From Nasdaq: 2025-02-07 18:00:16

Camden Property Trust (NYSE: CPT) held its Q4 2024 Earnings Call on Feb 07, 2025, discussing their fourth-quarter earnings. The company made forward-looking statements based on their current expectations and beliefs. They also highlighted the success of their team in exceeding operating budgets in 2024. The positive market backdrop positions Camden to execute their 2025 strategic plan, focusing on development starts and acquisitions. They discussed the growth of their Sunbelt markets, where population growth continues to outpace the nation. The company remains committed to improving the lives of their teammates, customers, and stakeholders. Camden Property Trust anticipates 1% revenue growth in most markets for 2025, with top five markets expecting 2% to 2.5% growth. The company’s overall portfolio is rated a B with a stable outlook, with a strong economy and in-migration expected to benefit Sunbelt-focused markets. Supply forecasts show a decline in new construction in 2025, setting up a below-average year for new supply in 2026. Camden’s top markets are expected to see strong performance, while markets like Nashville and Austin continue to face challenges.

Market forecasts for Camden Property Trust show top markets like Southern California, Washington, D.C. Metro, and Houston expected to perform well in 2025. Tampa is projected to be a strong performer due to high occupancy levels and low supply. Other markets like Denver, Atlanta, Phoenix, Raleigh, Orlando, Southeast Florida, Dallas, and Charlotte are forecasted for moderate growth. Nashville and Austin are expected to continue facing revenue declines due to new supply challenges.

Rental rates for Camden Property Trust in the fourth quarter of 2024 showed a decline in signed new leases but an increase in renewals. Renewal offers for February through April were sent out with an average increase of 4%, indicating positive growth expectations for the company’s properties. Camden’s move-outs to purchase homes remained low at 9.6% in the fourth quarter of 2024. The company reported core funds from operations of $190.4 million or $1.73 per share for the same period, exceeding prior guidance by $0.03 per share. Camden completed construction on several properties and acquired a new community in suburban Austin. The company expects core FFO per share to be in the range of $6.60 to $6.90 for 2025, with a midpoint of $6.75. Camden plans to reduce exposure to its largest markets and focus on geographic diversity and newer, faster-growing communities. Additional details on financial outlook and growth projections are available in their fourth-quarter supplemental package. In the first quarter of 2025, core FFO per share is expected to range from $1.66 to $1.70. This represents a $0.05 per share decrease from the previous quarter due to various factors. The company anticipates flat blended lease trade-outs and a strong balance sheet with net debt-to-EBITDA at 3.8 times. Questions from analysts during the call focused on lease growth assumptions and the impact of supply trading on the market. The company plans to acquire $10-15 million worth of assets and has a positive outlook for the future due to accelerating growth and rental increases expected in the coming years. In a recent conference call, Camden Property Trust discussed their strategy to recycle capital into more aggressive acquisitions and developments. The company believes there is minimal distress in the market, with stronger banks and borrowers. They anticipate better pricing and growth prospects moving forward, especially in markets like Austin. The company’s portfolio performed well in the fourth quarter, showing stability in new lease rates and improved occupancy rates. Camden Property Trust is optimistic about the upcoming year, with positive operating fundamentals and strong performance carrying over into January. Camden Property Trust had a strong January and expects continued improvement throughout 2025. The company anticipates a positive back half of the year and is optimistic about 2026 and 2027. The multifamily sector is expected to have impressive growth, benefiting Camden’s markets. Camden plans to acquire before selling for tax efficiency purposes. The company expects some GAAP dilution in 2025 due to acquisitions but anticipates a tighter spread in 2026 and 2027. The company plans to lower exposure in markets like D.C. and Houston to diversify its portfolio by the end of 2027. The multifamily sector is focusing on Nashville as a target market for growth, with plans to leverage balance sheet strength for opportunities. Repositioning projects have delivered an 8-10% return on investment, refreshing portfolios and lowering rental rates compared to new assets. Supply in Sunbelt markets is expected to remain steady for the next two years, with construction costs and tariffs impacting development. The company plans to continue repositioning assets and repurposing real estate to enhance value and combat new supply challenges. The real estate market is stable, with low risk of supply shortage until 2028, despite rent increases. Tampa’s demand boost is due to hurricanes but will moderate. Houston is thriving due to low supply and energy sector strength. Camden’s efficient operations drive success in top markets like Washington, D.C., Houston, and Southern California. Camden’s team’s execution ability contributes to high customer satisfaction and lower turnover. Expected yields for new developments are around 6%, with strong performance in North Carolina assets under construction. Despite challenges in finding developments that meet financial criteria, the market outlook for D.C. remains positive, with cap rates in the mid-fours to high fours range. D.C. has shown strong revenue growth and demand, with a spike in single-family property prices due to the new administration. Current demand trends are uncertain, with potential government downsizing and return-to-office policies affecting the market. Year-to-date, D.C. Metro has seen the highest increase in signed new lease rates. Development starts in 2025 aim for reasonable returns, with a focus on managing costs and ensuring positive spreads between buying and building prices. Confidence in revenue growth for future years will determine further investment decisions. and Houston are two of our best markets. And so, I think it’s all cyclical. I think it’s all about where you are in the cycle and what the opportunities are. And so, we are not — we’re not market timers. We’re more focused on execution. And so, what we have seen is that we can add a lot of value to our portfolio. We’ve got a lot of capital coming in. We’ve got a lot of capital that we can invest in the business. And so, we’re going to go where the opportunities are. And right now, there’s a lot of opportunities across all of our markets.

The top two performing markets for Metro and Houston are expected to remain in the top two or three for this year and next. The company is focused on balancing opportunities in 15 markets with strong migration, job growth, and rent growth potential, including markets like Austin and Nashville. New lease rates are expected to turn positive in Q3 and return to a more normal seasonal pattern in Q4. Proposed development starts in Nashville and Denver are still being evaluated for rent per unit needed to achieve a 6% yield.

Leasing trends for communities in lease-up are slower, particularly for single-family rental communities, but are expected to be sticky once occupied. Camden Durham and Wood Mill Creek are close to stabilization, while Long Meadow Farms is slightly behind. The company expects an uptick in 2025 from these communities as they stabilize. The company appreciates the participation in the earnings call and looks forward to future interactions. Camden Property Trust held a conference call with various analysts, including Keith Oden and Eric Wolfe. The transcript is available on The Motley Fool’s website. The company recommends doing your own research, including reading SEC filings. The Motley Fool has a disclosure policy in place. This news article was produced for The Motley Fool and may contain errors or inaccuracies. Additional details can be found in their Terms and Conditions. The views expressed in the article are those of the author and not necessarily Nasdaq, Inc.



Read more at Nasdaq: Camden Property Trust (CPT) Q4 2024 Earnings Call Transcript