Camden Property Trust Q2 Earnings Call Highlights

Key Points

• Camden Property Trust exceeded Q2 expectations with Core FFO of $1.68 per share and 95.7% average occupancy. Management reaffirmed its full-year Core FFO guidance midpoint of $6.75 and raised its same-store NOI outlook excluding California.
• The company completed the $1.625 billion sale of 11 California communities, using proceeds for $645 million of Sun Belt acquisitions, land purchases, share repurchases and roughly $900 million of debt repayment. The repositioning is expected to be FFO-neutral in the first year and accretive thereafter.
• Leasing trends improved materially: blended effective rent growth excluding California improved to negative 0.2% from negative 1.6% in Q1, while renewal increases exceeded 4% in July. Camden expects positive blended rent growth of about 1% or slightly more in the second half of the year.

Camden Property Trust NYSE: CPT reported second-quarter Core FFO of $1.68 per share, exceeding the midpoint of its guidance by $0.01, as occupancy and property operating results outperformed expectations. The apartment REIT also completed the sale of its California portfolio and continued redeploying proceeds into Sun Belt acquisitions, land sites, debt reduction and share repurchases.

Chief Financial Officer Ben Fraker said the stronger-than-expected quarterly result was driven primarily by occupancy at stabilized communities. Camden’s second-quarter occupancy averaged 95.7%, up from 95.1% in the first quarter, while July occupancy reached 95.8%.

Management reaffirmed its full-year Core FFO guidance midpoint of $6.75 per share. The company raised its outlook for same-store net operating income, excluding California, due to lower expected expenses while maintaining its same-store revenue growth outlook.

California Sale Drives Portfolio Repositioning

Camden completed the sale of 11 California operating communities on July 29 for $1.625 billion. The 19-year-old portfolio generated a trailing-12-month FFO yield of 5.6% and an AFFO yield of 5.2% for Camden, according to Chief Executive Officer Alex Jessett. Transaction costs are expected to total approximately $15 million, including more than half attributable to Los Angeles’ Measure ULA transfer tax on one sale.

Executive Chairman Ric Campo said the company’s plan was to sell California assets, acquire approximately $1 billion of newer properties in existing markets and use remaining capital for share repurchases. He described the execution as “nearly flawless,” with about $200 million of acquisition properties still to be identified.

Camden has used the proceeds across several capital-allocation initiatives:

• Repurchased $694 million of common shares during the second half of 2025 and first half of 2026 at an average price of $105.17 per share.
• Completed $645 million of operating-community acquisitions, with an average property age of five years, plus $45 million of land purchases.
• Received awards for two additional acquisitions and one land site totaling $195 million.
• Used about $900 million of California-sale proceeds to repay outstanding balances on its line of credit and commercial paper program.

Fraker said the completed investments include seven apartment community acquisitions in Atlanta, Orlando, Nashville, Dallas, Phoenix, Tampa and Charlotte, along with development land in the Raleigh and Tampa suburbs. Camden expects about $200 million of remaining 1031 exchange proceeds to be deployed by late in the fourth quarter.

The sale and reinvestment plan is expected to be FFO-neutral in the first year and accretive thereafter, Jessett said. Management expects the newer Sun Belt assets to grow faster than the older California properties that were sold. The company also expects the transaction to reduce recurring capital expenditures per unit by 5% and lower bad debt by 10 basis points.

Camden said its pro forma net debt-to-EBITDA ratio stood at 4.5 times at the end of July. Subsequent to quarter-end, the company also closed a one-year, $350 million unsecured term loan to enhance liquidity while it continues to recycle capital.

Leasing Trends Show Improvement

President and Chief Operating Officer Laurie Baker said operating conditions improved across Camden’s 13 current markets. Excluding California, effective new-lease rates declined 3.3% in the second quarter, while renewal rates rose 2.8%, producing blended effective rent growth of negative 0.2%.

That result represented a substantial improvement from first-quarter new-lease growth of negative 5.5% and blended growth of negative 1.6%. Baker said blended rent growth turned positive in both June and July.

Signed renewal increases reached 3.4% in June and more than 4% in July. Offers sent to residents with August and September lease expirations averaged a 4.2% increase. Annualized net turnover remained at 39%, unchanged from the second quarter of 2025, while move-outs for home purchases were 10.4%.

Jessett said approximately half of Camden’s communities had positive signed new leases in July, compared with 20% in March. On an effective basis, 65% of communities posted positive blended rates in July, while 75% were positive on a signed blended basis.

He also said average signed new leases across the system had turned positive on several days during July. However, he cautioned that daily pricing can fluctuate and said he did not expect new-lease pricing to be positive for the entire third quarter.

For the second half, management expects blended rent growth to be positive, in the range of about 1% or slightly above. Jessett said Camden’s approach has been to prioritize occupancy before pursuing greater pricing power.

Expense Outlook and Third-Quarter Guidance

Camden’s revised same-store outlook, excluding California, calls for 0.5% revenue growth, 2.5% expense growth and a 0.6% NOI decline. The updated NOI outlook improves on the company’s prior expectation for a 0.9% decline, reflecting expense performance that is 50 basis points better than initially expected.

Fraker attributed the improvement to lower water consumption, better trash-contract pricing, favorable insurance subrogation recoveries and insurance renewal pricing that was better than anticipated.

The company expects third-quarter Core FFO of $1.69 per share at the midpoint, up $0.01 sequentially. Expected gains from same-store operations, interest income, reduced corporate costs and lower interest expense are projected to be mostly offset by lower NOI following the California sale, net of contributions from recent and expected acquisitions.

Management also highlighted improving conditions in markets that have faced elevated supply. Baker said Austin occupancy rose to 96.1% in the second quarter from 94.7% a year earlier and reached 96.6% in July. Jessett said Austin signed new-lease declines improved from 11% in March to 3% in July.

While Camden intends to modestly reduce its exposure to its two largest markets, Washington, D.C., and Houston, Jessett said the company has no plans to exit any additional existing markets. He said the company continues to evaluate potential new markets but remains focused on locations with sustained population and employment growth.

About Camden Property Trust (NYSE:CPT)

Camden Property Trust is a publicly traded real estate investment trust (REIT) specializing in the ownership, development and management of multifamily residential communities across the United States. The company's core business activities include acquiring land for new construction, overseeing the design and development of garden-style and mid-rise apartment communities, and providing ongoing property management services. Camden's asset management team focuses on maintaining high occupancy levels, resident satisfaction and operational efficiency through consistent leasing, maintenance and community engagement programs.

Camden's portfolio encompasses a geographically diversified mix of properties located primarily in high-growth Sun Belt and major metropolitan markets.

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