Camden Property Trust (CPT) Earnings Call Transcript & Summary

Hello everyone, and thanks for joining us on Camden Property Trust's call covering results from the fourth quarter of 2025. My name is Kim Callahan, and I serve as Senior Vice President of Investor Relations. With me for the prepared portion of today's discussion are Ric Campo, who is Camden's Chairman and Chief Executive Officer; Keith Oden, our Executive Vice Chairman; and Alex Jessett, President and Chief Financial Officer. Additionally, Laurie Baker, Chief Operating Officer, along with Stanley Jones, Senior Vice President of Real Estate Investments, will be on hand for the question-and-answer segment. This event is being webcast via the investors section on camdenliving.com, and a replay should be accessible soon after we finish. Please be aware that this call is being recorded. Prior to starting our prepared remarks, I want to let everyone know that forward-looking statements will be made, reflecting our present expectations and beliefs; such statements don't guarantee future results and carry risks and uncertainties that might lead actual outcomes to differ materially from what's expected. Additional details on these risks appear in our SEC filings, which we urge you to examine. Any forward-looking statements expressed during this call reflect management's current views, and the company undertakes no duty to revise or update them as a result of later developments. As a reminder, Camden's full earnings release for the fourth quarter of 2025 can be found in the investors section at camdenliving.com, and it contains reconciliations to non-GAAP financial measures that we'll be covering on this call. Out of respect for everyone's time, we aim to wrap up within one hour, so kindly keep your first question to just one, then get back in the queue if you have a follow-up or anything else to raise. Should we not get to everyone waiting today, we'll gladly address further questions via phone or email once the call is over. With that, I'll hand things over to Ric Campo.

Hello, everybody. For those who had the music playing during the wait, its theme was Uncertainty—and frankly, that single word captures precisely where things stand today for REITs focused on multifamily properties. Saying that "uncertain" or "uncertainty" appeared repeatedly across conference call transcripts during 2025 would not be an exaggeration. Naturally so—why wouldn't it? The operating environment last year proved impossible to predict, and every signal suggests the coming year will feel much the same. The songs we heard earlier reflect turbulent times. Even so, for us the line that best expresses today's uneasy atmosphere comes from a classic by The Doors, Roadhouse Blues: "Well, I woke up this morning, and I got myself a beer." Nobody knows what lies ahead, and the finish line is perpetually just around the corner—by which I mean the finish line of not knowing. So let me share the things we do know for sure: we know we finished 2025 in a powerful position, exceeding the Core FFO guidance we originally set by $0.13 per share; we know that having an excellent home is a basic human need, and we're the ones delivering it; we know that the wave of new supply has crested and is plummeting rapidly across our markets. We also know that apartment absorption during 2025 reached one of the strongest levels seen in the past two decades. We have no doubt that the Sun Belt regions where we operate will outpace the remainder of the nation in growth, which is why we've decided to put our California assets on the market. Through this disposition, we can broaden our presence across the Sun Belt, streamline how we run the business, and repurchase our stock at a meaningful markdown relative to net asset value. We have no doubt that the people living in our communities are tough, and their economic outlook is solid, since they spend just 19% of their earnings on rent. We have no doubt that renting an apartment is far more within reach than homeownership, and that this will remain true for the foreseeable future; we have no doubt that net operating income and rates on new leases will rise going forward. There's no doubt in my mind that among all REITs, Camden holds one of the most solid balance sheets around. I'm equally confident that our team ranks among the finest in this industry, delivering living excellence to the people who call our communities home. And last but not least, I know for certain that Keith Oden is the next one to speak.

Thank you, Ric. As we shared yesterday evening, Camden's revenue growth on a same-property basis for 2025 landed at 76 basis points, and that is a 1 basis point outperformance versus the midpoint of the guidance we most recently provided. Our operations teams are essentially partying as though they've just taken home the Super Bowl trophy. When we built our 2026 projections, we examined supply outlooks and employment growth projections from a number of third-party data sources, and we approached the budget property by property, factoring in how each community has performed historically, what's happening now in its submarket, and other pertinent considerations. Turning to supply, it's evident that new deliveries across nearly every market we operate in hit their high point in 2024 and kept falling through 2025, which positions 2026 and 2027 to see below-average volumes of new supply. For our portfolio, completions measured as a share of inventory reached a peak of almost 4% in 2024, and this year they're anticipated to come in under 2%, then move to roughly 1.5% by 2027. On the subject of 2026 employment growth, I'll second what Ric said — uncertainty remains a dominant theme across the markets this year. Yet we're equally confident that any jobs added this year will mostly land in Camden's Sun Belt markets, which keep drawing corporate relocations and expansion thanks to their affordable, business-friendly environments. During 2026, we anticipate operating conditions will get better as the year progresses, with a modest pickup in the back half of 2026. Our 2026 same property revenue guidance range has a midpoint of 75 basis points. That's essentially what we delivered last year, with half our markets posting revenue growth between 1% and 2%, and most of the rest ranging from flat to up 1%. The two markets with minor revenue decreases will probably be Austin, because of ongoing supply pressure, and Denver, because of recent regulatory changes impacting income from utility rebilling. Many of you are aware that at the start of every year, we have a tradition of giving letter grades to forecast conditions in our markets, along with outlooks of improving, stable, or moderating for how we expect them to perform during 2026. At present, we grade our overall portfolio a B, with a stable but improving outlook. Our top three markets are rated either A- or B+, and ought to deliver revenue growth in the 1%-2% range this year. Washington, D.C. Metro comes in as an A- with a moderating outlook. In spite of all the discussion about D.C., DOGE, and politics last year, D.C. Metro plainly beat our expectations, posting 3.5% revenue growth in 2025, and it enters 2026 in a strong position with 96% occupancy. Houston follows with a B+ rating and a stable outlook, the same grade it received last year. Supply has been fairly constrained in Houston over the past couple of years, which let it claim the number four spot for revenue growth in 2025, and we look for Houston to beat our average portfolio growth once again in 2026. Our Southern California markets receive a B+ grade with a moderating outlook for 2026. Like D.C. Metro and Southern California did better than we initially thought, with revenue rising in the mid 3% range during 2025, mostly because bad debt came down. In most of our California markets, supply hasn't truly been a problem, yet we anticipate that the benefit from shrinking bad debt will diminish as we progress through 2026. Denver ranked third among our markets for revenue growth in 2025, earning a B+ grade with an outlook that is moderating. Conditions in the Denver market are reasonably steady, even if a handful of its urban submarkets are somewhat tougher. However, as I noted before, revenue growth should fall versus the prior year because we anticipate lower utility rebilling and other income in 2026. The following four markets of ours each received a B letter grade along with outlooks that are improving. Nashville, Atlanta, Dallas, and Southeast Florida should all get better as 2026 unfolds while existing supply gets absorbed. In a few of these markets, we've started noticing what people call green shoots, and for each market this year we've budgeted revenue growth of between 1% and 2%. Orlando, Raleigh, and Charlotte were given B ratings this year, with outlooks that are stable and budgeted revenue growth of 0% to 1%, versus growth that was relatively flat a year ago. Demand has been solid across all these markets, yet a few more quarters are needed before any meaningful improvements appear, because supply delivered was higher than average, especially in the two North Carolina markets; we'd give Tampa a B with a moderating outlook and Phoenix a B- with a stable outlook, and we expect revenue growth to be relatively flat in both markets this year. Tampa gained from occupancy that was above average in 2024 and for much of 2025, but it has since come back to more normalized levels near 95%, which tends to slow revenue growth there. Phoenix continues to deal with elevated supply, primarily on the western side, so for most of 2026 we expect pricing power to be constrained. And last, Austin gets a C+ this year with an improving outlook after having been stuck at a C- for the previous two years. New supply is at last slowing, and there's light on the horizon, but because of the overwhelming number of new apartment homes delivered during 2024 and 2025, it will take somewhat longer for market-wide occupancy to get better and for concessions to burn off. Stay tuned, since we fully expect Austin to earn a B or better in 2027. And now a few details of our... on our fourth quarter 2025 operating results. Rental rates in the fourth quarter saw new leases decline 5.3% and renewals rise 2.8%, producing a blended rate of -1.6%, which is pretty much consistent with what we observed in the fourth quarter of 2024 and with what we anticipated for the fourth quarter of 2025. For leases coming up for renewal in the first quarter, we've distributed offers carrying an average bump of 3%-3.5%, and true to what we anticipated, residents leaving to buy houses is still remarkably minimal — 9.6% in the fourth quarter, and 9.8% across all of 2025. At this point I'll hand things over to Camden's President and Chief Financial Officer, Alex Jessett.

Keith, thanks, and good morning. I want to start by walking you through what's happened lately on the real estate and finance side, and after that I'll get into our Q4 numbers along with what we're projecting for 2026. In the fourth quarter, we sold three communities — they're in Houston and Phoenix — bringing in $201 million altogether. We also bought a community in Orlando for $85 million, and we brought Camden Long Meadow Farms to stabilization; that's one of the two build-to-rent properties we have in suburban Houston. Looking at the whole of 2025, our transactions involved selling seven older communities that carried higher CapEx needs, averaging 22 years of age, for $375 million... plus picking up four newer properties averaging five years old for $423 million. Just recently, we started marketing our 11 California operating communities for sale. Naturally, final pricing depends on the market, but early value indications and what we're hearing in market chatter fall somewhere between $1.5 billion-$2 billion. Our assumption is that this deal closes mid-year. On top of that, we're assuming roughly 60% of what we get from the sales gets reinvested via 1031 exchanges into our existing Sun Belt markets that show high demand and high growth, while the rest — modeled at $650 million — goes toward repurchasing shares. Of that $650 million tied to the planned asset sales, we've already finished close to $400 million in buybacks, and we anticipate wrapping up the rest of the repurchases early in 2026. With this extra buyback activity in mind, our board just gave the green light to a fresh $600 million share repurchase authorization. The acquisitions for 2026 funded by the California sale proceeds — just over $1 billion — should take place over the summer months. Given how we expect the timing to play out across asset sales, asset purchases, and share repurchases, we're assuming this strategic transaction produces neither accretion nor dilution in 2026. Our core FFO guidance ranges take timing variability on transactions into account. Now for the financial results: last night we posted core funds from operations of $193.1 million for the fourth quarter, which is $1.73 per share — $0.03 above the midpoint of the quarterly guidance we gave previously. That beat came entirely from higher fee and asset management income tied to our third-party construction business, since we closed out several jobs favorably, coming in well under budget. Property revenues, expenses, and NOI all landed exactly where we expected. Moving to guidance — page 24 of our fourth quarter supplemental package lays out the key assumptions behind our 2026 financial outlook. For 2026, we expect Core FFO per share between $6.60-$6.90, midpoint $6.75, which is a $0.13 per share decline versus our 2025 results. We expect that drop to come mainly from an approximate $0.04 per share reduction in fee and asset management income, since the outperformance we saw in that category — especially during the fourth quarter of 2025 — isn't something we're anticipating in 2026. Roughly $0.045 a share, or a 3% rise, in general overhead plus other corporate costs — and about a $0.045 per share drop in same-store net operating income. Gains in operating income from our development, non-same-store, and retail communities are fully cancelled out by what we lost from selling older communities with higher FFO yields during 2025. At the midpoint, our expectation for same-store net operating income is negative 50 basis points, alongside revenue growth of 75 basis points, matching 2025, and expenses rising 3% compared with 1.7% in 2025. For every 1% that same-store NOI moves up, core FFO gains roughly $0.09 per share. California sits in our same-store guidance for the entire year, and it contributes accretively — about 25 basis points on revenue and 40 basis points on NOI. Our 2026 same-store revenue growth midpoint of 75 basis points breaks down as 55 basis points coming from rental income and 20 basis points from other income; across the year we anticipate market rent growth of about 2% portfolio-wide, with the bulk of it landing in the back half. Capturing part of that rental rate improvement, given our slightly negative earn-in, occupancy that is flat, and modest bad debt improvement, gets us to anticipated rental income growth of roughly 55 basis points. Other income — mostly utility rebilling plus fee income — makes up 10% of total property revenues and should rise near 2% in 2026, contributing about 20 basis points to same-store revenue growth. Other guidance assumptions, among them a plan for as much as $335 million in development starts by year-end and roughly $200 million of total 2026 development spend, are laid out on Page 24 of our supplemental package. Non-core FFO adjustments should come to about $0.14 per share for the year, mostly legal expenses and transaction pursuit costs. For the first quarter of 2026, we anticipate core FFO per share in the $1.64-$1.68 range. The $1.66 midpoint is a $0.10 per share step down from the fourth quarter of 2025, driven mainly by an approximately $0.05 per share sequential fall in same-store NOI, which stems from higher sequential same-store expenses tied to the timing of quarterly tax refunds, the January 1 reset of our annual property tax accrual, and other cost increases largely from typical seasonal patterns, such as the timing of on-site salary increases. A roughly $0.04 per share decline in fee and asset management income following the large outperformance we posted in the fourth quarter. And an approximately $0.04 per share rise in interest expense due to higher debt balances, partly a consequence of our actual and anticipated share repurchases. A hit of roughly $0.02 for each share to non-same store NOI, which comes from dispositions we completed late in 2025 along with ones we expect during the first quarter of 2026; that cumulative $0.15 per share drop in quarterly sequential Core FFO gets partly made up for by an increase of about $0.05 per share in Core FFO tied to our share repurchase activity. And lastly, later in this quarter we intend to bring a new bond transaction sized between $400 million and $500 million. With that, we'll now take your questions.

Thank you. Nick Joseph speaking, joined by Eric. Regarding the transaction involving the Southern California portfolio, could you explain what makes this the appropriate moment to proceed? Naturally, taking into account the current situation in California. My impression is that during the last several years, you've weighed that portfolio's exposure against everything else, so really, what prompted the decision to act at this point?

The reason we're doing this now comes down to our belief that a turning point is coming in the Sun Belt growth narrative, and our preference is to be ahead of it instead of trailing it. That's the first thing. So our view is that the Sun Belt will grow, and when the shift happens, I believe it will happen quite forcefully and quite sharply. So that's point one. Second, when you examine transaction volume throughout America, the coastal markets have been the liveliest trading environment. Consider this: as a developer, if you're looking to sell a development deal you completed, selling it in Austin today isn't something you'd want to do; meanwhile California has actually seen fairly solid revenue growth, so buyers aren't forced to time the moment when they expect the market to reverse and rise. It remains a fairly lively market. So those are the two primary reasons. And I suppose the final one would be that, in thinking about our capacity to get the transaction done in a very buoyant buyer market, we also consider the chance to put the capital back to work both in the Sun Belt and by purchasing the shares. When we're able to dispose of the California portfolio at a cap rate significantly below the implied cap rate embedded in our stock, that's essentially what pushed the decision — those three factors.

Appreciate it. So then, you know, you're out there marketing that portfolio, but what's your thinking on whether to break it apart into smaller portfolios or individual assets, or is the aim really to move the whole thing in one go?

Okay, so on the positive side, we've got plenty of interested parties out there, plus numerous ways this portfolio could be structured — whether it gets sold as one package or asset by asset. Our approach will be to get the highest possible price, whether that means selling things one at a time, in separate pieces, or some mix of those.

Thank you.

Thanks a lot. So, I suppose if we revisit a few of the things you laid out, plus the thinking around a second-half acceleration — could you take us through how you're viewing new rents, renewal rents, and the blends as the year unfolds? And when you consider reaching your targets, are there any markets that worry you more, or less? Thank you.

Sure, definitely. What we anticipate for Q1 is modest gains compared with Q4 of 2025, for both new leases and renewals, and that clearly translates into a modest gain on blended rates for Q1 of 2026. Once we move into Q2 and past that, visibility will be much greater since we'll be entering our busiest leasing periods. At that time, we'll provide additional detail on precisely what we're assuming for new leases, renewals, and blends for the remainder of the year. But I can tell you, clearly, baked into our figures is an improvement, and it's an improvement in the back half of the year, which is what I mentioned during the prepared remarks. Looking at specific markets, as Keith detailed when he provided his letter grades, we certainly have a fair number of markets getting better; and truly, we don't have any markets going the wrong way. So with that in mind, nothing really stands out to us as a major worry. We are definitely seeing green shoots in some of our markets that were somewhat more pressured through last year and the year before. So we believe we're in a solid position, but clearly, we need to get into the busiest leasing periods and watch how the remainder of this year plays out.

Thank you, and good morning to everybody. My question concerns the guidance. I realize you already addressed some of it during your prepared remarks, but I'd like greater clarity on the timing we should expect for those 1031 exchange acquisitions to close. Also, there's a belief circulating among the street that you'll wind up as a net seller in 2025, yet it simultaneously sounds as though part of the share repurchase program is tilted toward the early part of the year. Could you help me work through how those two things fit together?

Yes, of course. When we consider the full year and turn our attention to California — and by that I mean the California sale, roughly $1.1 billion of capital being redeployed into the Sun Belt, plus approximately $650 million of capital being redeployed into share repurchases — looking at everything together, what we're essentially saying is that there's no net impact at all on 2026 guidance. On timing, we expect California to close around the middle of the year. We also expect that $1.1 billion of redeployment to take place during the summer months, so you could describe that as mid-year too. There might be minor timing gaps where a sale happens ahead of a purchase, but our goal is to make that whole sequence as efficient as we can manage. Turning to buybacks, with where our share price sits right now, we see it as an extremely attractive opportunity, so we'll definitely be repurchasing shares sooner, completing them as quickly as possible; that's the plan for the year overall. Regarding the gap between our figures and the street's, I don't believe California plays much of a role, since, as I mentioned, it nets out to zero.

Yeah, thank you. Clearly, you're factoring in some development starts for this year. Could you discuss what you anticipate in terms of stabilized returns? What are costs looking like, and how are you underwriting rents right now for those development projects? Thanks.

Yeah-

Start with the costs. Go ahead, Alex.

Yeah. So if you look at things from a cost perspective, the positive piece of news is that expenses are declining. We're observing a decrease of somewhere from 5%-8% in costs. That said, it's obvious that projects remain difficult to underwrite. And should you be able — when you examine what we did during 2025, it came in on the quieter side, and when you look at the outlook we've provided for 2026, what we're indicating is that any groundbreaking will happen during the back portion of that year; there are a handful of land sites we possess, plus a few additional ones we have under control, which we obviously could finalize and could break ground on within this year. Even so, putting up developments stays a struggle. As for what we're charging in rent, naturally, the approach we take to evaluating these matters means we make an effort not to focus on trended figures too heavily. Our preference is to examine how all of it appears using an untrended approach, and what we're finding is, well, you know, roughly consistent with, let's say 5%-5.5% calculated untrended, which is capable of reaching something like a 6% when calculated on a trended basis.

Morning, everyone. Could you give us a little more detail regarding that $14 million in legal costs? And, you know, I realize you've moved from Nareit to core, but even so, throughout the sector, these legal costs, settlements, political advocacy, whatever it may be, taken together, are turning into a more routine component of the business. So please address, first, the $14 million, and second, how you're approaching legal, political advocacy, and related matters going forward.

Sure. I'll take the first part. The first part is that the $14 million represents the combined figure for non-core adjustments, which encompasses legal and expenses tied to development and acquisition activity, and so on. But legal costs, I mean, everyone is aware of the legal fights we're currently involved in, and legal cost is turning into a substantial figure. The bright side is that it will disappear eventually, correct? These are some quite specific actions that all of you are familiar with. Those matters will work themselves out, and we'll get back to a more, a more typical rhythm regarding that category. As for how we're approaching activation, Ric?

Alright, if we turn our attention to the matter of political action, the math here is actually quite straightforward. Over the past 5 years, the bulk of what we did on that front was concentrated in California. Of all the money we directed toward political advocacy, 92% went to California. As a result, once that portfolio is wound down, our political advocacy efforts across the Sun Belt will amount to essentially nothing.

Hello, and thank you; I'm Ami, and Michael is here with me. With competition having picked up somewhat and cap rates being rather low throughout the Sun Belt, what makes you confident that the money you get from selling assets can be put back to work inside that 1031 window? Also, should you be unable to put it back to work, how might earnings be affected? Would there be a tax consequence you'd need to cover? Thanks.

Yes. Well, we've just returned from NMHC, and I can tell you we spoke with a good number of sellers who definitely hold portfolios, individual properties, and so on, which they'd be delighted to sell to us. Camden is a wonderful purchaser, and sellers understand this since we carry no financing contingencies, since they realize we're genuine, since we've been at this for 33 years. That makes us the kind of buyer sellers are looking for; therefore, I doubt we'll struggle to put this money back to work. Plus, we have one of the finest acquisition groups in the industry, stationed throughout the nation, whose full-time job is handling exactly this. So that doesn't worry me much. Still, I'll say this: when you examine how we run our numbers, there are tax ramifications, and should we prove unable to put this money back to work, we'd probably need to issue some form of special dividend.

Thanks, that's helpful. If we circle back to the possible purchases, I'm curious about the kinds of transactions you have in mind. Do these involve development projects still working through lease up? Or would most of them be stabilized deals? And on top of that, could you discuss which particular markets you're reviewing, and whether that list takes in any new markets?

Hi, Stanley here. Regarding buying properties, we're assessing — in fact, we've already begun assessing — quite a few possibilities throughout each of our markets, and those are stabilized possibilities, some available on market and some off market. So, well... Obviously, we'll keep drawing on every relationship we have in order to locate chances to put the money from the California sale back to work. And as Alex mentioned, our investment team can handle it; we closed $423 million of acquisitions in 2025, and we definitely could have gone bigger on that, had we chosen to. So we feel quite confident about what lies ahead of us and are already gaining some ground on it.

At this point, we're not anticipating any new markets.

Hi, everyone. Morning. One more question about that SoCal portfolio deal. I think this is kind of a two-part question. First, it seems those properties remain in the same-store pool, and removing them would create a drag of roughly 15 basis points on your annualized same-store revenue guidance; so to start, does that sound right? And second, if you can actually get closer to the high end of the range you described, nearer to $2 billion, I'm wondering how you'd view the additional capital deployment from that, whether it would also be designated for acquisitions or whether any tax restrictions would apply there. Thanks.

Yeah, so, like I said during the prepared remarks, California coming out of same store will have an impact of roughly 25 basis points on revenue. So, that's the way you should think about it.

Regarding the scenario where the portfolio goes for $2 billion — something we'd be quite pleased about — what we'd do is grow the 1031 exchange pie, and then in all likelihood step up the buyback.

Yeah. Hey, everyone. A question about demand. Clearly, the employment picture for people coming out of college has had plenty of problems. I'm curious whether that has had a visible effect on your business, and whether it could be an upside lever if it turns out to be only a 2025 thing?

You know, the job outlook for college grads in 2025 was, in a sense, the poorest in a decade. And when you look at the unemployment rate for those in the 18 to 24 bracket, right now it sits at 10%. The other piece of it, as well, is that if you look at that same group still residing with family, it has returned to pre-COVID levels — meaning, as in 2019, we are back at 2019 levels, and it had dropped substantially across the last couple of years. So on one hand, it is certainly a difficult market for those people leaving school, which could serve as a tailwind if, in fact, you get, you know, some form of reasonable job growth during the second half of the year. You know, and there are, you know, a decent number of people who are fairly constructive regarding stronger job growth in 2026 compared with 2025. You know, when you consider the tailwinds from the big, beautiful bill, the tax refunds folks will receive because of that, and sort of the winding down of tariffs and some of those other items that have been a drag on the uncertainty side of the economy in 2025. Because I think what happened back then is, you know, immediately after, you know, liberation day, you know, firms like ours and many, many others simply didn't know how to respond, right? What's going to happen, and how will it be? And so you had this, this kind of hiring freeze that occurred, and, and the question will be whether that freeze thaws out in, in 2026, when you have a fairly stimulative construct with the, with the economy; so I, I think it remains to be seen. I view that as, as a possible tailwind once that demand is released, since most of those people want to be on their own and rent an apartment from Camden.