Camden Property Trust (



Q2 2011 Earnings Call

July 29, 2011 12:00 pm ET


Kim Callahan – VP, IR

Ric Campo –Chairman and CEO

Keith Oden – President

Dennis Steen – CFO


Jana Galan – Bank of America/Merrill Lynch

Dave Bragg – Zelman & Associates

David Toti – FBR

Nick Joseph – Citi

Jay Habermann – Goldman Sachs

Rob Stevenson – Macquarie

Alex Goldfarb – Sandler O’Neill

Karin Ford – KeyBanc Capital Markets

Ralph [ph] – UBS

Andrew McCulloch – Green Street Advisors

Jeffrey Donnelly – Wells Fargo Securities

Mark Biffert – Bloomberg Research

William Kuo – Cowen & Co.



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Good day. And welcome to the Camden Property Trust Second Quarter 2011 Earnings Conference Call and Webcast. All participants will be in listen-only mode. (Operator Instructions)

After today’s presentation there will be an opportunity to ask questions. (Operator Instructions)

Please note, this event is being recorded. I would now like to turn the conference over to Kim Callahan, VP Investor Relations. Ms. Callahan, please go ahead.

Kim Callahan

Good morning. And thank you for joining Camden’s second quarter 2011 earnings conference call.

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.

As a reminder, Camden’s complete second quarter 2011 earnings release is available in the Investor Relations section of our website at and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call.

Joining me today are Ric Campo, Camden’s Chairman and Chief Executive Officer; Keith Oden, President; and Dennis Steen, Chief Financial Officer.

Our call today is scheduled for one hour as there is another multifamily company hosting a call at 1.00 p.m. Eastern. As a result, we ask that you limit your questions to two with one follow-up and rejoin the queue if you have additional questions. If we are unable to speak with everyone in the queue today, we’d be happy to respond to additional questions by phone or email after the call concludes.

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

Ric Campo

I hope you enjoyed our recycled Bruce Springsteen pre-conference music. We plan on recycling our second quarter operating results for the next few quarters in foreseeable future. We actually had different music planned but somehow the file got recycled.

With that said, despite weak job growth and uncertain economic activity our business continues to strengthen. Our markets are adding jobs while new supply continues to be limited, growth markets that are pro business with low taxes and affordable housing added most of the jobs in America.

On Tuesday, USA Today ran a front page headline that if you want a job you need to move to Texas. Texas has created over half of all the jobs created in America in the last 12 months. We have continued to accelerate our acquisition and development programs to capitalize on what should be the best multifamily operating environment we’ve seen in decades.

On the acquisition side, we expect to complete over $500 million by the end of the third quarter. We will have an additional $225 million of acquisitions remaining to finish up our fund.

On the development side, we’ll start another $150 million through the end of this year. We’re on track to start $400 to $5 – $400 to $600 million of new development in 2012. Last week we began leasing at Camden LaVina in Orlando. We leased 35 apartments in the first weekend which is the strongest opening we’ve ever had for a new development.

First half of the year has been busy for all of our teams. We completed over $1.7 billion in transactions including acquisitions, development starts and capital market transactions. All of this activity has strengthened our balance sheet and positioned Camden very well to capitalize on future opportunities.

I’d like to give a big shout out to all of our Camden teams for a great first half of the year and remember we have the second half to complete.

I’ll turn the call over now to Keith Oden.

Keith Oden

Thanks, Ric. This was another quarter of outstanding execution by our real estate operations and support teams. Their efforts allowed us to once again raise our FFO estimates for the full year. Ric summarized the transactions in the quarter and I’ll share some details on our operations for the quarter and give some thoughts on what we think may lie ahead.

The drivers of our outperformance are the same as we cited in our original outlook for the year. Demand continues to be really strong coming from some of the usual places, as well as some unexpected ones.

Although, job growth remains quite weak nationally, several of our larger markets are experiencing robust job growth. Houston is projected to add 72,000 jobs this year, Dallas, 64,000, Washington D.C. Metro Area, 59,000, Atlanta, 37,000, Denver, 30,000 and Austin, 21,000. In each case those numbers are sufficient to move the needle by themselves.

In addition, the home ownership rate continues its (inaudible) decline. The average home ownership rate in Camden’s 15 markets now stands at 63.6% below the national average of 65.9%. This rate is dropping at roughly one-tenth of 1% per quarter.

While the majority of those households probably end up in a single-family rental, many are finding their way back to apartment homes. We believe this will continue and home ownership rate will stabilize around the long-term average of 64% to 65%. Although, some published research indicates the rate could fall as low as 62%.

New supply remains very limited. We’re still shrinking the overall inventory of multifamily housing due to the demolition of roughly 150,000 apartments per year. Across all of 15 – all 15 of Camden’s markets we expect a total of 22,000 multifamily completions in 2011.

That’s more like the number of apartments we would have seen built in an individual market like Houston, Dallas or Atlanta during a typical year. These trends are likely to remain in place throughout 2012 and will continue to support strong fundamentals in our business, as they say, facts are stubborn themes.

Our fundamentals continue to be strong as well. Our occupancy rate currently stands at 95%. We averaged 94.8% for the quarter, up from 93.9% in the first quarter. Despite the increase in occupancy, we’ve been able to continue pushing rents.

During the second quarter, new lease rents were up 6.1% and renewals were up 8.6%. For July to date, renewals are up 8.8%, new leases up 5.3%.

Current renewals out to September are trending up approximately 9%. Portfolio wide we’re 3.4% below peak rents and we still have room to increase rents just to bring our residents back to paying the rental amount they were paying three years ago.

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