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spk12: 14 people in the back of this truck i warned you twice and now i'm riding you up i said officer what have i done he smiled and said boy you're having too much fun Too much fun, what's that mean? It's like too much money, no such thing. It's like a girl too plenty, but too much class. Being too lucky, a car too fast. No matter what they say I've done, but I ain't never had too much fun. There was a fight Friday night at the Stumble Inn. Me and old Harley just had to join in. Next thing you know, we were both seeing stars. It threw us out, flowed down the bar. I said the long branch is open, the night's still young, and we ain't never had too much fun. too much fun what's that mean it's like too much money no such thing it's like a girl too pretty but too much class being too lucky a car too fast no matter what they say i've done well i ain't never had too much fun i'm a holy terror a tornado wind me up turn me loose and let me go
spk10: Good morning and welcome to the Camden Property Trust First Quarter 2021 Earnings. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Kim Callahan, Senior Vice President of Investor Relations.
spk01: Please go ahead.
spk00: Good morning, and thank you for joining Camden's first quarter 2021 earnings conference call. We hope you will enjoy our new, more interactive call format today. which includes a brief video presentation, as well as slides detailing some of the remarks from our executive team. Today's webcast will be available for replay this afternoon, and we are happy to share copies of our slides upon request. If you haven't logged in yet, you can do so now through the investors section of our website at camdenliving.com. 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 first quarter 2021 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. Joining me today are Rick Campo, Camden's Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman, and Alex Jesset, Chief Financial Officer. We will attempt to complete our call within one hour, as we know that another multifamily company is holding their call right after us. We ask that you limit your questions to two, then rejoin the queue if you have 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 email after the call concludes. At this time, I'll turn the call over to Rick Campo.
spk02: Thanks, Kim. The theme for our earnings call music was have fun. We've always believed that our candidate teammates do their best work when they're having fun. That's why 25 years ago, we chose have fun as one of our nine core values. Having fun is an essential ingredient of maintaining a great workplace. When your team is having fun, they have smiles on their faces, which puts smiles on our residents' faces, which ultimately makes our shareholders smile. It's a formula that has allowed us to earn a place on Fortune Magazine's 100 Best Places to Work list for 14 consecutive years with seven top 10 finishes. Just recently, we're pleased to announce that Camden placed number eight on this year's list. Creating a culture that encourages folks to have fun requires consistent, intentional focus, especially during the pandemic. Over the years, we have created traditions that support having fun, from skits and lip-sync contests to fun videos that deliver important messages to our teams. The pandemic allowed us to come up with new ways to maintain our culture in the new work environment. Camden's culture is our superpower that allows us to consistently perform at the highest level. And as Peter Drucker famously said, culture eats strategy for breakfast. Our earnings call platform allows us to share videos and enhance our messaging. Here's an inside view of one of the many cultural messages that we shared with all of our Camden teammates this year and now with you. Culture is really key to Camden. Culture is who we are. Culture is about how we treat each other, how we feel about each other. And without the culture, we would not have been able to do the great things we did in 2020 during the pandemic. And hopefully that culture will take us forward through 2021 when we get past the pandemic and then And then throughout the next few years, once we're done with the pandemic. So there was one last culture video that's called Past the Culture. And I get called by Keith and he goes, you know, what we need to do is we need to make a big ending. And I happened to be in Lake Tahoe. It was 45 degrees out. And he said, the big deal is at the end of the video, you got to jump in the lake and spike a football. And I was like, what? Are you kidding me? why do I always have to like jump in the lake or do something like that? And so I did it because it's all about culture. It's all about having fun. And it's all about taking care of each other, providing peak experiences, making sure that we know that it's not just a job. We're taking care of each other, our customers every single day. So here's the past the culture video. And it was 45 degrees in the water. It was very cold.
spk17: One man, one door. One mission, one heart, one soul. Just one soul of sun, one flash of lightning. I'm gonna tell you there's no black and no white No blood, no stain Bye. Bye. Bye.
spk02: Wow, wasn't that an interesting video and nice spike right into the cold water. But it's all about culture. It's all about making sure we're having fun at the same time as we're doing what we need to do every single day, taking care of each other first, taking care of our customers and ultimately having fun while we do it. During the first quarter, we saw operating strength building in most of our markets. Clearly, the opening of the economy driven by the speed at which the COVID-19 vaccinations have been distributed, has improved our results for the first quarter and our outlook for the rest of the year. This has led us to increase our net operating income and our FFO guidance. As tough and strange as the pandemic made last year, we've used the time to advance many initiatives that will drive revenues, lower expenses, and improve performance in key areas. To list a few, our investments in CHIRP funnel, and other AI opportunities will accelerate self-guided tours, virtual leasing, in-apartment package deliveries, and keyless communities, all driving better customer experiences while increasing revenues and lowering expenses. Our investments in our cloud-based ERP systems have made remote working seamless. It streamlines data mining, moving us closer to the Internet of Things. It creates for more robust ESG analysis and reporting on our ultimate carbon footprint reductions that we'll publish later in the year. We will be publishing a more expanded ESG report in the fall. I began the call with a discussion and a video on culture. We continue to do the right thing at Camden, moving forward on the journey to a more diverse, equitable, and inclusive workplace. Last summer, when there was great uncertainty, We advised our teams to focus on things they could control, get in the best health of their lives, embrace their friends and family as true partners with masks, proper social distancing, and vaccinations, of course. We also asked our team members to take care of our residents and each other and not to listen to the noise around them. We told them that the pandemic would pass and the years after would be great for our teams, their families, and our business. We see the light ahead, and it's not a train. I want to thank our team Camden, your families, for helping us get from there to here. Thank you, and I'll turn the call over to Keith.
spk19: So we're very proud of the fact at Camden that we have been included on Fortune Magazine's list of 100 best companies to work for for 14 years. It's an incredible accomplishment that reflects the fact that each of you takes pride in the workplace and continues to work hard to make Camden a great place to work. So a lot of people think about the fortune list and the Camden's culture and all the things that we do to support being a great workplace. And a lot of people look at that and they say what they see is expense and cost. And what we see is investment. We're investing in our brand. We're investing in our people. We're investing in our culture. And ultimately, we think those things are far more important than the small amount of impact that the expenses that we have are around maintaining Camden as a great workplace actually matter. And one of the ways to look at that is that we track our Camden's 20-year investment return against the S&P 500. And it's proof positive that creating a great workplace also creates great results for your shareholders. Over the last 20 years, Camden Property Trust has produced an annual return for our shareholders of over 11%, and the S&P 500 was about 7.5%. So almost 4% per year better than the S&P 500 for a 20-year period. That's pretty incredible. And we think it's directly attributable to the investment that we make in our culture, in our people, and making Camden a great place to work. So thank you for all you do, and thank you for being a part of this great company for all this period of time. Now a few details on our first quarter 2021 operating results. Same property revenue growth was down four-tenths of a percent for the quarter, and as expected, our top performers were located in our Sunbelt markets, with Phoenix at 5.8%, Tampa up 4.0%, Atlanta 2.2%, Raleigh 1.9%, and Denver rounding out the top five list at 1.3% up. Rental rate trends for the first quarter were slightly ahead of plan with signed leases down 0.8%, renewals up 3.4%, for a blended rate of 1.2%. For effective leases, which were generally signed in the fourth quarter or early in the first quarter, the blended rate was 100 basis points lower at 0.2%. Our preliminary April results indicated improvements across the board for signed new leases, renewals, and blended growth, averaging 4.5%, 4.7%, and 4.6% respectively. Future renewal offers are being sent out on average at over 5%. So our blended rental rates moved up from 1.2% in the first quarter to 4.6% in the month of April. This 340 basis point improvement exceeded our budget and was the primary reason for raising our full year revenue guidance. It's worth noting that Houston showed the fifth best improvement in revenue reforecast among all of Camden's markets, and we now expect Houston revenues to be only about 1.5% down from last year. Occupancy averaged 96% during the first quarter of 2021, which matched our performance in the first quarter of 20, and was the highest quarterly level achieved since the pandemic began. April 2021 occupancy has accelerated to 96.6%, exceeding our original budget and expectation and setting us up well for our peak leasing season, which has begun and generally runs through early September. Net turnover for the first quarter of 2021 was 200 basis points lower than 2020 at 35% versus 37% last year, marking yet another quarter of high resident retention and fewer residents choosing to move. Move outs to purchase homes dropped to 16.9% for the quarter versus 19% last quarter, which is in line with our seasonal patterns we usually see from the fourth quarter to the first quarter of each year. Next up is Alex Jessett, Camden's Chief Financial Officer.
spk03: Thanks, Keith. Before I move on to our financial results and guidance, a brief update on our recent real estate activities. During the first quarter of 2021, we commenced construction on Camden, Durham, a 354-unit, $120 million new development in Durham, North Carolina. And we began leasing at both Camden Lake Eola, a 360-unit, $125 million new development in Orlando, and Camden Buckhead, a 366 unit, $160 million new development in Atlanta. Subsequent to quarter end, we began leasing at Camden Hillcrest, a 132 unit, $95 million new development in San Diego. In the quarter, we collected 98.4% of our scheduled rents with only 1.6% delinquent. This compares favorably to the first quarter of 2020 when we collected 97.9% of our scheduled rents with a higher 2.1% delinquency. Turning to bad debt, in accordance with GAAP, certain uncollected revenue is recognized by us as income in the current month. We then evaluate this uncollectible revenue and establish what we believe to be an appropriate reserve. This reserve serves as a corresponding offset to property revenues in the same period. When a resident moves out owing us money, We typically have previously reserved all past due amounts, and there will be no future impact to the income statement. We re-evaluate our reserves monthly for collectability. For multifamily residents, we have currently reserved $9.2 million as uncollectible revenue against a receivable of $10.2 million. For retail, we are fully reserved against our $2.3 million receivable. In mid-February, Texas experienced a significant winter storm, resulting in widespread power outages, which led to, among other issues, corresponding water damage from broken water pipes. Less than 5% of our Texas units experienced any type of damage, with only a quarter of 1% requiring the resident to temporarily vacate their home. the vast majority of the damage has been fully repaired and operations have returned to normal. We are extremely proud of the efforts of Team Camden in responding to this unprecedented event. Last night, we reported funds from operations for the first quarter of 2021 of $125.8 million, or $1.24 per share, one cent above the midpoint of our prior guidance range of $1.20 to $1.26. The one cent per share variance to the midpoint of our prior quarterly FFO guidance resulted primarily from both higher occupancy and higher rental rates at our same store and non-same store portfolio, partially offset by the timing of certain property tax refunds in Washington, DC and Los Angeles, which we expected in the first quarter and will now likely not receive until the second half of the year. Contained within our first quarter results is approximately $900,000 of expenses directly associated with the Texas winter storm. Two-thirds of this amount is property level insurance, overtime, and repair and maintenance expense. The remainder is corporate level and tied to relief efforts including meals provided to our residents. the additional property level expenses were entirely offset by greater than anticipated amounts of unrelated insurance subrogation proceeds. Last night, based upon our year-to-date operating performance, our April 2021 new lease and renewal rates, and our expectations for the remainder of the year, we have increased the midpoint of our full-year revenue growth from 0.75% to 1.6%. Additionally, we have increased the midpoint of our same store expense growth from 3.5% to 3.9%. This increase is entirely to account for additional property level salary expenses now anticipated to result from our reforecasted full year revenue outperformance. As a result, we have increased the midpoint of our 2021 same-store NOI guidance from negative 0.85% to positive 0.25%. Our 3.9% revised expense growth at the midpoint assumes insurance expense will increase by approximately 22% due to the continued unfavorable insurance market. Property insurance comprises approximately 4% of our total operating expenses. Additionally, our revised expense growth assumes that salaries and benefits will increase by 3.5% as a result of additional compensation tied directly to the now-reforecasted revenue outperformance. The remainder of our property-level expense categories are anticipated to grow at approximately 3% in the aggregate. Last night, we also increased the midpoint of our full-year 2021 FFO guidance by $0.09 per share. $0.07 of this increase results from our revised same-store NOI guidance with the remaining $0.02 per share increase expected to be generated by our non-same-store portfolio. Our new 2021 FFO guidance is $4.94 to $5.24 with a midpoint of $5.09 per share. We also provided earnings guidance for the second quarter of 2021. We expect FFO per share for the second quarter to be within the range of $1.22 to $1.28. The midpoint of $1.25 represents a one cent per share increase from our $1.24 in the first quarter of 2021. This increase is primarily the result of an approximate one cent per share expected sequential increase in same-store NOI resulting from higher expected revenues during our peak leasing period, partially offset by related compensation expenses, the seasonality of certain repair and maintenance expenses, and increases from our May insurance renewal. As of today, we have just over $1.1 billion of liquidity comprised of approximately $260 million in cash and cash equivalents and no amounts outstanding under our $900 million unsecured credit facility. At quarter end, we have $358 million left to spend over the next three years under our existing development pipeline, and we have no scheduled debt maturities until 2022. Our current excess cash is invested with various banks, earning approximately 25 basis points. And finally, as I have discussed on prior calls, in 2019 and 2020, we set in play important technological advancements. 2021 will be the transition year that will lead to realized efficiencies in 2022, 2023, and beyond. From cloud-based financial systems to virtual leasing to mobile access to AI technologies that allow us to meet residents on their schedule, we are poised very well for the future. At this time, we will open the call up to questions.
spk10: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Our first question today will come from Alua Askarbeck with Bank of America. Please go ahead.
spk11: Hi, everyone. Congratulations on a great quarter. So I just wanted to start off a little bit big picture, asking more about the transactions market. I know you guys were guiding to about $400 to $500 million. So how are you guys thinking about that now that we are about four or five months into the year, and what opportunities are you seeing out there in the market?
spk02: Well, definitely we are seeing opportunities. The challenge, however, is the pricing is way, way beyond what we expected. You know, the good news is since we have a balanced disposition and acquisition program. We expect to get higher prices for our properties that we're going to sell, and so we're going to try to make that trade. To go back to our last big acquisition disposition programs in the last cycle, we sold a lot of properties, bought a lot of properties, and we were able to upgrade the quality of the portfolio over time. But I will tell you, I've never seen cap rates this low in my business career. I'll give you an example of real-time property that we were working on last week in Tampa, or this week in Tampa. I just got the email yesterday. So the original price talk for this, you know, reasonable property in Tampa, it's a middle of the road, you know, new development, decent property. We'll call it an A minus. Price talk at the beginning of the process was $77 million, plus or minus, which would have been in the low four cap rate, you know, kind of right at four-ish. The price, the property was... was awarded at a little over $90 million, which is a going-in cap rate of 3.2%. And with a 3% growth in revenue over a seven-year period, the only way you get to a six IRR is to have a 3.75 exit cap rate. Now, that's what properties are trading for in every major market in America today. So I think we'll be able to sell properties and buy properties. But the spread, I think, between older and newer is definitely going to be really tight. And it's a good trade for us. And we'll continue to do that. But pure acquisitions are pretty tough if you don't have a disposition behind it, you know, to try to capture that, you know, newer property and capture the lower capex part of the equation. That's why we would be doing it in the first place.
spk11: Got it. Thank you. And then I think you guys commented a lot on how you wanted to enter Nashville. So what do you guys think there in terms of cap rates on the transaction markets?
spk02: Same. You know, the cap rates are pretty tight in Nashville, too. You know, Nashville is an interesting market because when you look at its supply side, it has probably the second most supply coming into the market. And so I think that of any other city in the country. So, yeah. We're looking really hard in Nashville and our teams are going to be out there next week and we're actually going out to look at a few properties next week as well. We think we'll be able to move into Nashville this year. Again, you can acquire properties and we can acquire properties. You just have to you know, pay up today. Again, as long as we're selling properties at really high prices and buying properties at really high prices, I'm okay with that, and I think we'll be able to execute in Nashville.
spk11: Okay, great. Thank you. Good luck with that.
spk02: Thanks.
spk10: Our next question comes from Neil Malkin with Capital One Securities.
spk07: Hello, everyone. You know, first question, can you just talk about what you're seeing in terms of in-migration in some of your markets, your, you know, kind of larger Sunbelt markets? Obviously, you know, COVID has kind of been the great accelerator for that. I'm just wondering if your people on the ground are telling you that they continue to see that in earnest, if it's accelerating, if it's kind of steady, if Any commentary on kind of like where that's coming from and what markets are the biggest beneficiaries?
spk19: Yeah, so, Neil, we continue to see elevated levels across our platform, but it's not new. I mean, we've had in-migration going on that has been exiting the Northeast and parts of California, mainly Northern California, for the last decade. but clearly it's accelerated. And I would say the markets that we have, you know, it's the most impact and most visible right currently are in Atlanta, everywhere in Florida. And again, that's mostly a Northeastern phenomenon. In Austin, Texas, I would say that's the place where anecdotal evidence of out-of-state license plates, in particular California, is pretty incredible. The trends in some of our markets around home prices that I think exhibit characteristics of kind of people coming in and being willing to pay up. In Austin, Texas, as an example, it has the highest spread between asking price for a single family home and selling price. So in the last 12 months, the average price, sales price in Austin, Texas, for a single family home is 7% above what the asking price was. So it's just these are kind of crazy numbers historically that we've never seen before. But I think it is indicative, continues to be indicative of people finding incredible housing value in our markets relative to the markets that they're exiting. So I think it's just a continuation of what's been going on. Clearly, it's accelerated. And I don't see... A lot of people, I think, or some people think that this is strictly a COVID-related increase. I'm not so sure that that's true. So I think the trend that's been in place a long time is going to continue and probably at elevated levels.
spk02: Now, you look at the census numbers that came out, you know, Texas gained two congressional seats. You know, California lost one. New York lost one. You go up into the into the Rust Belt and a lot of a lot of those states lost and Florida gained. And, you know, it's a I think we have seen an uptick in Phoenix and in Florida for sure. But I think this is just a continuation. I agree with you totally that the pandemic is the great accelerator. And I think what will really be interesting is. will be once these states are open, right? Because California talks about being open, but it's really not open yet. I mean, fully, right? So when we get to a real pandemic is in the rear view mirror, then the question will be what happens over the next couple of years when people actually do have the ability to work from home and just use their laptop as their office, right? So I I think we're in a good position and we've always wanted to be in these markets because there are pro-growth markets and great weather and low housing prices that drives migration.
spk04: So I would add to that, if you look at most of our new residents come from Sunbelt markets, but if you think about non-Sunbelt markets, New York is our number one non-Sunbelt provider of new Camden residents.
spk07: Okay. Thanks for that. Other one for me is maybe a bigger picture. You know, talked about cap rates coming down. We've talked to brokers pretty much in all of your markets and, you know, sub four is like the name of the game. And when you think about your portfolio, you know, it's a great aggregated diversified portfolio, ridiculously low leverage compared to anything private. You know, a lot of growth avenues there. Do you think there should be a re-rating, or is it fair to say that cap rates on the public side need to come down, or are they justified being lower? If nothing else, the spread between Coastal and Sunbelt should be compressed, at least over the next several years, if not the cycle.
spk02: Well, if you calculated Camden's NAV based on the current cap rate environment, I mean, we have a spreadsheet that shows sort of various cap rates and what we think our NAV is. And if you use the Tampa number, we don't have that number on our spreadsheets. Okay. I mean, we go to like three and a half cap rates and we stop. And so, you know, clearly, you know, the question will ultimately be, you know, who's right, right? Is it the private market that's right or the public markets are right? And we've had this debate forever that that the public markets sometimes act as real estate and sometimes act as stocks. And so when the stocks get hammered, it's not because somebody is thinking about their NAV relationship to the private market. They're just selling a stock because they have an ability to buy some other stock that's going to go up faster or have whatever their reason for that trade is. I think we're trading more like stocks today, for sure. and less like real estate. When you think about why somebody is paying a low three cap rate in Tampa, I think it's pretty basic. Number one, the 10 years at a very, very low rate, you still have positive leverage when you finance using a 10 year or say two and a half or a 10 year mortgage at two and a half or two and some change. And compared to a three and a quarter cap rate, you have 100 plus basis, maybe a 90 to 100 basis points of positive leverage on that trade. And then you think about the worry that people have with the current sort of trajectory of trillion dollar here, a trillion dollar there, Fed and government stimulus and everything else that's going on out there. And you hear the word inflation and you hear the word, oh, gee, what happens long term inflation wise? Well, multifamily, we price our property, our, you know, our leases, you know, every single night and our leases roll over, you know, we're the fastest roller of a lease of lease type other than hotels. And, you know, eight, eight plus percent of our leases roll over every month. Right. So, It's a great inflation hedge if you're worried about that. And when you think about private capital looking for a yield, multifamily is a pretty good place to be. And the supply and demand side of the equation is pretty much balanced. You have great job growth going on in most of these markets. And once the markets are opened up, I think the coastal markets will do fine. It'll just take more time for them to them to get better than it does the markets that have opened up. So I think that's why cap rates are really low. And I wouldn't say that the private side is crazy right now. But clearly, the gap between real cap rates in the private sector versus the public sector, there's a biggest spread I've probably ever seen in my business career at this point. So who's right?
spk07: Could you just humor us? Yeah, well, I was going to say, could you just humor us? And what does the three and a half cap translate to?
spk02: Oh, well, I mean, you can look at just the NAV from, you know, the consensus NAV right now. It's like 119 bucks a share, and it's like a, you know, four and three quarter cap rate or something like that. You know, for every 10 basis points in cap rate, it's like two bucks a share. So you do the math. I'm not going to put a number out there, but it's about that. Two bucks a share for every ten basis points.
spk17: Do we have another question?
spk10: Our next question comes from Alexander Goldfarb with Piper Sandler.
spk15: Hey, good morning. Good morning down there. And, Keith, nice job DJing this morning on the tunes. So two questions. Two questions. First, obviously there are a lot of articles about the impact of the unemployment, the extended enhanced unemployment benefits with talking to a guy who does business across a lot of different states. And there's feedback that people won't take a job because they're getting paid more to sit at home. In your portfolio, and I don't know how much of that was a driver of your need to increase the property level payroll. But are you seeing across your markets that sort of the economy is being held back because people aren't taking jobs? Or we should read into it that the 4.5% rent increases that you guys got in April is an indication that if two different groups and the impact of the extended unemployment benefits has, you know, really no real impact. on your guys' ability to perform. Basically, what I'm asking is, as these benefits expire, would we see an acceleration of your portfolio, or the two are not related?
spk02: I think the two are related, but not directly. Because if you think about the people that are unemployed today that are receiving benefits, government benefits, those are people making – I think a vast majority of them make under $50,000 a year. And those are folks that are working in hospitality areas and things like that. And they're making 30% more by staying home than they are going back to work. Restaurants, for example, I was... driving out yesterday afternoon, I saw a restaurant that had help needed in every position, $500 signing bonus if you come in, right? And so that is holding back some of the economy from that perspective, but our average income is over $100,000. So Most of our folks are working. They're continuing to work and doing well. The biggest issue holding us back from from a higher revenue growth are restrictions on on increasing rent in certain markets like in California and in Washington, D.C. And so our top line number would be higher by at least 50 basis points if we didn't have those restrictions in place, in my opinion. So I think that once the economy opens more in these other markets and we get past this CDC restriction and a cap on renewals and things like that, then the multifamily business should be really good, you know, in the next six, eight, 10 months once we get past that piece. In terms of people, you know, our increase in cost for salaries today are not so much driven by we can't find employees, but it's by outperforming the original budget, so we have to increase our bonus accruals for them.
spk15: We definitely like hearing about bonus accruals going up, so that's a good thing. The second thing is on the development side, obviously you guys have, pared back your program tremendously over the years. But as you look at new markets like Nashville or just try to deal with, you know, rising construction costs, are you guys seeing more opportunity to put Camden Capital to work, like funding other developers, third party, and then do it as a takeout? Does that sort of mitigate risk or allow you to broaden your net? Or your view is that you really want to do development on your own because from start to finish, you feel like that holistically it's a better risk proposition.
spk02: I think that, that, uh, doing anything that isn't a hundred percent Camden owned with Camden control adds more risk, not less risk to the, to the, uh, to the process. And you can't really move the needle on, uh, in at least my, our opinion is you can't move the needle on driving revenue and driving, uh, by doing JVs or doing equity programs or whatever you want to call them. We still have the sting from a $3 billion joint venture program during 2008 and 2009 where our partners wanted us to default on debt so we could buy the debt back cheaper. When we did those joint ventures, the $3 billion didn't really move the needle for Camden, but what it did is it created more risk when the market turned down and we had challenges with dealing with our partners. You know, even though they're all deep pocketed, they didn't want to bring any cash out of their pocket. So we're going to keep our balance sheet pristine. We're not going to do deals like that. Other companies have different views of that. I get it, but that's not Camden.
spk19: And Alex, just on your point about the size of the development pipeline, if you take what's in lease up currently, plus what's under construction, we're close to 1.2 billion in new development. So we think we're we've been very opportunistic about taking advantage of delivering these yields into a declining cap rate environment that's going to create a ton of value. So I think $1.2 billion is about equivalent to our all-time high in terms of a development pipeline. So we definitely see opportunities. Everything that we're working on right now, based on kind of cap rates that are in play for acquisition assets, look like they're going to be really accretive. Okay. Thank you.
spk10: Our next question comes from Nick Joseph with Citi.
spk16: Thanks. Maybe just sticking with construction, what are you seeing on the cost side, both for the in-place development pipeline and also as you price out future starts?
spk02: So prices are up big time. If you look at – so let's take two periods of time. Take – This year, April of 2019 versus April of 2020, costs were up 2% or 3% maybe, and some markets actually flat. In the last 12 months, since April of 2020 versus 2021, multifamily costs in total are up about 12.5%. And it's all primarily driven by, well, there's three big drivers. One is just commodity prices. If you look at soft lumber prices in the last 12 months, soft lumber is up 83%. Plywood's up 53%. OSP board is up 65%. You know, even fuel, when you think about gas prices, Fuel, diesel, gasoline is up 50, 60 percent. Labor issues are there. Supply delays or supply chain backups are making products more difficult to get. And so the speed at which you can develop products. is slower. So it's a tough environment out there when it comes to cost. And good news for us is we did lock in lumber packages on several jobs that we had. So we don't have a lot of exposure on lumber at this point. we we did lock in about 70 of the package uh i really give kudos to our construction folks and our commodity um sort of consultants for helping us navigate that that this this tough water here so we don't have a we don't have camden doesn't have a big uh exposure to this big price increase but it does affect the way we underwrite new transactions, obviously, and it becomes more and more difficult. But I guess on the one hand, with cap rates compressing as much as they are, the spread on what you can buy an asset for versus what you can build it for a day, even with a cost increase, is still pretty wide. And so that's why you're going to continue to see new developments continue. Even though the going in yields are going to be down, the spread between what you can sell and buy for is still pretty robust.
spk16: Thanks. That's very helpful. And then just on the rental assistance plan, how do you think that impacts Los Angeles and Orange County specific to you?
spk19: Well, it doesn't. So far, it hasn't affected us in a positive way at all. And part of it is that all of the various... qualifying elements that you have to go through. And so far, it's been that our resident base does not qualify or has not qualified for any meaningful amount of rental assistance in particular in California. But that's it. It's a little bit different market to market. We do have some markets where we've gotten, you know, a couple of hundred thousand dollars in rental assistance. But overall, this entire you take the effect of delinquency, the effect of not being able to get people moved out who are not paying their rent. Overall, the whole event has been a pretty significant net negative for us around the margins, and by that I mean we're now at about $9 million in receivables, and that's that's about $8 million than what we would normally carry in our receivables. So we hope that over time a couple of different things will happen. We hope that if the CDC mandate is not extended, which it's currently out to June 30, and I guess it's anybody's guess as to whether it will be or not, but if that is not extended, then we should be in a position to start getting back control of our real estate. And we think that's going to be very helpful in kind of whittling away at that $9 million in receivables. But overall, in our portfolio, the ERAP has not been particularly helpful because of the average income of our resident base. So we'll see if in this next tranche there's fewer restrictions on how that gets used, but I'm not terribly optimistic about that.
spk02: You know, one of the challenges that you have with all this is that federal government, you know, puts this money out. In the last two stimulus, the one in December and the one that happened in February, $46 billion was allocated to rent assistance, which is a huge number, obviously. And to date, you know, there's been just a minute fraction of that money going out. And part of it is is that the government requirements to check the box. You know, we were having a meeting with our California folks, and I think the last number I heard, Keith, was that we had to send out 10,000 pages of documents to our residents in California. And it's like, Like what? You know, and so it's all this massive just government right requirements to say you got this right, this right, this right, this right. And here's what you can do. And when you start talking about 10,000 documents, what do you think those people are doing in those apartments or picking that document up, looking at it for the first paragraph and throwing it in the garbage? And so the challenge you have is that government requirements are tough. In Houston, for example, we were involved in designing the first set of programs for apartment rent relief here. And and we streamlined it. We gave out 70 million dollars of money in Houston, Texas, and did it really fast. And at the end, we ended up with 10 million dollars more by the end of the year. We could we couldn't give the 10 million out. So we had to give it to the food bank. Otherwise, based on government relations, government regulations, you'd have to give it back to the federal government if you didn't spend it. So the challenge you have with all this. stimulus and these things is that it's really hard to get the money out to people. And the people that are hurting are not the $100,000 households. The people that are hurting are the $30,000, $40,000, $50,000 players that are in C&D properties that aren't back to work or are not getting a getting stimulus money and what have you. And those are the ones that are the hardest to get, you know, check the box on. Once they get tight, once they go through a website and you don't have all their information, they just leave and they don't, so you're losing them. So it's a challenge. And those items, I think our industry has done a great job of trying to help the most vulnerable people in the multifamily space, but they just don't live at camp and then they don't live at most of the public company's apartments.
spk16: Thank you.
spk10: Our next question comes from John Kim with BMO Capital Market.
spk06: Thank you. You guys look great on video. I had a question on the occupancy pickup you had in April to 96.6. Were there any particular markets that drove that figure higher, and do you expect it to remain at this level for the remainder of the year, or do you expect it to trend back down to 96%, which is where you operated back in 2019?
spk19: Yeah, so I think that if you look at our pre-lease numbers and go out 30, 60 days, the indications are pretty good that we'll stay above 96% for the next couple of months. Obviously, we're coming into the best part of our leasing season. The strength was across the board. So just to put some perspective around it, we obviously did a complete re-forecast to support our change and increase in guidance. And of our 14 markets, if you look across our portfolio, the bottom-up re-forecast revenue projections went up in 12 of the 14. The only two markets where revenue did not increase was San Diego and Orange County, L.A. And the reason for that has nothing to do with the underlying strength of the market, which are both really good right now. It has to do with bad debt. So we continue to have a challenge in California with regard to elevated levels of bad debt because we can't. Because of the CDC eviction mandate and all the rent strikers that we have in our portfolio in Southern California. So absent those two, which, by the way, were very only slightly negative on reforecast because of bad debt. you know, without the bad debt in California, we would have been up on all 14 markets. And I don't think I've in my career ever seen a re-forecast done where all 14 markets had a positive revenue impact in a re-forecast. So I think it's just strength across the board. And if you kind of if you go to the top level of revenues in the new reforecast, we now have out of 14 markets, we have 13 that have positive revenue growth for the year. The exception to that, as we mentioned, called out in the opening comments is Houston. And Houston is down to a half a percent negative total revenues for the year. And I can tell you that our Houston folks are working their tails off to get off that list because they're the only one that has a negative a negative number for the revenue re-forecast. All the other 13 markets are really well positioned for our peak leasing season.
spk04: So, John, we've got seasonality in there, but our re-forecast assumes that we're going to have 96% occupancy for the full year. Obviously, it's higher occupancy in the second quarter and third quarter coming back down in the fourth quarter. But to compare that to our original budget, that's a 70 basis point improvement.
spk06: That's helpful. Thank you. And then On the cap rate discussion, you know, we thought some of that cap rate compression was offsetting income, but it sounds like that's not the case. But on that exit cap rate that you quoted, an example in Tampa at three and three quarters, is the view that cap rates are going to remain low because of rising construction costs, or is it the potential that the rental growth assumption that you quoted at 3% was a bit conservative?
spk02: Well, I think cap rates are a function, not of construction costs going up. Because that project, by the way, at the price that I stated, the $90 million price, it's 18% above replacement costs. So replacement costs is not a bogey today that investors are looking at. What they're looking at is what kind of cash-on-cash return am I going to get from this real estate, and a 3-2 cap rate is the competitive market today. And so whether, you know, when you think about how you do an IRR, right, an unlevered IRR has three components, what you buy in at, what your cash flow grows at, and what you exit at. And so for years, the question of what is your exit cap rate seven years out, you know, has been a – that's the – you know, that's like – the argument about what's real CapEx, right? In a new development, you put in 250, and you know it's not that long-term, but that's what people use. And so ultimately, what will drive the exit cap rate will be the environment at the time. And we know what drives price of any asset is first liquidity, how much liquidity is in the market. And we know today that there's massive liquidity in the market beyond belief liquidity. The second thing that drives cap rates and prices is, and these are in the most important order, is supply and demand. What's the business look like? What is is it excess supply long term? How you feel about about supply and demand dynamics relative to relative to being able to drive net operating income or cash flow growth in the market today, supply and demand is pretty much in balance. You look at imbalance from a, you know, just from a, from that perspective, we, in most markets. And so, you know, when you look at supply and demand, it's good. Then the next is inflation. and people have this inflation view or worry that you could have inflation. And then the last driver is interest rates. A lot of people think interest rates is the number one driver, but it's actually liquidity, supply and demand, inflation, and then interest rates. So with that backdrop, Cap rates are where they are because of really the first two issues, I think, and then maybe a little bit of an inflation issue. So who knows whether a three and three quarter cap rate is the right number in seven years, but I guarantee you that's the only way if you want a 6% IRR, unlevered IRR in seven years, that's the only way the math works.
spk06: So Rick, are you concerned that people are underwriting three and three quarters or are you It sounds like you think it's rational at this point.
spk02: No, I think people have been – if you want to compete in the market today and you have capital to place, multifamily is a coveted asset class for lots of reasons we've talked about before. And so if you have capital that has to go out and you go, where's the alternative investment? If I can't – if I don't like a 3-2 in Tampa with the growth profile and everything that we talked about, then where are you going to put your money? You're going to go in, you know, we're earning 25 basis points on 300 million bucks right now in cash. You know, the government is penalizing us because of the Fed and everything else going on, penalize anybody with cash. And so when you think about a cash flow stream that can grow, can be inflation protected, where it's a cashflow stream that people, it's hard to disrupt, right? Because everyone needs a place to live. You can't live on the internet or you can't disintermediate it by technology or whatever. You can improve it and improve its production with technology, but everybody has to put their head down and go to sleep at night in some place. They may not need a kitchen, but they definitely need a bathroom. And so with all that said, it's just, you know, it's the whole argument about why are asset prices where they are, you know, and what's your alternative from an investment perspective. And right now, multifamily looks good and people are willing to pay 3-2 cap. And as long as your weighted average cost of capital long term, you know, is good and you're making a positive spread on your weighted average cost of capital long term, then that's why people are doing it. So I don't think it's wrong. I just think it is.
spk06: Interesting stuff. Thank you.
spk10: Our next question comes from Amanda Sweetser with Baird.
spk05: Thanks. Good morning. Line up on guidance. Can you provide an update on the blended lease rates and bad debt assumptions that underlie your increased ranges?
spk04: Yeah, absolutely. So I think probably the best way to think about it is if you compare it to what we originally thought for blended rates when we did our original budget, we are increasing that by 50 basis points. So the math sort of works like this. Our occupancy is up 70 basis points. Our blended rental rates are up 50 basis points. That gets you to about 120 basis points. The offset to that is we are assuming that we're going to have slightly higher bad debt. That's entirely driven by California and the fact that when we did our original budget, we thought AB 3088 was going to expire in the beginning of March. Now it looks like that's the beginning of July at the earliest. And so you've got sort of an offset from that. And so we think that our bad debt is going to be about 160 basis points for 2021, which, by the way, is in line with what we had in 2020. But if you compare it to 2019, which was a normal year, that number would have been about 50 basis points.
spk05: That's really helpful. And then on dispositions, are you still targeting sales in Houston and D.C. today? And given some of your cap rate comments, have you changed the assumed cap rate spread between acquisitions and dispositions in your guidance at all? I think you were previously doing about a 150 negative basis point spread.
spk02: Right. We are still targeting those two markets, yes, in terms of dispositions. And I think we'll probably, in our guidance, we're continuing to use that same spread. And hopefully we'll do better than that. Based on what we're seeing and hearing today, we likely will do better than that spread. But we kept that 100 basis points negative spread in the model. Alex, I'm pretty sure we did.
spk04: That's correct. Absolutely correct.
spk02: Yeah, I think the real variation in the model between the buy and the sell will be timing, right? And that'll be an interesting – so there may be some timing differences given where things are, and hopefully we'll do better than that negative spread. Right now it looks like we will, but that's what we used in the model.
spk05: Thanks. Appreciate the time.
spk02: Sure.
spk10: Our next question comes from Brad Heffern with RBC Capital Market.
spk14: Hey, everyone. I know we're at the top of the hour, so I'll just keep it to one. I was wondering if you could just talk through Houston. You know, it's a little surprise to see the sequential rent growth down almost 4%. I know obviously COVID, you know, didn't necessarily break that market and COVID leaving isn't going to fix it, but Is there anything that you're seeing there that gives you optimism as we go forward, whether it's the energy recovery or supply or anything else? Thanks.
spk19: Yeah, so the big challenge that we have in Houston right now is not employment-related. Jobs have come back quicker than most people thought. The energy business is definitely getting better. It takes a while, but there's a pretty big lag between improvement in price of crude versus improvement in employment prospects in Houston and the energy business. But the issue in Houston is just supply. And we've talked about last year, we dealt with about 20,000 new apartments that got delivered in Houston. This year, we're going to get another 20,000 apartments delivered. And unfortunately, a lot of those are in, they're not distributed geographically very well. So they end up, everybody, all the merchant builders sort of built in the same places, and we definitely are catching a fair amount of shrapnel from the lease-ups of the merchant builders in the downtown area as well as uptown and midtown. So it's more of a supply issue for Houston. We do get some relief next year, thankfully, in terms of new supply. And overall, I would tell you that the general vibe of The recovery in Houston is, I mean, Houston's open. People are out. Restaurants are busier than I've ever seen them. So it's pretty robust. The feeling right now in Houston is pretty robust. So I think we'll do well as the, we'll do better as the year ensues. I think I shared with you there are, Our re-forecast for revenue growth in Houston is only down half a percent from last year. And if you'd have told me, I certainly wouldn't have made that bet six months ago, and we didn't when we were putting together guidance. But that, to me, sounds extremely encouraging for our Houston portfolio relative to original expectations.
spk02: I think also, just to add on to the Houston story, the winter storm had a bigger effect on Houston than it did on the rest of the state, and primarily because of what it did to petrochemicals and the plants in and around the ship channel. I mean, there are plants that are still you know, primary chemical plants that are still offline that are just getting geared up from the winter storm. So the winter storm definitely held Houston back. It could have been a whole lot better in Houston, I think, without the winter storm. And we're just starting, like I said, we're just starting to get that back. I think the other thing that's really interesting about Houston is, you know, the discussion of energy transition and What's going to happen with big energy and how big energy is going to make the transition from old school energy to more renewables? And we've seen a major acceleration of discussions by businesses. by the large energy companies, and part of that is driven by investor activism. If you look at ExxonMobil as an example, I mean, I own Exxon stocks, so I see all their, you know, the proposals that these activists have put in their votes and what have you. And finally, the U.S. majors are making a major move into this energy transition. Exxon, for example, just announced a $100 billion carbon capture program that could go in and around the ship channel, and it's $100 billion to build it. It needs to be part of the government. Maybe it's part of the government stimulus or infrastructure or whatever in addition to Exxon. putting their capital in. But I think there's going to be continued huge investments in these alternatives and wind and solar and carbon capture, and Houston's going to lead that. So we're going to be in a position where where it's not old-school energy that drives this market. It's transition energy. Texas already has the largest wind power source of electricity of any state in the country, and we're investing massive amounts of solar. You saw Tesla has a big... battery plant, a battery program that they're doing just south of Houston. So it's going to be a really interesting thing. So to me, the winter storm held us back. But once we get through the supply, you know, Houston should be move up to the, you know, the top quartile of our revenue growth in 20, you know, middle to the end of 2022 and into 2023 and 2024, in my view.
spk04: And I'll also point out, if you look at sequential occupancy increase, the largest sequential occupancy increase we had was Houston. From fourth quarter to first quarter, it increased 110 basis points. Yeah, fair enough. Okay, thank you.
spk10: Our next question comes from Austin Werschmidt with KeyBank.
spk08: Great. Thank you. Just sticking with the theme there on Houston, I was curious if the positive guidance revision there was more just around that sequential uptick that you just alluded to in occupancy, or are you also seeing a little bit better traction on lease rates as well? And then, you know, maybe, you know, Rick, your comment on when you think Houston starts to get better, is it probably mid-22 by the time we've absorbed some of this peak supply?
spk02: I think that's the peak supply side. Plus, you'll you'll start getting better job growth in a more normalized environment. Because, you know, what happened in Houston is you had the normal COVID. Unfortunately, you call it normal COVID job losses. Right. But but what's happened, you also have the oil and gas, you know, pounding, right? Last year at this time, I think oil and gas were within a few weeks of where it went negative, right? And so that was a huge issue here. And I think that that's over, obviously, and that once we get a more normal environment in Houston and a more normal business environment where people are actually traveling for business, then Houston will improve. When you look at visitors to Houston and conventions and things like that, It's more of a business destination than it is a tourism destination. And so I had lunch with the head of the convention group that markets Houston's convention business last week. And he said that starting in June, there are 18 citywide events. You have the World Petroleum Conference coming in December, which is an international event that was supposed to be last December, but it's going to be in December of 2021. And so once we get more momentum from the business side and the business travel side, we will, you know, Houston will move, I mean, quicker to that recovery. But I don't think that's, I think that's amid uncertainty. you know, at the end of 2022 event because of the supply.
spk04: Yeah. If you look at blended rates for signed leases from the first quarter of 21 to April of 21, Houston improved by 420 basis points. So, you know, still not an incredibly strong number, but an incredibly strong improvement.
spk08: Yeah, that's really helpful. And then, Alex, just to clarify, on the 50 basis points increase in lease rate assumption in your central revenue guidance, does that reflect simply leases signed at this point, or does it also assume higher lease rates kind of through the balance of the year?
spk04: Yes, it does. So it looks at what's effective for the first quarter, signed today, and signed today is obviously going to take you through the second quarter and a component of the third quarter, and then our expectations for the rest of the year.
spk08: that the lease rates in the back half of the year on both renewals and new leases are also higher than your original expectation. Correct. Okay. Thank you.
spk10: Our next question comes from John Polosky with Green Street.
spk09: Hey, thanks a lot for keeping the call going. I was just hoping to better understand how the internal dialogue around share repurchases has evolved, call it second half of 2020 and even earlier this year. You enter the downturn with a really well-positioned balance sheet, and then suddenly the only real dislocation comes. It's selling your share price, and the private market has remained rock solid. You still believe you're trading at a substantial discount to NAV, and you've got a bit better clarity. really since the summer on operating fundamentals. So just curious why you haven't taken advantage of the well-positioned balance sheet heading into the downturn on the share repurchase side.
spk02: Well, the challenge that we have with share repurchases is that the windows that we can buy or buy back shares is that they're fairly narrow. And And what happens oftentimes, like when you think about the, we bottomed at like $62 a share or something like that. And of course we started talking about, okay, let's back up the truck, right? But on the other hand, then all of a sudden the shares start moving up. And when you think about When I think about share buybacks, it's like, OK, I want to be able to buy a lot of shares. I don't want to just go tickle around the edges and do five million, 10 million, 20 million or something like that. And so to me, it has to be persistent down and we have to have the ability to acquire enough to make a difference. Because fundamentally, you know, when you think about rebalance sheets and how we balance, manage our balance sheet, you know, we're a leaky bucket, right? In the sense that all of our cash flow or not all of it, but most of it has to be paid out from dividends. And so when you're buying stock back in it's, unless you can make and get a big enough chunk to make a difference, I think it's just a kind of a waste of time. And so If you look back at every time that we've gotten to a point where we looked at the numbers and said, hmm, this looks like a really good price, it's gone up dramatically and away from us in the window so that we can acquire the stock. So it's not that we don't. think about it a lot, we do. But on the other hand, the constraints on doing it are oftentimes just not worth the effort in my view. If it's that investors, we buy the stock back and people go, they think it's cheap, then that's one thing. But you can make your own decision where you think it's cheap or not and buy or sell it. And to me, it's a real capital allocation issue. If you think about when we did buy back stock big, it was when we had long-term periods and big open windows. And at one point, I think we bought 16% of the stock back at the peak. And that was when, you know, the stock was low for, you know, months and even years. And today, it's just not, you know, have that opportunity.
spk09: I just mean more from the relative decision, right? So, you know, you put a dollar into a kitchen and a bath or a dollar into your stock. It's just a relative decision. And I mean, more talking about the second half of 2020, I mean, if you believe your NAV is whatever, 130 or above, and you had that visibility on the private market side, I mean, there was a good six, seven months where you know, you could be selling assets and repurchasing shares. So it's just more that the dollar is fungible and it's an opportunity cost of not acting, I guess is my question.
spk02: Yeah, you know, you can always do that. But I just think at the end of the day, You know, we're we're long term multifamily, long term owners of multifamily properties. And so there's a lot of friction that goes in between selling assets. And if you wave a magic wand and sell assets immediately and and then and have no risk of the execution and then and then buy stock and make a spread, you know. Yeah. But the world doesn't work that way. There's a lot of execution risk involved in it. And it's something that when we start talking about doing it, then I don't want to borrow money or use the current strength of the balance sheet to buy stock and then and then go sell assets after it. So I hear you, though. It's an asset allocation issue, and we think investing in our existing assets, creating returns that we think are pretty attractive, that's what we've been doing. Okay. Thank you for your time. Sure.
spk10: Our next question comes from Alex Kalmas with Zellman & Associates.
spk13: Hi, thank you for taking the question. Over the pandemic, we've seen the renewal and new lease spreads pretty wide. And in your April signings, they seem to reach some parity there. Can you talk about the dynamics on the leasing side and how you're approaching that? Obviously, the occupancy has fallen through, so it's been a good decision.
spk19: Yeah, so we use our revenue management system, Yieldstar, to price both new leases and renewals. So the inputs to the model are similar on both sides. I actually got a little bit of a timing issue in our portfolio because we actually voluntarily froze renewal increases early on in the pandemic, and we kept them frozen through midsummer. So some of the natural... renewal increases that would have happened are going to happen uh maybe in a little bit more robust way as we work our way through mid-summer but i think just on both sides it tells you that the model is is foreseeing and foreshadowing a lot of strength on both the new lease side and the renewal side throughout the balance of our re-forecast period got it thank you and uh just
spk13: Touching on the supply side for a sec, you know, we've talked about Houston. Do you have some updates on some of your other markets and how that's progressing? The start of the year has been pretty strong on the activity front. So has that changed how you're thinking about certain markets?
spk19: No. If you take Witten's numbers for total deliveries in 2020, We were about 100 across Camden's platform. We were about 154,000 delivered apartments. And his forecast for this year is about 151,000. So there's some movement around, some shifting among our markets. But in kind of a 10,000 feet, the supply picture for this year is not going to be much different than it was last year. And with the exception of Houston, which obviously took the brunt of the 20,000 apartments last year and then and then backed up with another 20,000 this year. Most of our markets are in really pretty good shape fundamentally. And if you just kind of go back to, again, Whitten's numbers, he's got job growth this year at 1.2 million. He's got new supply being delivered to about 150,000 apartments. And again, at 10,000 feet, that's eight times new employment growth to delivered supply. Five times is a long-term equilibrium. So in the aggregate, those ought to be really supportive and look like they are going to be supportive for raising rents and renewals throughout the year.
spk13: Great. Thank you very much.
spk10: This concludes our question and answer session. I'd like to turn the call back over to Rick Campo for any closing remarks.
spk02: Great. Well, thanks for being with us today. I understand that the Have Fun video was a little choppy for the group. In the replay, you'll be able to see it without being choppy. And let us know how you like this new format. I think it's kind of interesting and makes it a little more interactive and sort of helps go through when you're going through a slug of numbers like we are. It kind of helps you sort of follow that. So We look forward to hearing from you on this format, and then we'll see and talk to, I think, most of you in virtual form at NAREIT, so coming up in the next couple of months. So take care and thank you. Take care. Take care. Bye.
spk10: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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