Camden Property Trust ( CPT)

Q3 2011 Earnings Call

November 4, 2011, 12:00 p.m. ET


Kim Callahan – VP, IR

Ric Campo –Chairman and CEO

Keith Oden – President

Dennis Steen – CFO


Eric Wolfe – Citi

Alex Goldfarb – Sandler O’Neill

Jay Habermann – Goldman Sachs

Dave Bragg – Zelman & Associates

Richard Anderson – BMO Capital Markets

Paula Poskon – Robert. W. Baird & Co.

Mike Salinsky – RBC Capital Markets



Good afternoon, and welcome to the Camden Property Trust Third 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 third 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 third 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. We ask that you limit your questions to two and rejoin the queue if you have additional questions. If we are unable to speak with everyone in the queue today, we’ll 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.

Ric Campo

Thanks, Kim. Based on Camden’s operating results in the third quarter for Houston, Dallas, Austin, and Charlotte, the south is definitely rocking again. The continued strength of our operating results has been driven by the same macro factors throughout the year as follows, limited new supply pressure which we think will continue through 2013, continued negative consumer sentiment towards home ownership, and continued employment growth in our markets.

Since the beginning of 2010, 2.7 million plus or minus jobs have been created. More than two thirds of these jobs have gone to people 34 and younger, which represents the sweet spot of our customer base.

Camden’s markets experience more than double the national average in job growth over the last three months, are projected to exceed double the national average over the next 12 months. If you look over a 20-year historical timeframe, our markets have grown jobs of more than double the national average; we think that’s going to continue.

We expect the strong operating fundamentals to continue and accelerate, if we get even better job growth. All of our markets with the exception of Las Vegas did well in the quarter. In spite of the softness in Las Vegas, there are some positive signs in the horizon. Las Vegas posted the best year-over-year job growth in the last month since 2007.

In addition, year-over-year numbers are all pointing upward for Las Vegas. Air traffic is up 8.7%, convention attendance is up 19.6%, hotel occupancy is up 2.1%, average room rates are up 11.1%. With virtually no new supply in the horizon, all these metrics point to better market in the next few quarters of next year.

While Las Vegas represents only 6.5% of our same-store net operating income, the underperformance has been a drag on our overall same-store revenue and NOI growth rates. Excluding Las Vegas from the third quarter revenues, our revenues would have increased to 6.8%, 50 basis points higher. NOI would have been 8.1% or 70 basis points higher.

I point this out because I think Las Vegas is a great opportunity for us next year to accelerate growth as the market improves. Our team in the field and the support teams, and corporate teams at the regional office, the corporate office are prepared to step up and end the year strong, I’m sure.

So with that, I turn the call over to Keith Olden.

Keith Olden

Thanks, Rick. Before I address our operating metrics for the quarter, I want to spend a few minutes to address two themes that investors have been wrestling with for some time regarding multifamily business. The first is, what impact is the overhang of vacant single-family homes likely to have on the demand for multifamily rental housing. In other words, are we going to lose a ton of residence to single-family rentals?

And the second is, will the home ownership rate continue to fall, and how will this affect the multifamily sector. In other words, are a ton of our residence about to become single family homeowners.

Like all of multifamily peers, we’ve addressed these themes numerous times in the past, though primarily with either portfolio specific or [inaudible] evidence. However, there’s been some interesting research published recently that helps quantify the impact of the two trends are likely to have on our fundamentals.

Regarding the single-family overhang, we’ve argued for some time that single family homes are a poor substitute for multifamily housing. To a large degree, our view was based on the observation that our typical resident, 40% of which are under 30 year-old, do not have lifestyles or life circumstances, which are compatible with living in a single family home in the suburbs. By in large, our residence want to be near their jobs, friends, and fun.

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