Camden Property Trust

Good morning and welcome to Camden Property Trust's first quarter 2024 earnings conference call. I'm Kim Callahan, Senior Vice President of Investor Relations. Joining me today are Rick Campo, Camden's Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman, and Alex Jesset, President and Chief Financial Officer. Today's event is being webcast through the investor section of our website at camdenliving.com and a replay will be available this afternoon. We will have a slide presentation in conjunction with our prepared remarks and those slides will be available on our website later today or by email upon request. If you are joining us by phone and need assistance during the call, Please signal a conference specialist by pressing the star key followed by zero. All participants will be in listen-only mode during the presentation with an opportunity to ask questions afterward. And please note, this event is being recorded. 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 2024 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 this call. We would like to respect everyone's time and complete our call within one hour, so please limit your questions to one, 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.

Thanks, Kim. The theme for On Hold Music today was celebrations. We recently learned that we were included once again on the Fortune magazine's annual list of the 100 best companies to work for. This marks 17 consecutive years that Camden has been included on this prestigious list. We celebrate being on the list because it shows that Camden employees value and appreciate being part of a great workplace. Two-thirds of a company's score for inclusion on the Fortune list is based on an anonymous, third-party-administered employee survey. If a company's employees don't love what they do in their workplace, there's no chance that a company would ever make the list. The survey consists of 60 questions, and the most important is the final one, which asks employees if they agree with this statement. Taking everything into account, would you say this is a great place to work? 95% of Camden teammates agree with this statement. This is truly remarkable and certainly a cause for celebration. We believe that smiling, motivated, and committed Camden teammates serving our residents with purpose and commitment to living excellence leads to smiling customers, which always leads to smiling shareholders. I want to thank Team Camden for their continued support of improving the lives of our teammates, our customers, and our shareholders, one experience at a time. With the first quarter behind us, I will jump right into the issue that we spend most of our time talking about, apartment supply in our markets. Yes, we are at 30-year highs for apartment deliveries, and yes, that is limiting rent growth in most markets for now. The good news is that the market is adjusting quickly to the post-COVID low interest rate development frenzy. March apartment starts were the weakest since April of 2020 and are down 53% from peak volume and falling. Starts will likely fall to just over 200,000 apartments in 2025, primarily driven by low-income properties using tax credits and other government support. New deliveries should peak in 2024, falling by 31% in 2025 and 50% in 2026, which would be a 13-year supply low point. Apartment demand continues to be strong. During the first quarter, apartment absorption was over 100,000 apartments, the best first quarter demand in 20 years. The main drivers of apartment demand are population and employment growth. apartment affordability, and positive demographic trends. The most recent 2022-2023 census reported that the top 10 cities increased their populations by 710,000. Nine Camden markets are in the top 10. The bottom 10 cities reported a loss of 200,000 people. These were major cities on the west and east coasts where Camden has limited exposure. Employment growth has been robust in all of our markets except Los Angeles, which continues to struggle. Apartment affordability continues to improve as residents' wage growth has been above 5% for the last 17 months, while rents have been relatively flat. Consumers are spending less of their take-home pay for apartments. New Camden residents pay 18.8% of their income towards rents. Mortgage rates and rising home prices have kept move-out to buy homes at historic lows. 9.4% of our move-outs in the first quarter were attributed to residents buying a home, the lowest in our history. The monthly cost of owning a home today is 61% more than leasing an apartment. This is not going to change anytime soon. Demographic trends continue to be a tailwind, supporting demand from high propensity to rent groups, including young adults age 35 and under. Apartments should take a larger share of household formations given these demand drivers. 2024 demand should be sufficient in spite of supply concerns to set up accelerating rent growth for 2025 and 2026, assuming the overall economy continues on the current trajectory. Keith Oden is up next. Thanks.

Thanks, Rick. Our first quarter 2024 same property performance was better than expected primarily due to lower levels of bad debt and favorable trends for insurance and property taxes which Alex will discuss in detail. Overall operating conditions across our portfolio are playing out as we expected. In our market outlook on last quarter's call we projected our top five markets for revenue growth this year would be San Diego Inland Empire, Southeast Florida, Washington DC Metro, LA Orange County, and Houston. Not surprisingly, those were in fact the top five performers for the quarter with same property revenue growth ranging from 3.4 to 6.2% in those markets. And as anticipated, we are seeing the most challenging conditions in Nashville and Austin with those markets showing slightly negative revenue growth for the quarter. As we previously disclosed, we initiated a marketing strategy during February to boost occupancy going into our peak leasing season, allowing us to then increase pricing power. Rental rates for the first quarter had signed new leases down 4.1% and renewals up 3.4% for a blended rate of negative 0.9%, with average occupancy of 95%. Our preliminary April results show an improvement of 230 basis points for signed new leases to negative 1.8%, with renewal rates at 3.4%, resulting in a positive 0.6% blended rate. We believe our strategy was successful, with April occupancy averaging 95.2% and recently trending around 95.4%. Renewal offers for June and July were sent out with an average increase of 4.2%. And finally, turnover rates across our portfolio remain very low, driven by fewer residents moving out to buy homes. Net turnover for the first quarter of 24 was 34%, compared to 36% in the first quarter of 23. I'll now turn the call over to Alex Jessup, Camden's President and Chief Financial Officer.