don't think a part of it is California because, as I said, it's a net neutral.
Speaker #6: So that's it lays how out for the full can get year . You know , comes to as it to differential between our numbers and the street , I really think is of it is a part California because as I said , a it's just it's a net neutral .
[Analyst] (Citi): The next question comes from Steve Sakwa with Evercore ISI. Please go ahead.
Operator: The next question comes from Steve Sakwa with Evercore ISI. Please go ahead.
Speaker #2: The next question comes from Steve Sakwa with Evercore ISI. Please go ahead.
[Analyst] (Wells Fargo): Yeah, thanks. You guys are obviously penciling in some development starts this year. Could you maybe just talk about your expectations for stabilized returns? What are you seeing on costs, and how are you underwriting rents today in those development projects? Thanks.
Steve Sakwa: Yeah, thanks. You guys are obviously penciling in some development starts this year. Could you maybe just talk about your expectations for stabilized returns? What are you seeing on costs, and how are you underwriting rents today in those development projects? Thanks.
Speaker #8: Yeah, thanks. You’re penciling in some development starts, obviously, this year. Could you just talk maybe about your expectations for stabilized returns?
Speaker #8: What are you seeing on costs, and how are you underwriting rents today in those development projects? Thanks, guys.
Ric Campo: Yeah.
Alex Jessett: Yeah.
[Analyst] (Wells Fargo): Start with the costs. Go ahead, Alice.
Richard Campo: Start with the costs. Go ahead, Alice.
Speaker #6: Yeah .
Speaker #4: With the start costs... Go ahead, Alex.
Alex Jessett: Yeah. So on a cost basis, here's the good news: costs are coming down. We're seeing anywhere between 5% to 8% reduction in costs. But clearly, developments are still hard to pencil. And if you look at our activity in 2025, and it was more muted, and you look at the guidance that we have for 2026, and we're saying that any starts are going to be in the latter half of the year, we do have a couple of land sites that we own, and we have a couple of other land sites that we control that we clearly could close on and could start this year. But developments continue to be a challenge. When we look at rental rates, obviously, the way we sort of think about things is we try not to look at trended too much.
Alex Jessett: Yeah. So on a cost basis, here's the good news: costs are coming down. We're seeing anywhere between 5% to 8% reduction in costs. But clearly, developments are still hard to pencil. And if you look at our activity in 2025, and it was more muted, and you look at the guidance that we have for 2026, and we're saying that any starts are going to be in the latter half of the year, we do have a couple of land sites that we own, and we have a couple of other land sites that we control that we clearly could close on and could start this year. But developments continue to be a challenge. When we look at rental rates, obviously, the way we sort of think about things is we try not to look at trended too much.
Speaker #6: Yeah. So, on a cost basis, here's the good: costs are coming down. We're seeing anywhere in the news between reductions in costs.
Speaker #6: But clearly, developments at 5 to 8% are still hard to pencil. And if you look at our activity being muted and you look at the guidance that we have for '26, and we're saying that '25 and most of any starts are going to be in the latter half of the year, we do have a couple of land sites that we own, and we have a couple of other land sites under control that we could start later in the year.
Speaker #6: clearly close could on and could start this year . But , but , but developments continue to be a challenge we look at rental rates , obviously the way we sort of think about things when is we try not to much .
Alex Jessett: We try to look at what everything looks like on an untrended basis. We're seeing really sort of in line with, call it five, five and a half on an untrended basis, which can get you up to sort of a six on a trended basis.
Alex Jessett: We try to look at what everything looks like on an untrended basis. We're seeing really sort of in line with, call it five, five and a half on an untrended basis, which can get you up to sort of a six on a trended basis.
Speaker #6: We try to look at what everything looks like and we're untended on an seeing basis , you know , sort of in line with look at call it five , five and a half on an untended basis , which really , can get you up to sort of a six on a trended basis .
[Analyst] (Citi): The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Operator: The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Speaker #2: The next question comes from Alexander Goldfarb with Sandler. Please go ahead.
Alex Jessett: Hey, good morning down there. Can we just get a bit more color on the $14 million of legal expenses? And I know that you guys switched to core from a NAREIT, but still, across the industry, these legal expenses, settlement, political advocacy, whatever, in aggregate, is all becoming more a regular part of the business. So if you could just talk one on the $14 million and two, how you guys are thinking about legal, political advocacy, and stuff on a go-forward basis. Yeah. So I'll hit the first part. So the first part is that $14 million is the combined number of non-core adjustments, which includes legal and costs associated with development and acquisition activity, etc. But legal costs, I mean, it's well known, the legal battles that we're in the middle of, and legal cost is becoming a significant number.
Alexander Goldfarb: Hey, good morning down there. Can we just get a bit more color on the $14 million of legal expenses? And I know that you guys switched to core from a NAREIT, but still, across the industry, these legal expenses, settlement, political advocacy, whatever, in aggregate, is all becoming more a regular part of the business. So if you could just talk one on the $14 million and two, how you guys are thinking about legal, political advocacy, and stuff on a go-forward basis.
Speaker #9: good morning Hey , down there . Can we just get a bit more color on the $14 million of legal expenses ? And I know that you guys switched to Core Navarrete , but from a still , you know , across the
Speaker #9: industry , these legal that we expenses settlement , you know , political advocacy , whatever , you know , in becoming aggregate is all more regular part of the So if you could just talk the 14,000,002 , business .
Speaker #9: About how you’re thinking legal, political advocacy, and stuff on a go-forward basis.
Alex Jessett: Yeah. So I'll hit the first part. So the first part is that $14 million is the combined number of non-core adjustments, which includes legal and costs associated with development and acquisition activity, etc. But legal costs, I mean, it's well known, the legal battles that we're in the middle of, and legal cost is becoming a significant number.
Speaker #6: Yeah . So I'll hit the first part and so the first part is , is that 14 million is the combined number of non-core adjustments , which includes legal and other costs associated with development and acquisition activity , etc.
Speaker #6: . But but legal costs , it's I mean , well known the legal battles that that we're in the middle of and legal is becoming significant number .
Alex Jessett: The good news is that it will go away at some point, right? This is some very specific actions that you guys know about. Those things will resolve itself and will return to a more normal cadence when it comes to that category. In terms of how we're thinking about activation, Rick?
Alex Jessett: The good news is that it will go away at some point, right? This is some very specific actions that you guys know about. Those things will resolve itself and will return to a more normal cadence when it comes to that category. In terms of how we're thinking about activation, Rick?
Speaker #6: And the, uh, a news cost is that it will go away at some point. This is some specific actions, very that you guys know.
Speaker #6: About will resolve itself and will return to a more, those things, more normal cadence. Good to that in terms of how we're thinking about activation.
Speaker #6: category Sure .
Ric Campo: Sure. So when you think about, let me just talk about, yeah, political action issues. This is a pretty simple math. So in the last 5 years, our political action activity was primarily dominated in California. 92% of our spend on political advocacy was in California. And so once we close that portfolio, the political advocacy in the Sunbelt is pretty much zero.
Richard Campo: Sure. So when you think about, let me just talk about, yeah, political action issues. This is a pretty simple math. So in the last 5 years, our political action activity was primarily dominated in California. 92% of our spend on political advocacy was in California. And so once we close that portfolio, the political advocacy in the Sunbelt is pretty much zero.
Speaker #6: Rick .
Speaker #4: So when you think about the just talk about let me political the issues action , and this is simple simple , math . So in the last five years , our political action activity a pretty was primarily dominated in California , 92% of our spend on political advocacy was in California .
Speaker #4: And so, once we close that portfolio, the political advocacy in the Sunbelt is pretty much zero.
[Analyst] (Citi): The next question comes from Michael Goldsmith with UBS. Please go ahead.
Operator: The next question comes from Michael Goldsmith with UBS. Please go ahead.
Speaker #2: And the next question comes from Michael Goldsmith with UBS. Please go ahead.
[Analyst] (Bank of America Securities): Hi, thanks. This is Ami. I'm with Michael. What gives you confidence that you can redeploy the capital received from the asset sales within the 1031 window, given some of the increased competition that we've been seeing and pretty low cap rates across the Sunbelt? And then if you can't redeploy it, what's the potential impact to earnings? Is there a tax implication here that you would have to pay? Thanks.
Ami Probandt [Equity Research: Hi, thanks. This is Ami. I'm with Michael. What gives you confidence that you can redeploy the capital received from the asset sales within the 1031 window, given some of the increased competition that we've been seeing and pretty low cap rates across the Sunbelt? And then if you can't redeploy it, what's the potential impact to earnings? Is there a tax implication here that you would have to pay? Thanks.
Speaker #10: Hi, thanks. This is Amin. With Michael, does it give you confidence that you can redeploy the capital you received from the sales within the asset 1031 window, given the increased competition that we've...?
Speaker #10: Hi, thanks. This is Amin with Michael. Gives you confidence that you can redeploy the capital you received from the sales within assets in the 1031 window, given the increased competition and pretty low cap rates across some of the Sunbelt. And then, if you can't, what's the potential impact on earnings?
Speaker #10: Is there a tax implication here that you would have to— that you would— Thanks.
Alex Jessett: Yeah. So we just came back from NMHC. And I will tell you, we talked to quite a few sellers that absolutely have portfolios, have individual assets, etc., that they would love for us to buy. Camden is a fantastic buyer, and sellers recognize that because we don't have financing contingencies, because they know we're real, because we have been doing this for 33 years. So we are the type of buyer that sellers want. So I don't think we're going to have an issue redeploying this capital, and not to mention that we've got one of the best acquisition teams in the business spread across the country tasked with doing this on a full-time basis. So I'm not very concerned about that. But I will tell you that if you look at the way we're doing our math, is that there are tax consequences.
Alex Jessett: Yeah. So we just came back from NMHC. And I will tell you, we talked to quite a few sellers that absolutely have portfolios, have individual assets, etc., that they would love for us to buy. Camden is a fantastic buyer, and sellers recognize that because we don't have financing contingencies, because they know we're real, because we have been doing this for 33 years. So we are the type of buyer that sellers want. So I don't think we're going to have an issue redeploying this capital, and not to mention that we've got one of the best acquisition teams in the business spread across the country tasked with doing this on a full-time basis. So I'm not very concerned about that. But I will tell you that if you look at the way we're doing our math, is that there are tax consequences.
Speaker #6: Yeah. So, just came back.
Speaker #6: from Nmhc pay ? and I will tell you , we to talked a few sellers that absolutely have have portfolios , individual assets , etc.
Speaker #6: , that they for us to buy . Camden is a fantastic and sellers recognize that because we don't have contingencies because they know buyer we're real , financing because we have been doing this for 33 years .
Speaker #6: So, we are the type of buyer that sellers want. So, I don't think we're going to have an issue redeploying this capital.
Speaker #6: Not to mention that we've got one of the best acquisition teams spread across the country, with the business tasked with doing this on a regular basis.
Speaker #6: So, full time I'm not very concerned about. But I will tell you that if you look at the way we're doing our math, is that we are—there are—that.
Alex Jessett: If we cannot redeploy this capital, then we would likely have to do some type of a special dividend.
Alex Jessett: If we cannot redeploy this capital, then we would likely have to do some type of a special dividend.
Speaker #6: tax consequences. And if we cannot redeploy this capital, then we would likely have to do some type of special dividend.
[Analyst] (Citi): The next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.
Operator: The next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.
Speaker #2: The next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.
[Analyst] (KeyBanc Capital Markets): Great. Thank you. Just going back to the acquisition opportunities, just wondering the types of deals that you're looking at, are these development deals that are in lease-up? Are they mostly stabilized transactions? And then could you just also talk about some of the specific markets you're evaluating and whether there's any new markets included in that?
Austin Wurschmidt: Great. Thank you. Just going back to the acquisition opportunities, just wondering the types of deals that you're looking at, are these development deals that are in lease-up? Are they mostly stabilized transactions? And then could you just also talk about some of the specific markets you're evaluating and whether there's any new markets included in that?
Speaker #11: Great . Thank you . Just back to the going acquisition opportunities , just wondering , you know , the types of deals that you're looking at .
Speaker #11: Are, you know, development deals that are in lease-up or are they mostly stabilized, these transactions? And then could you just also talk about some of the specific markets you're evaluating? If there's any new and whether markets included in that?
Stanley Jones: Hi. This is Stanley. So on the acquisition front, we're already evaluating a number of opportunities across all of our markets. And those are stabilized opportunities both on and off-market. So look, we're going to continue to leverage all of our relationships to find opportunities to redeploy the proceeds from the California sale. And like Alex said, our investment team is up to the task. We did $423 million in acquisitions in 2025, and we certainly could have upsized that if we had wanted to. So we're very sanguine about the opportunity in front of us and are already making some headway with that.
Stanley Jones: Hi. This is Stanley. So on the acquisition front, we're already evaluating a number of opportunities across all of our markets. And those are stabilized opportunities both on and off-market. So look, we're going to continue to leverage all of our relationships to find opportunities to redeploy the proceeds from the California sale. And like Alex said, our investment team is up to the task. We did $423 million in acquisitions in 2025, and we certainly could have upsized that if we had wanted to. So we're very sanguine about the opportunity in front of us and are already making some headway with that.
Speaker #12: Hey , Stanley this is . So on the acquisition front , we are evaluating , we're already evaluating a number of of opportunities across all of our markets .
Speaker #12: And those are stabilized opportunities on both on- and off-market. So, you know, look, we're going to continue to leverage all of our relationships to find opportunities to redeploy the proceeds from the California sale.
Speaker #12: Alex said, investment, so the team is up to the task. We did $423 million in acquisitions in 2025, and we certainly could have upsized that if we had wanted to.
Speaker #12: So we're very sanguine about the opportunity in front of us and are already making some headway with that.
Alex Jessett: At this point, we're not anticipating any new markets.
Alex Jessett: At this point, we're not anticipating any new markets.
Speaker #6: And at this point, we're not anticipating any new markets.
[Analyst] (Citi): The next question comes from Haendel St. Juste with Mizuho. Please go ahead.
Operator: The next question comes from Haendel St. Juste with Mizuho. Please go ahead.
Speaker #2: The next question comes from Hendel Saint-Juste with Mizuho. Please go ahead.
[Analyst] (Mizuho): Hey there, guys. Good morning. Another one on the SoCal portfolio trade. I guess a bit of a two-parter. First, it looks like those assets are still in the same-store pool, and that taking them out would be about 15 basis points drag to your annualized same-store revenue forecast. So first of all, is that fair? And then secondly, if you're able to actually achieve closer to the upper end of the range that you outlined, closer to $2 billion, I'm curious how you'd think about the incremental capital deployment of that, if there would also be earmarked for acquisitions or any tax limitations there. Thanks.
Haendel St. Juste: Hey there, guys. Good morning. Another one on the SoCal portfolio trade. I guess a bit of a two-parter. First, it looks like those assets are still in the same-store pool, and that taking them out would be about 15 basis points drag to your annualized same-store revenue forecast. So first of all, is that fair? And then secondly, if you're able to actually achieve closer to the upper end of the range that you outlined, closer to $2 billion, I'm curious how you'd think about the incremental capital deployment of that, if there would also be earmarked for acquisitions or any tax limitations there. Thanks.
Speaker #13: there Hey guys . Good morning . Another one on SoCal portfolio trade . the guess a bit of a two parter . First , it looks like those assets are still in the same store pool and that taking them out would be about a 15 basis point drag to your annualized same store revenue forecast .
Speaker #13: First of all, is that fair? And then secondly, if you're able to actually achieve closer to the upper end of the range that you mentioned about the capital, I'm curious how deployment of closer to, I think, $2 billion—I'm outlining incremental to that.
Speaker #13: They, if would also be for acquisitions or earmarked—any tax limitations there. Thanks.
Alex Jessett: Yeah. So as I mentioned in the prepared remarks, the impact of California coming out of same store will be about 25 basis points on revenue. So that's how you need to think about it.
Alex Jessett: Yeah. So as I mentioned in the prepared remarks, the impact of California coming out of same store will be about 25 basis points on revenue. So that's how you need to think about it.
Speaker #6: So Yeah . as I mentioned , the prepared remarks , the impact of California coming out of same store will be about 25 basis points on revenue .
Speaker #6: So, so that's—that's how you need to think about it.
Stanley Jones: I think on the issue of if the portfolio sells for $2 billion, which we would really enjoy, we would increase the 1031 exchange pie and then probably increase the buyback.
Richard Campo: I think on the issue of if the portfolio sells for $2 billion, which we would really enjoy, we would increase the 1031 exchange pie and then probably increase the buyback.
Speaker #4: on the And I think issue of if we if it portfolio sells for $2 billion , which we would really enjoy , we would we would the 1031 exchange then increase the Pi .
Speaker #4: probably . And increase buyback
[Analyst] (Citi): The next question comes from Brad Heffern with RBC. Please go ahead.
Operator: The next question comes from Brad Heffern with RBC. Please go ahead.
Speaker #2: Next in the question queue comes from Brad Heffern with RBC. Please go ahead.
[Analyst] (RBC Capital Markets): Yeah. Hey, everybody. Demand question. There've obviously been a lot of issues with the job market for college graduates. I'm wondering if you've seen a noticeable impact on your business from that. And is that something that's a potential upside lever if that proves to be just a 2025 phenomenon?
Brad Heffern: Yeah. Hey, everybody. Demand question. There've obviously been a lot of issues with the job market for college graduates. I'm wondering if you've seen a noticeable impact on your business from that. And is that something that's a potential upside lever if that proves to be just a 2025 phenomenon?
Speaker #14: Yeah . Hey everybody . The question there issues lot of obviously been a with the graduates . I'm seen a college market for noticeable , you've job noticeable impact on your business from that .
Speaker #14: And is that something that's potentially an upside lever if that proves to be just a 2025 phenomenon?
Ric Campo: The job prospects for college graduates in 2025 was kind of the worst in a decade. If you look at the unemployment rate for people in 18 to 24, it's at 10% right now. The other part of the equation, too, is if you look at that same cohort living at home, it's back to pre-COVID levels, meaning in 2019, we're back to 2019 levels, and it was down big time over the last couple of years. So on the one hand, it is definitely a tough market for those folks coming out of school, which could be a tailwind if, in fact, you have some sort of reasonable job growth in the second half of the year.
Richard Campo: The job prospects for college graduates in 2025 was kind of the worst in a decade. If you look at the unemployment rate for people in 18 to 24, it's at 10% right now. The other part of the equation, too, is if you look at that same cohort living at home, it's back to pre-COVID levels, meaning in 2019, we're back to 2019 levels, and it was down big time over the last couple of years. So on the one hand, it is definitely a tough market for those folks coming out of school, which could be a tailwind if, in fact, you have some sort of reasonable job growth in the second half of the year.
Speaker #4: the know , the You prospects for college graduates has been in 2025 was kind of the worst in in a decade . And if you look at the unemployment rate for for people in their in 18 to 24 , it's at 10% right The other the other now .
Speaker #4: part of the equation too is if you at at those same that same cohort living at home , it's back to look pre-COVID levels , meaning like in , in 2019 , we're back to 2019 And it levels .
Speaker #4: was down big time over the last couple of So , years . so on the one hand it is definitely a tough market for those folks coming out of school which which could job be a you if , you know , some sort of in fact reasonable job growth in the second half of the year , you know , and have know , a fair number of folks that are pretty constructive better tailwind job about growth in 26 versus 25 .
Ric Campo: And there's a fair number of folks that are pretty constructive about better job growth in 2026 versus 2025 when you think about the tailwinds of the big, beautiful bill, the tax refunds people are going to get as a result of that, and kind of the wind-down of tariffs and some of those other things that have been a drag on the uncertainty aspect of the economy in 2025. Because I think what happened then is right after Liberation Day, companies like us and many, many others just didn't know how to react, right? Well, what's going to happen, and how is it going to be? And so you had this sort of hiring freeze that happened. And the question will be whether that freeze unthaws in 2026 when you have a pretty stimulative construct with the economy. So I think it remains to be seen.
Richard Campo: And there's a fair number of folks that are pretty constructive about better job growth in 2026 versus 2025 when you think about the tailwinds of the big, beautiful bill, the tax refunds people are going to get as a result of that, and kind of the wind-down of tariffs and some of those other things that have been a drag on the uncertainty aspect of the economy in 2025. Because I think what happened then is right after Liberation Day, companies like us and many, many others just didn't know how to react, right? Well, what's going to happen, and how is it going to be? And so you had this sort of hiring freeze that happened. And the question will be whether that freeze unthaws in 2026 when you have a pretty stimulative construct with the economy. So I think it remains to be seen.
Speaker #4: You know , when you think about the the tailwinds , the big , beautiful bill , the tax refunds , people are going to get as a result of that .
Speaker #4: And the kind of the the wind down of tariffs some of and those other other things that have been a drag on the uncertainty aspect of the of the economy in 2025 because I think what what happened then is , right after you know , , you know , Liberation Day , you know , companies like many , many us and others just didn't know how to react .
Speaker #4: Right? What's going to happen, and how is it going to be? And so you had this, this sort of freeze that happened.
Speaker #4: And the question will be whether that freeze thaws in a pretty meaningful way in 2026 when you have a stimulative construct with the economy.
Speaker #4: And the question will be whether that freeze thaws in a pretty meaningful way in 2026 when you have stimulative construct with hiring. So I think it remains to be seen.
Ric Campo: I look at that as a potential tailwind when that demand is released because most of those people want to be on their own and rent an apartment from Camden.
Richard Campo: I look at that as a potential tailwind when that demand is released because most of those people want to be on their own and rent an apartment from Camden.
Speaker #4: I look at it as a tailwind when that potential demand is released, because those people want to be on their own and rent most of Camden an—
[Analyst] (Citi): Thanks. And the next question comes from John Kim with BMO Capital Markets. Please go ahead.
Operator: Thanks. And the next question comes from John Kim with BMO Capital Markets. Please go ahead.
Speaker #15: Thanks .
Speaker #2: And the next question comes from Kim John with BMO Capital Markets. Go ahead, please.
[Analyst] (KeyBanc Capital Markets): Thank you. Alex, you gave the impact on same-store revenue from California in 2026. I'm wondering if you could provide that same figure for 2025 just to get an apples-to-apples where same-store revenue is going for your remaining portfolio. And then going forward, how do you think that it impacts same-store expenses? Just given California's really helped mitigate property taxes, what's the going forward impact on same-store expense growth?
John Kim [Managing Director: Thank you. Alex, you gave the impact on same-store revenue from California in 2026. I'm wondering if you could provide that same figure for 2025 just to get an apples-to-apples where same-store revenue is going for your remaining portfolio. And then going forward, how do you think that it impacts same-store expenses? Just given California's really helped mitigate property taxes, what's the going forward impact on same-store expense growth?
Speaker #2: .
Speaker #16: you . Thank Alex , you gave the impact on same store revenue from California in 26 . I'm wondering if you could provide that same figure for apples to 25 just to get an apples where same store revenue is going for your remaining and then going forward , how do you think that impacts same store expenses just given California's really helped mitigate property taxes ?
Speaker #16: What's the, you know, portfolio impact on same-store expense growth going forward?
Alex Jessett: Yeah. So if you look at 2025, the impact on revenue would have been the same 25 basis points. So it's consistent in 2025 as it is in 2026. If you look at expenses for 2026, it doesn't really have any impact whatsoever to our expense numbers. On a go-forward basis, you are right that Prop 13 does limit taxes, which is helpful to the growth rate in California. That being said, one of the things that we've absolutely experienced in our other markets when it comes to property taxes is they go up, but they also come down. I mean, if you look at our 2025 results, our property tax total growth was zero. And so California was up, but most of our other markets were, in fact, down.
Alex Jessett: Yeah. So if you look at 2025, the impact on revenue would have been the same 25 basis points. So it's consistent in 2025 as it is in 2026. If you look at expenses for 2026, it doesn't really have any impact whatsoever to our expense numbers. On a go-forward basis, you are right that Prop 13 does limit taxes, which is helpful to the growth rate in California. That being said, one of the things that we've absolutely experienced in our other markets when it comes to property taxes is they go up, but they also come down. I mean, if you look at our 2025 results, our property tax total growth was zero. And so California was up, but most of our other markets were, in fact, down.
Speaker #6: Yeah . So if you look at 2025 , the impact on revenue would have been the same points . 25 basis So it's consistent .
Speaker #6: It's consistent in '25 as it is in '26. If you look at expenses for 2026, it doesn't really have any impact whatsoever to the expense numbers on a go-forward basis.
Speaker #6: You are right that that prop 13 does does limit taxes , our helpful to which is helpful to the growth rate in California .
Speaker #6: That being one of the things that we've said, absolutely experienced in our other markets, when it comes to property, is the taxes. When it also comes down, they...
Speaker #6: go up , but
Speaker #6: And if you look at if you look at our our property tax 2025 results , total growth was was zero . And so California was was up .
Speaker #6: But most of our other, in fact, are down. So I don't really think that will have that much of an impact on expenses on a go-forward basis.
Alex Jessett: I don't really think it's going to have that much of an impact on expenses on a go-forward basis.
Alex Jessett: I don't really think it's going to have that much of an impact on expenses on a go-forward basis.
Stanley Jones: Let me add to that, that if you take the sort of portfolio cost, and I mentioned our political advocacy group expenses in California, if you take the last five or six years, say, and these costs, by the way, are not in same-store numbers, so they wouldn't be in your same-store occupancy numbers. But if you average the cost over that period of time, it's 80 basis points off of your net operating income. So said another way, if California is growing at a 4% NOI and the rest of our portfolio is growing at a 4% NOI, and we have to subtract that 80 basis points off of California because that's included in our corporate G&A, California really delivered a 3.2 NOI compared to the rest of our country that didn't have those same kind of operating costs embedded in our G&A.
Richard Campo: Let me add to that, that if you take the sort of portfolio cost, and I mentioned our political advocacy group expenses in California, if you take the last five or six years, say, and these costs, by the way, are not in same-store numbers, so they wouldn't be in your same-store occupancy numbers. But if you average the cost over that period of time, it's 80 basis points off of your net operating income. So said another way, if California is growing at a 4% NOI and the rest of our portfolio is growing at a 4% NOI, and we have to subtract that 80 basis points off of California because that's included in our corporate G&A, California really delivered a 3.2 NOI compared to the rest of our country that didn't have those same kind of operating costs embedded in our G&A.
Speaker #4: Let me add to that , that , that if you take the , the , the sort of portfolio cost and I our , our mentioned political advocacy
Speaker #4: group expenses in California , if you take the the last 5 or 6 years , say , and and and these costs by the way , are not in same store numbers .
Speaker #4: So they wouldn't be in your same-store occupancy numbers. But if you average the cost over that period of time, it's 80 basis points off of your net operating income.
Speaker #4: So said way . know , if You California is another growing at a 4% , NOI and the rest of our portfolio is growing at a 4% NOI , and we we have to subtract that 80 basis points off of California , because that's included in our corporate G&A .
Speaker #4: California really delivered a 3.2 NOI to us compared to our rest of our country that didn't have this same kind of operating cost embedded in our G&A.
Stanley Jones: So we actually, when you look at the overall Sunbelt portfolio, outperformed California by 80 basis points because of that excess cost. But it's not embedded in the NOI growth.
Richard Campo: So we actually, when you look at the overall Sunbelt portfolio, outperformed California by 80 basis points because of that excess cost. But it's not embedded in the NOI growth.
Speaker #4: were So we we actually when you the look at overall Sunbelt portfolio , outperformed California by 80 basis points of because that , that excess cost it's not in the NOI embedded growth .
[Analyst] (Citi): The next question comes from Rich Hightower with Barclays. Please go ahead.
Operator: The next question comes from Rich Hightower with Barclays. Please go ahead.
Speaker #2: The next question comes from Rich Hightower with Barclays. Please go ahead.
[Analyst] (Barclays): Hey. Good morning, guys. I think since Keith brought up 2027 as it relates to Austin specifically in the prepared comments, I'm going to assume 2027 is in play for this call. So maybe as we think about a lot of your core markets going forward, just give us a sense of kind of what that steepness of the recovery curve, that exit velocity, whichever metaphor you want to use, where do the markets stack up in your current forecasting as we think about the end of 2026 and then into 2027? Thank you.
Rich Hightower: Hey. Good morning, guys. I think since Keith brought up 2027 as it relates to Austin specifically in the prepared comments, I'm going to assume 2027 is in play for this call. So maybe as we think about a lot of your core markets going forward, just give us a sense of kind of what that steepness of the recovery curve, that exit velocity, whichever metaphor you want to use, where do the markets stack up in your current forecasting as we think about the end of 2026 and then into 2027? Thank you.
Speaker #17: Hey guys, good morning. I think since Keith brought up 2027 as it relates to Austin, specifically in the prepared comments, I'm going to assume '27 is in play for this call.
Speaker #17: So as we think about a lot of your maybe core markets going forward , just give us a sense of kind of what that the steepness of recovery curve , that exit velocity , metaphor you want to use , where do the markets whichever stack up in your current forecasting ?
Speaker #17: As we think about the end of ’26 and then into ’27? Thank you.
Alex Jessett: So now we have to say we're not going to give the guidance for 2027, but we will talk about it, Rich.
Alex Jessett: So now we have to say we're not going to give the guidance for 2027, but we will talk about it, Rich.
Speaker #18: So now we have to say we're not going to give the guidance for 2027. But we will talk about it, Rich.
[Analyst] (Barclays): It's not guidance. It's a rank order, right?
Rich Hightower: It's not guidance. It's a rank order, right?
Speaker #17: So, it's not the right rank order. It's a—
Alex Jessett: Yeah. Exactly. So one of the things that's kind of interesting about where we are, and it gives us some additional degree of optimism about what the Sunbelt markets may look like not only at the end of 2026 but into 2027 and beyond, is the fact that if you look at Camden's rents for properties in our portfolio that have been built in the last 5 years, as we sit here today, we are back to the rent levels that we were achieving at the end of 2021. So we are about to start year 5 of basically no rental growth. And this is unprecedented. I mean, in our 35 years of doing this or almost 40 years of doing this, we have never had a 3-year period where rents were flat to down. And not even in the GFC, not even in COVID.
Alex Jessett: Yeah. Exactly. So one of the things that's kind of interesting about where we are, and it gives us some additional degree of optimism about what the Sunbelt markets may look like not only at the end of 2026 but into 2027 and beyond, is the fact that if you look at Camden's rents for properties in our portfolio that have been built in the last 5 years, as we sit here today, we are back to the rent levels that we were achieving at the end of 2021. So we are about to start year 5 of basically no rental growth. And this is unprecedented. I mean, in our 35 years of doing this or almost 40 years of doing this, we have never had a 3-year period where rents were flat to down. And not even in the GFC, not even in COVID.
Speaker #18: Yeah exactly . Exactly . So one of the things that's kind of interesting about where we are and it gives us some additional degree of optimism about what the Sunbelt markets may look like , not only in end of 26 , but into 27 and beyond , is the fact that if you if you look at Camden's rents for properties in our portfolio that have been built in the last five years , we are as we sit here today , we are back to the rent levels that we were achieving at the end of 2021 .
Speaker #18: So we are we are about to start year five of basically no rental growth . And this is unprecedented . I mean , our 35 years of of doing this , almost 40 years of doing this , we have never had a three year period rents were where flat to down , not even in the not even in the GFC , not even in Covid .
Alex Jessett: So we are already four years in. We're beginning 2026. You see our guidance for 2026. If all this works out the way we expect it to, we will be four and a half years downwind of basically zero rental growth. That's just not sustainable long-term. We've seen it coming out of the GSC, coming out of COVID. When you get a turn and a pivot that Rick was talking about, it doesn't go from 1% to 2.5 because if you think about our average renter over that same period of time, our average renter's wages, their actual household income, has gone up an average of 4% a year over that five-year period. So their income's up 20%. Their rent's basically flat. Our residents are incredibly financially healthy. When it turns, it usually turns pretty hard.
Alex Jessett: So we are already four years in. We're beginning 2026. You see our guidance for 2026. If all this works out the way we expect it to, we will be four and a half years downwind of basically zero rental growth. That's just not sustainable long-term. We've seen it coming out of the GSC, coming out of COVID. When you get a turn and a pivot that Rick was talking about, it doesn't go from 1% to 2.5 because if you think about our average renter over that same period of time, our average renter's wages, their actual household income, has gone up an average of 4% a year over that five-year period. So their income's up 20%. Their rent's basically flat. Our residents are incredibly financially healthy. When it turns, it usually turns pretty hard.
Speaker #18: we we are So are already in . four years beginning 20 , 20 , you see our 26 and guidance for 2026 . If if this works out the way all of we expect it to , we will be four and a half years downwind of basically zero rental growth .
Speaker #18: And that , you know , that's just not sustainable long term . And we've seen it coming out of the GFC , coming out of Covid , when you get a turn and a pivot that Rick was talking about , it's it not doesn't go from 1% to two and a half .
Speaker #18: And because it's , you know , if you think about our average renter over that same period of time , our average renters wages , their actual household income has gone up an average of 4% a year over that five year period .
Speaker #18: So their incomes up 20% , their rents basically flat . We've got our so our residents are incredibly financially healthy . And when it turns it usually turns it's hard .
Alex Jessett: So it's always hard to pick that point, but it just feels like we are way, way down the trail of flat rent growth and due for something different.
Alex Jessett: So it's always hard to pick that point, but it just feels like we are way, way down the trail of flat rent growth and due for something different.
Speaker #18: So it’s too hard to pick that point. Just put it this way, like, we are way down the trail of flat rent growth.
Speaker #18: And due for something different.
Stanley Jones: The only thing I would add to that is that when you think about markets, we talked Keith gave Austin a C-plus, right? And the issue there is you've got really good job growth, but you just had a whole lot of supply. They added more than 15% of the supply in three years. And so Austin and Nashville are probably the ones that are a little slower to come out of the system. But all the rest of the markets are pretty much positioned for when that supply gets taken up over the next 12 months, that they're going to be you're going to have a situation where simple supply and demand economics work, which means that we'll have more demand than supply and rents go up. The other thing to think about is that if you think about the way concessions work, right?
Richard Campo: The only thing I would add to that is that when you think about markets, we talked Keith gave Austin a C-plus, right? And the issue there is you've got really good job growth, but you just had a whole lot of supply. They added more than 15% of the supply in three years. And so Austin and Nashville are probably the ones that are a little slower to come out of the system. But all the rest of the markets are pretty much positioned for when that supply gets taken up over the next 12 months, that they're going to be you're going to have a situation where simple supply and demand economics work, which means that we'll have more demand than supply and rents go up. The other thing to think about is that if you think about the way concessions work, right?
Speaker #4: The only thing I would add to that is that when you think about markets , you know , we talk . Keith gave Austin a c-plus , right ?
Speaker #4: And and the issue there is you've got really good job growth , but you just had a whole lot of supply . You know , they added more than 15% of the three years .
Speaker #4: And supply in, so Austin, Austin, Nashville are probably the ones that are a little slower to come out of the system.
Speaker #4: But all the rest of the markets are pretty much positioned for when that supply gets , gets taken up over the next 12 months , that they're going to be , you're going to have a situation where simple supply and demand economics work , which means that we'll have more demand than supply and rents will go up .
Speaker #4: other thing The to think about is , is that if you think the the , the way work , concessions right ? So when people are leasing up , they give a month free , they give two months free .
Stanley Jones: So when people are leasing up, they give a month free. They give two months free if it's really tough. Maximum is three months free. But I don't think there's not very many places where it's three months free. And so what developers do then or operators is once they get to the point where they don't need to give that month, they stop giving the month or the two, right? And so what happens then and if you stop giving a month, that's an 8.3% increase immediately in the rent roll by eliminating one month. So that's Keith's point, that it doesn't just all of a sudden, you go from flat to 1%, 2% growth. And when you stop the concessions, it's immediately if it's a one-month free, it's immediately an 8.3% increase in the rent roll on the next lease.
Richard Campo: So when people are leasing up, they give a month free. They give two months free if it's really tough. Maximum is three months free. But I don't think there's not very many places where it's three months free. And so what developers do then or operators is once they get to the point where they don't need to give that month, they stop giving the month or the two, right? And so what happens then and if you stop giving a month, that's an 8.3% increase immediately in the rent roll by eliminating one month. So that's Keith's point, that it doesn't just all of a sudden, you go from flat to 1%, 2% growth. And when you stop the concessions, it's immediately if it's a one-month free, it's immediately an 8.3% increase in the rent roll on the next lease.
Speaker #4: If it's really tough, the maximum is three months free. But I don't think there's very many places where it's three months free.
Speaker #4: And so what developers do then, or operators, is once they get to the point where they don't need to give that month, they stop giving the month or the two.
Speaker #4: Right. And so what happens then? And that's why if you stop giving a month, that's an 8.3% increase immediately in the rent roll by eliminating one month.
Speaker #4: So that's where that's the key , key point that it doesn't just all of a sudden you go from flat to 1% , 2% growth .
Speaker #4: And when you stop the concessions , it's immediately , if it's one month free , it's immediately an 8.3% increase in the rent roll on the next lease .
Stanley Jones: And then it just takes time to roll the leases over and get that revenue growth. And that's going to happen. It's because of simple supply and demand. And if you think about when rents went up big time in 2021 and 2022, it was a function of not enough supply and huge demand. And you had increases that were unprecedented. If you go to St. Pete, for example, we had a 50% increase in rents in a three-month period there. And the reason was we were at 98% occupied. We had a tiny number of units that were available. And the market price just skyrocketed as a result of that. And that's simple supply and demand economics.
Stanley Jones: And then it just takes time to roll the leases over and get that revenue growth. And that's going to happen. It's because of simple supply and demand. And if you think about when rents went up big time in 2021 and 2022, it was a function of not enough supply and huge demand. And you had increases that were unprecedented. If you go to St. Pete, for example, we had a 50% increase in rents in a three-month period there. And the reason was we were at 98% occupied. We had a tiny number of units that were available. And the market price just skyrocketed as a result of that. And that's simple supply and demand economics.
Speaker #4: So, and then it just takes time to roll the leases over and get that revenue growth, and that's going to happen.
Speaker #4: It's because of supply and simple demand . And if you think about what when rents went up time in big 2021 and 22 , it was a function of not enough supply .
Speaker #4: And you had huge demand. And you had increases that were unprecedented. If you go to Saint Pete, for example, we had a 50% increase in rents in a three-month period.
Speaker #4: There . And the reason was we were at 98% occupied . We had a tiny number of units that were available , and the market price just skyrocketed as a result of that .
Speaker #4: And that's simple supply and demand economics . And I think we have the recency effect that's going on in the market today , meaning that , oh , three years of flat rent growth .
Stanley Jones: I think we have the recency effect that's going on in the market today, meaning that, oh, 3 years of flat rent growth, it's probably going to be another 5 years or 6 years of flat rent growth. And that just doesn't happen long-term. The market will work, and supply and demand economics will move in our favor over the next few years.
Stanley Jones: I think we have the recency effect that's going on in the market today, meaning that, oh, 3 years of flat rent growth, it's probably going to be another 5 years or 6 years of flat rent growth. And that just doesn't happen long-term. The market will work, and supply and demand economics will move in our favor over the next few years.
Speaker #4: So it's probably going to be another five or six years of flat rent growth. And that just doesn't happen long term.
Speaker #4: The market will work, and supply and demand economics will move in our favor over the next few years.
[Analyst] (Citi): The next question comes from Rich Anderson with Cantor Fitzgerald. Please go ahead.
Operator: The next question comes from Rich Anderson with Cantor Fitzgerald. Please go ahead.
Speaker #2: the next And question from comes Rich Anderson with cancer . please Fitzgerald , ahead go . Hey , thanks .
[Analyst] (Cantor Fitzgerald): Hey. Thanks. Good morning. And just file this one away for 2027 on hold music, Austin Powers theme song, just throwing that out there.
Rich Anderson: Hey. Thanks. Good morning. And just file this one away for 2027 on hold music, Austin Powers theme song, just throwing that out there.
Speaker #17: Good morning. And just to file.
Speaker #19: This one away for 2027—on hold music, Austin Powers theme song. Just throwing that out there.
[Analyst] (Citi): There you go.
Nick Joseph: There you go.
[Analyst] (Cantor Fitzgerald): So my question is on new lease rate growth. Alex, you mentioned you'll give an update as you get closer to the spring leasing season. But what I see from Q4 2024, it was -4.7%. Q4 2025 is -5.3%. I get it. It takes some time for these things to happen, even though that was post-peak deliveries, as you described it, Keith. So I'm wondering, if you were to I think it's an important metric to get that above kind of the 0% threshold eventually for multifamily to work again, particularly in the Sunbelt. Do you think how probable, possible, or maybe even unlikely is it to see new lease rate growth this year somehow get above that 0% threshold? I know you perhaps want to be careful about setting expectations at this point, but probable, possible, unlikely, what do you think?
Rich Anderson: So my question is on new lease rate growth. Alex, you mentioned you'll give an update as you get closer to the spring leasing season. But what I see from Q4 2024, it was -4.7%. Q4 2025 is -5.3%. I get it. It takes some time for these things to happen, even though that was post-peak deliveries, as you described it, Keith. So I'm wondering, if you were to I think it's an important metric to get that above kind of the 0% threshold eventually for multifamily to work again, particularly in the Sunbelt. Do you think how probable, possible, or maybe even unlikely is it to see new lease rate growth this year somehow get above that 0% threshold? I know you perhaps want to be careful about setting expectations at this point, but probable, possible, unlikely, what do you think?
Speaker #17: There you .
Speaker #20: Go .
Speaker #19: So so my question is on new lease rate . Alex , you growth mentioned , you know you'll give an update as you get closer to this spring leasing season .
Speaker #19: But what I see , you know , from fourth quarter 24 , it was negative four point seven . Fourth quarter 25 is negative 5.3 I get it .
Speaker #19: You know it takes some time for these things to happen . Even though that was post deliveries as you described it Keith . So I'm wondering if you were to I think it's an important metric to get that above the , you know , kind of the 0% threshold eventually for , for multifamily to work again Sunbelt .
Speaker #19: , particularly in the how Do you probable or possible maybe even unlikely , is it to see new lease rate growth this year ?
Speaker #19: You know , somehow get above that 0% threshold ? I know , I know , you perhaps want to be careful about , you setting expectations at this point , but probable , possible , unlikely .
Speaker #19: What do you think ?
Alex Jessett: Yes. So clearly, that inflection point is very important. You're exactly right. And my belief is that as soon as we all hit that inflection point, I think a whole lot of generalists that have been out of our stocks are going to come flooding into our stocks, and we're all going to see massive pops. So it's just a matter of when, definitely not if, because it will occur. I think it's probable. I think it's probable that it could happen this year. Now, obviously, we're going to continue to update you guys as we get each quarter's worth of activities, as we see what's happening on site. But I certainly think it's probable.
Alex Jessett: Yes. So clearly, that inflection point is very important. You're exactly right. And my belief is that as soon as we all hit that inflection point, I think a whole lot of generalists that have been out of our stocks are going to come flooding into our stocks, and we're all going to see massive pops. So it's just a matter of when, definitely not if, because it will occur. I think it's probable. I think it's probable that it could happen this year. Now, obviously, we're going to continue to update you guys as we get each quarter's worth of activities, as we see what's happening on site. But I certainly think it's probable.
Speaker #6: Yes . So so clearly that inflection point is very important . You're exactly right . And my belief is , is that as soon as we all hit that inflection point , I think , I think a whole lot of journalists that have been out of our stocks are going to come flooding to our stocks , and we're all going to see massive pops .
Speaker #6: So it's just a matter of of when . Definitely not . If because it will occur . I think it's probable . I think it's probable that it could happen this year .
Speaker #6: Now, obviously, we're going to continue to update you guys as we get each quarter's worth of activities, as we see what's happening on the site.
Speaker #6: But I think it's certainly probable.
[Analyst] (Citi): The next question comes from John Pawlowski with Green Street. Please go ahead.
Operator: The next question comes from John Pawlowski with Green Street. Please go ahead.
Speaker #2: Next, the question comes from John Pawlowski with Green Street. Please go ahead.
[Analyst] (Green Street): Please go ahead.
John Pawlowski: Please go ahead.
[Analyst] (Green Street): Hey. Thanks for the time. Forgive me if I missed this during the call late, but I want to talk a little bit about the change in the Denver regulation around utility rebilling or reimbursements and then any other income. So maybe if you could talk about for a minute the specific legislation. And is there any other concerning draft legislation in other states or markets you're in that might drive downward pressure on your ancillary income, just given how proactive you've been over the years with bundling services? And there's a lot of non-rental income for each unit. So I'm concerned about longer-term risk to your other income streams.
John Pawlowski: Hey. Thanks for the time. Forgive me if I missed this during the call late, but I want to talk a little bit about the change in the Denver regulation around utility rebilling or reimbursements and then any other income. So maybe if you could talk about for a minute the specific legislation. And is there any other concerning draft legislation in other states or markets you're in that might drive downward pressure on your ancillary income, just given how proactive you've been over the years with bundling services? And there's a lot of non-rental income for each unit. So I'm concerned about longer-term risk to your other income streams.
Speaker #21: Please go ahead .
Speaker #20: Hey , thanks for the time . Forgive me if I missed this . I joined the call late , but I wanted to talk a little bit about the change in the Denver regulation around utility rebuilding or reimbursements , and then any other income .
Speaker #20: So maybe if you could talk about for a minute the specific legislation, and is there any other concerning draft legislation in other states or markets you're in that might drive downward pressure on your ancillary income, just given how proactive you've been over the years.
Speaker #20: And with bundling services . And there's a lot of there's a lot of non rental income for each unit . So I'm concerned about longer risk to your other income streams .
Alex Jessett: Yeah. So we didn't talk about it in the prepared remarks, but what you're referring to is House Bill 25-1090. And yes, this is new legislation that was put in place in Colorado effective 1 January of this year, which no longer enables us to bill for common area utilities. It is a significant item for us. The total value of this is about $1.8 million. If you extrapolate that out, that's close to 19 basis points of same-store NOI. So certainly, it is an issue. It's something that we're having to account for. And obviously, we certainly do make sure that we monitor regulations that are out there. The good news is that most of our markets, the reason why they grow so fast, is because they're pro-business, pro-growth. And obviously, putting legislation like that in place is not pro-business or pro-growth.
Alex Jessett: Yeah. So we didn't talk about it in the prepared remarks, but what you're referring to is House Bill 25-1090. And yes, this is new legislation that was put in place in Colorado effective 1 January of this year, which no longer enables us to bill for common area utilities. It is a significant item for us. The total value of this is about $1.8 million. If you extrapolate that out, that's close to 19 basis points of same-store NOI. So certainly, it is an issue. It's something that we're having to account for. And obviously, we certainly do make sure that we monitor regulations that are out there. The good news is that most of our markets, the reason why they grow so fast, is because they're pro-business, pro-growth. And obviously, putting legislation like that in place is not pro-business or pro-growth.
Speaker #6: Yeah . So we didn't talk about it in the prepared remarks . But what but you're referring to is House Bill 25 1090 .
Speaker #6: And yes, this is new legislation that was put in place in Colorado effective January 1st of this year, which no longer enables us to bill for common area utilities.
Speaker #6: It is a significant item for us. The total value of this is about $1.8 million. If you extrapolate that out, that's close to 19 basis points of same-store NOI.
Speaker #6: So certainly is an issue . It's something that we're that we're having to account for . And obviously we we certainly do make sure that we monitor regulations that are out there .
Speaker #6: The good news is , is that most of our markets , the reason why they grow so fast is because they're pro-business , pro-growth , and and obviously putting legislation like that in place is pro-business or poor or pro-growth .
Alex Jessett: So not really worried about it in other places, but we're certainly paying attention to Denver. I don't know, Laurie, do you have anything you want to add?
Alex Jessett: So not really worried about it in other places, but we're certainly paying attention to Denver. I don't know, Laurie, do you have anything you want to add?
Speaker #6: So not really worried about it in other places . But we're certainly paying attention to to Denver . I don't know , Laura , do you have anything to add ?
Laurie Baker: I mean, I would just add, you asked about some of the specifics of Colorado. And I mean, the key impacts are no hidden rental fees. So it's full transparency. We're seeing this across the country. We're all kind of mobilizing as an industry to ensure that there is transparency and that our residents know exactly what they're paying for. But in this particular bill, the landlords have to show the tenants the full cost of renting before they sign anything. And that includes this common area maintenance and giving some estimates of what their utilities would be. And so that's some of the impact here, trying to average out what you assume each renter's utilities bills will be. So that's the impact we're seeing. There's certain things you are not allowed to charge back to our residents. So submetering is important because of this restriction.
Laurie Baker: I mean, I would just add, you asked about some of the specifics of Colorado. And I mean, the key impacts are no hidden rental fees. So it's full transparency. We're seeing this across the country. We're all kind of mobilizing as an industry to ensure that there is transparency and that our residents know exactly what they're paying for. But in this particular bill, the landlords have to show the tenants the full cost of renting before they sign anything. And that includes this common area maintenance and giving some estimates of what their utilities would be. And so that's some of the impact here, trying to average out what you assume each renter's utilities bills will be. So that's the impact we're seeing. There's certain things you are not allowed to charge back to our residents. So submetering is important because of this restriction.
Speaker #22: I mean , I would just add , you know , you asked about some of the the specifics of Colorado and I mean , the key impacts .
Speaker #22: Are , you no hidden rental fees ? So it's full transparency . We're seeing this across the country . We're all kind of mobilizing as an industry to ensure that there is transparency and that our residents know exactly what they're paying for .
Speaker #22: But in this particular, you know, Bill, the landlords have to show the tenants the full cost of renting before they sign anything.
Speaker #22: And that includes this common area maintenance and giving some estimates of what their utilities would be . And so , you know , that's that's some of the impact trying to average out what you assume each renters utilities , bills will be .
Speaker #22: So you know, that's the impact we're seeing. There are certain things you are not allowed to charge back to our residents.
Speaker #22: So, submetering is important because of this restriction. We have some properties, all of ours are metered, and we did it fast and furious at the end of the year to make sure that we were able to capture as much of the information we needed.
Laurie Baker: We have submetered all of our properties. We did it fast and furious at the end of the year to make sure that we were able to capture as much of the information we needed. But it did eliminate any unclear utility pass-through charges and just really requires more disclosures. So that's the impact overall. As Alex said, I don't think we're expecting in any of our other markets something similar to this, but we are closely monitoring that within Camden as well as at the industry level. I play a big role with the National Multi-Housing Council. This is something we're paying attention to across the country.
Laurie Baker: We have submetered all of our properties. We did it fast and furious at the end of the year to make sure that we were able to capture as much of the information we needed. But it did eliminate any unclear utility pass-through charges and just really requires more disclosures. So that's the impact overall. As Alex said, I don't think we're expecting in any of our other markets something similar to this, but we are closely monitoring that within Camden as well as at the industry level. I play a big role with the National Multi-Housing Council. This is something we're paying attention to across the country.
Speaker #22: But it did eliminate any unclear utility pass through charges and just really requires more disclosures . And so that's the impact overall . And I , as Alex said , I don't think we're we're expecting in any of our other markets something similar to this .
Speaker #22: But we are closely monitoring that within Camden as well as at the industry level . And I play a big role with the national Multi-housing Council , and , you know , this is something we're paying attention to across the country .
[Analyst] (Citi): The next question comes from Alex Kim with Zelman & Associates. Please go ahead.
Operator: The next question comes from Alex Kim with Zelman & Associates. Please go ahead.
Speaker #2: And the next question comes from Alex Kim with Zelman and Associates. Please go ahead.
[Analyst] (Zelman & Associates): Hey, guys. Thanks for taking my question. Could you talk about if you're seeing any difference in performance or rent growth between your urban and suburban assets and kind of your expectations through the balance of the year as well? Thanks.
Alex Kim: Hey, guys. Thanks for taking my question. Could you talk about if you're seeing any difference in performance or rent growth between your urban and suburban assets and kind of your expectations through the balance of the year as well? Thanks.
Speaker #11: Hey , guys .
Speaker #20: Thanks for taking .
Speaker #11: My question: Could you talk about if you’re seeing any difference in performance, growth, or rent between your urban and suburban, and kind of your expectations through the balance of the year as well?
Speaker #11: Thanks .
Alex Jessett: Yeah. Absolutely. So it's interesting. Our urban assets are absolutely doing better and really starting to gap out just a little bit in terms of what we saw in the Q4 2025 revenue. And my gut is, and the way we've modeled it is that that's probably going to continue as we go throughout 2026. This is sort of a turnaround from what we saw, obviously, for about three or four years. So today, what we're seeing is Class A urban is doing a lot better. But of course, they got impacted worse at points in time. So they had a little bit of gas in the tank to get back to where they were and go from there.
Alex Jessett: Yeah. Absolutely. So it's interesting. Our urban assets are absolutely doing better and really starting to gap out just a little bit in terms of what we saw in the Q4 2025 revenue. And my gut is, and the way we've modeled it is that that's probably going to continue as we go throughout 2026. This is sort of a turnaround from what we saw, obviously, for about three or four years. So today, what we're seeing is Class A urban is doing a lot better. But of course, they got impacted worse at points in time. So they had a little bit of gas in the tank to get back to where they were and go from there.
Speaker #6: Yeah , absolutely . So it's interesting , our urban assets are absolutely doing better . And and really starting to starting to gap out just a little bit in terms of what we saw in the fourth quarter of 25 revenue .
Speaker #6: And my gut is and the way we've modeled it is , is that's probably going to continue as we go throughout 2026 . This is a it's sort of a turnaround from what we what we saw .
Speaker #6: You know, obviously, for about three or four years. So what we're seeing is, today, what is class A urban is doing a lot better.
Speaker #6: But of course , it's you know , they got impacted worse at points in time . So they had a little bit of gas in the tank to get back to where they were and go from there .
[Analyst] (Citi): The next question comes from Julien Blouin with Goldman Sachs. Please go ahead.
Operator: The next question comes from Julien Blouin with Goldman Sachs. Please go ahead.
Speaker #2: The next question comes from Julian Sloan with Goldman Sachs. Please go ahead.
[Analyst] (Zelman & Associates): Yeah. Thank you for taking my question. So I think you mentioned you're expecting market rent growth of around 2% in your markets this year. I think on the Q3 call, that was in the sort of 3% to 3.5% range. Two quarters ago, I think third parties were maybe talking more over 4%. I guess, what has changed the most in that outlook to sort of drive that revision downwards? And then as we think about that 2% expectation for this year, what does that assume in terms of job growth? And sort of how do you think of maybe sort of the down-case scenarios to that?
Alex Kim: Yeah. Thank you for taking my question. So I think you mentioned you're expecting market rent growth of around 2% in your markets this year. I think on the Q3 call, that was in the sort of 3% to 3.5% range. Two quarters ago, I think third parties were maybe talking more over 4%. I guess, what has changed the most in that outlook to sort of drive that revision downwards? And then as we think about that 2% expectation for this year, what does that assume in terms of job growth? And sort of how do you think of maybe sort of the down-case scenarios to that?
Speaker #23: you for
Speaker #23: question taking my . Yeah . Thank . I think you mentioned you're expecting market rent growth of around 2% in your markets . This year .
Speaker #23: I think on the third quarter call, that was in the sort of 3 to 3 and a half range, two quarters ago.
Speaker #23: I think third parties were maybe talking more over 4% , I guess what has changed the most in that outlook to sort of drive that revision downwards and then as we think about that 2% expectation for this year , what does that assume in terms of job growth and sort of how do you think of maybe sort of the down case scenarios to that ?
Alex Jessett: Yeah. So if you think about the way Ric started this call, it is he talked about uncertainty. And this is clearly a time of uncertainty. And what all the economists, and obviously what we're doing, is we're talking about what economists are telling us. What the economists were looking at in mid-2025 is they were looking at the simple math that supply is falling off the cliff. And everybody recognizes that the last time you got to the level of the supply that we're expecting, everybody had some really, really large outsized growth. It's just a matter of when does that actually happen and how quickly is all of the excess supply being absorbed? And so obviously, it's taken a little bit longer to absorb some of that excess supply. I think we've hit on some of the reasons earlier in the call.
Alex Jessett: Yeah. So if you think about the way Ric started this call, it is he talked about uncertainty. And this is clearly a time of uncertainty. And what all the economists, and obviously what we're doing, is we're talking about what economists are telling us. What the economists were looking at in mid-2025 is they were looking at the simple math that supply is falling off the cliff. And everybody recognizes that the last time you got to the level of the supply that we're expecting, everybody had some really, really large outsized growth. It's just a matter of when does that actually happen and how quickly is all of the excess supply being absorbed? And so obviously, it's taken a little bit longer to absorb some of that excess supply. I think we've hit on some of the reasons earlier in the call.
Speaker #6: Yeah . So if you if you think about the the way Rick started this call , is he talked about uncertainty . And this is clearly a time of uncertainty .
Speaker #6: And , and what all the economists and obviously what we're doing is we're talking about what economists are telling us , what the economists we're looking at in mid 2025 is looking they were at the simple math that is falling off the cliff .
Speaker #6: And and everybody recognizes that the last time you got to the level , of the of supply that we're expecting , everybody had some really , really large outsized growth .
Speaker #6: It's just a matter of when that actually happens and how quickly all of the excess supply is being absorbed. And so, obviously, it's taken a little bit longer to absorb some of that excess supply.
Speaker #6: I think we've hit on some of the reasons earlier in the call . If you looked at the at the hiring of May grads , that was that was obviously very weak .
Alex Jessett: If you looked at the hiring of May grads, that was obviously very weak. Obviously, the job growth hasn't been as great as everybody had expected. And I think that's been putting some pressure on it. But back to one of my earlier comments, it's not a matter of if. It's a matter of when. It's absolutely going to occur that we're going to see this momentum come back to us, but it's just pushed back a little bit.
Alex Jessett: If you looked at the hiring of May grads, that was obviously very weak. Obviously, the job growth hasn't been as great as everybody had expected. And I think that's been putting some pressure on it. But back to one of my earlier comments, it's not a matter of if. It's a matter of when. It's absolutely going to occur that we're going to see this momentum come back to us, but it's just pushed back a little bit.
Speaker #6: Obviously, the job growth hasn’t been as great as everybody had expected, and I think that’s been putting some pressure on it.
Speaker #6: But back to one of my earlier comments. It's not a matter of if, it's a matter of when. It's absolutely going to occur that we're going to see this momentum come back to us.
Keith Oden: Yeah. Just specifically on the employment growth outlook for 2025, Witten originally had job growth across Camden's markets closer to 350,000. As everybody knows, that got revised dramatically down. I think he ended up the year at 170,000. His forecast for 2026 is 257,000 jobs across Camden's markets. So part of the headfake for forecasters and everybody that looks at this data was that 1 million jobs sort of evaporated that were reported as created in 2025 that, as it turns out, after all the revisions, it was not anything close to that. So some of it was probably just in the dataset. People that look at this and use the BLS statistics were using numbers that got revised away. So hopefully, we're on track with better data for 2026.
Keith Oden: Yeah. Just specifically on the employment growth outlook for 2025, Witten originally had job growth across Camden's markets closer to 350,000. As everybody knows, that got revised dramatically down. I think he ended up the year at 170,000. His forecast for 2026 is 257,000 jobs across Camden's markets. So part of the headfake for forecasters and everybody that looks at this data was that 1 million jobs sort of evaporated that were reported as created in 2025 that, as it turns out, after all the revisions, it was not anything close to that. So some of it was probably just in the dataset. People that look at this and use the BLS statistics were using numbers that got revised away. So hopefully, we're on track with better data for 2026.
Speaker #6: But it's just—it's just pushed back a little bit.
Speaker #18: Yeah . Just to on the on the specifically employment growth Outlook 2025 , Witten had originally had job growth across Camden's markets closer to 350,000 .
Speaker #18: That everybody knows. That got revised dramatically down. I think he ended up the year at 170,000. His forecast for 2026 is 257,000 jobs across Camden's market.
Speaker #18: So you know , part of the head fake for for forecasters and everybody that looks at this data was that , you know , a million jobs sort of evaporated that were reported as created in 2025 that as it turns out , after all the revisions , it was not anything close to that .
Speaker #18: So some of it was probably just in the data set . People like that . Look at this . And use the BLS statistics we're using numbers that got revised away .
Speaker #18: So hopefully we're we're on track with better data for 2026 and across 257,000 jobs Camden's platform would be a really good for us , particularly in light of what Alex described as , you know , we got we're about to get getting close to the end of this outsized development pipeline that we've had to work our way through for the last three years .
Keith Oden: And 257,000 jobs across Camden's platform would be a really good year for us, particularly in light of what Alex described as we're about to get close to the end of this outsized development pipeline that we've had to work our way through for the last three years.
Keith Oden: And 257,000 jobs across Camden's platform would be a really good year for us, particularly in light of what Alex described as we're about to get close to the end of this outsized development pipeline that we've had to work our way through for the last three years.
[Analyst] (Citi): The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Nick Joseph: The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Speaker #2: Then the next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
[Analyst] (Piper Sandler): Hey. Thank you for taking the follow-up. Just wanted to go back to the comments on lack of rent growth. Certainly, in the past number of years, everything else has gone up: Uber rides, groceries, everyone has streaming services, etc. So Rick, do you think the traditional sort of 20% rent to income still holds, or do you think because of inflationary pressure on people's lives plus all their other activities and subscriptions that maybe that number is no longer 20%? Maybe it's something lower than that.
Alexander Goldfarb: Hey. Thank you for taking the follow-up. Just wanted to go back to the comments on lack of rent growth. Certainly, in the past number of years, everything else has gone up: Uber rides, groceries, everyone has streaming services, etc. So Rick, do you think the traditional sort of 20% rent to income still holds, or do you think because of inflationary pressure on people's lives plus all their other activities and subscriptions that maybe that number is no longer 20%? Maybe it's something lower than that.
Speaker #9: Hey , thank you for taking the follow up . Just wanted to go back to the comments on lack of rent growth . Certainly in the past number of years , everything else has gone up .
Speaker #9: Uber rides , groceries , you know , everyone has streaming services , etc. so , Rick , do you think the traditional sort of 20% rent to income still holds , or do you think because of inflationary pressure on people's lives , plus all their other activities and subscriptions , that maybe that number is no longer 20% ?
Speaker #9: Maybe it's something lower than that?
Ric Campo: No, I don't think so. I think that that number is still a really good number. At 20, people are very it's a very affordable thing. If you look at the real job growth or real wage growth over the last 3.5 years, 4 years, it's 4% to 5%. And that's real. That's after inflation, right? So the thing that's interesting when you think about when I think about our customers, and we spend a lot of time trying to get inside their financial heads and also in what their preferences are for apartments and things like that. And you look at the forward consumer confidence numbers and stuff like that. And affordability is the big question today.
Richard Campo: No, I don't think so. I think that that number is still a really good number. At 20, people are very it's a very affordable thing. If you look at the real job growth or real wage growth over the last 3.5 years, 4 years, it's 4% to 5%. And that's real. That's after inflation, right? So the thing that's interesting when you think about when I think about our customers, and we spend a lot of time trying to get inside their financial heads and also in what their preferences are for apartments and things like that. And you look at the forward consumer confidence numbers and stuff like that. And affordability is the big question today.
Speaker #4: No , I think that I I think that that number is still a really good number at at 20 at people are very it's a very affordable thing .
Speaker #4: If you look at the , at the , at the real job growth or real wage growth over the last three and a half years , four years , it's it's 4 to 5% .
Speaker #4: And that's real . That's after inflation . Right . So the thing that's interesting when you think about when I think think about our customers , we spend a lot of time , you know , getting trying to get inside their financial , you know , beds and also in what their preferences are for apartments and things like that .
Speaker #4: You know , and you look at the like the , you know , the forward consumer confidence numbers and stuff like that . And affordability is like the big question today .
Ric Campo: But when you look at our demographic, average income of $121,000 for our resident base, their earnings are going up 4% to 5% on a real basis for the last three to five years, then you go, "Well, what's really happening to them? Why are they unhappy? Why is the consumer confidence at low levels?" Part of it is just the psychology that you had high inflation and prices of everything kind of went up. And then I think the bigger psychological issue, and this gets to the overall housing market, which includes the single-family for-sale market, and the inflation numbers really haven't caught the it didn't include this kind of concept on housing. So COVID with low interest rates and increased demand drove housing prices up dramatically. Interest rates doubled on the 30-year mortgage.
Richard Campo: But when you look at our demographic, average income of $121,000 for our resident base, their earnings are going up 4% to 5% on a real basis for the last three to five years, then you go, "Well, what's really happening to them? Why are they unhappy? Why is the consumer confidence at low levels?" Part of it is just the psychology that you had high inflation and prices of everything kind of went up. And then I think the bigger psychological issue, and this gets to the overall housing market, which includes the single-family for-sale market, and the inflation numbers really haven't caught the it didn't include this kind of concept on housing. So COVID with low interest rates and increased demand drove housing prices up dramatically. Interest rates doubled on the 30-year mortgage.
Speaker #4: But when you look at , at our demographic average income of $121,000 for our , for our resident base earning , their earnings are going up 4 to 5% on a real basis for the last 3 to 5 years .
Speaker #4: Then then you go , oh , well , what's really happening to them ? Why are they unhappy ? Why are they ? Why is the consumer confidence , you know , at low levels ?
Speaker #4: Part of it is just the psychology that you had high inflation and prices . Everything kind of went up . And then the I think the , the bigger psychological issue and this gets to , to the , the overall housing market , which includes single family market , the single family , you know , for sale market and , and the inflation numbers really haven't caught the , the haven't didn't include this kind of concept on housing .
Speaker #4: So Covid with low interest rates and increased demand drove housing prices up dramatically . Interest rates doubled on the 30 year mortgage . So the attainability of of a single family home today is so expensive relative to what it was pre-COVID that that's hanging on the I think on the consumer's mind a lot .
Ric Campo: So the attainability of a single-family home today is so expensive relative to what it was pre-COVID that that's hanging, I think, on the consumer's mind a lot. And so even though their financial picture is pretty good, they still feel really bad about the economy and about because of this single-family house price issue and just the narrative that's going on. Because if you think about other big-ticket items like the price of gasoline, and I filled up my Suburban the other day, and it was $2.17 a gallon. So even though you have food prices that continue to be elevated and some other costs that went up because of inflation, gas prices are down. Rents are flat. So I think it's a psychological issue that we have with American consumers today that isn't as real from a pure dollars and cents perspective, from an apartment perspective.
Richard Campo: So the attainability of a single-family home today is so expensive relative to what it was pre-COVID that that's hanging, I think, on the consumer's mind a lot. And so even though their financial picture is pretty good, they still feel really bad about the economy and about because of this single-family house price issue and just the narrative that's going on. Because if you think about other big-ticket items like the price of gasoline, and I filled up my Suburban the other day, and it was $2.17 a gallon. So even though you have food prices that continue to be elevated and some other costs that went up because of inflation, gas prices are down. Rents are flat. So I think it's a psychological issue that we have with American consumers today that isn't as real from a pure dollars and cents perspective, from an apartment perspective.
Speaker #4: And so even though their financial picture is pretty good , they still feel really bad about the economy . And about because of this single family house price issue and , and just the narrative that's going on .
Speaker #4: Because if you think about other big ticket items like , like the price of gasoline and I filled up my suburban the other day and it was $2.17 a gallon .
Speaker #4: So even though you have food prices that are continuing to be elevated and some other other , you costs that that that went up because of inflation , gas prices are down , rents are flat .
Speaker #4: So , so I think it's a psychological issue that we have with American consumers today that , that , that isn't as real from a from a pure , you know , dollars and cents perspective from an apartment perspective , it's more of a more of a , an overarching issue .
Ric Campo: It's more of an overarching issue. Unfortunately, that overarching issue makes people think everything's more expensive, even though their finances are pretty good.
Richard Campo: It's more of an overarching issue. Unfortunately, that overarching issue makes people think everything's more expensive, even though their finances are pretty good.
Speaker #4: And unfortunately, that overarching issue makes people think everything's more expensive, even though their finances are pretty good.
[Analyst] (Citi): The next question comes from Mason Guell with Baird. Please go ahead. Hey. Good morning, everyone. Looks like your revenue-enhancing and repositioning CapEx guide is down from last year. Can you talk about why this is guided lower and what initiatives you are working on within this category?
Operator: The next question comes from Mason Guell with Baird. Please go ahead.
Speaker #2: And the next question comes from Mason Gehl with Baird. Please go ahead.
Nick Joseph: Hey. Good morning, everyone. Looks like your revenue-enhancing and repositioning CapEx guide is down from last year. Can you talk about why this is guided lower and what initiatives you are working on within this category?
Speaker #24: Hey , good morning everyone . It looks like your revenue enhancing and repositioning CapEx guide is down from last year . Can you talk about why this is guided lower and what initiatives you are working on within this category ?
Alex Jessett: Yeah. So on the reposition side, it is down slightly. But you have to keep in mind this is something that we do every year. And we are reaching the point in time where we've done probably 70% to 80% of our portfolio, and there's a little less opportunities to be there this year. But I will tell you, I still believe this is one of our absolute best uses of capital. Absolutely plan to continue to do it. And I will tell you that I have no doubt that our repositioning team is listening to this call, and they're probably very excited that somebody else is noticing all their good work that they're doing. So yes, we will continue to do this. It's a good use of capital for us.
Alex Jessett: Yeah. So on the reposition side, it is down slightly. But you have to keep in mind this is something that we do every year. And we are reaching the point in time where we've done probably 70% to 80% of our portfolio, and there's a little less opportunities to be there this year. But I will tell you, I still believe this is one of our absolute best uses of capital. Absolutely plan to continue to do it. And I will tell you that I have no doubt that our repositioning team is listening to this call, and they're probably very excited that somebody else is noticing all their good work that they're doing. So yes, we will continue to do this. It's a good use of capital for us.
Speaker #6: Yeah . So on the on the reposition side , it is down slightly , but you have to keep in mind we're now this is something that we do every year .
Speaker #6: And we are reaching the point in time where we've we've done probably 70 to 80% of our portfolio . And there's , there's a little less opportunities to be there this year .
Speaker #6: But I will tell you, I still believe this is one of our absolute best uses of capital. We absolutely plan to continue to do it.
Speaker #6: And I will tell you that I—I've no doubt that our repositioning team is listening to this call, and they're probably very excited that somebody else is noticing all their good work that they're doing.
Speaker #6: So yes , we will we will continue to do this . It's it's a good , good use of capital for us .
[Analyst] (Citi): The final question comes from John Pawlowski with Green Street. Please go ahead. Thanks for taking the follow-up. I want to go back to the development economics question. So the four properties that you have in the pipeline today, on current market rents, can you give me an estimate on where these would be yielding today? Is it in that 5% to 5.5% range? Alex, you quoted on the shadow development pipeline. I'm just wondering how these four assets are kind of trending given the malaise in market rent growth the last few years.
Nick Joseph: The final question comes from John Pawlowski with Green Street. Please go ahead. Thanks for taking the follow-up. I want to go back to the development economics question. So the four properties that you have in the pipeline today, on current market rents, can you give me an estimate on where these would be yielding today? Is it in that 5% to 5.5% range? Alex, you quoted on the shadow development pipeline. I'm just wondering how these four assets are kind of trending given the malaise in market rent growth the last few years.
Speaker #2: The final question comes from John Pawlowski with Green Street. Please go ahead.
Speaker #20: Thanks for taking the follow up . I want to go back to the development economics question . So the for properties that you have in the pipeline today on current market rents , can you give me an estimate on like where these would be yielding today , or is it in that low that 5 to 5.5% range ?
Speaker #20: Alex , you quoted on the shadow development pipeline . I'm just wondering how these four assets are kind of trending , given the the malaise and market rent growth in the last few years .
Alex Jessett: Yeah. If you look at our development pipeline that we've actually put out there, it's two deals, which is Baker in Denver and Gulch in Nashville. And then what I told you is that we've got a couple of other sites that we control. And those sites that we control, then we could close on this year and, in fact, start this year. When I look at those sites, those returns are a little bit better. Those returns are penciling on those couple of sites to sort of call it the mid-five on an untrended basis. Baker and Gulch are more challenging. This is why if you look in our math, originally, we had them as 2025 starts, and now I've got them as potentially late 2026 starts.
Alex Jessett: Yeah. If you look at our development pipeline that we've actually put out there, it's two deals, which is Baker in Denver and Gulch in Nashville. And then what I told you is that we've got a couple of other sites that we control. And those sites that we control, then we could close on this year and, in fact, start this year. When I look at those sites, those returns are a little bit better. Those returns are penciling on those couple of sites to sort of call it the mid-five on an untrended basis. Baker and Gulch are more challenging. This is why if you look in our math, originally, we had them as 2025 starts, and now I've got them as potentially late 2026 starts.
Speaker #6: Yeah . If , if , if you look at if you look at our development pipeline that we've actually put out there , it's two , two deals , which is Baker in in Denver and Gulch in Nashville .
Speaker #6: And then what I told you is that we’ve got a couple of other sites that we control, and those are sites that we control and we could close on this year.
Speaker #6: And in fact , start this year . When I look at those sites , those returns are a little bit better . Those returns are penciling on those on those couple of sites to sort of call it the the mid five on an untended basis .
Speaker #6: Baker and Gulch are are more challenging . This is why if you look in our math , originally we had them as as 2025 starts and now I've got them as potentially late 2026 starts .
Alex Jessett: So the math is. I think everybody's pretty well aware of what's going on in Denver, at least downtown Denver. It's a tough place to develop today. I do think the economics are going to get better, but we're certainly waiting to see if those economics get better before we get started. We talked about buyouts. Buyouts are absolutely coming down 5% to 8%, but maybe they'll come down a little bit more, which makes that economics better. And then I would say the same thing about our deal in downtown Nashville. I mean, Nashville is a fantastic market, but everybody knows that downtown Nashville is very oversupplied. And so we're waiting to see a little bit more clarity. And when we see some more clarity in that market, then we can take a look at the economics and make sure it makes sense to start.
Alex Jessett: So the math is. I think everybody's pretty well aware of what's going on in Denver, at least downtown Denver. It's a tough place to develop today. I do think the economics are going to get better, but we're certainly waiting to see if those economics get better before we get started. We talked about buyouts. Buyouts are absolutely coming down 5% to 8%, but maybe they'll come down a little bit more, which makes that economics better. And then I would say the same thing about our deal in downtown Nashville. I mean, Nashville is a fantastic market, but everybody knows that downtown Nashville is very oversupplied. And so we're waiting to see a little bit more clarity. And when we see some more clarity in that market, then we can take a look at the economics and make sure it makes sense to start.
Speaker #6: So the math is , I think everybody's pretty well aware of what's Denver . going on At least downtown Denver . It's a tough place to it's tough develop today .
Speaker #6: place to the get better , do think economics are going to but we're certainly waiting to see if those economics get better before we before we get started , we talked about buyouts , buyouts are absolutely coming down 5 to 8% , but maybe they'll come down a little bit more , which makes that economics better .
Speaker #6: And then I would say the same thing about about our deal in downtown Nashville . I mean , Nashville's a fantastic market , but everybody knows that downtown Nashville is very oversupplied .
Speaker #6: And so we're waiting to see a little bit more clarity. And when we see some more clarity in that market, we can take a look at the economics and make sure it makes sense to start.
Alex Jessett: But if we can't do it on a way that's accretive to our shareholders, we're not going to. But right now, we're patient, and we're going to find the right time to start, which is penciled to be towards the end of this year.
Alex Jessett: But if we can't do it on a way that's accretive to our shareholders, we're not going to. But right now, we're patient, and we're going to find the right time to start, which is penciled to be towards the end of this year.
Speaker #6: But if we can't , if we can't do it on a on a way accretive to that's our shareholders , we're not going to .
Speaker #6: But right now we're patient, and we're going to find the right time to start, which is penciled to be towards the end of this year.
[Analyst] (Citi): This concludes our question and answer session. I would like to turn the conference back over to Ric Campo for any closing remarks. Thank you. We appreciate you being on the call today, and we'll see you soon. We'll talk to you soon, I'm sure. Thanks. Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Nick Joseph: This concludes our question and answer session. I would like to turn the conference back over to Ric Campo for any closing remarks. Thank you. We appreciate you being on the call today, and we'll see you soon. We'll talk to you soon, I'm sure. Thanks. Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker #2: This concludes our question and answer session. I would like to turn the conference back over to Rick for closing.
Speaker #4: Thank you . remarks for any we'll see you soon or talk to you soon . I'm sure . Thanks .
Speaker #4: We
Speaker #4: You being called today—on the appreciate.
