Camden Property Trust Stock

Good afternoon. Welcome to Bank of America's 2026 Global Real Estate Conference. I'm Jana Galan, BofA's residential REIT analyst, and we're pleased to have with us Camden Property Trust's CEO, Alex Jessett; CFO, Ben Fraker; and SVP, Investor Relations, Kim Callahan.

I'll turn it over to Alex for opening remarks, and then we can jump into Q&A.

Thanks, Jana, and good afternoon, everybody. Thanks so much for joining us today. We've only got about 30 minutes, so I'll keep my opening short and leave as much time as I can for your questions. If you want more detail, our updated investor presentation is up on our website, and it covers a lot of what we're going to walk through today.

For anybody who doesn't know Camden well, here's the quick version. We're a multifamily REIT with nearly 57,000 apartment homes in 13 major markets around the country. We are an S&P 500 company. Our total market cap is $15 billion, and we've been public for 33 years now. About 80% of the portfolio sits in the high-growth Sunbelt markets and the rest is in the Washington, D.C. area or the DMV and in Denver. Within those markets, 60% of our assets are in suburban submarkets and roughly 60% would be considered Class B rather than Class A on price point. And we've got one of the youngest portfolios in the business with an average age of 16 years.

Our markets lead the country in job growth, population growth, in-migration and just overall demand for apartments, and that has driven record absorption across our portfolio. New supply hit a 50-year peak in 2024 and deliveries have been coming down steadily ever since. In our markets, completions as a percentage of inventory in '27 and '28 are projected to run below the 20-year historical average of 2.3%.

And buying a home is still out of reach for a lot of people with mortgage rates around 7% and a big premium to own versus rent. Put all that together and it sets us up a really good operating environment with better revenue and NOI growth in 2027 and beyond. And, no, before anybody asks, we are not going to give any 2027 guidance today. So sorry, folks.

Our markets are doing what we expected and third quarter trends so far are right in line with our most recent guidance. Based upon what we actually saw in July and August, plus where we think September lands, we expect to average 95.7% to 95.8% for occupancy in the third quarter, with blended lease rate growth between 1% to 2%. That's consistent with what we talked about on our second quarter call back in July.

Our peak leasing season usually runs from March to the end of August, and this year felt a lot more typical or more normal than last year when things slowed down by midyear and the July 4 holiday. Given the pickup we saw in July and August, we expect the third quarter '26 occupancy and lease rate growth to come in above both last quarter or the second quarter of '26 and last year or the third quarter of '25. That sets us up well heading into the fourth quarter. Retention is still high, turnover is still low and move-outs to buy a home has averaged 10% since 2023, which is a record low.

We'll keep balancing occupancy against asking rents to maximize revenue now that we're in the slower stretch after Labor Day, so expect a slight moderation in sequential occupancy and rent growth in the fourth quarter. As most of you know, we closed the sale of our 19-year-old California portfolio in late July for $1.625 billion.

We put approximately $700 million of the proceeds back into share buybacks and the rest is going towards acquisitions in our high-growth Sunbelt markets. So far, we've completed $750 million of acquisitions, adding newly built communities with an average age of 5 years across several of our markets, and we're working on a few more deals we'd like to close before year-end.

We also added 3 new development sites to the pipeline, 1 in Raleigh and 2 in Tampa, and we expect to start the Raleigh project later this year. Camden has one of the best balance sheets and lowest leverage ratios in the multifamily space, and we are one of only of a handful of U.S. REITs with an A- or better credit rating from all 3 rating agencies. Liquidity is in great shape. We've got $1.2 billion available under our unsecured line of credit and commercial paper program, plus roughly $600 million in cash, cash equivalents and 1031 exchange-related accounts.

And we don't have much coming due in the near term. We've got $553 million of debt at an average interest rate of about 5%, maturing between now and year-end and we plan to refinance it accretively in the near term using our unsecured credit facilities.

So to wrap it up, Camden has the right products in the right markets, high-growth Sunbelt markets that are set up to outperform as new supply keeps declining and demand for rental housing stays solid. Our balance sheet is strong, leverage is low, liquidity is ample, and we can refinance what's coming due accretively.

We've got a proven track record of recycling capital to improve the portfolio and its growth profile and creating value for shareholders along the way. And over the past 30 years, we've delivered solid long-term total returns averaging 10.7% a year, which beat several NAREIT and broader market indices.

With that, let's open up the question from the BofA team and our audience today.

Thanks so much, Alex. That was a fantastic update and summary. And maybe I'll just start big picture before diving into the details of those points you highlighted. So 2026 has been a pivotal year for CPT with new leadership and exiting California. And then it's also been a year of significant consolidation in the public apartment REIT sector. How are you thinking about markets and scale today?

Absolutely. So well, I hit the first part, which is a new leadership. The great news is, is that what's been working for Camden for the past 33 years isn't changing. I've been at Camden for 27 years. Ben has been at Camden for 26 years. And Kim, we won't say how long she's been at Camden. So the good news is that everything that has been working for quite some time and has delivered outsized results is not changing.

The second thing is, and so we'll talk about California and the California transaction. And I think that's really the best capital allocation story that we have seen in REIT world this year. If you can trade out of 19-year-old assets in California, and California, by the way, is a market that we do not believe is going to grow as fast as the Sunbelt.

If you look back over history, California has not grown as fast as the Sunbelt. And so we're able to trade 19-year-old assets in California for 5-year-old assets in our high core, high-growth Sunbelt markets, and we were able to do that on a net neutral basis. That is fantastic. And by the way, it's net neutral in year 1. It should become accretive in year 2 and go on from that point. So I think that is a really strong example of how to allocate capital in an efficient manner.

And by the way, the way we are able to make that work is we bought back $700 million of Camden shares at a significant discount to NAV. And so we are absolutely prepared to do transactions like that, and we think this is a great story. You asked about the M&A transactions that have happened in REIT space. And yes, there certainly has been some M&A transactions, which we will let the investors decide whether or not they think those make sense.

But here's what I will tell you on markets. The Sunbelt has outperformed for 30 straight years. If you go look at total shareholder return over 20 years, the top 2 companies at the top of that list are the 2 Sunbelt mark -- the 2 Sunbelt companies. And that is because what drives our business is really simple. It is job growth and it is employment growth. And if you look to see where -- excuse me, job growth and population growth. And if you look to see where the job growth and population growth has been and where it's consistently been, it has been in the Sunbelt.

I guess just on that point, is the Midwest, the new Sunbelt?

So I will tell you that we were in the Midwest at one point in time, and we exited the Midwest because what we found, although the Midwest had lower volatility, it didn't really have outsized rent growth. And so it's interesting to see right now, you do have affordability that is causing some folks to start to move into more traditional Sunbelt markets.

But you have to remember that our business, it takes quite a long time to make major capital investments, right? Because you want scale wherever you go. So in any market you go, you want to make sure that you can go into in a meaningful fashion. And it takes more than a year or more than 2 years or more than 3 years of a trend before you start to say, yes, this is where we want to go.

I will tell you that we do deep dives on markets all across the country constantly. The last deep dive that we did that worked was Nashville, and we entered Nashville probably about 6 years ago. But we've done deep dives on all sorts of other markets. At this point in time, no other market is screening well for us.

Interesting.

And maybe just following up on scale in terms of what's kind of sufficient in terms of -- I don't know if you think of it as unit count or AUM in a certain geography? How do you kind of scale your operations to be most efficient?

Yes. So we think that we need about 5 or 6 communities in a market for it to really work. The good news is, is that the only market that we have that is sort of below that level is Nashville. The better news is that we bought 2 assets in Nashville this year, and we started a new development. So we'll get to that point, and then we'll keep growing from there. But that's typically what you need.

And then on the updates you provided, you're proving out your expectation that third quarter blends will exceed second quarter blends. Curious how that kind of ties into this peak leasing season being a little bit more normal or traditional. I guess, like what is causing that break in the seasonality with the 3Q versus 2Q?

Yes. So I don't think it's really a break in seasonality. I think what it is, is it's a -- number one, it's a return to more typical seasonality. If you think about this conference last year, we were all telling you that come 4th of July, all of a sudden, demand just dropped off, right? Well, this year, we got not only through the 4th of July, we got a whole another month, all of August.

And so obviously, that's been incredibly helpful for us on that side. And then if you think about why are we able to have higher blends in the third quarter versus the second quarter, our markets have never had a demand problem. Demand has been incredibly strong in our markets. What we've had is a supply challenge.

And if you remember that peak supply or the supply peaked in about the second -- excuse me, the third or fourth quarters of 2024. So now we are continuing to work through all that supply, and we're at this point in time where there's much less supply to work through, and that's obviously given us additional pricing power. That is only going to improve from here.

Maybe if you could talk a little bit about kind of concession usage in your markets, how it's ranging between the -- still a little bit higher supply markets versus those where the absorption has been incredibly strong?

Yes. I mean, so concessions seem to be fairly stable in our markets right now. Now there are certainly pockets where we are seeing concessions just absolutely go away. And we're seeing pockets where they're sticking around. But here's the more fascinating thing to me.

The fascinating thing is that when you turn off concessions, you immediately see really outsized revenue growth in that particular submarket or market. And I'm going to give you an example. So the example I'm going to give you is Austin, Texas. The first thing you need to know is I am so incredibly bullish on Austin, Texas. That has nothing to do with the fact that I'm a Longhorn and that we just beat Ohio State.

But I'm incredibly bullish on Austin, Texas, because every 25- to 34-year-old in America seems to want to live in Austin. The challenge that Austin has is that if you think about the percentage of stock that should typically be delivered in any 1 year, that should be around 3% of the stock. Austin delivered 10% of the stock every year for the past 3 years.

What that effectively means is that if you drive around, 25% of everything you see in Austin is brand new. The good news is, is because demand has been so incredibly strong, Austin has been absorbing all of that supply. And here's a great example of what can happen as soon as the supply gets absorbed. So we have an asset in Austin called Camden Rainey Street and Camden Rainey Street, for those of you who are familiar with Austin is just south of downtown. It is a cool hip area where people like me are generally not invited, but I think my kids are invited.

But we had really one of the first apartments on Camden -- on Rainey Street, once again named Camden Rainey Street. After we bought that, we all of a sudden had a lot of new development all around us. Basically, Camden -- excuse me, Rainey Street became a high-rise development Mecca, and there were massive concessions offered. And Camden Rainey Street last year had occupancy of 88% that it was our lowest occupancy system-wide.

On Friday, I was in Austin visiting with our teams, and I talked to our community manager at Camden Rainey Street, and I said, "What's your occupancy right now?" She said, "We're over 99% occupied." I'm going to tell you that is the highest occupancy that we have system-wide. It also tells me we should raise rents.

But if you look at what's happening in terms of new leases, we have actually had periods of time now recently at Camden Rainey Street, where we are having low double-digit increases in new leases. That is unheard of. But the reason is, is because all of the direct supply right around it leased up and turned off concessions. And as soon as the concessions turned off, leases started popping.

Now by the way, that is absolutely an anomaly in Austin. I'm not going to tell you anybody else is doing that. It's not happening anywhere else in Austin, but it is indicative of how fast new lease rates can increase as soon as you get new supply absorbed, and that's exactly what we saw.

Great. Maybe shifting a little bit to the expense side of things, guidance improved at second quarter earnings. Curious what you're seeing from insurance, property taxes and then your controllable expenses heading into the back half?

Yes, sure. So our expenses have been mostly as we anticipated other than really our outsized better-than-anticipated insurance renewal we had. Our policy year runs from May 1 through April 30. We had a 20% decline in our property insurance premiums, which is leading to more favorability in our expenses for this year. .

The reason that happens is we have more participants in the reinsurance market. And so we've seen insurance go up quite a bit, but this allowed it to ratchet back down. And for the back half of the year, the only thing that would be outstanding is tax rates that we anticipate to come in, but we don't anticipate any great surprises there.

Great. And then on the transaction side, you've been very active recycling capital this year, selling $1.7 billion and buying close to $800 million of apartment communities. Can you talk to us a little bit about the cap rates as well as the depth and breadth of buyers?

Yes. So if you look at our sales, so our sale once again was a 19-year-old portfolio in California. We sold that at an AFFO yield of 5.2%. There's a Prop 13 adjustment that the buyer would have to take that's worth about 30 basis points. So effectively, that means the buyer paid about a 4.9% cap rate with real CapEx for a 19-year-old portfolio.

Now whether or not that is representative of what it would be everywhere else, that's hard to say. When we go out and we buy brand-new assets, right, so the average age of the assets we bought is 5 years old, it's just under 5% in terms of cap rates. So it is still a really robust market in terms of cap rates.

Now the reason why cap rates on new real estate are as low as they are, is twofold. It is, number one, there's a lot of money that has been raised to go make acquisition transactions, and you can buy real estate at a discount to replacement cost, which is really attractive to a lot of investors. And then the second thing is there's not that much new multifamily assets on the market.

So you've got this little imbalance between supply and demand, and that's obviously what's keeping cap rates fairly low for right now. And of course, because we were able to sell at such a good cap rate, that's why we can buy at low cap rates and still make everything work on a net neutral year 1 basis.

I'm not disputing that this is an excellent cap rate, but just curious whether you think that there is a kind of portfolio discount or premium out there.

Somebody asked me that question today and I said, if there's a portfolio discount, we certainly didn't see it in California, but perhaps there is. We're not out looking at portfolios in general, right? My issue with portfolios has always been you have a $1 billion portfolio and you look at the real estate and maybe you like half of the real estate, you don't like all of it.

We can go out and we just proved it because we did it this year, you go out and buy $1 billion of exactly the real estate you want and exactly the submarkets you want with exactly the amenities you want and you don't have to settle for anything, right? So I generally try to stay away from portfolios unless there is a really compelling financial reason for it. I'd rather go out and just pick and put together the portfolio that really serves us and serves our investors the best.

And you've also acquired land and have $632 million of developments underway. Kind of curious if you could share a little bit of how you're underwriting this? What kind of premium over acquisition cap rates do you require to start a new development? And then just comment on what's going on with construction costs?

Yes. So the good news is that construction costs are coming down. We think they're down about 5% to 8%. Now they're not down in commodities. They're not down in labor. They are entirely down in profit margin for subcontractors. That's where it is. The problem with that is you really can't squeeze it much more because at some point in time, subcontractors, they have to be able to pay their folks, right?

And so I think we're probably at the point where construction costs are the lowest that they're going to go. When it comes to making a decision between an acquisition and a new development, about 5 years ago, we made the decision. We used to have acquisition personnel, and we used to have development personnel. And about 5 years ago, I was put over that department, and I said we're going to stop all of that. We're going to have real estate investment professionals.

And the reason why I wanted real estate investment professionals is I didn't want somebody to come and talk their own book, right? I wanted somebody to come and say to me, the best investment option for Camden and its shareholders is x, whether that's a development or whether that's an acquisition. So here's how the conversation typically works when our folks bring us a new development. The first question I asked them, I say is, can you buy it for less?

And if you can buy it for less, then the answer is just go buy it, don't build it, right? And then the conversation then moves on from that point in time. So we did buy 3 new land parcels this year. But I will tell you, we probably looked at 100 in order to get to the 3 that actually makes some sense because we are trying to make sure that we are as disciplined as we possibly can.

Camden is a prolific developer. We are really good at doing this. We've created billions of dollars of value for our shareholders by development, but we are absolutely not one of those people that says we're a developer. Therefore, we must always develop. We will only develop if it makes sense and if it makes sense for our shareholders.

Now by the way, if we can develop something and it's going to be a stabilized 6% and I compare that to Camden's share price, which is right now like a 6.4% or 6.5%, but Camden's share price represents a 16-year-old asset because that's the average age of our portfolio, a brand-new asset is obviously 0 years old.

If I can look at that and say, yes, I think that a 6% on a brand-new asset is going to grow faster than a 6.4%, 6.5% on a 16-year-old asset, then that can make some sense. But we've got to really make sure that that's the right opportunity for our shareholders. And as I said, it's not something that we're just running out and saying we will always develop. That's just not our mentality.

Great. Maybe on the balance sheet, obviously, in excellent shape with the A- credit rating from S&P and a positive refi that's very unique coming up. Should you be leveraging the balance sheet more? And should you be buying back more stuff?

So I've publicly said on the last earnings call that we are open to levering up a little bit to buy more shares. We bought over $700 million already. Obviously, that was funded from dispositions. But I will tell you, I believe Camden is a screaming buy. And when I sit here and I look at Camden trading at a 6.4%, 6.5%, and I realize that our debt-to-EBITDA, Ben, what's our debt to EBITDA right now?

4.5x.

4.5x. That tells me that we've got some capacity to do accretive transactions, whatever that might be.

Maybe we could dive a little bit into some of your markets and curious kind of your outlook on the Greater D.C. portfolio?

Yes. So the DMV for us, if you go to 2025, was our best-performing market. It was also the market that I talked about the most because everybody wanted to talk about DOGE. And by the way, for our particular portfolio, DOGE ended up being pretty much a nonevent. If you look at where we are in the DMV, our largest concentration is Northern Virginia. And Northern Virginia has outperformed Maryland and the District almost consistently since we first moved into the market 20-some-odd years ago.

So Northern Virginia is absolutely always been strong for us. It also has lower levels of supply. Then it goes to Maryland and then it goes to the district. The district for us has been an underperformer. And I do think a component of that, although a smaller component is DOGE. I always told everybody last year that I was one of those folks that had no idea that federal workers weren't actually going into the office. I just assumed federal workers went at the office. And then all of a sudden, they were called back, and I realized that they're all like fly fishing in Boise.

And so they all came back and I think the offset of the incremental demand from them moving into the district that offset the job losses that were associated with DOGE, and that's why the district ended up doing pretty well for us last year. But as I look at it on an ongoing basis, we will narrow or sort of shrink our exposure to the DMV over time. And that's just because it's over 10% of our NOI, and I don't want any one market to be over 10% of our NOI. And as we bring back our exposure to the DMV, likely that will happen in the district.

And then also curious on Houston, one of your larger markets that, are you seeing any of the benefits of the higher gas prices?

Yes. Is it not crazy to ask, are you seeing benefits from higher gas prices? So in July, right around 50% of our communities in Houston had positive signed new leases. Obviously, that's a good trend, right? And so that is indicative that Houston is on the right track.

But we talked to a lot of the energy company CEOs. If you think about drilling, drilling is a really capital-intensive thing. And there's not a lot of -- energy companies are not going to be reactive to what may be just a temporary strike -- excuse me, a temporary spike in oil prices to start drilling, right? Because this thing can go away really fast.

If the Strait of Hormuz opens up, all of a sudden, you're going to see oil prices drop. And so what I'm being told by the oil and gas executives is this is not a catalyst for them to start making major capital expenditures. If they made major capital expenditures, that's what would cause the job creation. So at this point in time, it's really not an event for Houston.

But a good July.

But a good July.

And then maybe some of the larger Sunbelt markets, Atlanta and Dallas and how they're trending?

Yes. So I called out certain markets that actually had the majority of their communities have positive signed new leases in July. And the markets that I called out that fell into that category would be Atlanta, Dallas, Raleigh, Charlotte and South Florida. And so those are the markets that I would expect to sort of lead us into the recovery as we go forward.

Great. And maybe a little bit on the renewal side. It's been amazing how the retention keeps getting better. I guess, where do you kind of see it going from here? And obviously, mortgage rates are getting -- going higher, lower?

So we continue to have for Camden, record-level retention. A lot of people try to tie it to mortgage rates. I don't actually think that that's -- that much of a driver. So in our markets, you have to remember that the reason why somebody leaves multifamily and they go to single-family is usually lifestyle driven.

And it's typically, they got married, they had their first child, and they start to think about school districts. And at that point in time, they move out to single family. If you look at the percentage of our move-outs that's typical to buy a single-family home, it's typically 14% of our move-outs. We turn half of our units every year.

So what that means is that 7% of our residents typically every year move out to buy a single-family home. We are now at the point where 5% of our residents are moving out to buy a single-family home. That is not that significant of a swing going from 7% to 5%. I think the real reason why we are all seeing turnover be as low as it is, is it comes down to demographic factors that are happening in this country and the demographic factors that are happening in this country, as I said, is that folks are getting married later. People are having children later or people are having no children at all.

And if they are in that situation, there is no real pressing desire in our markets for them to go out and buy a single-family home. They enjoy all of the amenities, the freedom, the sort of low maintenance lifestyle that you get from living in a multifamily rental, and that is continuing. And what's ended up happening is that our residents are becoming older, right? And as our residents become older, they become more established and they become less likely to move.

And one of the interesting things is that we have a tendency for the past 30 years to talk about 25- to 34-year-olds and talk about their propensity to rent and I would argue that perhaps we should be expanding that, and it should be 25- to 40-year-olds or 25- to 42-year-olds, because we just know that people are staying renters for longer periods of time. And unless anybody thinks that, that demographic is going to all of a sudden shift and that all of a sudden people are going to start getting married earlier or having more children, I think this is something that's going to be a tailwind for the multifamily market for quite some time.

What's the actual number that you've seen that shift in terms of the age demographic?

Yes. So our average age -- or excuse me, our median age is 32 right now, and it's gone up a couple of years in the last like 10 years.

Like 2 years...

Yes.

And maybe going back to kind of the demand drivers. You highlighted it's always kind of been job growth and population growth. Do you think that there could be maybe further upside with any change to immigration policy? We keep seeing articles about the percent of college and high school grads still living at home with their parents, maybe unlocking that?

Yes. So if you look at the past couple of years, we've had about 1.15 million additional 25- to 34-year-olds move home with mom and dad. I consider that gas in the tank. Now by the way, I have a 22-year-old and a 20-year-old, and I sincerely hope that 25 -- they're not living with me. But if they were to live with me, it wouldn't be for very long. And I have a belief that this excess million folks living at home with mom and dad are going to be kicked out sooner or later. And they will clearly become renters. I doubt somebody gets kicked out and all of a sudden becomes a home buyer. That's not just sort of how the math works.

And then when you look at migration, and let's sort of talk about domestic and international migration combined. If you look at the markets that are anticipated to have the highest immigration in 2026 through 2028, basically, we are in all those markets, right? And by the way, nowhere on the list do I see New York City, nowhere on the list do I see any markets in California with the exception of Sacramento and Riverside.

So people continue to move out of the Northeast out of the Pacific Northwest and down to our markets. That is absolutely a trend that's continuing. Now the broader sort of global discussion around immigration, here's what I know. I know that for any economy, it is incredibly important that population grows.

And so obviously, if we don't have the immigration that we all need, that will be a damper on the overall economy. What I will tell you, though, because the domestic in-migration continues to favor our markets. And if you compare us to a New York or California that without international immigration net loses people every single year, I think we are suited and well positioned to outperform the rest of the multifamily sectors, those of us in Sunbelt.

Maybe just a follow-up on the Austin example that you gave where the concessions really plummeted. I guess, was there a specific occupancy that you saw hit in the competition where they pulled back where then you could look at other assets that have seen this heavy supply and, say, okay if these other markets mirror what happened here by x month year, we think this is going to be like a big impact.

Yes. So it's typically the absorption of the new supply. So it is typically -- remember that every single time, if you deliver 300 units, you have to go from 0% occupied to 95% occupied. And generally, what we see is that once merchant builders sort of get to around the 80% type occupancy, they'll start to dial back. And then once they get to 95, it goes away.

Now I will tell you this particular community in Austin is a poster child of extremes because it had the worst amount of new supply directly competing with them. So it's hard to say, is there another scenario like that. But there clearly is across all of our portfolio, there clearly is a 50-year high of new supply that was delivered that is being absorbed. And as it's being absorbed, we should see those concessions be turned off, right?

And if you look at where we are right now, a lot of the data that we're seeing says that concessions have been sort of a little bit sticky the last couple of quarters. And I think that's probably having a lot of merchant builders because they're now getting to the final point where they're just trying to get this thing done, where they're trying to get the stabilization and then we should see the concessions go away.

And then when we saw you in June, I know you were emphasizing that as analysts, we typically model what we have been seeing, right, the low growth and you were talking about, let's say, call it, more green shoots of higher growth potential. Like do you still think that's a possibility?

So the last time that we were in a situation where we had such a dramatic delta between previous new supply and current new supply was coming out of the GFC. And when we came out of the GFC, we had 5 years where we averaged same-store NOI of over 6%. Now this looks and feels fairly similar. Now obviously, what we do know is the GFC had an even further decrease in new supply. But it is a good example to look at what can happen swing from excess supply to a dearth -- to not enough supply.

My last, I know you've been good at telling us in your view, how far out that limited new supply will be. I feel like the last time we saw you, maybe you talked to '28, '29. I mean where are you, I guess, right now in your thinking?

That's one of the beautiful things about real estate is we've got perfect clarity to exactly what new supply looks like in '27, '28 and really most of '29. It's either started or hasn't started, and we can look at that. And so we're going to be in a pretty good shape for the next 2.5 years.

Now I will tell you, will supply pick up again? Absolutely. Of course, supply will pick up again. But we all have a tendency to suffer from what I call the recency effect, which is every single time I say, well, supply will pick up again, people go, "Oh my gosh, it's going to look like 2024."

And I have to remind everybody that was a 50-year high in terms of new supply really created almost entirely because we had free money. So unless anybody thinks that interest rates are going back to 0, I would not expect to see the level of supply that we saw delivered or peaking in 2024 for the rest of at least my career. Maybe some younger folks in this room maybe they'll see it. But definitely, won't see it for the rest of my career.

Unfortunately, we're out of time, but I have 3 quick rapid-fire questions we're asking all our REITs. Number one, if long-term rates stay higher for longer, which has the biggest impact on your sector's earnings, higher refinancing costs, lower transaction activity or less new supply?

I'm going to go with less new supply.

Over the next 3 years, will third-party capital become a more important source of growth for public REITs than balance sheet capital?

No.

For your sector, will 2027 same-store NOI growth be higher, the same or lower than 2026?

Higher.

Great. Thank you so much.

Thank you, everybody.

Good morning, and welcome to Camden Property Trust Second Quarter 2026 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 Executive Chairman; Alex Jessett, Chief Executive Officer; Laurie Baker, President and Chief Operating Officer; and Ben Fraker, Chief Financial Officer; Keith Oden, our Executive Vice Chairman; and Stanley Jones, Senior Vice President of Real Estate Investment will also be 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. And please note, this event is being recorded.

Before we begin our prepared remarks, I would like to advise everyone that we will be making forward-looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations. Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to update or supplement these statements because of subsequent events.

As a reminder, Camden's complete second quarter 2026 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 the call. We would like to respect everyone's time and complete our call within 1 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. If we are unable to speak with everyone in the queue today, we'd be happy to respond to additional questions by phone or e-mail after the call concludes.

At this time, I'll turn the call over to Ric Campo.

Good morning. Our on-hold music today featured a song about each of the 5 Camden markets, which recently hosted World Cup soccer games, Houston, Dallas, Miami, Atlanta and Los Angeles. Now that the World Cup has been completed, the host cities are celebrating the success and the economic benefits that the games produced. The last time the U.S. hosted the World Cup was 32 years ago in 1994 the year after Camden joined the New York Stock Exchange. That year, 9 cities hosted games and only 2 Sunbelt cities were included, Dallas and Orlando. This year, 11 cities hosted the games and the Sunbelt representation doubled. Camden has significant presence in all 4 Sunbelt host cities.

Sunbelt cities have led the nation in population growth, employment growth, and a domestic in-migration over the last 3 decades. During this time, the Sunbelt has gained stature and recognition as confirmed by its prominence in this year's World Cup. We believe these trends will continue to make the Sunbelt an attractive place in which Camden's residents can live, work and play.

As you know, we made the decision this year to improve our market concentration in the Sunbelt markets due to the sale of our California properties and reallocation of the proceeds to our Sunbelt markets. The plan was straightforward: sell the California properties for $1.625 billion, acquire $1 billion of newer properties in our existing markets and spend the remainder to buy back Camden's shares. Sounds simple, to execute to $3.25 billion in transactions in 6 months or so. At the same time, continue to operate our California properties at a high level, ensuring the sales success, easier said than done.

As it turns out, the execution has been nearly flawless with only $200 million of acquisition properties left to identify. This is a direct result of our amazing team at Camden, including our West Coast property operations 100-member team led by Carter Powell, our national operations and asset management teams led by Laurie Baker, Travis Oden and Mike Zimmerman, our Real Estate Investment team led by Stanley Jones with [ Landon Bass ] leading the California sales effort. Our Legal Team, led by Josh Lebar, our HR team, led by Allison Dunavant, our IT and Marketing teams led by Kristy Simonette, our construction team, led by Steve Heffner, our Investor Relations team led by Kim Callahan, and our finance treasury, tax, risk and accounting teams led by Ben Fraker and Kevin Necas, truly a great team effort, job well done in Camden.

We operated in California for 28 years. Saying goodbye is truly bitter-sweet. I want to thank Team Camden California for a job well done and all the best in the future. Hope our paths cross again soon. Up next is Alex Jessett.

Thanks, Rick, and good morning. As just mentioned, our time in California came to a close this week. As we've often said, Camden exists to improve people's lives. Over the years, we improved the lives of our Camden team in California by providing a Great Workplace where they could do their best work and have fun. We improved the lives of our residents by providing quality homes, which were expertly maintained and managed by some of our industry's finest professionals. And finally, we are and we will continue to improve our investors' lives through the reinvestment of the California proceeds into both faster-growing, newer Sunbelt communities and Camden stock.

The biggest negative of the sale was having to part ways with approximately 100 Camden team members, many who have been with Camden for 10-plus years. I want to acknowledge the loyalty and professionalism they exhibited throughout our years together, which continued through Wednesday's closing. Thank you for all that you did to make our years in California, fun, meaningful and rewarding.

The California sales proceeds were in line with our expectations, and I would like to thank the buyers for their professionalism throughout the process. The $1.625 billion of consideration for this 19-year-old portfolio represents for Camden a trailing 12-month FFO yield of 5.6% and an AFFO yield of 5.2%. The Prop 13 adjustment for the buyer should represent an approximate 30 basis point reduction from these numbers. In addition to the $694 million of Camden shares we repurchased at an FFO yield of 6.4% and an AFFO yield of 5.5%, we closed on $645 million of acquisitions with an average age of 5 years and an FFO yield just under 5% and 2 land sites for a total of $45 million.

Additionally, we've been awarded 2 other acquisitions and an additional land site for a total of $195 million. We are actively underwriting several other acquisition opportunities and remain confident we can effectively deploy the remaining 1031 proceeds from the California sale. As mentioned previously, this strategic market rebalancing is FFO-neutral in year 1 and anticipate to be accretive in short order as the newer Sunbelt communities we acquire should grow faster than the older California assets we disposed off. In addition, we will no longer be subject to high levels of regulatory and advocacy spend in California. This spend, which we booked to property management expense would have reduced our California portfolio's annual NOI by approximately 80 basis points. Camden already has the youngest portfolio in the multifamily REIT sector and the sale of our California assets, combined with our 2026 new acquisitions, further reduces our average age by 1 year.

In addition, we expect our future recurring CapEx spend per unit to decline by 5% and our bad debt to be reduced by 10 basis points after the sale. At the beginning of the year, we gave [indiscernible] FFO guidance of $6.75 per share at the midpoint of our guidance range. Last night, despite all of the moving parts this year, we reaffirmed that midpoint of $6.75 per share. Our initial guidance for same-store growth contemplated 50 basis points for revenue and negative 90 basis points for NOI when excluding the California portfolio. We are maintaining that full year same-store revenue guidance and increasing our full year same-store NOI guidance on better expense control.

I know we are all looking for green shoots and they're becoming plentiful. Sequentially, signed blended lease rates improved 160 basis points in the second quarter as compared to a 70 basis point sequential increase this time last year. In July, almost [ 50% ] of our communities had positive signed new leases, up from only 20% in March. Looking across our markets, the majority of our communities in Atlanta, Charlotte, Dallas, Raleigh and Southeast Florida achieved positive signed new lease growth in July and approximately half of our communities in Houston, Orlando and Washington, D.C did as well. Additionally, signed renewal gains have increased by 170 basis points from March to July. And finally, on an effective basis, 50% of our communities had positive blends in the second quarter, increasing to 65% in July. On a blended signed basis, 55% of our communities were positive in the quarter, increasing to 75% in July. The trend is our friend.

And finally, one of the questions I've been asked the most over the past couple of years is when Camden will start registering positive signed new lease growth? As you know, we have dynamic pricing, which changes daily, and I'm happy to report that system-wide average signed new leases have been positive a handful days this month, including at least 2 days this week, and that is a very green shoot. Camden has been extremely busy this year, and I echo Ric's shout out and thanks to our fantastic team members who have worked tirelessly to make all this happen.

I will now turn the call over to Laurie Baker, our President and Chief Operating Officer.

Thank you, Alex, and good morning, everyone. [ Prorating ] conditions across our portfolio are playing out as anticipated with steady improvements seen across our 13 current markets. Rental rates for the second quarter, now excluding California, had effective new leases down 3.3% and renewals up 2.8% for blended rate growth of negative 0.2%. This was in line with our expectations and reflected a 220 basis point improvement from negative 5.5% new lease rate growth in the first quarter of 2026. We also saw a 140 basis point improvement in blended rate growth from negative 1.6% in the first quarter 2026 to negative 0.2% for the second quarter 2026, and our blended rate growth turned positive in both June and July.

Our renewal rates were fairly steady for the first half of 2026 but began to improve during our summer leasing season. The effective growth rate for renewals in both the first and second quarter was slightly below 3%. However, our signed renewal increase was 3.4% in June and over 4% in July, which positions us well for those leases becoming affected during the third quarter. Renewal offers to residents with August and September expirations were sent out with an average increase of 4.2%.

Occupancy has also shown improvement and has been trending slightly ahead of budget with second quarter averaging 95.7% versus 95.1% in the first quarter of 2026. July occupancy was 95.8%, and we expect occupancy rates to remain relatively stable through the third quarter before moderating slightly with normal seasonal trends towards year-end. Turnover rates across our portfolio remained very low with second quarter 2026 annualized net turnover consistent with second quarter 2025 at 39%. A testament to our strong resident retention and satisfaction, and move-outs for home purchases also remained low at 10.4% for the second quarter.

So while we're not declaring victory, we are encouraged by what we are seeing. Our operating story in the second quarter is one of improvements, strong renewal execution and broad-based pricing recovery across the portfolio. The green shoots are becoming more visible and our teams are doing exactly what Camden teams do best, executing locally, staying disciplined in positioning the portfolio to capture upside as market conditions continue to improve.

With that, I'll turn the call over to Ben.

Thank you, Laurie, and good morning, everyone. I will cover our second quarter results, the California disposition and related capital allocation activity, our balance sheet and our updated third quarter and full year outlook.

Camden reported second quarter core FFO of $1.68 per share, $0.01 above the midpoint of our guidance range of $1.67 per share. The out-performance was driven primarily by stronger-than-anticipated occupancy across our stabilized operating communities. We are encouraged by continued improvement in leasing trends, new supply is past peak levels in most of our markets. Concessions are beginning to moderate and underlying demand remains healthy. As a result, revenues and NOI exceeded our expectations for the quarter.

Next, I will discuss capital allocation and balance sheet activity. On July 29, we completed the sale of our 11 California operating communities for a combined $1.625 billion, the transaction was a major strategic step that allowed us to redeploy capital into higher growth markets, in Camden shares while maximizing tax efficiency. Our capital allocation priorities were clear; maximize long-term shareholder value and shift capital towards our existing Sunbelt markets with stronger population growth, employment growth, migration, household formation and long-term multifamily demand.

First, we repurchased $694 million of Camden common shares during the second half of 2025 in the first half of 2026 at an average price of $105.17 per share. That was well below our estimated consensus NAV of around $130 per share and represented a 6.4% FFO yield. Second, we designated $1 billion of the California sales proceeds for 1031 Exchange Transactions in order to maximize tax efficiencies. And as Alex mentioned, we are making great progress on that front. Completed investments include 7 operating community acquisitions in Atlanta, Orlando, Nashville, Dallas, Phoenix, Tampa and Charlotte as well as 2 [ development ] land sites in the suburbs of Raleigh and Tampa. Approximately $900 million of the California proceeds were used to repay all outstanding balances under our line of credit and commercial paper program. $195 million will be used to purchase awarded real estate, including 2 communities and 1 land site in the third quarter. Approximately $200 million is anticipated to be used for future 1031 acquisitions to occur by late fourth quarter, and the remaining $330 million will be used for general corporate purposes.

The repayment of our line of credit and commercial paper further strengthened Camden's balance sheet, resulting in a pro forma net debt to EBITDA at a strong 4.5x at the end of July and preserving substantial liquidity to fund acquisitions, development opportunities and other capital allocation priorities.

Subsequent to quarter end, we closed and funded a new 1-year $350 million unsecured term loan. As this term loan is not revolving, we are leaving the balances outstanding to further enhance liquidity as we continue to opportunistically recycle capital.

Turning to guidance. For the third quarter, we are providing core FFO guidance of $1.69 per share at the midpoint, up $0.01 from our second quarter core FFO of $1.68 per share. The sequential increase is driven by the following items. First, we expect a $0.03 benefit from improved same-store operations reflecting higher revenues during peak leasing season, lower insurance expense following our favorable renewal and lower property taxes from incrementally higher third quarter tax refunds. Second, we expect $0.02 of incremental interest income from cash balances currently held for future acquisitions and general purposes. Third, we expect $0.02 from lower corporate expenses primarily due to the timing of public company fees, lower disposition related costs and the elimination of regional overhead costs previously supporting our California operations. Finally, we expect a $0.01 benefit from lower interest expense due to lower debt balances.

Together, these items add to a positive $0.08, partially offset by $0.07 from lower NOI following the California sale, net of NOI contributions from acquisitions completed in the second quarter and completed or expected in the third quarter. The result is our projected $0.01 sequential increase in core FFO per share. For the full year, we are maintaining our core FFO guidance midpoint of $6.75 per share, unchanged from our prior annual guidance.

Operating performance has exceeded our expectations, and we now expect $0.03 per share full year benefit from better-than-expected same-store NOI performance, driven primarily by lower operating expenses. That benefit is primarily offset by the timing of real estate transactions throughout 2026. On same-store guidance, I want to provide additional perspective on the California disposition. At the beginning of the year, our same-store midpoint outlook, including California was revenue growth of 0.75%, expense growth of 3% and an NOI decline of 0.5% because California is no longer in the same-store pool, the more relevant comparison is our original outlook, excluding California.

On that basis, the original midpoint implied revenue growth of 0.5%, expense growth of 3% and an NOI decline of 0.9%. Our updated outlook, excluding California shows revenue tracking in line with that original expectation and materially better expense performance. On an apples-to-apples basis, excluding California, revenue is in line with our initial outlook. Expenses are 50 basis points better and expected same-store NOI has improved by 30 basis points from a 0.9% decline to a 0.6% decline. Our revised same-store midpoint outlook, excluding California, is now revenue growth of 0.5%, expense growth of 2.5% and an NOI decline of 0.6%. The expense improvement is primarily driven by better utility performance, including lower water consumption, improved [ trash ] contract pricing, favorable insurance subrogation recoveries and insurance renewal pricing that came in better than originally anticipated.

In summary, we are pleased with our second quarter results and the continued improvement in occupancy and operating fundamentals across the portfolio. The California disposition was a significant strategic milestone. We used the proceeds to repurchase shares at an attractive discount to NAV, reinvest tax efficiently through 1031 exchanges and increased exposure to attractive Sunbelt growth markets. With improving operating fundamentals, a flexible balance sheet and a younger, more growth-oriented portfolio, Camden remains well positioned for the future. Thank you, and we will now open the call to questions.

[Operator Instructions] Our first question today comes from Eric Wolfe from Citi.

For the 50 bps same-store revenue guidance, can you talk about how you're going to get there from an occupancy rate, bad debt and other income perspective? And then obviously, you threw out a lot of statistics there in terms of what you're seeing in July and August thus far. But maybe help us understand sort of what you're seeing in terms of blends and how that plays into the guidance?

Absolutely. Thanks, Eric. So the first thing, obviously, and we did throw out a lot of stats there. And I hope the overriding view is that we're seeing a lot of green shoots. And so we're not going to get into our total July numbers, but what I will tell you is when we look at the effective July rates that we have, both on new leases, renewals on a blended basis, it's looking pretty good. And when we look at a signed, the signed has really given us a lot of comfort as the way the rest of this year can roll forward. And if you think about it on the signed basis. If you look at a new lease, every new lease, we signed it about 25 days before the people move in. And then if you look at it on the renewal side, we're about 60 days before they move in. So we've got pretty good visibility right now to the way the rest of the third quarter is going to look. And it is really a sharp acceleration versus what we saw this time last year.

And then when you look at the occupancy side, so obviously, we're really, really comfortable with where our occupancy is right now. We are anticipating a slight uptick in the third quarter, which is normal. And then we are anticipating a slight downtick in the fourth quarter. Now if you compare that to what we saw in the fourth quarter of last year, in the fourth quarter last year, we saw a pretty significant drop-off occupancy, I think it got down about 95.1%. We're absolutely not anticipating that, that's what's going to occur this year. And once again, we've got pretty good visibility on a couple of -- going out about 3 months and things are looking really, really strong for us right now.

Our next question comes from Jamie Feldman from Wells Fargo.

This is Connor on with Jamie. And congratulations on such a well-managed portfolio sale. Can you clarify whether the $1.625 billion sale price is stated before or after transaction costs and fees? And if before, approximately how much of transaction-related fees should investors assume?

Yes, absolutely. And thanks, Conor, for the congratulations. It absolutely goes to our teams in the field. They did a wonderful job in getting this transaction across the finish line. When you look at the $1.625 billion, that is before transaction costs and transaction costs for us is in the neighborhood of $15 million. I will point out that over half of that is management tax on one transaction that we have in or we had in Los Angeles, the city of Los Angeles. So you see some of the additional costs that are just associated with operating in that marketplace. But yes, it's about $15 million.

Our next question comes from Haendel St. Juste from Mizuho.

I wanted to go back to the subject of stock buybacks. Earlier, you mentioned that you hit your target from the portfolio redeployment, and you still have some acquisitions that you're targeting. So I'm curious, given where the stock is, broadly, are stock buybacks off the table? And would they require any incremental dispositions just broadly your thoughts on capital deployment with a range of options in front of you today?

Haendel, I think we have to -- let me just talk about how we think about capital allocation first, right? So when you think about capital allocation, there's lots of things you can do, right? You can buy assets, you can develop, you can improve your portfolio through enhancements that we are doing through our rehab programs and redevelopment programs and you buy stock. And so we clearly have bought a lot of stock. And if you take a look at the last 2 years, just to put it in perspective, we sold $2.1 billion of older assets. We bought $1.1 billion roughly so far. We have $200 million left on this 1031 exchange program to try to minimize the special dividend that we might have to have. And we decided that rather than doing a special dividend, we do -- if we're going to give -- send capital back to shareholders, we'd rather do it in a buyback than a special dividend.

So when you think about all that calculus and we do some development. And the development that we're doing is definitely lower than we normally do, primarily because it's hard to make numbers work and all that. So I would say that just generally, if you look at the best investment we can make today, it's buying our stock even at this level today. The -- we are in the real estate business long term. So we don't want to sort of shut down our operations of being able to buy and sell and develop. But on the other hand, we're going to definitely lean towards that -- the capital allocation creates more value for shareholders. And today, when you look at the existing market, and you look at our NAV, the consensus NAV is somewhere in that $130 range and you look at our stock at $111 today. That's a gap, a big gap.

And we've always said that that we will lean into buying stock if it's at a significant discount and it's persists over a long period of time and we can't -- or a reasonable period of time, so we can actually execute. And then we are going to lever up long term to buy stock. So we would have to sell additional assets. But I wouldn't say that we're done buying stock back. I would just say that if the market continues and we're able to thread the needle between the tax efficiency and the ability to create some cash flow out of asset sales without having to pay special dividends, we could lean into buying the stock again too. Alex, you might want to augment that?

Yes, absolutely. That's exactly right. And the way we look at it right now is we have maximized the tax efficiency aspects, and that's why we are buying assets entirely for that reason. But repurchasing shares is a great use of our capital. As I tell most of you guys and we met at NAREIT or other conferences, Camden is a screaming buy, and we believe that too, so that's why we're out there buying.

Our next question comes from Brad Heffern from RBC.

Alex, you gave that commentary around system-wide signed new leases having been positive a few days in July. I just want to make sure I understand that right. Should we assume that, that means new lease should be close to flat in July and August? Or does that just bounce around a lot day-to-day and you have some more negative days and it just blends to something lower?

Yes, it absolutely does bounce around quite a bit. but we are getting pretty close to the point where it's going to be flat. Now it's not going to be flat for the full quarter. And whenever anybody asks me about this, I already said third quarter, but not for the entire third quarter. I said it might be a day, it might be a couple of days, and that's exactly what we've hit.

I think you have to remember that if you sort of think about the way the peak leasing cycle works or peak leasing season works, you really sort of peak out towards the latter part of August and then in September, it starts the decline of the typical seasonality. So I wouldn't expect to see it for the full quarter, but absolutely love the direction that we're going, love these green shoots, and this is the first time in several years that we can sit here and tell you, we've seen system-wide some positive new leases. So it's absolutely wonderful, wonderful green shoot for us.

Our next question comes from Steve Sakwa from Evercore ISI.

Just maybe sticking on that theme, Alex. I think at NAREIT,you had sort of maybe talked about a further improvement in new lease pricing into the fourth quarter. And I'm just wondering, just based on all the green shoots you're seeing, is that still your expectation for new leases? And if you could just maybe give us a sense for maybe what your expected blended -- blended rent growth is for the back half? That would be great.

Yes, absolutely. So if you look at the third quarter and the fourth quarter, I think on the new lease side, they're going to look fairly similar. And a lot of it is, is that the fourth quarter becomes an easier comp for us. If you look at it on a blended basis, what we're anticipating is both the third quarter and the fourth quarter to be positive on the blend sort of in the 1% and just over 1% type range. That's what we're expecting. And once again, what's different this year in our math than what you would typically see is that the fourth quarter last year was decidedly weaker and that does help us with the [indiscernible].

Our next question comes from Jana Galan from Bank of America.

Curious, just following up on the term loan, what the plan is for the debt maturities in the back half of the year?

Sure. So the reason we put the term loan in place was to enhance our liquidity as we were waiting to sell our California portfolio, and we have that for 1 year, which is going to give us continued flexibility and full availability under our line of credit and commercial paper program as we approach that maturity. So we're going to continue to watch the markets. And if it makes sense, we will issue another long-term bond to refinance that in November, but the term loan does allow us to have that additional liquidity and financial flexibility under our line and commercial paper.

Our next question comes from Rich Anderson from Cantor Fitzgerald.

So Alex, when we were at a NAREIT. We talked about this sort of hockey stick concept of future growth. And you implied that in the third quarter, you expect and I don't want to put words in your mouth -- don't want me to do that, but there would be some sort of real visible hockey stick-type of event in the third quarter, and that was what was behind your guidance. I understand you're laying out all these green shoots, but it doesn't still feel like hockey stick to me. So I'm wondering if you're pulling back on that third quarter thesis a little bit or if it's still very much intact as you look into the coming quarter?

Absolutely. Not pulling back whatsoever. And maybe that's just because I'm in Texas, and I don't really know what a hockey stick looks like. Here is what I tell you guys. The third quarter is looking really strong. We have tons of green shoots. And because of that, we feel really good that the third quarter in terms of new leases, renewals, blends, is going to be an outlier as compared to what we've seen in the third quarter last year and what we're seeing in the second quarter this year. So I feel really, really good about that.

And then that's going to give us the pricing power that we need as you move into the typical weaker fourth quarter. And so we feel very good and not pulling back on our thought process whatsoever.

I'm sorry, the interesting part of this equation is, I think that a lot of folks have the recency effect, right, which is, gee, from -- in '24, '25 and '26, revenue grew on average for cumulatively through that period 2.1%. So we have had 41 months of -- and if you go just back before into 2023 because you started having your -- the slowdown because of supply then. So you had 41 months so far where we've had rents that have basically been flat or down in most markets. And so the market has this recency effect like, "Oh, well, that's just going to -- let's just take the graph, and we'll just take it out into '26, '27, '28, and that's what's going to happen.

And -- but if you look at post-financial crisis, okay? So -- our revenue went down roughly 5.1% in 2009 and 2010. From 2011 through 2019, the highest growth rate was 6.5%, the lowest growth rate was 0.9%. And through that 8-year period, it averaged somewhere around 4%. And so we're going to go back to a more normalized economy. You never had -- we had an unprecedented situation where you had a 50-year high in supply, and so that's clearly something that we had to work through and we'll continue to work through. And once we do get to this point where you have a balance in supply and demand. We still have high demand in our markets. And we know that supply is going down. And so when you hit that pivot point, it's going to be more like a hockey stick than a slow slog growth, in my opinion. And just because of the history of where we operate and the history of how these markets work when you have supply and demand or demand higher than supply, which is getting ready to happen next year probably.

Our next question comes from Wes Golladay from Baird.

A quick question on concessions. I know you don't typically like to use them, but I believe you were using them last year. Have you pulled back on that?

Yes. This is Laurie. We're continuing to see our concessions in the markets level off. And where we're seeing them the most is where there's development in these high supply areas. As a practice, we do not use concessions, but we have on a handful of our communities where we've had acquisitions or new developments that we are also leasing up -- that is something we usually put into our pro forma. We always assume at least a month of concessions for development. And then we have to manage throughout the lease up, what makes the most sense with sometimes specials for early move-ins.

And so we are seeing that moderate throughout all of our markets. And where we're seeing it moderate is where we're also seeing the opportunity for us to pick up on both occupancy and our new leases and renewals. So let me just give you kind of an example. Austin, obviously, one of the highest concessionary markets. One of the most challenged with supply, is quickly changing. And we're continuing to work through that supply but we also continue to see strong demand absorption with more than 11,000 units just in the last 12 months. So if you look at the beginning of last year, 2025, we've seen occupancy improve 6 quarters straight. So quarter-over-quarter, we're continuing to see occupancy improve. Second quarter 2025 occupancy was at 94.7%. And this quarter, we just delivered 96.1%. So you have 140 basis points better, and then we're currently in July, I'll just share "Don't smack me, Alex".

But our occupancy is sitting at 96.6%. So again, as occupancy firms up, concessions burn off and we have the ability to improve our pricing, you're just starting to see that play out. As you just heard from Rick and Alex talking about the change. And who would have thought that we'd be sitting at 96.6% occupancy in Austin, Texas today. So that's kind of -- again, we're managing around the concessions. We're continuing to sell the value and making price decisions based on what makes the most sense to balance occupancy on our portfolio.

Our next question comes from John Kim from BMO Capital Markets.

Just listening to this call and the other calls in the sector so far. There hasn't been a lot of talk about AI or technology advancements or data analytics, Airbnb. And I was wondering if there's anything else that you're doing on this front? That would meaningfully drive same-store revenue? Or has most of this already been accomplished?

We are incredibly bullish about what AI can do really for every single line item on an income statement. And let me tell you what we're doing. So the approach that we're taking at Camden, we're dividing into three words. We call it leadership, crowd and then lab. And leadership is a concept that all of us in a leadership position is encouraging AI, encouraging our teams to work with AI, encouraging our teams to come up with solutions that are AI-driven.

The next thing is we look at the crowd. And our belief is that the best solutions always come from those that are closest to the problem. So we are empowering all of our team members to play around, see what they can use AI for in order to create efficiencies. And then once they come up with solutions that work or that they believe work, we have put together a lab. And my belief is we are one of the few companies really in the country that have put together this lab concept where it's also like a sandbox where they can play with whatever they're rolling out and make sure that, number one, it's safe; number two, it works, et cetera. But if you look at an income statement, and then you start at the very top, if we can use AI to increase our renewal percentages, that is one of the most dramatic changes that can actually flow through the bottom line.

If we can -- if you look at the expense categories, if we can use AI to make sure that we minimize our property insurance expense, remember the property insurance for us is about 7% of our total expenses. If we can proactively get on top of where the claims occur and make sure that we do what we need to, to minimize those. If you think about workers' compensation claims, if we can use AI to analyze where those occur, that will 100% help us in that category, if we can use AI to help understand our utility spend, that will absolutely be helpful. We believe that AI is here to help Camden, to help our team members be more efficient, and we are very, very bullish about it. Every Senior Vice President in this company meets once a month, to discuss the AI initiatives coming out of each of their departments.

So this is something that we are at the front lines of. And I firmly believe that at this point in time next year, we will be talking about real life, real benefits to the bottom line for Camden. So incredibly excited about it. There's a lot out there, and we are at the forefront of it.

Our next question comes from Michael Goldsmith from UBS.

This is Ami on with Michael. So I know you guys just sold out of California, but are there any other noncore markets in the portfolio that you could target for sales in the future, maybe D.C. portfolio and become a pure-play [ Sunbelt REIT ]or anything else that you guys might be looking to do with the portfolio moving forward?

So the rest of our markets, they're like our children, we love them all equally. Sometimes we get annoyed with some of them, but we love them all equally. And so we're not going to sell out. We have no intention to sell out of any of our existing markets. Now as I've mentioned before, we will reduce our exposure to our 2 largest markets, and that's D.C. Metro and that's Houston. And that's just for portfolio allocation purposes. So expect us to reduce our exposure there slightly. But no, the rest of our markets, we intend to stay in for the long time.

Our next question comes from Adam Kramer from Morgan Stanley.

Great. I'll sneak in a two-parter here, if that's okay. First is just on sort of market level. If you go sort of your expectations going into 2Q, which markets had the strongest improvement relative to expectations and which markets maybe disappointed relative to those expectations?

And then second part, I think we asked earlier, apologies if I missed the answer. Just thinking about your same-store revenue guidance midpoint now. What would be sort of the rough contribution from occupancy, rent growth and then sort of ancillary revenue?

I'll take the second one first. As far as the same-store revenue guidance goes, yes, it's made of all components. We've seen better occupancy in the second quarter. And as Alex said earlier, we're going to hope to see -- we are planning on seeing an uptick in the third quarter with a slight downtick back in the fourth quarter. Our bad debt is normalized as expected. We think it's going to come in for the new same-store portfolio at around 40 basis points that compares to our prior 50 basis points guidance, which at 10 basis points is primarily driven by California being gone. Our

other income, we expect to grow somewhere around 3% and -- and as Alex touched on earlier, our back half blends will be somewhere 1% or north of that in the back half, and we feel very comfortable with our guidance, the way it is laid out. And based on the green shoots we have seen, the occupancy strength we've seen and the renewals that we've begun to sign.

And I'll hit the first part. So if you think about our expectations for the second quarter, there's not any one market that was really an outlier from what we expected. As I mentioned in my prepared remarks, we clearly had a lot of our markets that were showing green shoots. Good news is, is that's what we expected. And when you look at the markets that are a little bit behind and obviously, markets that jump out for being a little bit behind would be sort of Austin and Denver and Phoenix. But when I look at Nashville, when I look at those markets, though, I know what the issues are, right?

So Austin, in Nashville, that's a supply issue. And when I look at Austin, Austin is sort of an interesting market to me because -- we always sort of talk about the second derivative. If you actually look, Austin is showing the highest improved momentum amongst all major U.S. markets. This is not a Camden number. This is across all all operators in Austin. There's been a 360 basis points of less decline in rents market-wide March to June. But let me tell you what it is for us.

If you look at March, signed new leases in Austin were down 11%. If you look at July, they're down 3%. That still is a negative, but that is 800 basis points better than what we saw in March. So even the market that had been softer for us are starting to show some fairly meaningful green shoots. And then you look at Phoenix. I'm always amazed that anybody rents with a 120 degrees, right? Phoenix is reverse seasonality, that's what happens. And Phoenix is really a story of two markets, right? It's East versus West. And the East side of Phoenix is absolutely outperforming the West. Thankfully, we are 100% on the east side. So no one market is doing better or worse than we expected. They're all doing in line with our expectations. But we just continue to see some things that really are giving us comfort as we look at the way the rest of this year can shake out.

Alex, I would just add, you mentioned Denver and Denver has been one that's been -- a lot of talk about, but we're seeing some of the biggest gains in our effective leases from the second quarter to where we're sitting today, and moving again from a negative 7.7% on effective new leases second -- in our second quarter to now negative 4.3%. So I mean, again, you're seeing improvements across the board even in those that have been a little more challenged, whether it is a supply story or just some of the market dynamics and that leads us to believe that we're definitely trending in the right direction and directionally should position us for steady improvement since those leases become affected in our third and fourth quarter.

Our next question comes from Austin Wurschmidt from KeyBanc Capital Markets.

I realize things can change quickly as you just alluded to with the examples in Austin, Phoenix and Denver. But what percentage of leases today are at a gain to lease? And what's kind of the magnitude of that gain to lease?

Here's the way I would look at it, and I come back to my prepared remarks. So in my prepared remarks, I talked about that 50% of our communities in July have positive signed new leases. So that's definitely the direction you want to be in, if you compare that to where we were in March, where it was only 20%. And if you're looking at just sort of not looking at new lease or renewals. But the question -- if the question is about gain or loss to lease on the financial side, in July, we actually rolled into a loss to lease situation. And we haven't been in a loss to lease situation this year. So feel really good. That's the direction in which we're going.

And if you look and you say, okay, well, where are the gain to leases. The gain to leases are exactly where you would expect them to be, gain to lease. We've got a slight gain to lease in Austin, and we've got a little bit of a gain to lease in Nashville, but the rest of them are operating a loss to lease.

Our next question comes from Alexander Goldfarb from Piper Sandler.

I just wanted to follow up on Ami's question. understand that you're going to reduce your top two markets reduce that exposure. But as you guys conducted this process, I know originally years ago, you run Kansas City, but certainly, the landscape has changed, especially as we think about where supply [indiscernible] are. Are any -- did any of the Midwestern markets or any of those at all attractive to you from a pro-growth low supply markets that you'd want to enter? Or as you undertook this California repositioning exercise you did look at Midwest and determined that your best investment remains in the Sunbelt?

Yes. So what we do is we look at where the population growth is and where the employment growth is. And if you look at the markets in which we operate right now, those markets lead the nation in both of those categories. It is interesting, and we are paying attention to the fact that some of the Midwest markets are starting to get population growth a little bit more outsized than they typically do. And I think that's an affordability issue. What we have yet to see is whether or not that is a long-term trend.

If you think about what we do, obviously, we are a very capital-intensive business. We're in a slow-moving business when it comes to investments. And so you want to make sure that you're not jumping on a trend that may not last, right? And so we continually evaluate all of the markets out there. And I will tell you that if any one market jumps out, and shows that it is a long-term trend of high population growth, high employment growth, then we will absolutely look at that market. But right now, we think we're in the right markets.

I will tell you that probably two to three markets a year, we do a deep dive on to see if it's something that we want to enter. And the last one that we did a deep dive on that screen was Nashville, everyone that we deep dive since then hasn't screened. But we continue to look -- and if we believe that on a long-term basis that we can go into a market, create shareholder value, then we'll do that.

Our next question comes from Rich Hightower from Barclays.

Just a small one for me. And I know it's a relatively minor line item in the OpEx stack, but I did notice that your marketing and leasing expense, which I know is separate from the concession question earlier. It's gone up double digits year-to-date, well above any other cost category. So does that signal anything about the strength or weakness of the market kind of beyond the revenue commentary?

Rich, so I'll answer that. Our customer acquisition costs have increased year-over-year, meaning that guests are just more expensive. But the marketing spend for us was really ramped up as we entered into this leasing -- the peak leasing season where demand is typically high. And -- and we wanted to make sure that we went into this last summer season capturing as much of the demand as possible. I mean, remember, we are coming off a 95.1% occupancy in the first quarter, not where we want it to be.

And so we didn't hold back in our marketing spend in case we had a shorter leasing season like we did last year. Fortunately, we didn't and so far have not experienced that. But that was a little bit of the reason, and we didn't want to be sorry at the end of the season that we didn't push a little bit where we thought we could actually make a difference. And the good news is lead volume has been up. We've been able to drive more qualified traffic as evidenced by just an increase of our guest card to visit ratios, which was up about a little over 7% year-over-year.

Our next question comes from Peter Abramowitz from Deutsche Bank.

Just wondering if you could give us an update on migration in your markets so far this year. Curious how it's been relative to historical levels and your expectations coming into the year, and which markets has it been stronger or weaker than your expectations?

Yes. The good news is that domestic in-migration into our markets continuing. And it's funny, I saw a headline from John Burns, who's a pretty good researcher out there. And his title was Domestic Migration is Normalizing, Not Disappearing. And I would tell you, if you go back and -- and Ric made a comment earlier where he said it's the 30-year trend into the Sunbelt markets. So I'm going to tell you it's been a 50-year trend into the Sunbelt markets. And sure that trend did an acceleration during the COVID times, but it is back to the long term and the long-term trend for us is very good for people moving into our markets, and one of the things that we look at is we say what percentage of our new renters are coming from outside of the Sunbelt.

And when you look at that in the second quarter, 16% of our new renters were move-ins from non-[indiscernible] locations. And if I track that backwards, and I just sort of look and say, -- all right. What was that a year ago? A year ago, it was 15.5%. What was it before that, it was 14%. So it's not a matter of us seeing any drop-off on the domestic in-migration. And the reason is simple. It is you can come to our markets. Our markets have plentiful jobs, our markets are where young people want to be. Our markets have although people don't like it when it's the middle of the summer, our markets have fantastic weather, remember, you never have to shovel the heat off your car. So a lot of these drivers are what's causing people to continue to move to our markets, and we're continuing to see it in our data.

Our next question comes from Julien Blouin from Goldman Sachs.

Yes. I just wanted to go back to the blends expectation for the back half. It sounds like it a little over 1%, which I think would imply around 200 basis points of improvement versus the first half. Just wondering, your main Sunbelt here is assuming just 30 bps of improvement in the back half versus the first half. I guess I was wondering if you had any thoughts on why the ramp for your portfolio would be so much stronger over the coming months. Do you think the variance is maybe driven by market exposures? Is it age of assets? Do you feel like you have maybe just a more fundamentally bullish view of the coming months.

I think it really comes down to what we've seen so far on the occupancy momentum that we picked up as well as the renewal momentum we've started to see and sign renewals that Alex and Laurie have talked about on top of the green shoots that we've begun to recognize across various of our markets on the new lease side as concessions begin to roll off with competing lease-ups. So that's really what it is. It's based on our current performance and what we're seeing so far.

And I'll add to that. All of our peers are great operators. And so their experience is perhaps different than our experience. I do know that sometimes people take different tasks or different approaches when it comes to do you get the occupancy up first. And then when you get the occupancy up, that gives you pricing power. That's the approach that we're taking and I'm sure whatever they're doing is right for their portfolio.

Our next question comes from John Pawlowski from Green Street.

My question is on the pricing on the 7 acquisitions you did in the quarter. So there could be a meaningfully different kind of going in yield versus a year 1 or year 2 stabilized yield just based off of what you assume for concession burn off. So Alex, could you share like the spot going in kind of cash NOI yield and then how you guys underwrote like maybe year 2 yield on these acquisitions?

Absolutely, but I'm going to let Stanley Jones, our Head of Real Estate Investment, take that one.

John, when we look at the year 1 yield, as Alex mentioned in his prepared remarks, we are on that book of business, are in the high 4s and is based on current effective rents, 6 of these acquisitions are offering some concession, some ranging from from no concessions up to just over 1.5 months. I would say, what I would caution against is painting those concessions across these deals with a broad brush. It's not always on every floor plan or lease term, oftentimes, it's on vacant units. So just a word of caution there.

And then as you look at supply in the submarket, which these have been very competitive submarkets and have dealt with a lot of supply, the story for each of these acquisitions is really good. With just a few units left to absorb and very little new construction on the horizon. So as we look through the balance of I think our underwriting is conservative, and we're assuming no real effective rent growth until we get into 2027 and 2028. When we start to gradually remove those concessions. And once all the concessions are removed from the underwriting over the next 1 year, 1.5 years, you could see a path to getting to a yield in the mid-5s.

And I'm just going to add to that because, obviously, we've talked about a lot of transactions this year. And the fact that we are able to trade out of a 19-year-old portfolio in California with all of the complications associated with California into a 5-year old portfolio and blending the share repurchases and able to do that in a year 1 FFO neutral year 2 FFO accretive basis, I think it's just a remarkable accomplishment and a fantastic capital allocation.

Our next question comes from Alex Kim from Zelman & Associates.

I wanted to ask about development lease-up velocity. Just curious how that's going in the two projects that you guys have in lease up and how are rents and concessions tracking relative to underwriting. And then just potentially what are the expected stabilization yields?

Yes, absolutely. So if you go back to original pro formas. Obviously, with a lot of these deals when we were underwriting them, we didn't sort of have the expectation that we would be dealing with a 50-year high term in terms of new supply. But I will tell you that they're all doing really well. And if you just look at where we are right now, and let's not talk about -- we've got one deal in lease-up, which is our Village District deal, and it's getting towards the end of lease-up which always makes it a little bit slower because you start to deal with the back door, but feel pretty good about where that one is.

And I think that one is going to shake out to a stabilized yield at just 6%. When you look at the deals that are under construction, and we're talking about South Charlotte and Blake me first, those two deals, the real story there is that construction costs are coming in pretty dramatically as compared to what we originally anticipated. And the great news about that is -- you can get to a good number by having the numerator or the denominator moving in your favor. The denominator is very much moving in our favor on both of those. Nations is a little bit early in the process. So we haven't started leasing that one yet. But feel really good about the direction and where we're going. And we think that we're going to hit stabilized yields for these assets sort of in the high 5s, right around 6% range.

And our next question comes from Eric Wolfe from Citi as a follow-up.

You mentioned July renewals were over 4% and you were sending out, I think, these renewals at the 4.2% level. I guess what would you expect to achieve on that 4.2%. I think historically, you've said maybe 50 basis points lower, but didn't know if the movement on new leases maybe meant that it could come in a little bit tighter than historical. So just curious what you think you can achieve on those renewals?

I mean, as you said, we continue to see the -- where our renewals go out. And by the time they're signed, the effect it is somewhere within that expected beat [indiscernible]. With August and September renewals going out at an average of 4.2% without giving you the exact numbers because they're moving day by day. I can tell you the September numbers are even stronger than the August number. So until good about that continued trend. And as long as it's going directionally to levels closer to the high 4s, we feel good about the third quarter and going into the fourth.

And then, I guess, maybe just last one. I mean, you gave the occupancy number. [indiscernible] gave the renewal number, I think, for July. I guess what's the hesitancy to provide sort of new lease number for July, you gave pieces of it, right? I think you have different pieces. But just curious like why -- I guess, why not just provide that number? Or if you think it sort of misleads people to provide that number because it changes around so much? Just curious on the philosophy there.

Yes. It's always funny because at one point in time, we started the way we kept giving all this information out there. You basically started giving monthly new lease and renewals. And that really does put you on -- it puts you on a treadmill where I think people focus far too much on little pieces of data rather than looking at the whole picture. Now that being said, we sort of laughed about it because it seems like whenever anybody has got some good numbers, then they want to talk about it. And we really do have good numbers. We're like, we really want to talk about it. But so I think we gave you enough color that you can gather that our numbers both on the new lease renewal and occupancy side are pretty good for July. But at this point in time, we're going to try very hard to stay away from giving monthly numbers.

The thing I think about when I think about this real time, give me the exact lease rates that you signed today, I think about the way -- The Street reacts to second derivatives. So we've made the statement today, and it's clear that the second derivative for Camden's portfolio and for the multifamily industry is very positive and on a steep trajectory up. Now what has that done, to the investor expectations? Nothing.

So on the other hand, if the second derivative was down, the stocks would crater. And so it's like a really interesting issue. So this idea of giving real-time information of like here's what the lease was today, and here's what it was tomorrow, that kind of thing is just -- there's just too much data out there, and the market reacts to things that -- to me, you need longer-term data, you need more data that is -- that shows the trend going on for better than a day or a week or a month. And so that's why I think the industry is trying to go that direction, even though, like Alex said, we'd like to show you our really good numbers and then that happens in one week, but then people get stressed out about a bad number for a week too. So that's kind of the theory anyway.

And ladies and gentlemen, with that, we'll be ending today's question-and-answer session. I'd like to turn the floor back over to Alex Jessett for any closing comments.

Thank you for joining us today, and we look forward to visiting with many of you at the upcoming mean conference season begins in September. Take care.

And with that, we'll be concluding today's conference call and presentation, we do thank you for joining. You may now disconnect your lines.

Good morning, and welcome to Camden Property Trust First Quarter 2026 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 Executive Chairman; Alex Jessett, Chief Executive Officer; Laurie Baker, President and Chief Operating Officer; and Ben Fraker, Chief Financial Officer; Keith Oden, Executive Vice Chairman; and Stanley Jones, Senior Vice President of Real Estate Investments, will also be 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. And please note, this event is being recorded.

Before we begin our prepared remarks, I would like to advise everyone that we will be making forward-looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations. Further information about these risks can be around 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 first quarter 2026 earnings release is available in the Investors section of our website at camdenliving.com, and it includes reconciliations to non-GAAP financial measures we will be discussed on the 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. If we are unable to speak with everyone in the queue today, we'd be happy to respond to additional questions by phone or e-mail after the call concludes.

At this time, I'll turn the call over to Rick Campo.

Good morning. Our theme for today's precall music has changed. We recently announced some important changes to Camden's executive team with the promotions of Alex Jessett, Laurie Baker and Ben Fraker, we continued our long-standing commitment to succession planning featuring Camden's home-grown talent. This will ensure the continuity of Camden's family values, institutional knowledge and unique culture Alex, Laurie and Ben each brings 25-plus years of tenure at Camden to their new leadership roles. And in the words of [indiscernible], I'll be here when you're ready to roll with the changes. These promotions will ensure that Camden would be ready to roll with the changes in the years ahead.

But one thing that never changes is Camden's commitment to workplace excellence which was recently reinforced by our place on the Fortune Best Place to Work list in America for the 19th consecutive year, ranking #13 this year. 96% of our employees say Camden is a great place to work, which has led to the highest customer sentiment scores that we've ever seen. The macro case for improving apartment fundamentals continue to be strong. New supply has peaked and has been cut in half in most of our markets. First quarter apartment net absorption was one of the best since 2016 despite slow job growth and tepid consumer sentiment. Apartments provide consumers with a compelling low housing cost alternative to owning a home. I want to give a big shout out to Camden team members for continuing to prove the lives of our teammates, our residents and our stakeholders when experienced at a time.

Next up is no stranger to you, but our new CEO, Alex Jessett.

Thanks, Rick, and good morning. As Ben will cover in detail, we had a strong first quarter. Much of the outperformance was timing related, and we are looking forward to seeing how our [indiscernible] season unfolds throughout the remainder of this quarter and next. In the first quarter, we recorded our lowest bad debt level since the onset of COVID-19 at less than 40 basis points. We attribute this in part to outsized income tax refunds received by many of our residents, combined with their continual financial strength and the impact of our enhanced resident credit screening. For middle and higher income earners, 2026 tax refunds were up approximately 10% over last year created an enhanced spending power.

Despite headline reports of declining consumer sentiment, the data illustrates the financial health of our target demographic remains strong, with spending up 3% year-over-year primarily on services and retail. Our renters pay alone 19% of their income towards rent, allowing them additional discretionary funds often not seen in the more expensive coastal markets. On the demand side, our markets remain strong. CBRE's latest headquarter relocation study, which covers 725 public announcements between 2018 and 2025 and shows activity accelerating in 2025 and concentrating on a short list of metros. Dallas-Fort Worth remains a top destination with more than 100 headquarter relocations since 2018. In 2025 alone, the metro added another 11 interstate or international headquarters from higher-cost markets, including Los Angeles, the Bay Area, New York and Chicago.

Additionally, for the 12 months ended January of this year, Dallas led the nation in absolute job growth, followed by Houston in #2 and Austin at #4. On a percentage basis, Austin led the nation with most of our markets in the top 30. The Houston metro area led the nation last year in population growth with just under 127,000 new residents added in the 12-month period ending July 1, of 2025. That equates to 1 new resident every 4.1 minutes or 347 new residents each day. Among the top 10 metros with the largest population games, only the Dallas Fort Worth metro came close with roughly 124,000 new residents. No other metro added even half as many. This disparity highlights Texas' appeal to workers and families supported by relatively strong job markets, lower cost of living and the absence of a state income tax.

Beyond Dallas Fort Worth, the CBRE relocation study showed a group of Sunbelt and growth markets emerging as consistent headquarter winners. It highlighted Miami, Austin, Charlotte, Nashville, Phoenix, Tampa, Atlanta and Raleigh Durham as rising contenders with a pro-business climate, including tax advantages, labor availability and lower costs. The decades-long trend of domestic migration to the Sunbelt normalized in 2025, not disappeared. In fact, Wind's migration tracker shows domestic migration reaccelerating in 2026 and as compared to 2025 in most of our markets with sequential annual increases over 10% in Austin, Dallas, Houston, Orlando, Phoenix and Tampa Camden is in the right high-demand markets ready for the upcoming lower supply environment.

Turning to the real estate front. Our California sales process is progressing on schedule. As we shared previously, we've had strong interest with over 230 companies signing confidentiality agreements. We are currently in the diligence process with one buyer for the entire portfolio with an anticipated close date at the end of June or early July. If it does not work out with this buyer, there are other strong buyers who could step in, although with a later closing date. At this point, we're not going to comment further on the potential buyer or the sales price other than to say it is in line with expectations. We continue to assume 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 model at $650 million has been used for share repurchases in late 2025 and year-to-date 2026.

During the first quarter, we disposed of a high CapEx 4-year-old community in Dallas for $77 million, generating an approximate 12% unlevered IRR over an almost 30-year hold period. After quarter end, we acquired Camden Alpharetta, a 269 home apartment community in the Atlanta, Georgia Metro area and Camden at Lake Nona, a 288 home apartment community in the Orlando, Florida Metro area for a combined $170 million. We are actively underwriting several other acquisition opportunities and remain confident we can effectively deploy the 1031 proceeds from the California sale. However, as I previously noted, the timing of the exchanges can add considerable variability to our 2026 earnings as we do not receive the sales proceeds until we complete the exchanges.

I will now turn the call over to Laurie Baker, our President and Chief Operating Officer.

Thanks, Alex. Camden's operating performance to date is generally in line with our expectations. While our first quarter results were slightly ahead of budget, the outperformance was mainly driven by timing-related items. Overall, and as expected, we saw a slow but steady improvements across our portfolio as we move through the first quarter and into the beginning of peak leasing season. Our preliminary results for April are on track and indicate modest improvements in both occupancy and blended lease rate growth compared to the first quarter. .

Turnover remains exceptionally low, and our first quarter 2026 annualized net turnover rate of 30% was one of the lowest in our company's history. This is in part due to minimal move-outs related to home purchases, which accounted for 9.2% of our total move-outs this quarter. but it also reflects record levels of resident retention, which are a testament to Camden's unwavering focus on customer service and providing living excellence to our residents. We will continue to focus on renewals and retention going forward, helping us protect and maintain occupancy and to mitigate expenses related to unit turnover. Renewal offers for May, June and July were sent out with an average increase in the mid-3% range. Our team at Camden remains committed to this year's rallying cry of smarter, faster, better, which means smarter and leveraging data, insights and AI to drive better outcomes, remove repetitive tasks and improve our margins.

Faster with AI to enable quicker, more efficient service for our customers and teams and better by amplifying our people and improving the customer experience as reflected in our highest customer sentiment score to date in the first quarter.

I will now turn over the call to Ben Fraker, Camden's Chief Financial Officer.

Thanks, Laurie, and good morning, everyone. I'll begin with our capital markets activity from the quarter, followed by a review of our first quarter results and our outlook for the second quarter and remainder of the year. During the first quarter, we continue to take disciplined actions to further strengthen our balance sheet and enhance our long-term financial flexibility. We proactively recast our $1.2 billion unsecured revolving line of credit extending its maturity for years while preserving attractive covenant terms and lowering all-in pricing by 15 basis points.

The recast enhances our liquidity position and reflects the continued support we receive from our bank partners. During the quarter, we also issued $600 million of 10-year unsecured bonds at an all-in effective rate of 5%. This issuance allowed us to lock in long-term fixed rate financing, extend our weighted average debt maturity and reduce near-term refinancing risk. As Alex previously mentioned, we were active with our share repurchases during and subsequent to the quarter with share repurchases of $423 million at an average price of $104.08 per share.

These repurchases along with $271 million in repurchases completed in 2025 and reflect our disciplined and opportunistic capital allocation approach as our shares trade at a significant discount to NAV. While we will continue to monitor our share price performance, our updated full year 2026 guidance assumes no other share repurchases. As a result of these actions, we ended the quarter with strong liquidity, well laddered maturities and leverage metrics that remain comfortably within our long-term targeted ranges.

Turning to our first quarter results. We delivered a solid start to the year. For the first quarter, core FFO was $1.70 per share, which exceeded the midpoint of our guidance by $0.04 per share, which we can attribute to the following items. The outperformance compared to guidance was driven by $0.01 from higher revenues from our operating properties, primarily attributable to lower-than-anticipated bad debt and higher collections on delinquent rent. Another $0.02 resulted from property expense savings, which were largely timing related and not indicative of a change to our full year expense outlook. The remaining $0.01 of the beat was due to the timing of third-party construction fee income, which we had previously expected to earn later in 2026.

Operating conditions during the quarter tracked our expectations for lease trade-out and occupancy. Additionally, outside of our core operating results, we recorded $58.2 million of noncore FFO charges most of which were related to the previously disclosed $53 million class action lawsuit settlement detailed in the 8-K furnished on April 9. The remaining charges were primarily due to $4.9 million of anticipated investment losses from 2 climate technology funds.

Turning to full year 2026 same-store guidance. While we experienced better-than-expected bad debt and delinquency results during the first quarter, we believe it is premature to extrapolate one quarter's performance into a full year trend, particularly given market variability. As a result, we are reaffirming the midpoint of our full year same-store revenue guidance at 0.75%. Similarly, the first quarter expense outperformance was largely timing related. So we are reaffirming the midpoint of our same-store expense guidance at 3%. With the midpoints of both revenue and expense guidance unchanged, the midpoint of our same-store NOI guidance remains unchanged at negative 0.5%.

Our same-store guidance continues to assume improving lease trade-out fundamentals as we enter peak leasing season, along with moderation in new supply pressure as the year progresses. With no change in our expected same-store results, and transaction volume and timing and range of our original plan, we are keeping the midpoint of our full year core FFO per share guidance of $6.75. We also provided earnings guidance for the second quarter of 2026. We expect core FFO per share for the second quarter to be within the range of $1.65 to $1.69, representing a $0.03 per share sequential decline from the first quarter at the midpoint. This anticipated decline is driven by a $0.04 sequential decrease in same-store NOI and as higher expected revenues during our second quarter are offset by the seasonality and timing of certain repair and maintenance expenses and the timing of our annual merit increases.

This $0.04 same-store NOI decrease is partially offset by $0.01 of additional non-same-store NOI from our completed and projected net acquisitions. In closing, Camden remains in a strong financial position our balance sheet strength, ample liquidity and disciplined capital allocation provide us with meaningful flexibility as operating conditions evolve. At this point, we will open up the call for questions.

[Operator Instructions] The first question comes from Eric Wolfe with Citi.

I think you said that April blends were modestly better than the first quarter, which came in at, I think, around negative 1.4%. But you also said that April was generally in line with your expectations and what you had in guidance thus far. Could you maybe just talk about sort of the ramp that you expect for the rest of the year? I guess it would seem like based on your guidance that you expect a pretty big ramp so I was just curious when you expect to see that? And if you see any early signs of that increase in spreads based on your [indiscernible] data?

Yes, absolutely. So let's sort of frame it. Let's first talk about occupancy. So April occupancy is right around 95.4%. Now that compares to 95.1% in the first quarter. So that's a pretty considerable increase. And then when you look at blended rates for us in April, and I'm certainly not giving interim data because I don't want our peers to smack me. But we are seeing blended rates up about 100 basis points in April as compared to what we saw in the first quarter. So all of that is in trend and absolutely positive. If you look at how we're thinking this is going to lay out for the rest of the year, what we're anticipating is a pretty strong third quarter. And with the hope that at that point in time, we've got enough of the new supply absorbed and then that leads into sort of an atypical better fourth quarter than what you'd normally see because you've got supply coming down so dramatically.

So that's what's built into our number. I will tell you, at this point in time, we are feeling pretty good about how April is shaping out. And we're certainly seeing several of our markets that I would classify as showing green shoots. Markets that are jumping out to me would be Atlanta Dallas, Orlando, Nashville, Raleigh and Southeast Florida. And we think those are going to be the markets that are going to really lead us in the sort of return to normalcy all the supply is absorbed.

The next question comes from Jamie Feldman with Wells Fargo.

Great. First, congratulations to everyone on all the changes. Excited to see what comes next. I guess as we think about -- going back to those comments, can you talk about concessions? How have they been trending? And then as you think about the ramp, we expect to see for the rest of the year, what's your expectations for concessions coming in and how that helps?

Yes. I mean, as you know, we don't offer concessions. And so what we're doing is we have to look and see what's out there in the marketplace. And the good news is that we are seeing concessions come down fairly meaningful in most of our markets. And once again, that's really tied to supply. If you look at the vast majority of our markets, new supply is down 50% from its peak. And because of that, you're no longer in a situation where you've got a lot of developers that are trying to go from 0% occupied to 95% occupied and offering every single concession possible to get you there.

So we are seeing concessions come down, as I said, pretty considerably in most of our markets. And really, the easiest way and the best comp that I have for that is the one asset that we got in development, which is our Village District community in Raleigh, and that particular community, remember that we always assume that you're going to give 1 month 3 in a new lease-up. And that's to compensate for the fact that there's construction activity, et cetera, going on. And we are all a concession there, but it's not much over that 1 month. And so what that really does tell you is that concessions are starting to get into check in our markets.

The next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Yes. Laurie, I think you indicated asking rates on renewal leases are going out in the mid-3% range. I think last quarter, you were sending out around 3% to 3.5% achieved closer to or just below, I think 3% with the number. Just curious kind of what the take rate has been from the asking versus achieved? And if you think that starts to narrow a little bit as you get into the peakly season as it sounds like things have picked up a bit.

Yes. So we saw that in the first quarter, we were going out with the range in the mid-3s. And I think we reported that last quarter. And what we saw is just a little bit of price sensitivity in the first few months of the year, but we're now starting to see in our May, June, July lease renewals that are going out that we're able to get a little bit more of an increase in those numbers. And with our renewals being so high, we're feeling pretty good about kind of landing right around the same range of usually 50 bps on where people sign. And so as we have the opportunity to push in markets where we're getting a little more pricing power, we'll continue to do so in the markets where there's more concessions in supply. We may not be able to get to those top line numbers that we're going out at.

But we feel pretty good about the conversations we're having out there. And just it has a lot to do with how well we take care of our residents and explaining to them the costs that are associated with moving and the product we provide and the service level we provide those conversations typically go pretty well. So we're feeling good. Our teams are very focused on explaining what the concession market is and how our net pricing equates to that. So I think we're feeling good about, as we said earlier, going out with the mid-3s and a little higher as we get into our peak summer.

Next question comes from Steve Sakwa with Evercore ISI.

I guess I wanted to ask maybe kind of a size portfolio question. Obviously, there's been some stories about industry consolidation. And I'm just wondering at your portfolio size, as you sort of think about the data you gather from your existing assets, do you think that data would be better if you were 2, 3, 4x bigger? And how are you using other data sources to kind of think about pricing today?

Yes. So the first thing I'll tell you is we try not to comment on rumors about mergers and acquisitions that are out there. So that's point number one. Point number two, we're very fortunate and the investor community is very fortunate that, that leadership at all these companies are really good. And so whatever decision other companies make, we've got to believe is right for them. For us, the way we sort of think about this is that bigger is not better, better is better. And if you look at a long-term trends, there's absolutely no correlation between size of the company and total share of return.

So that's the big picture way of looking at it. And then when you look at data, here's what I'll tell you, with the scale we have, we've got enough information. We've got enough data to make the appropriate decisions across every aspect of our business. And I do not think that if we were in a situation where all of a sudden, we were 2 or 3x the size we are, that we would see any type of significant increase in our ability to collect data, analyze data and utilize data. I think we are -- this is a world where we've got perfect clarity into all of our information. And remember that we're a pretty good-sized company. And we've got a lot of units that we can look at and we can see how those units are behaving, and we can see how our consumers are behaving. And so I'm not really sure that there's any real significant improvements on the data side to come from being considerably bigger.

The next question comes from Jana Galan with Bank of America.

Maybe a question on acquisitions as you prepare to deploy the disposition proceeds, can you talk about cap rates in the Sunbelt markets, how you typically underwrite year 1 rent growth? And if you're seeing more opportunity in kind of core product? Or are you looking at maybe unstabilized or lease-up?

Sorry, could you repeat your question? You kind of cut out in the middle, and I missed a few -- the first part of your question.

Sure. Sorry about that. So just on acquisitions, curious how you what cap rates you're seeing out there, how you think about underwriting year 1 rent growth? And in terms of what's out there, is it kind of more opportunity in core assets or in unstabilized or lease-up assets?

Sure. So obviously, transaction volumes are still clearly below sort of pre-COVID levels. but today are trending in line with where we were in 2025. And we are evaluating a number of opportunities as we look to redeploy the proceeds from our California transaction. Not seeing a lot in terms of lease-up acquisition opportunities this year. those types of opportunities. I think sellers who have properties and lease up are really trying to get them to a point of stabilization before they go to the market to create as much liquidity for that asset as they possibly can. And that's -- and then from a pricing standpoint, cap rates have really been stable over probably the last 18 months, and I'll tell you that the trades for newer, well-located properties in the Sun Belt, those cap rates are in the to 5% range and have been for some time. And that's certainly what we're seeing.

The next question comes from Rich Anderson with Cantor Fitzgerald.

Congrats to everyone for all the moves, very exciting. So my question is on sort of the cadence of the recovery from here. I think if we were sitting here at this time last year, we probably would have thought by now we would be seeing more in the way of real CPI plus lease type growth and particularly out of the new lease category. It seems like that, that got delayed a year given the tail of supply. But I'm curious if you could comment about what you think the cadence of the growth recovery will be as we get into 2027. Is it more of like a hockey stick like we saw in 2022? I would hope not, or more of a gradual improvement based on whatever forces are at work as supply burns off. I'm just curious how you envision sort of the cadence from that third quarter strength that you talked about in onward?

Yes, absolutely. So the first thing I'll tell you is if you go back and you look at 2025, if you remember, we had a little bit of a head fake because in 2025, April looked fantastic. And then all of a sudden things just stopped pretty quickly. And a lot of that was tied to the factors that we know, liberation day, et cetera. If you look at what we are assuming, we are assuming that this recovery could look a lot like what we saw coming out of the GFC. And if you look at what we saw coming out of the GFC, we saw several years of just really, really considerable growth you look at 2011, I think our NOI was up about 7% in 2012, it was up 9% in 2013, it was up 6%. So you could see something similar to that.

Now if you look at the cadence, we certainly are, and I know you said you hope it's not a hockey stick. We are anticipating sort of a hockey stick in the latter part of 2026 as we get through this absorption. Then when you get into 2027 at that point in time, clearly not going to give any guidance, but I would anticipate, if you just look back at what we saw coming out of the GFC, then it becomes a steady but strong growth on a go-forward basis.

I would just add to that some numbers around the completions in Camden's markets, the cadence looks like in 2025, we had 200,000 completions that drops to about 150 this year. That drops to $135 million in 2027 and down to $120 million in 2028. And the thing that's important about that is it's very hard to change the trajectory of that completion number because if it's not already under construction, it's not coming by 2027.

The next question comes from Brad Heffern with RBC Capital Markets.

Congratulations on all the promotions. Glad to see the music is sticking around amid all the changes. Going back to the 1Q blends, typically, we see a jump sequentially in the first quarter. Your peers have generally reported that last year was 100 basis points higher or so in the first quarter. It sounds like that was already assumed in guidance, but I'm just wondering if you can talk through why you didn't expect or see that sort of normal seasonal pattern.

So the first thing is music is not going anywhere. We love our music and expect to see that for to the point whenever I'm handing it over to somebody else, that music will continue. So if you think about the first quarter, what we were doing in the first quarter was making sure that we were setting ourselves up appropriately for the rest of the year. And we feel good about the way our first quarter unfolded. It was in line with our expectations. It was in line with our guidance. It's interesting because there's obviously going to be a lot of comparison between the multifamilies and we can fully understand that. We are all in different markets. If you look at the markets in which we overlap with our competitors, and in particular, one of our competitors, we outperformed in most of those markets.

And so however you get there on the revenue side, our revenue results, we feel really good about, and we feel that we're doing the right thing to set ourselves up for a successful second, third and fourth quarter of this year. And when we look at our April results, our April results are doing very well, as we just talked about. And so we feel very good about how our trend is looking.

The next question comes from Haendel St. Juste with Mizuho.

Congrats on the promotions. My question is on the buybacks capital deployment. As you said, you repurchased $150 million that you outlined on prior calls. We have another couple of hundred million of still capacity in the buyback. Can you talk about more kind of capital allocation from here, your level of interest in maybe more buybacks? Are they more dependent on incremental dispositions beyond the SoCal portfolio sale? Could you shift a bit of capital from maybe acquisitions to more buybacks. So some thoughts here on capital deployment, the options on the table and then remind us the tax limitations regarding kind of 1031?

Sure. So between 2025 and '26, we bought back $693 million in advance of our California sales at an average price of $105 and change. That represents a 6.4% FFO yield. So that's been an excellent source and allocation of our capital. Like I said in my prepared remarks, we're going to continue to monitor our share price performance. But as of now for our transaction plan, we have no additional share repurchases in our 2026 guidance. And as far as taxable room, we have planned for $1 billion in acquisitions, which is about the amount we need to maximize the use of proceeds to offset any additional special distributions we would need to make.

But I will point out, just because we do not have any other share repurchases in our guidance, that does not mean that we will not do any additional share repurchases. We have plenty of capacity in our balance sheet, plenty of capacity with our leverage once the California transaction closes that we can absolutely do more share repurchases. And so that is absolutely something that is up there for opportunities for us as we go forward.

The next question comes from John Kim with BMO Capital Markets.

On the Southern California portfolio sale, I know you don't want to get into the details of it. But I wanted to ask about the rationale of selling to one buyer for the entire portfolio rather than splitting up the portfolio where you might have gotten better pricing. And given the amount of interest that you've gotten on the sale why not more actively pursue acquisitions ahead of closing of it?

Yes. We had a lot of interest, and we had a lot of interest on both the portfolio side, individual asset side and then subportfolio sides. We believe at this point, what we have done, we picking the one bar that we have picked is we have limited our execution risk while maximizing proceeds. Now it is important to note that there were a lot of buyers clustered together. And so we did make a choice going with a particular buyer because of the strength of that buyer. But to your point, whether we could maximize proceeds by splitting it up, maybe we could have gone a little bit more, but it would have introduced additional risk that we didn't think made sense to us.

And then as I did point out in the prepared remarks, even though we have picked a buyer and we're still in the diligence process, the good news is that there were several buyers and there are several buyers that are around. I think there are several buyers really hoping that our current buyer sort of falls out, but we don't think that's going to happen. But -- and then when it comes to opportunities for more acquisitions, we are really active right now. Since in the last couple of weeks, we've actually been awarded another $250 million worth of acquisitions.

So that gets us up to pretty close to halfway towards our $1 billion goal. There is a lot out there. And I will tell you right now, we are the prettiest buyer in the market. Everybody is coming to us, everybody is showing us opportunities because they know that we have the capacity to close and they know that we are for real. And so I'm expecting that we're going to come out with a really, really great additional portfolio to enhance what we have today from this process. So feeling really good about the acquisition opportunities, feeling really good about the California process and how it's progressing.

The next question comes from Alexander Goldfarb with Piper Sandler.

Congrats all around Alex, Laurie and Ben. I guess you guys will have to lead the Camden Company's skids at those offsites. So a question for you about the demand and supply, you and a number of the other Sunbelt players have all commented that certain markets are rebounding and showing strength. But overall, as you outlined, it's still going to be a tough market until later in the year. Is this a matter of there were a lot of projects from last year that just had slow lease-ups? Is this stuff that leaked into this year? Or is it that you need faster jobs? Basically, what I'm asking is -- is this a jobs issue? Or this is a supply issue? And if it's a supply, was this just projects that got delayed from last year or slower lease-up? Or just trying to better understand the dynamics here.

Alex, I'm going to hit the most important point first. Rick and Keith are not going to be let out of skids. I fully anticipate seeing them and seeing them dressed up on a continual basis. This is entirely a supply story. Demand in our markets are incredibly strong. As I laid out in the prepared remarks, you can look at domestic in migration, you can look at job creation. You can look at corporate headquarter relocation -- all of those favor our markets over the coast. This is merely a matter of absorbing the existing supply that's out there. And that is why we feel very good about how the latter part of 2026 should sort of end up because you will have that excess supply being absorbed to a point that was made earlier.

If you look at our markets, our market supply is down 50% over its peak. If you look at most of our markets and you just look at a year-over-year basis, you've got supply just on a year-over-year basis, down anywhere between 20% to 60%. What that tells you is once that supply is absorbed, we are going to have very, very healthy revenue growth.

The next question comes from Adam Kramer with Morgan Stanley.

This is [indiscernible] with Adam Kramer. My question is about the difference in Class A versus Class B or affordable by comparison product and urban versus suburban product. And as supply comes down, and obviously, it's mostly Class A high-quality product supply that's coming down. How do you see the outlook for the Class A versus Class B and other products in your portfolio and across your markets performing over the next few quarters or years in the kind of better supply environment?

Yes. So -- As versus Bs for us right now is pretty flat. Where we're seeing the delta is suburban versus urban. And if you look at on the revenue side, and you just look at last quarter, our urban assets actually were 70 basis points better than our suburban assets. Once again, and to the earlier question, this is entirely a supply story. If you look at our markets, apartment supply is falling fastest in urban areas. And because of that, that is where we're seeing the additional pricing power in statistics like that, that make us feel very good about our ability to get positive rent growth as we move through the year because we do know that once you get past the supply falling in the urban areas, it's falling -- it's going to fall in the urban areas as well. We'll get it all absorbed, and that is what should lead to continued strength as we go throughout the year.

The next question comes from Michael Goldsmith with UBS.

This is Ami on with Michael. We wanted to touch on Houston where occupancy was down pretty materially year-over-year in the quarter. So wondering what the outlook is for that market? And if you think that the recent higher gas prices have any positive impact there.

For Houston, Houston is a really interesting market because if you look at all of the fundamentals in Houston, they are fantastic. When you actually look at the results, though, they're not as great. And there are some really interesting data around the consumer sentiment that seems particular to Houston Houston's consumer sentiment has fallen pretty dramatically in '26 as compared to '25. I think a lot of that is around just some of the effects of immigration, which does have a huge impact to Houston. And I think that, that negative customer sentiment is having an impact in the way the Houston consumer spends their money. And obviously, that's impacting rent. But if you get past the sentiment issue, and what we know about sentiment is humans are incredibly resilient and they have an ability to return to the positive really fast.

And once they get past that sentiment issue, they're very strong. In Houston, in particular, we've got a lot of job creation. We've got a lot of population growth. We know our consumer is doing really well. In fact, our rent to income in Houston is 16%. It's one of the lowest in our entire portfolio. So the consumer is there, the consumer has the ability to spend more money. Supply has come down pretty dramatically, Houston will get better. It's just a sentiment issue. Let me add to that a little bit. When you think about consumers today, and Houston is a great example of that, and I echo Alex's issue about immigration because immigration is a big issue, and it's definitely stressing a lot of folks out, especially since Houston is the most diverse city in America with our -- we have a minority majority of Hispanic people that live here and 25% of our population is foreign born in Houston.

But consumer in general is interesting. When you think about the consumer sentiment generally across the country, it's not great. And -- but if you look at job growth, you look at wage growth, you look at consumer spending is good. So the consumer is kind of stressed about a lot of things. And the things that they're stressed about our number one, inflation continues to be an issue. And when you think about inflation in housing, so in Houston, for example, housing prices have gone up 60% since the pandemic. In Houston, Texas, and people go, it used to be affordable here and that's bothering consumers. But if you look at it nationwide, it's the same issue. Housing costs are up. Apartment rents, of course, have been flat for 36 months, but housing prices continue to be up, interest rates were up.

So all those things have kind of created this. And this uncertainty by the way, politically has created this tension in the consumer. The interesting part is the consumer is actually doing really well. And so the feeling they have is bad. The underlying consumer strength is good, but to Alex's point, that tension or that stress or that feeling of uncertainty in bad that the consumer has is making them slower to make or is causing them slower to make housing decisions and to move around, so you have less moving around than you would normally have. The other thing I think that's really interesting is that the -- when you look at what's happened to college people have graduated from college this year and last year is that there's been sort of a failure for launch for about 10% or 12% of those graduates.

If you look at stats on people living at home that we're not living at home before pre-COVID, we have about a $900,000 increase in 20 to 25-year olds that are living at home or room made today. So it's a really interesting kind of weird place even though the world is good. From a consumer perspective, they're fairly uncertain.

The next question comes from Rich Hightower with Barclays.

I guess I want to combine 2 categories and the one question for a second. So if I think about the earlier question about sort of the benefits of scale and data and how that informs revenue management and then, of course, the fact that you and several of your peers have sort of put the RealPage lawsuit stuff in the rearview mirror at this point. And I know that revenue management around that topic has already sort of changed throughout the industry. But just maybe help us understand when you combine those 2 threads, what has changed about the way units get priced, how you use information, how the marketplace, the competitive marketplace uses information in a different way? And has anything really changed fundamentally on the ground since then.

So if you look at -- we'll hit RealPage first of all, all of that litigation, we did come to an agreement terms, but it's not in the rearview mirror yet. We've got a little ways to go. And so hopefully, we can stop talking about that in the next couple of quarters completely. If you look at the way revenue management works, revenue management really does rely a lot on your existing data on your existing units the amount of tours you give, how long that particular unit has been on the market, the occupancy of your particular community. And so fundamentally, sure, there's been some changes in the way revenue management works, but we do not think that any of those changes will have any negative impact on us whatsoever.

The other thing that's really important is if you look at the way we do it is we have a full-time department called the revenue management department that does nothing but all day long, but price or individual units, revenue management, the software is a tool. It is a tool that our human use. And so our humans are constantly going through repricing every single day, looking at recommendations, et cetera. One of the things that we used to say 5, 10 years ago was whenever we bought an existing community that was using YieldStar or some other revenue management software but only just had it turned on without any additional human interaction.

We used to say we love to buy those because we knew we could come in and we could absolutely use our talents, use our resources, use our institutional knowledge and use our data and make it better, make it perform far better than revenue management software on its own. So do not think there's going to be any delta, any differential here whatsoever. And the reality is, is that we've all been using a compliant software now for quite some time. And so feel good about the resources we have and feel good about the way we will price our real estate and do not expect to see any negative impact whatsoever.

Yes. And I would just add that the benefit we have today is the fact that there are new operating models. There are new tools. We have AI. We have a BI team that is continuing to work our on-site teams and that revenue team to provide data via our dashboards and gain more insights that we've just never even had the ability to make in the moment real-time decisions about what's happening in the field. And so by the nature of how we've evolved as an organization and our revenue team who's been involved since the very beginning, they have such good insight into what's happening with all of our properties and getting the weekly daily information that allows us now to even price better with that information in those tools.

But as Alex shared, this has always been based on what we do internally with our strategy and our strategies change. And sometimes what's happening in a submarket, what's happening in -- at a local community is driven by some of the outside circumstances, but it's our on-site teams and the data we have about our occupancy and our traffic and our leasing velocity that dictate how we price and how we look at our renewals.

The next question comes from David Julian with Goldman Sachs.

Yes. I just wanted to go back to the tax refund benefit. Do you think that's been a big driver of the April sequential improvement in blends just because up until this point, it doesn't sound like we were seeing the typical seasonal uplift we would usually expect and how do you think about the duration of that benefit into future months?

It's really interesting when you look at the data. So you saw this large increase in tax refunds. And what happened was folks spent it on a couple of things. One of them, which is to quote somebody else here -- somebody else that is really an American is that they use it to pay down debt. And so that's sort of a onetime benefit and then they used it for a lot of discretionary spend. I think going to restaurants, I think retail shopping. So they're absolutely spending the money I don't think that, that's the driver of what you're seeing in the April uptick.

I think the driver of what you're seeing in the April uptick is us hitting the typical leasing season. and the continued absorption of supply. So I don't think that's the factor whatsoever. But I do -- I clearly do think it was a large component of our bad debt, significant outperformance in the first quarter.

The final question comes from Alex Kim with Zelman & Associates.

Congrats to everyone for the respective moves. I wanted to ask a little about the development environment today and some of the economics that you're seeing, particularly in relation to kind of your capital allocation strategy. Where does development fit in relative to acquisitions and then potentially looking at share repurchases. And then just a bit more specifically on [ Kim and Baker ] given that Denver seems to be a bit slower in the time line for its recovery in revenue and in operating fundamentals.

If you look at the best uses of our capital today, number 1 is share repurchases. Obviously, we're limited on how much we can buy back if we're using dispositions to fund that. Once you get past that, developments and acquisitions are sort of a toss up. At one point, I would have said development, absolutely. 3 years ago, development is absolutely better than acquisitions. Today, what we're seeing is that you can buy real estate at a discount to replacement costs almost everywhere. And so what that means is that acquisitions becomes an incremental better cost of capital if you're just looking at it -- excuse me, better use of capital, if you're just looking at it from 10,000 feet, then when you start to dial it back and you start to really dig into the numbers, there are certain environments in certain locations where developments make more sense.

And so we certainly are continuing to do our developments. We'll talk about Baker in a second, but we do have other land sites that we control. At this point in time, we control 3 additional land sites that we have not purchased those 3 additional land sites we intend to buy this year, and those will be developments that we believe are going to create pretty significant value for our shareholders. But keep in mind that we're talking about development land sites versus buying $1 billion of stabilized assets. So that should answer the question right there about what do we think is a better use in a broad stroke. When you look at Baker, Baker has been sitting there on our development pipeline for quite some time. And the reason why it's been sitting there and not started is, at this point in time, the math isn't that great.

And we are in no hurry to go start something that we do not believe is the right thing to do for our shareholders. So we'll continue to evaluate Baker. Baker is in the sort of central business district of or central business area of Denver. As everybody knows, that area is really soft right now. So we need to see some improvements in that area. And if we see improvements in that area, we will start that development. And if we don't, we won't. We are committed to doing what is right for our shareholders and making sure that we use our capital to create the best investments.

This concludes our question-and-answer session. I would like to turn the conference back over to Rick Campo for any closing remarks.

Thank you for joining us today and look forward to seeing all of you really soon. Hope everybody has a great weekend. Take care.

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

Good afternoon, everyone. Welcome to Citi's 2026 Global Property CEO Conference. I'm Eric Wolfe with Citi Research, and we are pleased to have with us Camden Property Trust and CEO, Ric Campo. This session is for Citi clients only and disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC 26 to submit questions.

Ric, I'll turn it over to you to introduce your team, give some opening remarks and tell people the top reasons to buy your stock today.

Great. Thanks. Appreciate for you hosting and being here today. With me today, I have Alex Jessett, our President and CFO. I also have Kim Callahan, our Senior Vice President of Investor Relations, and her team Connie Chao here as well. So thank you for being here. For those of you who are not familiar with Camden, we are a multifamily company with over 58,000 apartment homes located in 15 major markets across the U.S., primarily in the Sunbelt.

We are an S&P 500 company with a total market cap of $16 billion and have been operating as a public company since 1993. We were asked by the Citi REIT team of why you should buy our stock. We have two main reasons. The first is because it's extremely cheap and undervalued right now on a private market versus public market basis. That's why we've been buying it. We've completed $473 million of stock repurchases over the last 6 months.

The second reason and as important is because we're in the right markets and the right product. We have -- we're in high-growth markets, high demand Sunbelt markets that lead the nation in job growth and population growth in migration and overall demand for apartment homes, and they are positioned to outperform the overall market once the remaining apartment inventory is fully absorbed. I'm sure we'll talk about that here in a second and that when pricing power returns, which we think is going to happen very soon, and we'll have an acceleration of net operating income growth and revenue growth after that happens.

So with that, one last thing, I guess people are going to -- have been asking us today about our Southern California disposition. I'll just get right out in front of that. Why now? The reason is we believe that when you look at California, it's 10% of our operating income. We get more than 10% of our time spent talking about 10% of the portfolio. We think it's an opportune time to reinvest the capital in the sale, which should be in the $1.5 billion to $2 billion range into the Sunbelt markets. We think the Sunbelt markets are going to grow very well once the supply is taken up in the next 12 months, plus or minus.

We also created a really interesting opportunity to buy the stock back. So we've announced that we're going to reinvest about $1.1 billion in Sunbelt real estate, and we're going to acquire $650 million of the stock. The ability to do that creates a really opportunity for us to do basically a flat deal. So it's not dilutive or accretive in the first year, but we think it's going to be accretive once the market starts growing.

With that said, we have already completed $473 million of the share purchase buybacks already. And we have -- the timing is going to be pretty much the summer. We already have a number of properties that we're working on to backfill the portfolio, and we think we'll be able to do 1031 exchanges to make that happen sometime in the summer. When you look at just fundamental supply and demand recap, we've talked a lot about that and the excess supply that's in our markets.

So the supply peaked in 2024 and has fallen dramatically, creating a pretty constructive multifamily operating environment for the next few years. Demand for quality apartment homes is strong. 2025 had the highest absorption rate of apartments in 20 years in spite of a very weak job growth, which we were really happy about. Resident retention is very high. Turn remains low. Move-outs to buy purchase of homes is below 10%, given the cost aspects of rent versus owned today. We think that a large portion of our portfolio residents are going to continue to be residents of choice and will be that way for quite a while. At this point, I'm happy to open it up to questions so that we can get to what's on your minds today. So thank you, Eric.

So you mentioned one of the reasons to buy the stock is the accelerating growth profile and NOI and revenue. You look at last year and things started really, really strong. And then we had, of course, Liberation Day, and I think it sort of took down everybody because you saw sort of job growth recede a bit after that, given uncertainty. At the same time, you've also had some questions about impact of AI on job growth and whether that sort of structurally leads to a bit lower job growth going forward. Why do you think now is the time that we're going to start seeing that recovery? And can you get that recovery if you don't see a rebound in jobs in the short term?

Well, the first important part is that supply continues to fall. And so that -- the headwind that we've had has been just the massive excess supply or 50-year high in supply because we had free money in the world post-COVID. So supply is definitely going down. We know that, that's a fact. I think the interesting part of the reason why we think '26 could be very constructive is that you think about '25, you mentioned the Liberation Day, and we started out. We started out very strong in '25 and then the peak leasing season ended at 4th of July rather than at the end of the summer. And we were sort of puzzled by that because the construct was pretty good given the job numbers that were being produced.

However, we found out in September that those jobs were elusive and they really weren't there, 911 (sic) [ 911,000 ] reduction in jobs in the September report that came out. So in spite of being a pretty weak job year, we still had a 20-year high in absorption for multifamily and absorbed a lot of multifamily units. When you think about 2026, the uncertainty that was created by Liberation Day, the lack of a tax bill being completed, the tariff issues, what -- whether the Fed was going to start cutting rates or how much they're going to cut rates were created a massively uncertain market, and I think that's what happened to job growth as people just didn't hire because they were too worried about what was going on in the economy.

If you think about today, however, in 2026, we have a tax bill. We know that between now and April 15, $75 billion to $100 billion of excess tax refunds are going to John Q. Public in America. We know that the other aspects of the tax bill are in place. We also know tariffs are what they are. They didn't create an inflationary environment. They didn't really cause the job market to do what -- to be weaker really. And the Fed has been cutting interest rates.

The other thing that I don't think people talk about is that the regulatory reductions that have happened in the first year of the administration have been significant. A senior airline executive was telling me just recently that airline regulation is down, and they haven't seen this kind of deregulation in 15 years, and that's improving their ability to operate and improving operating margins. So that doesn't include energy, manufacturing and trucking and other areas of deregulation that's happened.

So you have an ability to, in fact -- those are tailwinds that are happening in the economy that we didn't have in 2025. So with those tailwinds, we should have a reasonably constructive 2026. On the AI question, I'm going to let Alex answer that.

Yes, I'll hit AI. But first, I also want to point out that we've actually seen this before. If you think about coming out of the GFC that time was known as the jobless recovery, and we had 3 years of the best revenue growth we've ever had as a company. What was similar to then is that we had supply drop off considerably.

So we've certainly had a situation before where we've had very, very strong growth without that much job creation. When it comes to AI, I would tell you, I'm extremely bullish about AI, and I'm very bullish that AI will end up benefiting the 25- to 34-year olds. If you think about people who will do well with AI, there are folks who are generally more innovative, more creative, more curious, more tech savvy.

What does that start to sound like? That starts to sound like 25- to 34-year-olds. And what will likely happen is that the young folks are the ones that companies are going to want to hire because they can come in and they can use this new technology and they can create real value. The folks who I think should actually be concerned are the 50-year-olds who might want to stick their head in the sand and say, I don't want to be part of this. I think those folks are likely to be displaced because if you can bring in two 25-year-olds for less than the price of a 50-year-old and that 25-year-old can create real value through this technology, I think that's a good thing. And ultimately, that's going to benefit our renters.

One thing I'll add to AI is I sit on the Houston branch of the Dallas Federal Reserve Bank, and that gives me an opportunity to see all the Fed research and every Fed meeting that I've had, including one that I had about 3 weeks ago, talks about AI because the Fed's mandate, obviously, is dual mandate employment and price stability. And so they are looking at this issue a lot. And everything that I've seen in the last year that comes out of the Federal Reserve, they do not have a massive worry about the displacement of near-term jobs.

They think ultimately, what's going to happen is it's going to create more productivity and additional jobs that don't exist today that we don't really know about. And then ultimately, there might be some dislocation here and there, but not massive dislocation. They're not thinking about it as a threat to current employment growth in the near term.

That's helpful. And then I'm right in the middle of those 2 age groups, so we'll see where I land, right? Can you talk us through sort of what's happened year-to-date through operations, any sort of forward signs of the early part of the peak leasing season? I think as part of your revenue management system, you can typically not see 60 to 70 days forward, but you're certainly pricing 60 to 70 days forward. So just give us an update on sort of what you're seeing in the recovery in your markets thus far.

Yes. So what I said on the call is that we expect the first quarter to be a slight improvement from the fourth quarter. So far, everything is trending in line with our expectations. Keep in mind, though, that there is a tremendous amount of seasonality in our business in the fourth quarter and the first quarter are the 2 slowest. And so at this point, it's a little early to see exactly what we're going to -- what's going to happen during the peak leasing. Certainly look forward to getting back in front of everybody. Once we have some more information, once we've really started gone through part of the second quarter, we'll have some new updates for everybody. But so far, it's looking in line with our expectations.

Okay. And can I just ask where generally renewals going out and if you have an expectation around retention and turnover staying relatively the same?

Yes. So renewals are going out in the mid-3%. Remember, we don't traditionally have a lot of negotiations around that. So it's generally accepted pretty close to that. And then you have to look at retention. We've had record level retention improving every single year really since coming out of COVID. Our expectations and what we've modeled is a slight sort of give back in that just because it's been so good that you don't want to assume it's going to continue. But that's what we've assumed that we'll have slightly higher turnover in 2026.

And I imagine on the demand front, you were probably partly impacted by weather and some of the bad weather that we saw. But I guess as we got into sort of the better weather sort of demand as you define it, whether that's leads, conversions, anything else that you use internally, is that sort of normal on a year-over-year basis? Are you seeing the sort of typical seasonal trends?

So far, we're seeing typical seasonal trends. Now our expectations for the full year are that we'll follow a typical seasonal trend until you get to the third quarter. And then we're assuming that we start to see some uptick as you have all the excess supply that's been there for the last several years continue to get absorbed.

And I know it's still very early, but I guess on the market side, it seems like seeing a little bit more pricing power in places like Atlanta, Dallas. Maybe just talk through sort of where you're starting to see the green shoots of pricing power emerge and then sort of what you really need to see happen this peak leasing season before you get that sort of real pricing power, like where you'd like to see concessions among some of your private competitors go down to? Just anything that you're sort of watching out for that you think would give you increased pricing power as we get into that peak leasing season?

Yes. So when it comes to green shoots, you hit 2 of the markets. So clearly, we're seeing green shoots in Atlanta. We're seeing them in Dallas. We're actually seeing them in Nashville. And if any of you guys saw the Wall Street Journal article that came out last week about Austin, shockingly, we're starting to see some green shoots in Austin. But none of that is really surprising. If you think about all of our markets, our markets are incredibly high demand markets. And so everything that sort of tempered the growth has been a matter of supply.

So as long as the demand stays constant, we know that supply peaked to Ric's earlier point, we know supply peaked in the third quarter of '24. And so it's just been a steady absorption from then through today. And so as long as that continues, we would expect to see some more green shoots on a go-forward basis. If you think about concessions, the great thing about concessions, remember that we don't give concessions, but the great thing about concessions from our competitors is that traditionally, what they do is they give 2 months free or they give 1 month free. Nobody who's giving 2 months free, all of a sudden says, well, this week, I'm going to give 1 month and 3 weeks free. It's not how it works. It's usually a pretty steady step down.

And so if you go from 2 months free to 1 month free, all of a sudden realize that that's an 8.3% embedded growth or implied growth across the Board without even seeing any top line rental rate increases. So we're certainly starting to see concessions come down. That's obviously really helpful. We should see a lot more once we get into the peak leasing. We'll see what our peers or competitors are doing around the concession side. And as soon as we are able to get to a point where new leases can turn positive, that's what we need. That's the real momentum that will allow us to keep pushing rents and keep pushing renewals.

And one thing I'll add to that is that when you think about our consumer because people worry about the consumer and how the strength of the consumer is, especially when you think about a K-shaped economy. And our consumer is really strong. On average, they make $118,000 a year. They're paying 19% of their income to rent, which is the lowest in the sector, and it's the lowest we've had for a long time. So you -- if you think about what's happened over the last 30-plus months, you've had flat to down rent growth in certain markets, and you've had 4% to 5% wage growth in the consumer environment.

So what's happened is renters have been growing their incomes at the same time where rents have been flat. So there's a fair amount of room to be able to absorb rental increases for these renters and for our customers. And at the end of the day, when you think about concessions going -- they're around 8% in our markets right now. On average, they're usually around 3% when you don't have a supply and demand imbalance. And that change immediately drives 5 percentage points to the bottom line when you don't have or the top line, which is better on the bottom line with our leverage.

So you're in a situation where that could change really quickly. That's why I think Alex mentioned earlier the 3 years after the financial crisis where you had the jobless recovery, but you had top line growth that was better than 5% for 3 years straight.

And we had an investor question. So obviously, feel free to ask questions. And in your markets, are operators still offering concessions on renewals. And I think the question effectively is trying to get at the point that for the stuff that has delivered over the last couple of years, obviously, they probably had concessions in place. When it comes time for that resident to renew, are they sort of reoffering that concession? Is that person moving out? Just trying to understand for those that have already delivered and kind of stabilized, are they able to get that sort of 8% jump that you just talked about a moment ago?

Yes. So concessions on renewals is very rare. We do have some circumstances where we've seen in Austin, a few circumstances where we've seen it in Nashville and in other very, very high supply sort of pockets in a market. So it's not very common. What is far more common is that the -- to the original point is that the concession is given upfront and then the renter then starts to pay the higher rate on a go-forward basis. So if it's 1 month free, the first month, they don't pay, second month through the 12 months, they're paying the market price. And so on the renewal side, then you absolutely would be able to see that type of increase because the concession has then gone.

And then you made this point on the call that normally when you see things recover, it's not like you just go 1%, 1.5%, 2%, like it moves quickly once it starts going. I guess my question is, do you think the same can happen this time, just given that unemployment is sort of already pretty low at 4.3%. I think in some instances in the past, right, you've had a little bit of a rebound in sort of demand along the same time because it's either triggered by job losses or something else. But just curious sort of the speed at which you think things can recover once you start seeing that pricing power.

Yes. I think it could be quickly. The question will be what is net absorption in the first half of 2026 because we know we have lower supply. The question will be, will that supply get to a point where you do have an inflection point in the market. And I'll give you an example of Austin. Austin was along with Nashville, the #1 overbuilt market, right? Not because they didn't have demand. They just had a lot of demand early on and same thing with Nashville, and it was just a place where builders could get deals done.

And so we have a property in Rainey Street, which is a pretty hot area. It's very funky, cool area that had massive supply come in. Property was -- we had real trouble over the last 2 years keeping the property at 90%. We had big concessions, lots of issues with construction and getting people in and out of the Rainey Street area with all the buildings getting built.

Today, the property is 98% leased. They're occupied. There's no concessions at Rainey Street today. And that happened over about a 2- or 3-month period. It went from 92% to 98% and then concessions went away period. And so that's happening in Austin. That's why the Wall Street Journal wrote an article about it. You get this -- I think we have the recency effect that humans have if everything is going high to the right, it always goes to high to the right. There's never an inflection point down, right? And the same thing goes with multifamily and with how the concessions work.

So you're seeing that happen. And ultimately, whether we get to that inflection point in the summer will really just depend on the spring leasing season and then how strong it is. And like I said before, the reason it didn't happen in '25 was we just had so much supply and we needed a little bit more job growth to get it to that inflection point. So we'll see if the tailwinds help us in '26.

And I guess one of the fears that some investors have had is that if you look at your turnover, it's gone down to historically low levels, which obviously is good, but creates a little bit of a tougher comp there. At the same time, you have the Trump administration really trying to push for affordability on housing going into a midterm election. Have you seen any signs yet that turnover is starting to rise, the retention is going lower? And then are there any policies that you've seen out there either proposed or those that have been put in place that sort of worry you and think that this could be something that's a bit more stimulative for the for-sale market at the expense of rentals?

Go ahead.

Well, I'll hit the first part of that. So if you think about turnover, turnover for us so far is in line with expectations. When you start to talk about turnover that's associated with home purchases, right, if you look at our historical move-outs for home purchase, it's about 14%. Today, it's about 10%. But remember that, that 14% is of the 50% who move out. So you're talking about 7% of our tenants or our residents typically will move out to buy a home. So today, it's 5%. So there's a 2% delta.

First of all, 2% is really not that significant of a number. The second thing you have to realize is that the entire profile of renters is changing system-wide and really across the country, not just with Camden. If you look at our average renter today, our median renter is 32 years old. Our average renter is 35 years old. That's a 2-year increase in the past 10 years. And part of that increase is that folks are making lifestyle decisions or choices or changes at a later point in time.

Typically, in our markets, why somebody moves out to go to single family is that they got married and they had their first child and they start to think about school districts and all those other factors. So our folks are getting older. 75% of our folks are single. So they've got a long way to go before they hit that. They've got to find somebody first. And then they have to get married and then they have to have children. So we've got a pretty long runway on that.

And then the other thing that I always think about is if you really did have a bunch of folks that were living with us that really said, my lifestyle has made it such that I should be in single-family, but I cannot afford single-family. If that was really the case, then we would see an increase in people who are moving out to rent single-family. Our percentage of our move-out to rent single-family is 2%. Last year, it was 2%. The year before, it was 2%. It has never changed from that number.

So I don't really think we have this sort of embedded cohorts of humans that are just waiting for something to change to go out and buy a home. And then even when you start to look at interest rates, and obviously, we saw the 30-year made some movement, but you have to recognize that the price of single-family homes is up 60% since COVID. So even if interest rates came down dramatically, it still prices out so many of the consumers out there. And I do think that, that price challenge is part of the reason why people are, in fact, delay and you're getting married later because it's expensive to get married. They're having children later because it's expensive to have children. Ric, you want to add...

Yes. On the policy side, there's really nothing that the administration could do to stimulate housing demand going forward. There's really even the ban on single-family home ownership for big companies is just not going to move the needle. And the stimulative things that are in place that I talked about earlier are in place. And that's really the only thing that the administration can really do. And they've done a lot, clearly.

The question is whether it's enough. And when you get down to policies like I'll give an example, the 50-year mortgage. The 50-year mortgage marginally improves the ability for somebody to buy a house. But let's face it. Homebuilders have been squeezing their margins. Our margins have been compressing dramatically, primarily because they're buying rates down. So buying rates down was what needed to happen to stimulate the market, you would think that homebuilders wouldn't have had declines in sales last year relative to the previous year.

So there's really not much that the administration can do to hurt our business from a policy perspective when it comes to the demand side. The only thing that really could hurt the multifamily and delay the recovery is something that happens to the job market that we don't expect if you had a recession or something really will happen in the next 3 or 4 months as a result of what's going on in the world, perhaps. But as far as other policy that's out there, there's really nothing that's going to -- that could change multifamily trajectory at this point.

Got it. And then I would say the other fear that people generally have, especially with the Sunbelt is that there's this fear that if things start improving, right, and things start improving, you see rent growth go up and all of a sudden, you're going to see a flood of supply come back in 1 to 2 years. I've heard from some of your peers that construction costs have come down anywhere between 5% to 10%. I guess how sustainable do you think it is that we're going to see a sort of a long period of slow low and slow supply? Like how long do you think this sort of low supply can last?

I think can last at least 2 or 3 years because there's -- when you think about the folks that supported the 50-year high in supply, so supply just to put that in perspective, it went from 300,000 units to over 600,000 units. So if you started a project in 2024 in Austin, Texas, and you were supposed to get a rate of return or even '23 in Austin, Texas or Nashville or anyone else where else in America, you're not making your rates of return you thought you were going to make. Because rents didn't go up and actually, you're having to give concessions. And so at the end of the day, investors are -- equity investors are on -- are protesting multifamily development today because they're not making the returns that they were supposed to make in the last cycle.

So I think there is a very low probability that you'll have a massive increase in supply. And people are still waiting for the inflection point on rents. And so when you think about trying to pro forma a development today, even though rent -- the costs are down 5% to 8%, plus or minus, but rents are not up in any market. So you have to really believe in trending and you have to trend pretty aggressively to make any numbers work dramatically. It doesn't mean anything that there's not going to be anything built. A lot of what's being built today is COVID money and tax credit money that is being basically government funded for affordable housing that really isn't competitive with our housing, which is 60% of AMI type of transactions. And I know Alex has some comments on this, too. Go ahead.

Yes. So to add to that, if you think about it, there's really 3 things that have to happen in order for starts to start again. The first thing is that you have to see construction costs come down. And obviously, you did allude to the fact that we're seeing -- we're seeing 5% to 8%, maybe some folks are saying 5% to 10%. So construction costs have to come down.

Additionally, you have to get top line rental rate growth that has not happened. And then you need to see some stability or decreases in the short-term rate. When that all occurs, and my gut is that will occur sometime in 2026. When that does occur, then all of a sudden, developments will start to look like they make some more sense. But you have to remember that as soon as you get the green light on a development, you then have to go out and get your plans and your permits done. And what I'll tell you is one of the things I track very closely is the ABI, which is the Architectural Billing Index, and that shows our architects working on plans. And if you track that index, you'll see that, that index has actually come down cumulatively every single month for the past 30 months. So we know that the architects aren't even working on things.

So as soon as you get the green light and equity providers say, yes, we're willing to do some deals, you're going to spend a year. So let's say this starts at the end of '26. You're going to spend all of '27 getting your plans and your permits ready, then you're going to start a transaction, then it's going to take you to 2030 or 2031 before you deliver. So my gut is that you will see an increase in supply, but I don't think it's an issue until 2030 or 2031. I also don't think it's ever going to look like the supply that we just came off of.

Remember, to Ric's point about the recency impact, every single time people now talk about supply, they think that we're going to do what we just did. Remember that, that supply was created by free money, right? Unless you think interest rates are going to go back down to effectively 0, we are not going to see that level of supply again. We will see a typical level of an uptick in supply, as I said, probably 2030, 2031.

And then maybe switching to capital allocation. We talked about the SoCal portfolio sale in good length, but on the call, I guess what has the interest been like thus far? Are you seeing different buyer profiles than you expected or sort of the normal names? And then what's a good estimate for thinking about like the selling costs, the transaction costs on a portfolio that's $1.5 billion to $2 billion. Is there a sort of like percentage like 1.5%, 2% that accounts for like transfer taxes, broker costs?

Yes. So first is this is the preeminent portfolio on the market in America today. And because of that, we are getting unprecedented interest. We have almost 400 confidentiality agreements signed. Now here's what's interesting is apparently, companies have multiple CAs signed for some reason. So let's just break it down to companies. We have 230 unique companies that have signed confidentiality agreements. To put that in a frame of reference, when we exited Las Vegas, we had about 30 to 40. So 230 versus 30 to 40. So hopefully, that translates into some really good pricing. Time will tell. So that's point one.

And if you think about the timing, and Ric alluded to this earlier, the timing is that over the next couple of weeks, we'll start to get some indications of interest. And then we hope to get this whole thing closed by the summer. When it comes to selling costs, it's really -- for a portfolio of this size, it's really not that significant. Identified selling costs that we know of is around a $10 million range.

Okay. And then in terms of buybacks, I mean, it's good to see you active. I guess one of the things I was confused on the call is why there's just no accretion built in because it seems like some of the buybacks are occurring early in the year, you're selling the portfolio in the middle of the year, acquisitions if they occur a little bit thereafter. Like why wouldn't there be accretion associated with that? Is that just a conservative placeholder assumption in case it doesn't happen? Or is there something that's actually reducing that accretion from the buyback?

So there are two things to look at. The first thing is that we're selling a portfolio that's 19 years old and it has about a 30 basis point Prop 13 adjustment baked into it. We're turning around and we're taking $1 billion of that capital, and we're going to buy assets that are 5 years old. So there is a negative spread between the disposition and the acquisition.

Now clearly, getting all of the share repurchases done upfront is accretive. But then the other side of it is for the $1 billion that we're going to do in 1031 exchanges, the way a 1031 exchange works is if we sell an asset and we're going to do a 1031 exchange, we do not get the proceeds. The proceeds go to an exchange accommodator, and they sit with that exchange accommodator, and exchange accommodator pays us a very small interest rate because that's how the exchange accommodator makes money. So the delay between selling and buying any delay, even if it's a month or 2, has a dilutive impact.

Got it. And I guess what do you think is -- what's built in your guidance in terms of the negative spread from what you're selling versus buying?

Yes. So we anticipate that for Camden, we're going to say that the California disposition is a mid-5%. Now the buyer will probably say it's a 5% because remember, you have that Prop 13 impact. The assets that we're looking at to buy are in the high 4%. Now keep in mind, though, this is important, that's on FFO. AFFO is very different because we're talking about a 19-year-old portfolio that has high CapEx versus new assets with very low CapEx.

That's an example. I don't think that -- I think there is a decent shot that the number will be in the 4%.

Yes. I mean I was going to -- we only have a minute left, so -- but I was going to ask about -- you said there was like a negative spread, I think, last year and it ended up being quite as big as you guided conservatively on it and it worked out. But -- so that's good to hear. I guess maybe just quickly, we don't have much time, but I was going to ask you like why buy in the high 4% in the Sunbelt, I guess, if you have -- maybe we'll make a rapid fire. Why buy in the high 4% in the Sunbelt?

Because we think that the Sunbelt is going to outperform the rest of the country once we have the pivot point, we'll get above 5% growth in NOI or 5% growth in revenue for a few years straight, and we want to be into that. The other issue is that if we don't 1031 exchange, we'd have to do a very large special dividend in the $600 million to $700 million range. We'd rather buy the stock rather than giving us -- than doing a special dividend.

Right. Rapid fire. What will same-store NOI growth be for the apartment sector in 2027?

3.5%.

Will there be the same fewer or more apartment companies at this time next year in the public space?

No, fewer.

Great. Thank you.

Thank you.

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. And please note, this event is being recorded.

Before we begin our prepared remarks, I would like to advise everyone that we will be making forward-looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations.

Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. 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 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.

We would like to respect everyone's time and complete our call within 1 hour. So please limit your initial question to one, and rejoin the queue if you have a follow-up question or additional items to discuss. If we are unable to speak with everyone in the queue today, we'd be happy to respond to additional questions by phone or e-mail after the call concludes.

At this time, I'll turn the call over to Rick 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. 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 [ Dora's classic Roadhouse Blues ]. Well, I woke up this morning and I got myself a beer. The future is uncertain and the end is always near. The end of uncertainty that is, here's what we are certain about.

We are certain that we finished 2025 strong, exceeding our original guidance for core FFO by $0.13 a share. We are 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 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. 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.

Thanks, Ric. As we reported last night, Camden's same-property revenue growth for 2025 came in at 76 basis points, which represents a 1 basis point beat to the midpoint of our most recent guidance. And 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, 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. 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 Ric'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 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%. 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 rebilling.

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.

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 # 4 for revenue growth in 2025, and 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 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. 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 #3 revenue growth market in 2025 and receives a grade of B+ with a moderating outlook. 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 rebilling 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. 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 grade Tampa of B with a moderating outlook and Phoenix of 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 2 years. 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 of our -- on our fourth quarter '25 operating results. Rental rates for the fourth 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 and what we expect for the -- expected for the fourth quarter of '25. Renewal offers for first quarter 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 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.

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. During the fourth quarter, we disposed of three communities located in Houston and Phoenix for a total of $201 million, acquired one community in Orlando for $85 million and stabilized Camden Long Meadow Farms, one of our two build-to-rent communities located in suburban Houston.

Our transaction activity for full year 2025 included the sale of seven 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 billion to $2 billion. We are assuming this transaction closes midyear.

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. 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, 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. 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 a midpoint of $6.75, representing a $0.13 per share decrease from our 2025 results.

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 negative 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 and is approximately $0.09 per share in core FFO.

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 earn-in, flat occupancy and a slight improvement in bad debt results in expected growth of approximately 55 basis points for rental income.

Other income which is primarily comprised of utility rebilling 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 in development starts at the end of the year and approximately $200 million of total 2026 development spend. Noncore 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 the first quarter of 2026 to be within the range of $1.64 to $1.68. The midpoint of $1.66 in represents a $0.10 per share decrease from the fourth quarter of 2025, which is primarily the result of an approximate $0.05 per share sequential decline in same-store NOI and 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 January 1 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 and an approximate $0.02 per share decrease in non-same-store NOI due to our late 2025 and anticipated first quarter 2026 disposition activity. 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 million to $500 million bond transaction later this quarter.

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

[Operator Instructions] Our first question comes from Eric Wolfe of with Citi.

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?

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 is going to grow. And when it turns, it's going to turn, 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. The -- when you think about -- if you're a developer and you want to -- you need to sell your development deal you did, you'd rather not sell it in Austin today, but in fact, California has had a 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 of those three things.

And then you're marketing that portfolio, but how are you thinking about either splitting up into smaller portfolios or individual assets? Or is the goal really to sell it all at once?

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. And what we're going to do is maximize the purchase price, whether it's individually or separate or combinations of thereof.

And the next question comes from Jamie Feldman with Wells Fargo.

Great. Thank you I guess just going back to some of your guidance and the thoughts on the pickup in the second half. 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 are more or less concerning as you think about hitting your numbers?

Yes, absolutely. So what we're expecting in the first quarter is slight improvements versus the fourth quarter of '25 in both in terms of new leases and renewals, which obviously will translate to slight improvement on a blended rates for the first quarter of '26.

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 season. 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.

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. And really, we don't have any markets that are declining. So 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. So feel like we're in good shape. But obviously, we need to get into the peak leasing season and see how the rest of this year unfolds.

And the next question comes from Jana Galan with Bank of America.

A 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 miss relative to Street, maybe that you're 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.

Yes, 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 midyear, the anticipation also is, is that the $1.1 billion of redeployment happens in the summer months, so call that midyear 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. And so we're certainly going to be doing the share prices earlier as soon as we can get them done. So 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 just -- it's a net neutral.

The next question comes from Steve Sakwa with Evercore ISI.

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?

Yes with the cost. Go ahead Alex.

Yes. So on a cost basis, here's the good news, is 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 can -- you look at our activity in '25 and it was more muted and you look at the guidance that we have for '26, 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. We try to look at what everything looks like on an untrended basis, and we're seeing really sort of in line with, call it, 5%, 5.5% on an untrended basis, which can get you up to sort of a 6% on a trended basis.

And the next question comes from Alexander Goldfarb with Piper Sandler.

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 in 2, how you guys are thinking about legal, political advocacy and stuff on a go-forward basis?

Yes. So I'll hit the first part. So the first part is, is that $14 million is the combined number of noncore adjustments, which includes legal and costs associated with development and acquisition activity, et cetera. 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. And 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 we'll return to a more normal cadence when it comes to that category. In terms of how we're thinking about activation, Ric?

Sure. So when you think about the -- let me just talk about the political action issues, and 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 efficacy was in California. And so once we close that portfolio, the political efficacy in the Sunbelt is pretty much 0.

The next question comes from Michael Goldsmith with UBS.

This is Ami on 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.

Yes. 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, et cetera, 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 of 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 we are there are tax consequences. And if we cannot redeploy this capital, then we would likely have to do some type of a special dividend.

The next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

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?

This is Stanley. So on the acquisition front, we are evaluating -- 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 sales.

So 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.

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

And the next question comes from Haendel St. Juste with Mizuho.

Another one on the SoCal portfolio trade. I guess, a bit of a 2-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. 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, close to the $2 billion. I'm curious how you think about the incremental capital deployment of that if they would also be earmarked for acquisitions or any tax limitations there?

Yes. 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.

And I think on the issue of if we -- 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.

And the next question comes from Brad Heffern with RBC.

Yes, 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?

The job prospects for college graduates has been -- in 2025 was kind of the worst in a decade. And if you look at the unemployment rate, for people in their -- in 18 to 24, it's at 10% right now. The other part of the equation, too, is if you look at those same -- that same cohort living at home. It's back to pre-COVID levels, meaning like 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.

And there's a fair number of folks that are pretty constructive about better job growth than '26 versus '25. 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? 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 frees on base in 2026 when you have a pretty stimulative construct with the economy.

So I think it remains to be seen. I look at it as a potential tailwind when those -- when that demand is released because most of those people want to be on their own and run an apartment from Camden.

And the next question comes from John Kim with BMO Capital Markets.

Alex, you gave the impact on same-store revenue from California in '26. I'm wondering if you could provide that same figure for '25, 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 impacts same-store expenses? Just to get in California really helps mitigate property taxes? What's the going-forward impact on for expense growth?

Yes. So if you look at 2025, the impact on revenue would have been the same 25 basis points. So 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 our expense numbers. On a go-forward basis, you are right that [ Prop 13 ] does limit taxes, which is helpful to 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 as they go up, but they also come down. If you look at our 2025 results, our property tax total growth was 0. And so California was up, but most of our other markets were, in fact, down. So I don't really think it's going to have that much of an impact on expenses on a go-forward basis.

Let me add to that. That if you take the sort of portfolio cost, and I mentioned our political advance group expenses in California, if you take the last 5 years -- or 6 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 said 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 and opposed to our -- compared to our rest of our country that didn't have those same kind of operating costs embedded in our G&A. So we were -- 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.

And the next question comes from Rich Hightower with Barclays.

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. So maybe as we think about a lot of your core markets going forward, just give us a sense of kind of what that deepness of the recovery curve, that exit velocity, whichever metaphor you want to use, where do the market stack up in your current forecasting as we think about the end of '26 and then into 27?

So now we have to say we're not going to give the guidance for 2027, but we will talk about it, Rich. Our guidance...

It's a rank order, right?

Yes, 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 20 -- at the end of '26, but into '27 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. We are -- 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 -- 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.

So we are already 4 years in. We're beginning 2026, and you see our guidance for 2026. If all this works out the way we expect it to, we will be 4.5 years down wind of basically 0 rental growth. And that's just not sustainable long term. And we've seen it coming out of the [ GSE ], coming out of COVID.

When you get a turn and a pivot that Ric was talking about, it's not -- it doesn't go from 1% to 2.5% because it's -- if you think about our average rent 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 5-year period. So the income is up 20%. Their rent is basically flat. We've got -- so our residents are incredibly financially healthy. And when it turns, it usually turns pretty hard. So it's hard to -- 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 do for something different.

The only thing I would add to that is that when you think about markets, we talk -- Keith gave Austin of C plus, right? And the issue there is you've got really good drop growth, but you just had a whole lot of supply. They added more than 15% of the supply in 3 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 in the supply and rental go up.

The other thing to think about is -- is that if you think about the way concessions work, right? So when people are leasing up, they give a month for you, they get 2 months free if it's really tough, maximum is 3 months free, but I don't think there's not very many places where it's 3 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 2, right? And so what happens then -- and that's -- if you stop giving a month, that's an 8.3% increase immediately in the rent roll by eliminating 1 month. So that's where -- that's the Keith's point that it doesn't just all of a sudden, you go from flat to 1%, 2% growth. When you stop the concessions, it's immediately if it's a 1 month free, it's immediately an 8.3% increase in the rent role on the next lease. So -- and then it just takes time to roll the leases over and get that revenue growth. So -- 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 '22, it was a function of not enough supply and huge demand, and you had increases that were unprecedented. If you go to [ St. Peak ], for example, we had a 50% increase in rents in a 3-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. And I think we have the recency effect that's going on in the market today, meaning that 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.

And the next question comes from Rich Anderson with Cantor Fitzgerald.

And just file this one away for 2027 on hold music Austin Powers theme song, just throwing it out there. 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 fourth quarter '24, it was negative 4.7%, fourth quarter '25 is negative 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 the 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?

Yes. 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 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 is because they 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.

And the next question comes from John Pawlowski with Green Street.

Forgive me if I missed, I joined the call late, but I wanted to talk a little bit about the change in the Denver regulation around utility rebilling and 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 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-term risk to your other income streams.

Yes. So we didn't talk about it in the prepared remarks, but what you're referring to is House Build 25-1090 and yes, this is a new legislation that was put in place in Colorado effective January 1 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 it certainly 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, is that most of our markets, the reason why they grow so fast is because they're pro business pro growth and obviously, putting the legislation like that in place is not pro business or pro growth. 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 to add?

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 are some things you are not allowed to charge back to our residents. So sub-metering is important because of this restriction, we have submeter all of our properties. 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. But it did eliminate any unclear utility pass-through charges and just really requires more disclosures. And so that's the impact overall.

And 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. And I play a big role with the National Multi-Housing Council and this is something we're paying attention to across the country.

And the next question comes from Alex Kim with Zelman & Associates.

Do 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?

Yes, 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 fourth quarter '25 revenue.

And my gut is -- and the way we've modeled it is that's probably going to continue as we go throughout 2026. This is sort of a turnaround from what we saw, obviously, for about 3 or 4 years. So today, what we're seeing is Class A urban is doing a lot better.

But of course, it's and they got impacted worse at that point in time. So they had a little bit of gas in the tank to get back to where they were and go from there.

The next question comes from Julien Blouin with Goldman Sachs. I think you mentioned you're expecting market rent growth of around 2% in your markets this year. I think on the third quarter call, that was in the sort of 3% to 3.5% range, maybe 2 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?

Yes. So if you think about the way Ric started this call as 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 we're 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, if you look at the hiring of May grads, that was obviously very weak. There's -- 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.

Yes. And just specifically on the employment growth outlook, 2025 Wheaton originally had job growth across Camden's markets closer to [ 350,000 ]. That is -- everybody knows that got revised dramatically down. I think he ended up the year at 170. His forecast for 2026 is 257,000 jobs across Camden's markets. So part of the [ head fake ] 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 data set, people like that look at this and use the [ BLS ] statistics or we're using numbers that got revised away. So hopefully, we're on track with better data for 2026. 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 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 3 years.

And the next question comes from Alexander Goldfarb with Piper Sandler.

Just want 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, et cetera. So Ric, 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?

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, we spend a lot of time getting -- trying to get inside their financial heads and also and what their preferences are for apartments and things like that. And you look at the -- like the forward consumer confidence numbers and stuff like that.

And affordability is like the big question today. 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 3 to 5 years. Then you go, well, what's really happening to them? Why are they unhappy? Why are they -- why is the consumer confidence at low levels. Part of it is just the psychology that you have high inflation and price everything kind of went up. And then I think the bigger psychological issue, and this gets to the overall housing market, which includes single-family for sale market. And the inflation numbers really haven't caught the -- haven't -- 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. So the attainability of a single-family home today is so expensive relative to what it was pre-COVID. But that's hanging on the -- 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 are continuing 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, it's more of an overarching issue. And unfortunately, that overarching issue makes people think everything is more expensive, even though their finances are pretty good.

And the next question comes from Mason Guell with Baird.

Looks like your revenue enhancing and repositioning CapEx guide is down from last year. Can you talk about why this has guided lower and what initiatives you are working on in this category? .

Yes. So 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. 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

And the final question comes from John Pawlowski with Green Street.

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, could 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? 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 in the last few years.

Yes. 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 that 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-5 on an untrended basis. Baker and Gulch are more challenging. This is why if you look at our math, originally, we had them as 2025 starts. And now I've got them as potentially late 2026 starts.

So the math is -- I think everybody 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. 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 and we can take a look at the economics and make sure it makes sense to start. But if we can't do it in 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.

This concludes our question and answer session. I would like to turn the conference back over to Rick Campo for any closing remarks.

Thank you. We appreciate you being on the call today, and we'll see you soon -- or talk to you soon, I'm sure.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to Camden Property Trust Third 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. And please note, this event is being recorded. Before we begin our prepared remarks, I would like to advise everyone that we will be making forward-looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations. Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. 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 third 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 1 hour. So please limit your initial question to 1 then rejoin the queue if you have a follow-up question or additional items to discuss. If we are unable to speak with everyone in the queue today, we'd be happy to respond to additional questions by phone or e-mail after the call concludes.

At this time, I'll turn the call over to Ric Campo.

Thanks, Kim. Our on-hold music theme today was moving. This week, we completed the move of Camden's Houston corporate headquarters from Greenway Plaza to the Williams Tower in the Galleria. This is a big deal. Camden has been at Greenway Plaza for over 40 years. We are excited about moving on and the new beginnings that it will bring for 2026 and beyond.

As I was leaving my office for the last time, the thought that popped in my head was don't look back. And that reminded me of a song by the classic rock band Boston. The first versus of the song captured my sentiment as I was leaving the building. Don't look back, a new day is breaking. It's been too long since I felt this way, I don't mind where I get taken. The road is calling today is the day.

Team Camden is not looking back. We look forward to welcoming you to our new offices, and we look forward to the continued success for the next 40 years. Strong apartment demand continued through the third quarter, making 2025 one of the best in the last 25 years for apartment absorption, helping to fill up the record number of recent deliveries.

The summer peak leasing season was met with continuing new supply, slower job growth and economic uncertainties that led apartment operators to focus on occupancy instead of rental increases earlier in the season than usual. Apartment affordability improved during the quarter with 33 months of wage growth exceeding rent growth and increased affordability improves apartment residents' ability to absorb higher rents when new apartment deliveries are leased up in 2026 and beyond.

Apartments and our shares are on sale, but not for much longer. Resident retention continues to be strong, in large part because of living excellence provided by our on-site teams. Great job, Team Camden. The case for investing in apartments is compelling. Demand is high, supply is falling to below 10-year pre-COVID averages, bringing balance back to the market.

Rents are affordable, apartments provide flexibility and mobility to residents. Rent versus buy economics favor renting more than ever. And demographic and migration trends both support new demand going forward. We look forward to moving to a stronger growth profile after the excesses of post-COVID supply environments end. Camden is positioned well with one of the strongest balance sheets and no major dilutive refinances over the next couple of years.

Private market sales of apartments have been robust with cap rates for high-quality properties landing in the 4.75% to 5% range. And there is a clear disconnect between private and, and public market values for apartments. In the quarter, we bought back $50 million of our shares at a significant discount to consensus net asset value. If market conditions remain at current levels, we will continue to buy the stock, and we have $400 million remaining in our authorization. This can be funded through dispositions of our slowest growing higher CapEx properties.

I want to give a big shout out to Team Camden for their steadfast commitment to improving the lives of our teammates, our customers and our stakeholders, one experience at a time.

Thank you. And next up is Keith Oden.

Thanks, Ric. Camden's third quarter 2025 operating results were in line with our expectations with same-store revenue growth of 0.8% for the quarter up 0.9% year-to-date and up 0.1% sequentially. Occupancy for the quarter averaged 95.5%, consistent with third quarter of 2024, and down slightly from 95.6% last quarter. Year-to-date through September, occupancy has averaged 95.5% versus 95.3% last year. Rental rates for the third quarter had effective new leases down 2.5% and renewals up 3.5%.

Our blended rate growth was 0.6% declining 10 basis points from last quarter and 40 basis points compared to the third quarter of 2024. Our preliminary October results reflect typical seasonality and a moderation in both pricing and occupancy as we move into our slower leasing season during the fourth and first quarters. Renewal offers for December and January were sent out with an average increase of 3.3%. Turnover rates across our portfolio remain 20 to 30 basis points below last year's levels and move-outs attributed to home purchase were a record low of 9.1% this quarter.

Moving into new office space is never easy, especially when it involves 5 floors and several hundred corporate team members. But the end result was definitely worth a significant amount of time and effort invested by our design and special projects team. Our new headquarters look amazing. A big shout out to Venmills, Chrissy Hopper, Luther Alanis, Kevin Neely, Amy Funk, Zev Malone, Teresa Watson, Blake Robinson, Pango, Derek, Aaron and the entire IT support team. And finally, we want to give a special thanks to Camden's team of executive assistance on a job incredibly well done. We can't wait for everyone to get a chance to visit.

I'll now turn the call over to Alex Jessett, Camden's President and Chief Financial Officer.

Thanks, Keith, and good morning. I'll begin today with an update on our recent real estate activities, then move on to our third quarter results and our guidance for the remainder of the year. This quarter, we disposed of 3 older communities for a total of $114 million. Two of the 3 disposition communities were located in Houston and the third in Dallas. These disposition communities were on average 24 years old. These older, higher CapEx communities were sold at an average AFFO yield of approximately 5%.

We used the proceeds in part to repurchase approximately $50 million of our shares at an average price of $107.33, which represents a 6.4% FFO yield and a 6.2% cap rate. During the quarter, we stabilized Camden Durham and completed construction on Camden Village District both located in the Raleigh-Durham market of North Carolina. Additionally, we continue to make leasing progress on Camden Long Meadow Farms, one of our two single-family rental communities located in suburban Houston.

At the midpoint of our guidance range, we are now anticipating $425 million of acquisitions and $450 million of dispositions for the full year, reduced from our prior guidance of $750 million in both acquisitions and dispositions. This implies an additional $87 million in acquisitions and an additional $276 million in dispositions in the fourth quarter.

Turning to financial results. Last night, we reported core funds from operations for the third quarter of $186.8 million or $1.70 per share, $0.01 ahead of the midpoint of our prior quarterly guidance, driven primarily by the combination of higher fee and asset management income and lower interest expense resulting from the timing of capital spend and lower floating rates.

Property revenues were in line with expectations for the third quarter. We are pleased with how well our property revenues are performing considering the peak lease-up competition we are facing across many of our markets, illustrating the significant depth of demand in the Sunbelt, and we did adjust our full year 2025 outlook for same-store revenue growth from 1% to 75 basis points, and property expenses continue to outperform, particularly property taxes coming in well below our forecast once again.

As a result, we are decreasing our full year same-store expense midpoint from 2.5% to 1.75%. And maintaining the midpoint of our full year same-store net operating income growth at 25 basis points. Property taxes represent approximately 1/3 of our operating expenses and are now expected to decline slightly versus our prior assumption of increasing approximately 2%. This is primarily driven by favorable settlements from prior year tax assessments and lower rates and values primarily from our Texas and Florida markets.

For the fourth quarter, we are assuming occupancy will be in the range of 95.2% to 95.4%. Blended lease trade-out will be down approximately 1% and bad debt will be approximately 60 basis points with then 10 basis points of our pre-COVID levels, almost entirely as a result of the decreased transactional activity anticipated in the fourth quarter combined with lower floating rate interest expenses, we are increasing the midpoint of our full year core FFO guidance by $0.04 per share from $6.81 to $6.85. This is our third consecutive increase to our 2025 core FFO guidance and represents an aggregate $0.10 per share increase from our original 2025 guidance.

We also provided earnings guidance for the fourth quarter. We expect core FFO per share for the fourth quarter to be within the range of $1.71 to $1.75, representing a $0.03 per share sequential increase at the midpoint, primarily resulting from the typical seasonal decreases in property operating expenses, favorable final property tax valuations and rates and lower interest expense, partially offset by the impact of our anticipated fourth quarter net dispositions.

Noncore FFO adjustments for 2025 are anticipated to be approximately $0.11 per share and are primarily legal expenses and expense transaction pursuit costs. Our balance sheet remains incredibly strong with net debt-to-EBITDA at 4.2x. We have no significant debt maturities until the fourth quarter of 2026 and no dilutive debt maturities until 2027.

Additionally, our refinancing interest rate risk remains the lowest of the peer group, positioning us well for outsized growth.

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

[Operator Instructions]. Our first question today comes from Eric Wolfe from Citi.

I was just wondering if you could provide any early thoughts on 2026 in terms of the building blocks earning -- any thoughts on other income or whatever else you can share about how you're thinking about 2026 at this stage?

Yes. So certainly, we're not giving guidance for 2026 quite yet. What I will tell you is the earn-in for us is probably going to be pretty much flat, which is going to be consistent with the earn-in that we had for 2025. Everything else we will give you when we have our next earnings release. But I will tell you, if you look at just the broad environment and what's going to be happening in 2026, it certainly does shape up much better than we saw in '25 in terms of uncertainty that's out there.

If you think about when we were going through 2025, obviously, there was a tremendous amount of uncertainty around tariffs, around taxes, et cetera, most of that should be worked out as we go through 2026. The other thing that we think about is a significant amount of multifamily supply that was absorbed in 2025 that we will not have to absorb in 2026.

So as I said, we're not going to give any guidance, but if you're an optimistic person, there's certainly things to be optimistic about when we look at next year.

Our next question comes from Jamie Feldman from Wells Fargo.

You talked about the public-private disconnect around apartment valuations. I was hoping to get your thoughts on the current broader appetite for investment in apartments from private investors, especially for groups that can write the really big checks, given the growing concerns on jobs, immigration, the government's focused on fixing the housing market? And are there any specific markets that stand out in terms of more interest, less interest or even from your end, more concerned or less concerned given the macro overlay.

So the first thing I'll tell you is there remains robust demand for multifamily. In fact, if you look at the amount of dry supply -- or excuse me, dry powder that is there by asset class, multifamily absolutely leads all asset classes. And so everybody is looking for assets. The challenge is, there's just not a lot out there. Stanley, I don't know if you want to opine on this.

Sure, Alex. Just a little bit of additional color on the current transaction environment. Like Alex said, the market is healthy. There's a ton of debt and equity capital available. There's really good bid depth and thus really strong liquidity in the market. So with respect to volumes, 2025 is trending about the same as 2024, so still well below pre-COVID levels, which is, to some extent being driven by lenders continuing to modify and extend loans. So no meaningful distress in the market.

And from a pricing standpoint, cap rates have really stabilized over the last few quarters with cap rates for Class A assets in our markets in the 4.5% to 5% range and in the Class B space in the 5% to 5.5% range.

Let me add to that, that there's probably -- there's definitely been more sales on the coast than there have been in the Sunbelt. And the reason being that clearly coastal revenues, you can predict in terms of positive growth easier than you can in the Sunbelt, given the supply issues that we've been facing there. And when you think about sellers, the seller in the Sunbelt is looking at the market saying we do know that supply and demand will be in balance. The question is when. And so there is a -- to Stanley's point, the lenders are not pressing people to sell.

So why would you sell into a market when underwriting future growth is more difficult today just because of what's going on in the marketplace. So there's less transaction volume in the Sunbelt. I think what's going to happen, however, there will be a pivot and that pivot will probably happen sometime in, I would guess, mid-26 and you'll have a combination of lenders finally saying, "All right, we've extended. Now you need to do something." so that's going to put pressure on sellers to sell. But at the same time, once you get to the middle of '26, based on Alex's discussion a minute ago, you should have a more constructive environment, and it should be easier than for people to look out into '27 and '28 and see a very robust rental growth scenario given the supply dynamics that we have today.

Our next question comes from Adam Kramer from Morgan Stanley.

Just wanted to ask about sort of how you see the fourth quarter shaping up relative to normal seasonality. I think one of your peers talked about a sort of a relatively normal 4Q, maybe even a little bit better than normal seasonality in the fourth quarter. I think that was a little bit of a surprise, just given some of the headlines and some of that is a little bit sensational out there.

But just wondering, within your portfolio with absorption data that actually, I think, still looks pretty good for the Sunbelt and even nationally, how do you see the fourth quarter shaping up in terms of lease spreads relative to typical seasonality?

Yes. So the first thing I'll tell you is, if you think about our portfolio, and it's important before we talk about the fourth quarter to go back and look at the third quarter, if you look at the deceleration that we saw from 2Q '25 to 3Q '25 on a blended rate, it was only 10 basis points. I think that's the lowest deceleration in the space. And what that tells you is that we're starting to get some footing here in the Sunbelt markets.

When we go into the fourth quarter, what we're anticipating and what I said in the prepared remarks is that we think our blend will be down about 1%. If you sort of think about that on a typical seasonality basis, this sort of is what you see in the fourth quarter. And this year, now we did sort of hit the slower leasing period 1 month earlier than we typically would, but the fourth quarter is shaping up like a traditional fourth quarter.

Our next question comes from Austin Wurschmidt from KeyBanc Capital Markets.

Kind of going back and piggybacking on the last question, I mean, so with this sort of reacceleration now in lease rate growth, -- would you expect that to just carry into the early part of next year and into the spring leasing season based on what's going on in the fourth quarter versus what you expect -- what you saw in the third quarter?

And then just also -- so is it occupancy that's the driver of that 25 basis point decrease to 2025 same-store revenue growth guidance?

So Austin, thanks again for the '26 guidance question. We're not going to answer '26 guidance questions quite yet. But what I will tell you is -- the main driver that we saw in the reduction, which is a very minor reduction in top line revenue growth, was an occupancy driven. It was rate driven, and that is because we were making sure that we could get the occupancy to the level that we felt comfortable for going into the fourth quarter. And in order to do that, we did have to drop rental rates slightly.

I think the key takeaway that we're going to give you for 2026 is based on Alex's answer to the question, maybe 2 questions ago. And that is there should be less uncertainty in 2026. And the uncertainty that we have today, we know that tax reform is off the table, we know inflation is coming down. We know that Federal Reserve's lowering rates. And we know that there's a midterm election coming, which means that the administration is going to do whatever they can to make sure the economy is good in November of 2026.

The big tariff debates will likely be less of a debate during that period for all the obvious political reasons. And we have a 25% reduction in new deliveries in Camden's markets. And so -- with all that said, generally speaking, when you have a midterm election in this environment, you're going to have a -- unless something really comes off the rails, it should be a reasonable environment to improve demand and to create more optimistic scenario in 2026. Now obviously, there could be lots of slips that change that, but we'll see.

Our next question comes from Steve Sakwa from Evercore ISI.

Ric, I guess going back to your question about the disconnect between public and private, I guess, how big are you willing to lean into that on the share buyback and do dispositions. There hasn't been many very large buybacks in the REIT space. And typically, they haven't been overly success, but I'm just curious, how much would you lean into this size-wise?

Well, the -- if you go back in history, in the -- leading up to the bubble and the tech rec in 2000, we bought 16% of the company back at that point. We could sell properties on Main Street for $0.75 or for $1, and we could buy our stock back for $0.75 on the dollar. Right now, with the current stock price today, it's a 30% discount to consensus NAV. It's a mid-6, mid-6% cap rate.

And the market today is a 4.5% to a 5% cap rate. So with simple math, that's a 150 to 200 basis point positive spread to sell an asset and buy stock. And we've always said that we would allocate capital in this way if we had a significant discount, I think 30 is pretty significant. And it was persistent, meaning that we had enough time to be able to sell assets to fund the buybacks. We will not increase leverage to do that. And it's very typical capital allocation model. And over the last maybe 7 or 8 years, we've had opportunities to buy stock back, but it's never lasted long enough and with the constraints that we have on how much we can buy in a day and that kind of thing. The opportunity is not lasted long enough to actually make a material difference. Today, we'll see how long it lasts, and we're going to lean in pretty well.

Our next question comes from Michael Goldsmith from UBS.

Can you talk a little bit about the impact of direct supply? And if there's any way to quantify how that will improve like, for example, are you able to provide how much of your portfolio is directly competing with supply now? How does that compare to last year? And if there's an anticipated figure for next year?

So you -- I didn't hear the first part of your question. You said direct supply?

How much of your portfolio is directly competing with some new supply?

Yes. So every part of our portfolio is directly competing with delivered supply. So we're in the -- between last year and this year going into 2026 -- we're going to see the highest number -- the largest number of supply across Camden's portfolio in the last 45 years. So it's pervasive. Obviously, some places are better than others, but all -- everyone is dealing with some level of supply. The highest 2 markets in our world, for supply and the impact thereof is or Austin and Nashville. And to various degrees, all of our markets are dealing with some level of oversupply. California would probably be at the very far end of the range, but still there's supply issues and supply that we're having to deal with there. So to one degree or another, every market has been impacted.

The good news is as Ric mentioned, we're likely getting going to see a 25% decline in deliveries next year. If we continue to see good demand that has continued across our platforms, incrementally, it should be better in terms of the absorption making a difference for our ability to push rents and maintain occupancies.

When we look at specific assets that are younger, that are directly in submarkets where there is a tremendous amount of new supply we are seeing significant improvements on that. Last year when we first started talking about this number, we said that about 20% of all of our assets were directly competing with new supply, thanks to the record level of absorption that we've seen in '25. The good news is that number is down to 9% of our portfolio today. And that's just going to continue to improve as we go through '26 and into '27.

I think the other thing you have to think about in -- and I'll just use an example like Austin, which is like the poster child or poster city for excess supply. So in Austin, even the suburban properties that are older and kind of B properties in good locations, are all feeling the supply pressure. And the reason it's not that they're so competitive with the new supply. It's just that consumers in Austin read the paper every day, saying apartment rents are coming down, and they expect a deal.

And so you have a consumer sentiment issue in some markets like Austin, Nashville, and a couple of others. And where the consumers, even though there's not as much competition in the suburban B properties, the consumer has this mindset that they have to get a discount and then that just kind of feeds into the market and you end up with a market that -- where you can't actually raise rents because of that sentiment. Once that -- you have that pivot point, it changes dramatically.

And I would just add, Ric, this is Laurie. That if you look at Austin, which does have quite a bit of supply, a great example of a story where the tides eventually will turn is Rainy Street, and it can turn quickly. And so we're going from the lowest occupied community in our portfolio mid-summer to now the highest occupied community. So it's starting to turn. And when it does, I think it will turn quickly.

And our next question comes from Jana Galan from Bank of America.

Congrats on your move. I was hoping, can you provide some commentary on what your team is seeing in greater DC, given it's been such a strong performer this year and into the third quarter, but some of the years noted less activity. If you could just comment on that.

Yes. So D.C. Metro remains our top market. And if you sort of look at how it progressed throughout the year, in the first half of this year, it was just an extreme outlier in terms of new leases and renewals. And we think most of that was driven by the return to office movement, in particular on the government side. As we're progressing throughout the year, obviously, we think most of those folks have returned to office and have now leased their apartments and so now it's gone from being an extreme positive outlier to just being the best market we have, which we'll still definitely take you look at it, it is our -- in the third quarter, it's our top sequential revenue market.

It's our top quarter-over-quarter revenue growth market. And -- and it just remains incredibly strong. When it comes to DOGE, because obviously, that's what we talk about so much. I will tell you, we are still not seeing any evidence of our consumer being directly impacted by DOGE. What we're seeing more is a shift in the market of the way our competitors are reacting and concerns about potential impact from DOGE. But we're just not seeing it whatsoever. It remains an incredibly strong market.

And as you know, when we're talking about D.C. Metro, we're really talking about the DMD and the trend continues where Virginia is -- or Northern Virginia, which is where we have most of our real estate is incredibly strong followed by the district and then followed by Maryland.

And our next question comes from Rich Anderson from Cantor Fitzgerald.

So I understand the uncertainty or lack or maybe lower uncertainty next year. I'm in the camp that I don't know, I think there will always be a lot of uncertainty in the next few years, but we'll see. But in terms of supply and its impact on 2026, not a guidance question, I just want to know your history is with -- when guidance -- excuse me, when supply delivers what's the typical tail of disruption from that asset or those collections of assets that come to market essentially vacant. Is it an 18-plus month sort of issue and maybe the real growth story for Camden doesn't materialize until 2027? Or is it quicker than that? And maybe you can say something specific about your portfolio that makes it quicker or longer based on your own circumstances. So I just want to get some color on how supply might impact things next year, even though the deliveries are coming down.

They are coming down. I think in our portfolio, if you kind of look at the mix between Whitten and RealPage's numbers, they've got supply in Camden's markets coming down from 190,000 in 2025, down to about 150,000 in 2026. If you roll that forward to 2027 on their numbers, you're going to be somewhere around 110,000 completions across Camden's platform. So the trick and the tail that you're talking about, it's always a little tricky because when something delivers, usually the data providers are talking about building completed buildings, if they have the granularity to say that they've received their certificate of occupancy that becomes supply.

The reality is, is that people don't go to that level of detail on when an apartment community delivers actual leasable units. So that -- but if you think about the time it takes from the beginning of first apartments delivered, and I'm talking suburban, walk-up type product, from that point forward on a typical 300 apartment community, average lease-up is going to be somewhere around 25 units per month.

So call it, 10 to 12 months if things are kind of at a normal pace, you would expect to see all of those units absorbed over that 10- to 12-month period from the time that you first start turning your apartments.

So there's just a lot of gray areas around when does that happen? When does construction end, does that really matter? It doesn't really -- what really matters is leasable apartments that come online for the developer to be able to put to sign a lease on. So that's kind of what we're looking at.

So if you think about the average coming down from 190,000 apartments to 110,000 over a 2-year period, it's pretty significant. And if the demand side of the equation stays kind of like it is today, doesn't have to get a whole lot better, just kind of in this zone, then you're going to see a significant impact -- positive impact in 2026. And there's no chance that, that doesn't get better in 2027 because that cake is already baked on deliveries for 2027.

I think we need to talk more about demand than supply because we know what supply is, right? And so when you think about demand, 2025 was the best year in 20-plus years of apartment absorption in spite of the incredibly high supply that came into the market. What's driving that is the same thing that's been driving apartment demand for a long time, migration, demographics.

And today, we have even a more interesting one, which is the retention. So retaining more people than we ever have, which means that we don't need as many people coming in the -- to lease new apartments when the people are moving out. And so you have this really interesting situation where people are staying longer everywhere. You have less mobility in America today for lots of different reasons, and it's really helping the apartment markets.

And then if you pivot to, to home purchases and think about that, we have 9% of our people moving out to buy homes. That is not going to change anytime soon. If you look at the math on homes, if you look at medium income for a home or medium home price plus interest at current cost, it's $3,200 a month compared to in 2019 when it was $1,750 a month.

And what's driving that clearly are 3 major things. One is home price appreciation is up over 50% since in most markets, some doubled in -- since 2019. You had increases in interest rates, obviously, and increases in taxes and insurance. if you had a 0 to 30-year mortgage rate, the monthly cost for a medium price home today would be about $1,900 a month compared to $1,750 in 2019. And the driver of that is not interest rates, the driver is home price cost and insurance and taxes. So it's going to be a long time before you have people moving out to buy houses.

The other part of the equation, I think the medium age of first-time homebuyer today is 40 years old before COVID, it was like 34 or 35. So there's been a massive shift and the ability of Americans the demographics continue to be in our direction plus migration. And so I think the demand side is going to be much higher than people believe because of that -- those equations. And so I think we need to focus on demand as much as supply for sure.

Our next question comes from Alexander Goldfarb from Piper Sandler.

Ric, we'll stick with the 40 years of experience that you guys have. I was just looking at a stock chart of Camden and not to -- I'm not picking on Camden, but REITs have had a tough go in the public world. And maybe the private world isn't any better, but it just seems that in the private world, the assets are rewarded more than they are in the public world. I'm just curious, in the 40 years, you and Keith took Camden public, what do you think is missing there?

And do you think that the current setup where, as you just described, less home affordability, more propensity to rent, do you think it's finally the time where we will see the REITs actually deliver what they're supposed to?

If you do take a look at the private values and public values, over a long period of time, they're pretty close. We have for 40 years or 33 years as a public company, there's times when the markets get dislocated like they are now. And generally speaking, it hasn't lasted very long because once the market decides that, that the assets are undervalued then smart investors come in and buy the stock, so they drive the prices back closer to NAV. And so for me, being in the public market, I think it's great. We have access to capital that none of our private competitors have.

We don't have the same sort of business model, which is I got to sell my properties in order to create value for my shareholders or from my owners. So you're constantly buying and selling and buying and selling or building the selling. And that's a great business model for some, but -- but for us, we buy and hold and create long-term cash flow and benefits for our shareholders. And I think it's a great space.

Yes. So Alex, I kind of think of it like a playing field. And the playing field over our 30-plus years as a public company, sometimes it's been tilted in our favor. Sometimes it's been tilted in the favor of the private guys -- and it can happen pretty quickly. If you think about kind of coming out of the COVID world or in the bottom of that time frame, the playing field got tilted pretty quickly towards the private guys because debt was free and plentiful. And that's never a good -- that's more interesting to private guys than it is to public companies.

So for the last couple of years, in my mind, has sort of been tilted our way a little bit on the -- certainly on the debt side, certainly on the balance sheet side of things, the ability to finance projects that private guys probably couldn't have gotten done in the last 18 months. I think there's still some of that out there, and I think that we're going to continue to use that to our advantage.

Let me just add one last thing because oftentimes, people would ask me, especially when we get to a discounting NAV like we are right now, they go, why are you public? And why wouldn't you just go private? Just sell the company. They're like, okay, I got that. So there is a disconnect, and it's significant, right? It's like $3 billion, okay? So if somebody buys the company, then they're going to make an expected rate of return on that asset that they buy.

And ultimately, they believe that the prices are going to continue to rise and therefore, we're going to make a reasonable rate of return. And so at the end of the day, if the reason that we are at a significant discount to NAV is because people don't trust management. We are a value trap. We really are a poor operator, and we just are awful and you can't really bridge that gap. And yes, so the company move on because the market is voting you deserve to be a public company and valued at least what your assets could trade for in the private market.

On the other hand, if you have a dislocation in the market like we have today, right? So we have slow growth or flat growth and you have uncertainty environment, you have an oversupply condition, and there's a lot of concern about when that supply condition is going to change. That will change. And what will happen, the same thing that's happened over the last 30-plus years is the market will recognize that the stocks are cheap, the stock will go up to or above its NAV, and that you'll be back.

And so to me, the issue is what is causing the disconnect and then what -- how do you get out of that disconnect and ultimately, the market will figure that out, and it may take longer or shorter. It just depends on what's out there and what's the du jure of investors today, but we feel pretty comfortable where we are.

Our next question comes from Wes Golladay from Baird.

I just wanted to ask you about selling the assets that you're doing. Are you able to shield the taxable gains there? And then one separate tax question. I believe you mentioned there was a big accrual the big rebate you got from a prior year. How much of a headwind will that be for next year?

Yes. So the first thing I'll tell you is if you look at the sales that we're doing, we are doing 1031 exchanges on those with the acquisitions. We're doing reverses. So we bought the real estate first. And then we're selling the real estate. So that's what we're going to do now. To piggyback to one of Ric's earlier comments about buying back shares, we do have the ability to sell or to absorb about $400 million of gains where we don't have to do 1031 exchanges if we want to use those proceeds to repurchase shares.

When you think about property tax refunds, here's the best way to think about it. If you look at 2024, we had about $6.5 million of property tax refunds. If you look at 2025 that number dropped down to about $5.5 million. But we are consistently good in getting refunds. This is something we do. As we've talked about in the past, we contest almost every one of our valuations. If we go through a normal contesting process and we don't win and we don't feel comfortable with where we're settling, we will file lawsuits.

And a lot of what you're seeing are -- is the settlement of those lawsuits. We have no reason to anticipate that in '26 and '27 and '28 and going on forward that we won't continue to have the same level of success that we're seeing. And so I'm not anticipating any significant sort of headwinds associated with the refunds that we got in '25.

In particular, as I said, because the refunds we got in '25 were actually less than the refunds we got in '24, and we're still showing a negative growth on the property tax side.

Our next question comes from Rich Hightower from Barclays.

Covered a lot of ground this morning, but I believe at Camden sort of has an operational philosophy not to use concessions. But obviously, the market around you, we'll use concessions and flex up or down based on the individual operators. So as you think about -- or as we think about sort of market rents next year comping against sort of the net effective market rents in '25, what's the impact of concessions as far as you can tell. So it's a bit of a sneaky question on '26, but just help us understand.

Well, a little bit of a sneaky question. But I think what would be helpful for you is for Laurie to sort of give a rundown of what we're seeing in the market, not for Camden, but in the market on the concession side.

So in our highest supply markets, we continue to see elevated concessions as operators work through the success inventory. But on average, these markets are offering right around 5 weeks of concessions, approximately 10%. So those key markets include Austin, Nashville, Denver and Phoenix.

And so where supply pressures remain most pronounced, that's what we're seeing. But despite these headwinds, we've been able to kind of navigate these markets pretty well, and we're outperforming the market average, each with kind of limited pricing power. But again, those are embedded into our net prices. So beginning in July, we actually initiated incremental price reductions, so that we could prioritize our occupancy, and that strategy has really paid off. So while conditions remain challenging, we are taking a disciplined approach to really position ourselves to remain strong on the occupancy side as we head into next year.

So if you look at the concessionary impact in the market then. So if you look at the highest supply markets, we just talked about Austin, Nashville, et cetera. So they're having 10% concessions or sort of think about effectively 6 weeks, that's what needs to burn off in 2026.

Now the good news is, is that those concessions are not being prorated mostly and so they're upfront, which means that the consumer is used to paying the appropriate rental rates. And so when they go to renewals, it shouldn't be a big shock to them. But that is what needs to roll off in those markets.

Our next question comes from John Kim from BMO Capital Markets.

Despite the favorable supply outlook with deliveries going back to pre-COVID levels, you haven't started the development projects since the first quarter. And I'm wondering why projects had not leveled out for you at this time. Or do you plan to accelerate development starts as indicated on the last call?

Yes. I mean what I'll tell you is today, you can buy real estate at a discount to replacement cost. And if you can buy real estate at a discount to replacement cost, then that is a better use of capital. In addition, obviously, as we just talked about, we are using some of our capital to repurchase shares.

Now I will tell you, this is going to change. We are already seeing construction costs starting to come down. Depending upon where you're building those costs can be down 5% to 10%, which will certainly help the math. The other thing I would tell you is we are very good developers. And when we find land sites and we are actively looking at additional land sites, we've got land sites under contract as well. when we pulled in a trigger, it's because we believe that we can create value for our shareholders.

And we do believe with construction costs coming down, looking at, what, '20 -- call it, '26, '27, '28 could look like in terms of revenue growth. That can make a lot of math work -- and so expect to see us get a little bit more active on the development side. But in 2025, as I said, when you combine a discount to replacement cost, that just seemed like a better use of capital.

Our next question comes from Linda Tsai from Jefferies.

Nice work with your 3Q blends being down only 10 bps quarter-over-quarter. With your 4Q blends expected to be down 1%. Is that all of the new leasing spread side, as it seems like the 4Q comparisons are a bit easier than 3Q. So just wondering if there are certain markets where you're seeing more softness or that somewhat reflects conservatism.

Yes. So the first thing I'll tell you is, I made the comment that as we were going through the end of the third quarter, we did make a push on the occupancy side. And when we made that push on the occupancy side, that was at the expense of some new lease growth. And so when you sign something in the third quarter, you're effectively seen in the fourth quarter. So yes, we are expecting new leases in the fourth quarter to be the primary driver of what we're seeing in terms of having a blended fourth quarter of just negative 1% approximately. So that's where we're seeing it.

Markets that we're seeing additional softness, there's no one market that jumps out. I will tell you, that we are starting to see some markets that are doing the inverse that are actually doing better than we had expected. And call out a couple of those markets because I think we focus too much on the ones that are a little softer, let's focus on some of the good ones. And so we absolutely saw second and third quarter improvements in Nashville, in Dallas and Charlotte and in Atlanta. And then Laurie can give some quick entail of what we're seeing on the ground there.

Yes, absolutely. So while we experienced the elevated supply in these markets, we're starting to see really some encouraging signs, signs as demand rises. So on -- or actually, I would say, as the demand really remains strong. But on total rent gain for renewals and new leases, blended rents have actually turned positive in Dallas, Charlotte and Nashville. And we're also seeing improvements in Atlanta. So some specifics just to give you a little color. So in Dallas, for instance, blended rent gains improved quarter-over-quarter, moving from a negative point -- or negative 1.2% to a positive 0.6%. We also saw our average days vacant improved by 7 days. So moving from 38 days in Q2 to 31 days in Q3. If you look at Charlotte, again, blended gains moved from negative 0.2% and to a positive 0.5%. So an improvement there.

We also saw 61 more move-ins in Q3 than we saw in Q2 just in Charlotte. Nashville, let's talk about that in another high supply market, but we saw blended gains improve from a negative 1 point -- yes, negative 1.3% to a positive 0.4% in the quarter. And we also saw our renewals and transfers peak in August. So again, that was the highest they've seen in Nashville for the whole year and then I'll end with Atlanta.

Blended gains increased from -- it was already positive, but it was positive 0.3% and we improved 2.7% quarter-over-quarter and recorded 96 more move-ins during the third quarter than the second quarter. So just some positive improvement particularly with the blended shift in rents being strong occupancy trends or signaling just progress we're making in managing these challenges in the these concessionary supply-driven markets and positioning ourselves for really a sustained recovery if all things remain the same.

Yes. I just want to piggyback really quick because Nashville is an interesting market. Granted, we only have 2 assets in Nashville. But obviously, it's a market that we talk about supply quite a bit. And Laurie had talked really great about how fast Rainy Street in Austin turned.

In Nashville, when you look at the actual lease rates on new leases, that went up $61 from the second quarter to the third quarter. $61 is pretty dramatic, and that tells you how fast things can turn.

Our next question comes from Michael Lewis from Truist.

Great. So I want to go back to the conversation about demand that came up in a few questions. And I want to push back on anything you said, I agree with all of it, but I think you left out at some point. And so -- let's pretend I'm not an optimistic person, and I look at October, the most layoffs in any month since 2003, 22 years ago, manufacturing activity down 8 straight months, inflation is now 3% and Fed's going to be cutting. The ADP drives number came out. It's really just healthcare and education, not really adding jobs anywhere else. So why shouldn't I be concerned about demand as we kind of move forward the next few months?

And I know you're not giving '26 guidance, but would it be completely shocking if same-store revenue was not materially better than it was this year? Like would that be stunning?

I think the -- look, I put, I think, a cautionary side of the equation and said the glass is half full, but it's still half, right? And it could be half empty if you don't believe that the economy will hold in there for the midterms. So there are things to be optimistic about. There are also things to be worried about. And you just mentioned a number of them, right? I think at least for us, the good news is we don't need as much demand because we have less supply coming in, and we have a retention rates that are at historic highs, right? So we have fewer people moving out. So we don't need as many people to move in to offset those folks.

And so I think these are definitely your points are well taken and are -- and we understand them. But I don't think any of us know what the economy will look like. I think we need fewer jobs than normal to have a reasonable apartment market in 2026 because of the other things we talked about. But it's still an issue out there, obviously.

And just one follow-up, Michael, on the idea of the stats that you gave about layoffs, et cetera. We have a very good barometer in our portfolio given our platform that we know immediately when people start losing their jobs because they move out. I mean it's like almost automatic you lose your job, there's stress, maybe you stay a month, but it's a really quick read-through for us. And we're just not seeing people -- we're not seeing that as an increase as a reason for move out. I lost my job.

Obviously, there's always people in the economy who are losing their jobs, but we've not seen what you're talking about, the read-through that would suggest that our residents in Camden's markets are losing their jobs. And that's been -- that's certainly been a hallmark of the past. Our demographic is different.

Our markets given the growth profiles of our markets from in migration and the concentration of the jobs that are being created being the preponderance in Camden's markets, I think we've been pretty resilient in the past, and my guess is we will be in the future.

Our next question comes from Omotayo Okusanya from Deutsche Bank.

Just curious, portfolio-wise if you seen any really big differences in performance in regards to your Class A versus your Class B or your urban versus suburban assets?

Yes. I'll tell you, and I think it's entirely supply driven. We are seeing our Class A assets to a little bit better than our Class B -- and then I will tell you that in the third quarter, our urban assets actually did a lot better than our suburban assets. But once again, that makes sense to me because it's just following where the supply is. If you think about -- the first wave of supply was very urban focused.

And then the second wave was suburban-focused. And so now you're seeing the supply disproportionately in the suburban markets.

But I believe you said that your Class B is doing -- your Class A is doing better than your B, but a lot of the supply is, A, isn't it?

Well, a lot of the supply is A. But if you think about where most of our B assets are, most of our B assets are in the suburbs where the supply is.

Our next question comes from Julien Blouin from Goldman Sachs.

Alex, on the second quarter earnings call, you mentioned fourth quarter blends would look a lot like the second quarter, but it sounds like guidance now for the fourth quarter is about 150 bps below the second quarter. I guess when you sort of think of all the things you mentioned earlier, slower job growth, supply economic uncertainties. What has changed the most in the last 90 days to drive that? Or is it just the posture of landlords sort of moving more aggressively than anticipated to prioritizing occupancy over rate?

I think you nailed it. That's exactly what it is. And it's really interesting to see because D.C.is a great example of that. As I talked about earlier, D.C. is incredibly strong. The reason why we saw a drop off in the third quarter and an anticipated -- continued drop off in the fourth quarter is just all of the talk about those resulted in some reactionary actions from the competitors out there.

And I think when you sort of look at the uncertainty that we've talked about quite a bit on this call already, the uncertainty that confines 2025, I think a lot of competitors when they were looking at where they were and realizing that they're about to hit their slow season, which is the fourth quarter and the first quarter, really tried to go after occupancy.

And the way they did that is they drop rates. And I will tell you that even though demand is very strong when you have this amount of supply and you've got competitors that are dropping rates all around you, you do have to sort of move in the same direction, and that's exactly what we saw.

And our next question comes from Alex Kim from Zelman & Associates.

Congrats on the move to the new office here. You're down the street from one of my pocket picks, Kenny and Ziggy's now. I want to dive a little into marketing costs here a little bit. This expense bucket has been elevated the past couple of years with double-digit year-over-year growth. And I was wondering if this is somewhat reflective of weaker front-end demand that's required more advertising to maintain leasing traffic and occupancy or something else entirely?

Yes. I'll tell you what it is. It's really 2 things. It's number one, we're really big into SEO, search engine optimization. And so we are buying -- we're buying the placements when people search for apartments. And with the level of supply that is out there and folks are trying to obviously chase the same traffic that we're trying to chase. What we found is that, that the cost of SEO has gone up pretty dramatically.

And obviously, if you've got a lot of folks that are buying and trying to make sure that they are the first name that appears, you're going to expect to see some additional costs on that front. So we're absolutely seeing that.

And then the second thing, which is in line with your question is if you sort of look at, although demand is record high, supply is also pretty high. And so we're all fighting for the same prospects. And so because of that, we absolutely are trying to make sure that we can generate as much traffic as we possibly can. So that's what you're seeing now. I would expect that once we get this supply absorbed that the SEO costs will come down pretty dramatically.

Ladies and gentlemen, our final question today is a follow-up question from Julien Blouin from Goldman Sachs.

I just wanted to go back to something you mentioned last quarter's earnings call, which was that Witten Advisors was telling you that 2026, you could see over 4% market rent growth across your markets. I'm just curious, are they still telling you there's a path to that kind of market rent growth in 2016 despite the fact that the second half is maybe playing out a little bit weaker than we had hoped.

The numbers have come down a bit, but they still have 3% or 3.5% in '26 and over 4% in '27, so they have moderated their numbers slightly, but it's not dramatic. And it's likely to be more second half is what they've showed in their model.

And ladies and gentlemen, with that, we'll be ending today's question-and-answer session. I'd like to turn the floor back over to Ric Campo for any closing remarks.

We appreciate you being on the call today, and we will see some of you in Dallas in December for NAREIT. So thanks a lot. We'll see you then.

And with that, ladies and gentlemen, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

Good morning. Welcome to Bank of America's 2025 Global Real Estate Conference. I'm Jana Galan, and I cover the residential REITs at BofA. We're very excited to have with us Camden's President and CEO, Alex Jessett, and Senior Vice President of Investor Relations, Kim Callahan.

I'll turn it over to them to start with a few opening remarks, and then happy to take Q&A from the room, or I can go through a list, I've got prepared.

Thanks, Jana. So good morning, and thank you for joining us today. Since we only have about 30 minutes for our discussion, I'll keep my prepared remarks brief to allow as much time as possible for Q&A. An updated investor presentation is available on our website and includes much of the information we'll cover today.

For those of you not familiar with Camden, we are a multifamily REIT with nearly 60,000 apartment homes located in 15 major markets across the U.S. We are an S&P 500 company with a total market cap of $16 billion and have been operating as a public company for over 30 years. Approximately 75% of our portfolio is located in Sunbelt markets, with the remainder in Washington, D.C. Metro, Southern California and Denver.

And within our markets, roughly 60% of our assets are located in suburban submarkets and just over 60% would be considered Class B versus Class A and price point. Our markets lead the nation in job growth, population growth, in-migration and overall demand for apartment homes, which has supported record levels of absorption across our portfolio.

After hitting a 50-year peak in new supply last year, deliveries of new apartment units are now steadily declining, and home buying remains unaffordable with an approximate 60% premium to own versus rent across the U.S. All of these factors clearly set the stage for improved revenue and NOI growth in 2026 and beyond.

Camden's strategy is to focus on high-growth markets measured by projected employment, population and migration growth, operate a diverse portfolio of assets, geographical, A versus B and urban versus suburban, recycle capital and create value through acquisitions, dispositions, development and redevelopment, repositioning and repurpose projects, maintain a strong balance sheet with low leverage, ample liquidity and broad access to capital, and deliver consistent earnings and dividend growth for our shareholders.

Our markets are performing as expected, and our third quarter operating trends to date are in line with our most recent guidance. We continue to balance occupancy levels with new lease and renewal rates in order to maximize revenue, and we are monitoring bad debt and delinquencies, which have been trending lower than anticipated this year.

Resident retention remains high, turnover remains low, and move-outs for home purchases have averaged just 10% since 2023. Our 2025 guidance calls for core FFO per share of $6.81 and same property growth rates of 1% for revenues, 2.5% for expenses and 25 basis points for NOI at the midpoint of our range.

To date, this year, we have completed $338 million of acquisitions, adding newly built communities in Austin, Nashville and Tampa to our portfolio, and we are actively looking at additional opportunities. We've also completed $174 million of dispositions so far this year, and we are currently marketing additional properties for sale with expected closings in the fourth quarter of '25.

Camden has one of the best balance sheets and lowest leverage ratios in the multifamily sector, and we are one of only 10 U.S. REITs with an A credit rating. Our liquidity is strong, with approximately $700 million available under our unsecured line of credit and commercial paper program and no significant future debt maturities until the fourth quarter of next year.

And regarding that debt maturity in the fourth quarter of next year, we expect to have the ability to refinance that $500 million maturity accretively in the future lower interest rate environment, given the current interest rate on that debt tranche is running in the mid-5% range.

At this point, we'll open up to questions from the BofA team and our audience today. Thank you.

Thanks, Alex. And -- maybe if we could just start with the spring/summer leasing season. It just seemed a little bit weaker. And I guess when the revised job report came out, that kind of explained what was going on. But I guess if you can help us with what your one ground teams were communicating back to you and kind of how it trended in your different markets.

Yes. So I'll get to the spring/summer leasing trend. But first, I do want to hit the point about the revised job number. So if you think about what we experienced last year, we had a 50-year high in terms of new supply. So last time we saw new supply at that level, it was 1974. And we also had a 50-year high in terms of absorption. So think for a minute that we did a 50-year high of absorption anticipating that we had 1.7 million new jobs. The reality was we only had 900,000 jobs. And so I think that bodes really well for the demand equation in the Sunbelt. If you think that we were able to absorb that level of new supply with a much level -- much lower level of job creation. So I think that's actually fantastic news and really does get me more optimistic about what '26 and '27 can look like because we realize that we don't need such a high level of jobs in order to absorb the existing supply. So that's point number one.

But if you look at what happened in the spring and summer leasing season, I will tell you that the second quarter behaved as we expected. We had 0.7% on blends with new leases down around 2% and renewals up about 3.5%. When I look at the third quarter, the guidance that I gave for the third quarter was for blends to be slightly under 1%. So by the way, 0.7%, which is what we saw in the second quarter is slightly below 1%. So anticipating that the third quarter new lease and renewals will look very similar to the second quarter.

I will tell you that we certainly did see increased price sensitivity across the board in the end of the second quarter and going into the third quarter. A lot of that, I believe, is related to new supply and supply that came on board last year. If you think about it, across the board, we peaked in supply in the third quarter of 2024.

And so if you deliver your units, it typically takes 12 to 18 months to stabilize that real estate after you deliver the units. And so a lot of the units that were delivered at the end of last year are reaching the point in time where they're trying to get their stabilization complete. When you're trying to complete your stabilization, it's very similar to if you're a retailer and you're trying to sell the last few products that you have, what do you want to do? You want to accelerate the movement of that product.

And so we did see increases in concessions, as I said, in the latter part of the second quarter and the beginning part of the third quarter. And that, of course, did create price sensitivity a little bit on the new lease side. But the good news is we had anticipated it. It is in our guidance. And we certainly did not see the price sensitivity on the renewal side. And keep in mind that we're having record levels of retention. And so renewals are becoming a larger and larger component of our overall blend.

And maybe just touching on -- you had mentioned the move-outs for home purchases around 10%, but how has that kind of moved around?

Yes. I mean so move-outs to home purchase has been about 10% really since 2023. And the one thing I'd like to tell you because I get asked lots of time about whether we're concerned that there will be some -- some change that will cause a lot of folks to all of a sudden leave our communities and move to single family.

So the first thing you have to know is that the historical level of move-outs to purchase homes in our portfolio is 14%. Keep in mind, that's 14% of our move-outs. Our move-outs are only about 50%. So effectively, 50% times 14% tells you that about 7% of our humans every single year want to move out to purchase a home. That number is now down to 10%. So take the same math to 50% of 10%, and that tells you that there's 5% of our humans are moving out to buy a home. So we're talking about 2% of our folks that typically would move out to purchase a home aren't moving out today. 2% is not really a significant number.

The other thing I will tell you is if you look at our -- if you look at the markets in which we operate, the discount to rent versus buy in our markets is between 50% to 60%. That is a significant discount. And it's really unlikely that, that discount is going to be abated in any significant way anytime soon. So I think all of this sets up really well for us to continue maintaining reasonable 10% move-outs to purchase homes for quite some time. But as I said, even if it does increase to 14%, that's really not a significant issue for us.

And that discount rent versus buy, I'm sure like Southern California is at the biggest discount. But if you can kind of walk us through some of the other markets?

I'll tell you, interestingly, Houston, Texas is a 60% discount. If you look at Dallas, it's a 50% discount. So it is really across the board. The only market that we operate in that doesn't have that extreme of a discount is Miami. And by the way, Miami is a 20%-plus discount. So this really is across the board.

Now the other thing I'll tell you is if you think about the way our markets behave, typically, in our markets, if somebody moves out of multifamily and they move into single-family, it's generally because they've had a lifestyle change. And that's typically they got married and had their first child and they start to think about school districts, et cetera.

If you look at our resident base, 75% of our renters are single. They have a long way to go before they have to get married first and then have their child. So they've got a ways to go before that lifestyle change kicks in. So I think I feel very comfortable that we're going to continue to have really high levels of retention.

And maybe if I can ask a few kind of market-specific. Coming out of earnings, there were a few markets where your commentary was a little bit of an outlier relative to peers, but I think that's when we're looking at very broad markets. And I guess one area was commentary on Los Angeles. But again, you guys have Southern California portfolio, more Orange County. But if you could maybe kind of talk to what you're seeing in the Southern California portfolio?

So I will tell you there are certainly other multifamily REITs here who are better suited to answer questions about Southern California than I am because it's not a huge part of our portfolio.

I will tell you though that Los Angeles is actually one of our best-performing markets right now. Keep in mind, though, we actually only have 3 assets that are in L.A. County. One is in Hollywood; one is in Glendale, and one is in Long Beach. And Long Beach certainly behaves differently than the rest of L.A. County. But I'll tell you that those assets did well for us. I recognize that some of our peers have a much larger portfolio, and they may have different experiences. But I will tell you that occupancy is high at all 3 of our communities. Bad debt, which was certainly problematic for us for quite some time in those communities, has abated significantly. And on a long-term basis, we think those communities should do just fine.

And maybe kind of same question on D.C.?

Yes. So when we talk about D.C., we're talking about the DMV. So we're talking about the District, Maryland and Virginia. And keep in mind that 50% of our portfolio is actually in Northern Virginia. We've operated in the DMV for 20 years. And for 20 years, Northern Virginia has outperformed. Northern Virginia is just a really strong market.

But obviously, one of the questions that we get asked the most about is DOGE and the impact of DOGE on the DMV in general. And I will tell you that when we talk to our folks on the field, they say that DOGE is absolutely not a factor whatsoever. We're not hearing about anybody coming into the leasing centers and saying that they've lost their jobs because of DOGE. We're not hearing anybody come in and say they're worried about their jobs because of DOGE.

And so the obvious question should be, well, why is that the case? Because obviously, DOGE is something. And I will freely admit that I'm one of those people who had no idea that federal workers were not going into the office every single day. I don't know I just assume government workers went into the office. And it turns out they were actually all living in Boise.

And so what I think has happened is that the governmental workers being called back to the office in D.C. has more than offset any job losses that are associated with DOGE. The other thing that you have to realize is the typical governmental workers is a 40-year-old. That's just not really our demographic. We're more in the sort of 25- to 34-year-olds. Keep in mind that our average resident is 31. So I think a lot of the governmental workers are not our renters. And then obviously, I think there's that incremental demand that has come from -- that's come from the governmental workers returning back to the District. By the way, realizing that, that many workers were not actually showing up in the office in the District and you recognize how well on a relative basis that the DMV did over the past 3 years, I think, is really a good thing because it shows the overall strength is an inherent strength of that market.

And then maybe just digging into some of the higher supply markets. And you've still got some that are going to see peak deliveries, and then those facing kind of the renewal cycles. I guess where would you kind of characterize your major markets in that?

Yes. I mean, so first of all, every time somebody says high supply to me, I mean to correct them and say high demand. But yes, so all of our markets are incredibly high demand. But a few of our markets are still experiencing high levels of supply. And 2 markets that jump out to me are Austin and Nashville. And I'll sort of hit each of them individually.

I'll do Nashville first and tell you that Nashville is really a story of downtown Nashville versus the rest of Nashville. So downtown Nashville certainly does have a lot of supply that is trying to work through. But if you go into the suburbs, it's a very different story. The good news is that every 25- to 34-year-old in America wants to live in Nashville. And if they don't want to live in Nashville, they want to live in Austin, Texas.

And so we'll jump over to Austin. And the thing I will tell you about Austin is -- if you go to 2024 and you look at our portfolio in general and recognize that the supply was about 4% of the stock in '24, and that was a really, really high number. By the way, just as a point of reference, that number drops down to 2% in '26 and 1.5% in '27. That's why we feel so optimistic about '26 and '27.

But if you go back to Austin, that number instead of being 4% in Austin was 10%. One out of every 10 multifamily assets that you see in Austin was delivered in the last year. That certainly creates a challenge in terms of lease-ups. The good news, once again, is that every 25- to 34-year-old wants to live there. So you have incredibly high demand. We have to just get through this supply. The good news is that the supply spigot has been turned off. So we think supply will peak in that market latter part of this year. And then you've really got sort of a 12- to 18-month time frame for us to get all of that real estate leased up. Obviously, the demand is there, so it will be leased up, but you're not going to see a lot of pricing power. In fact, you won't see any pricing power in Austin for quite some time.

But once we get past that, I think Austin is going to be one of the absolute best markets in America because you have to recognize when we keep talking about all the supply, the reason why the supply was so high, why it was a 50-year high of supply was that you had effectively free money. You had a scenario where somebody could go borrow 75% loan to cost at 2%. Well, that made a lot of deals penciled, but the reality was it should have never been done. And I'm very confident to say that in the rest of my professional career, we will never again see an environment where you have that type of free money. And because of that, you will never again have that excess level of supply.

So maybe Austin and Nashville is more of a rent recovery 2027, but the rest of the Sunbelt, we'll see that earlier?

Yes.

Great. And then maybe just kind of touching on kind of the transaction market.

Yes. I mean, so the transaction market remains fairly muted. So we'll talk about acquisitions first, and then we'll talk about development. So on the acquisition side, the reality is there's just not a lot of real estate that's hitting the market. The reason is, is because there is such volatility on interest rates. And if you think about if you are a private group and you're looking to sell real estate, and we saw this happen quite often, they would take their real estate out, they begin a marketing process when the 10-year was at 4%, and then within a couple of weeks, the 10-year is at 4.4%, right? You've got a 10% spike in interest rates. Well, a 10% spike in interest rates absolutely changes the underwriting.

And the last thing you want to do if you are somebody trying to sell real estate is to take a transaction out and then have that transaction fail, have that transaction not close because the reality is all of a sudden, that particular deal becomes tainted, right? Everybody assumes that there's something inherently wrong with that deal, and that's why that deal did not close. Even though there may be nothing wrong with it, it's just a fact -- just a result of the volatility of interest rates. And so because of that, you've seen very few deals actually hit the market.

And I'll tell you one of the interesting things that we're starting to see a lot of is folks who don't want to risk having a transaction not work. And so they're doing sort of quasi off-market deals where they'll tell a broker, call 5 or 10 specific buyers, don't market this, just talk to them and see whether or not they're interested.

The good news is that Camden gets that look and Camden gets that look because people recognize that we have the ability to transact. And so we're seeing some deals there, but nowhere near the level of deals we'd like to see. Now my gut is interest rates, obviously, I think we all can assume, get cut next week. And I think when sellers start to recognize that interest rates are likely not to go back up, but likely to hold steady or go down. I think you'll start to see more deals hit the market.

But this is really not the right time for deals to hit the market because you're starting to hit the slow period. So I think where you'll start to see the larger pickup will be the beginning of next year when funds have new capital allocations, et cetera, and sellers recognize that. And so I think you'll start to see deals pick up at the beginning part of next year.

When it comes to development, because I think development is one of the really important things to talk about. You have to recognize that almost all deals that are built in America today are built by merchant builders. And remember that a merchant builder is nothing more than a manufacturer hired by an equity provider to build a product and to sell that product at a profit.

Today, across the board, you can buy multifamily assets at a discount to replacement cost. If you can buy multifamily assets at a discount to replacement cost, then that means inherently, there is no profit in that transaction. And that is why equity providers are not giving money to merchant builders today. Equity providers instead are giving money to acquisition funds.

So I will tell you that, that's not going to last forever. There will be a point in time when multifamily assets start to trade again at a premium to replacement cost, which is what should happen. But there are 3 factors that are going to drive that. Factor number one is that you have to start seeing rental rate growth increase. And I think most of us anticipate that, that's going to happen, call it, '26 and '27. Factor number two is you're going to have to see construction costs start to come down. And we're starting to see construction costs come down. We've got costs coming down about 3% to 5% today. To give you an idea of how much could construction costs come down during the GFC, they came down 10%. So sort of assume that's your outer band. And then the third thing that needs to happen is you need to see interest rates start to come down. I think we all sort of assume that that's going to happen starting next week.

So when the combination of those 3 things occur, then all of a sudden, you will start to see deals trade at a premium to replacement cost. And when that happens, then all of a sudden, you will start to see developments make more sense. But the thing you have to realize is that let's assume all that occurs mid-2026. It will then take a year from that point in time for people to get their plans and their permits and all that done. Then once all that's done, so let's say they start in a year's time from that, that gets you to mid-'27, then you're talking about 2.5 to 3 years to deliver the product. So you're talking about supply increasing around 2030. So it looks like we should have a fairly long run rate.

The other thing that makes me feel pretty good about that is I track the ABI, which is the Architectural Billing Index. The Architectural Billing Index shows what are architects actually working on. And I will tell you that index has been down 27 in the past 30 months. So that tells you that architects aren't even working on deals, right? So you've got to get all the economics to start working. Then you have to get the plans done, drawings done, permits done, et cetera. So I think we've got a fairly long runway before you see any type of increase of supply. And then by the way, as I said earlier, I don't think you're ever going to get back to the point in time where supply is the level that we saw in 2024 because I don't think we're ever going to see free money again to that level.

Maybe jumping back to that broker phone call. Can you let us in on kind of what's the bid-ask spread for those types of acquisitions?

Yes. I mean, so what I will tell you is it is interesting because brokers -- typically, when a deal hits the market, the first thing you do is you go to your broker and you get what's called a BOV, a broker opinion of value. The challenge becomes that there's not a lot of deals that are actually transacting. And so broker opinion of value have a tendency to not always be the most accurate currently.

And so we certainly are hearing cases of folks who are going out and saying, listen, I want to market this very tightly, call a couple of folks. It's based upon a BOV. And oftentimes, they are not getting to their BOV number. And part of that is because, once again, you're not broadly marketing it, right? You're just going to a select group of deals, a select group of humans. So some of these transactions are working. If you look, we bought 3 deals this year and 2 of the 3 came that way.

And then at the development side, maybe talk to development yields, kind of what you're realizing on this crop of assets and then as you underwrite future deals?

Yes. I mean so what I will tell you is the developments we have, and we don't have a lot right now, we're sort of in the 5.5% to 6% yields. But the thing that you have to remember, and let's go back to the point that I made about most multifamily assets today are trading at a discount to replacement cost.

So it's always sort of amusing to me because I talk to a lot of merchant builders and I say, what are you guys building to? And I say, I'm building to a 6.5. And I say, that's interesting. So okay, do you recognize that you can buy assets at a discount to replacement cost? And I say, yes, I do. And I say, okay, what do you think new deals trade at? And they say high 4s. I say, well, okay, well, this is a simple math then because based upon that simple math, there's no way are you building a 6.5. That's just not how this works because presumably, if you can buy at a discount to replacement cost, then your yield is something less than the high 4s.

And I will tell you that we've had several land parcels that have been brought to us for us to take a look at. And when we do the math, that's exactly what we discover. So we look at the math and somebody says, okay, you can build that for 100 and I say what can you buy it for? And they say, you can buy it for 95. We'll go buy the asset, don't build the asset.

Now by the way, that math once again will change. And when that math changes, Camden is going to have a competitive advantage, number one, because we're very good developers, and that's very important. And then number two, because of the strength of our balance sheet, we can fund new developments using 100% debt. And using 100% debt obviously gives us a cost of capital advantage. So you will see us pick it up again in terms of new development. But today, it's very hard to make a new development pencil.

Anything.

It's a question on demographic. You're more exposed to 25 to 34 [indiscernible] and so I guess unemployment rate growing faster for those democratically. So [indiscernible] you, see?

Yes. So the first thing, and I'll make sure everybody heard the question. The question was talking about our demographic is 25- to 34-year-olds. And that particular group, there's a lot of sort of narrative around them having a hard time finding jobs, et cetera. I will tell you that, that is another thing that bodes very well for the Sunbelt based upon that because the reality is that the young folks are going to go where the jobs are and the jobs are in the Sunbelt. And of course, sitting here in New York City, which is a great city, but I'm going to tell you that a lot of young folks that typically would move to New York City to try and start their career are going to look at those type of stats and they're going to say, "You know what, if it's harder to find a job, I'm going to go where the jobs are far more plentiful, and that's going to drive them right down to our market." So I think that is an absolute plus.

The other thing I will tell you is there's certainly a lot of discussions around AI and the impact that AI is having on young folks getting jobs. I'm going to go on the record and tell you that I am an incredibly optimistic person about what AI will actually end up doing. And every single time there is a major technological innovation, it ends up creating more jobs. It ends up creating jobs that none of us here have even thought of none of us here have even pictured. But my gut is in a year's time, we're going to be talking about brand-new industries, brand-new jobs, and those will likely go to the young folks because the young folks are the ones who embrace change the best. The young folks are the ones who are learning about these innovations and the young folks are the ones that older people like myself are going to go to and ask for help. And I think this is an incredibly exciting time for them.

Maybe just one follow-up on the revised jobs. You said that you take that as a positive. I'm sure that there are some in the room may be thinking opposite, right? Is this an issue that I guess, can you talk about the most recent demand you're seeing? And how would you characterize that customer? Yes, why isn't it an issue that, I guess, it could be a growing issue as we head into the fall winter next year?

Yes. So the question is about the jobs revision and my optimism from it. And so here's the math that I look at. So in 2024, you had 4% of the stock delivered. And that 4% of the stock was absorbed originally, we thought with 1.7 million jobs. That 4% now appears was actually absorbed with 800,000 jobs. So then when you then go out to 2026, and you say that you're going to have 2% of the stock delivered.

Well, based upon the math that we all thought yesterday at 8:00 a.m. before yesterday at 9:00 a.m., based upon that, we would have made the assumption that you needed half of 1.7 million jobs or 850,000 jobs to absorb the 2%. Now based upon the math that came around at 9:00 a.m., all of a sudden, you say, okay, well, maybe you only need half of 800,000 jobs. So now you're talking about 400,000 jobs in order to absorb 2% stock. And if that's the case, then you start to say, what if we actually have 800,000 jobs, what if it's consistent, then all of a sudden, you start to say, well, now you actually have excess demand. So it's a really interesting sort of thought process.

Now I will tell you, are we seeing anything that's a leading indicator to us that there are folks losing their jobs, that there are folks worried about their jobs, that there are folks not getting jobs. The answer is we're not, right? And I come back to the fact that we're having 50-year high in terms of absorption, record level absorption.

And you look at our renter base, our average renter pays about 19% of their income to rent. So our average renter is financially very strong, and we're not seeing any issues with them having trouble keeping their jobs, et cetera. By the way, when jobs become harder to find, once again, people move to where it's a lower cost of living and where jobs are more plentiful, and that is the Sunbelt.

Maybe if we could talk a little bit about your expansion into single-family homes and BTR?

Yes. So I want to be really clear, we're not expanding into single-family homes. We're expanding into build-to-rent. And so we have 2 build-to-rent communities that we're doing as a test case. They're both located in suburban Houston. We did that on purpose because, obviously, this is where we are. And every time we do a test case; we want to make sure we can watch it really closely. So one of them is in far North Houston in the Woodlands suburbs if you guys are familiar with Houston. The other one is in far Southwest Houston.

I've made this comment, I think, on every earnings call for the past 2 years, this is an incredibly slow lease-up. This particular demographic is much different than our demographic. And so I'll just sort of paint you a picture really quick just to tell you that this is not our typical demographic.

If you look at our move-outs reasons from our traditional multifamily, 2% of our move-outs move out to rent a single-family home. So once again, that's 2%, 50%, so that's 1%, right? And so only 1% of our humans typically move out to rent a single-family home. So this is a brand-new demographic for us.

What we've learned about this demographic is it takes them a very long time to make a decision to rent. I think about our typical 31-year-old that leases multifamily. We give them a fantastic tour. Our real estate looks great, and they say, "I'm ready to sign." And they sign a lease and it's fantastic. This particular demographic, they show up on a Saturday. We're talking about the BTR now. They show up on a Saturday, they take a look around. We say, do you want to sign? They say, "let us think about it." And they come back the next Saturday and they bring a buddy. And I'm thinking this is great to bring a buddy who's also going to rent. No, that's not the case. They're trying to get their buddy opinion. And so they look around and we think they're going to lease and now they don't. And then they come back the next weekend with take measures and they start measuring rooms, and it's like he's going to please just lease. So it's a very slow lease-up.

The good news, though, is if it takes you that long to make a decision to move out. We think it's going to take you much longer to make a decision to move out. So we think it's going to be really sticky. But obviously, we need to make sure that, in fact, is the case. But that is the thesis that we have, which is that this opens us up to a new demographic that they are going to be a lot stickier. Obviously, there is, as everybody knows, inherent cost with turnover. So if we can eliminate a lot of that inherent cost, we think that makes a lot of sense for us. And as we continue to operate these assets, if we believe that we can do it in an efficient manner, if we believe that we can use our existing expertise and do this well, then you'll see us do more of them. And if ultimately, it ends up not working, then you won't see us do more.

And do you think eventually kind of stabilized yields are in line with the apartment product or potentially higher?

I think, ultimately, they're going to be in line. When I think about the factors that are positive, as I said, I think it's going to be a much lower turnover. And I think the offset to that might be, whether they're more price sensitive.

Anyone else in the room want to touch on anything?

Any other new markets that you're looking at to expand?

So as I -- the question was any new markets that we're looking at. And so as I always tell everybody, our business is really simple, just follow the population growth and follow the employment growth, and that's where you should be. And so if you look at the top 25 markets across the country in terms of population growth and employment growth, we're really in all those markets. So at this point in time, there's not any new market that screens for us. But I will tell you that we've got teams that are constantly evaluating new markets and taking a look at them and see if they make sense for us. But as of right now, there's no new adds.

Anything to update maybe on the regulatory front? Talk about this housing emergency or the Road's Act.

So on the regulatory front, I would tell you that part of the reason why the states that we're in do so well is because they're very pro-business. Part of being pro-business is that you're low on regulations. And so I'm not worried about anything changing on the regulatory front.

When it comes to governmental incentives to -- or initiatives to solve the housing affordability issue, listen, I'm all in favor of what can work. I will tell you that a robust single-family housing market tends to create jobs. And remember as what I just said is that job creation is really good for our business. And so if something creates jobs, I think at the end of the day, there's a plus.

And then back to the other math that I walked you through, it's not going to really take our residents away because our residents are very happy being in the multifamily world because they are single individuals that like the idea of 900 square feet and no maintenance and all the flexibility that comes with that. So listen, I think if somebody can make these things work, I think that's fantastic, but I think there's a whole lot of work to go. If you recognize that there's a 60% discount to rent versus own, that's a huge bridge to gap.

Thank you. I'm going to close with the 3 rapid fire questions.

Okay.

When the Fed starts to cut, do you expect borrowing rates for long-term debt to decline, stay flat or potentially rise?

Decline.

Last year, the majority of companies stated they're ramping up spending on AI initiatives. How would you characterize your plans over the next year, higher, flat or lower?

Higher.

And then do you believe same-store NOI growth for your sector will be higher, lower or the same next year?

Higher.

Great. Thank you.

Fantastic. Thank you, everybody.