Camden Property Trust

good morning and welcome to camden property trust second quarter 2021 earnings conference call i'm kim callahan senior vice president of investor relations and joining me today are rick campo camden's chairman and chief executive officer keith odin executive vice chairman and alex jessett chief financial officer if you haven't logged in yet you can do so now through the investors section of our website at camdenliving.com All participants will be in a 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. And please note, this event is being recorded. Today's webcast will be available for replay this afternoon, and we are happy to share copies of our slides upon request. 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 2021 earnings release is available in the investor section of our website at camdenliving.com, and it includes reconciliations to non-GAAP financial measures, which will be discussed on the call. We hope to complete our call within one hour, as we know that today is another very busy day for earnings calls and other multifamily companies are holding their calls 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.

Good morning. The theme for our on hold music today was coping with the chaos. Last year when the pandemic began, we held a company-wide conference call to share some of the lessons learned from the great financial crisis. I started the call with the first line of the famous Roger Kipling poem, If. It goes like this. If you can keep your head when all about you are losing theirs and blaming it on you. We went on to lay out a list of suggestions to help cope with the chaos that we knew was headed our way. Among them, other ideas, a few suggestions were included in our on-hold music today. We knew that Queen and David Bowie and our teams were going to find themselves under pressure, and we knew when that happened, we told them just to take the advice from the Eagles and take it easy. We encouraged them to embrace innovation, fail fast, and as Boston reminded us, don't look back. We said we would rely on Camden's values and culture and do things our way because like Bon Jovi, we weren't born to follow. And finally, we encouraged them to get on board the REO Speedwagon and roll with the changes. At the end of the call, we showed a video that was produced by our Dallas, Texas operations group during the great financial crisis, but seemed just as appropriate for what we faced at the beginning of the pandemic. We thought you might find that interesting today. So go ahead and roll the video. Thank you. When we held our first quarter earnings call, we were beginning to see an acceleration in both occupancy and pricing power across our markets. The actual rate of acceleration that occurred since the call has far exceeded our estimates and resulted in the improved earnings guidance we released last night. Across the board, we are seeing very strong performance and continued improvements in our operating fundamentals. And in almost all cases, our current rental rates exceed their pandemic levels. The outlook from our third-party economists and data providers is also quite positive, and they expect the apartment business will continue to thrive as we move into the second half of 2021 and into 2022. Despite the ongoing levels of high supply in many markets, demand has been greater than anticipated, allowing positive absorption of newly delivered apartment homes. Our occupancy is currently 97 percent, leasing activity is strong, and turnover remains low So overall, I would say our outlook for Camden and the multifamily industry is very good. We are excited to have entered the national market with the acquisition of two high quality apartment properties. Our acquisition and development teams continue to work hard and smart to find opportunities in a very competitive environment. I want to give a shout out to our amazing Camden team members for doing a great job and taking advantage of this strong market. Great customer service and sales acumen is very important in a market like this. We must deliver great customer service and support the Camden value proposition when asking for and getting double-digit rental increases from our customers. Thank you, Team Camden, for everything you do every day to improve the lives of our teammates, our customers, and our stakeholders, one experience at a time. Next up is our co-founder, Keith Odom.

Thanks, Rick. Now for a few details on our second quarter operating results. Same property revenue growth was 4.1% for the quarter and was positive in all markets both year over year and sequentially. We had remarkable growth in Phoenix and Tampa both at 9.1%, Southeast Florida at 8.6%, Atlanta at 5.7%, and Raleigh at 4.6%. We thought the April new lease and renewal numbers we reported on last quarter's call were pretty good at nearly 5%. But as Rick mentioned, pricing power continues to accelerate. For the second quarter of 21, signed new leases were 9.3% and renewals were 6.7% for a blended rate of 8%. For leases which were signed earlier and became effective during the second quarter, New lease growth was 5.4%, with renewals at 4%, for a blended rate of 4.7%. July 2021 looks to be one of the best months we've ever had, with new signed new leases trending at 18.7%, renewals at 10.5%, and a blended rate of 14.6%. Renewal offers for August and September were sent out with an average increase of around 11%. Occupancy has also continued to improve, going from 96% in the first quarter this year to 96.9% in the second quarter and is currently at 97.1% for July. Net turnover ticked up slightly in the second quarter to 45% versus 41% last year due to the aggressive pricing increases we had instituted, but it remains well below long-term historical levels. Move-outs to home purchases also ticked up slightly from 16.9% in the first quarter this year to 17.7% in the second quarter, which reflects normal seasonal patterns in our markets. So despite the constant headlines regarding increased number of single-family home sales, it really has not had an effect on our portfolio performance as the move-outs to purchase homes are still slightly below our long-term average of about 18%. Rick mentioned Camden's why in his opening remarks. It's something we discuss internally often. Our purpose, or why, is to improve the lives of our teammates, customers, and shareholders one experience at a time. In our company-wide meeting at the beginning of the pandemic, we shared the Star Wars video, and we emphasized that the chaotic months ahead would provide an extraordinary number of opportunities to improve lives one experience at a time. We focused our efforts on improving our teammates' lives, who likewise focused their attention on improving our residents' lives. The results have been truly amazing, and we could not be more proud of how Team Camden has performed throughout the COVID months. Improving the lives of our team and customers has in turn improved the lives of shareholders, including the approximately 500 Camden employees who participated in the employee share purchase plan this year. I'll now turn the call over to Alex Jesset, Camden's Chief Financial Officer.