Camden Property Trust

Good morning and welcome to Camden Property Trust's second quarter 2026 earnings conference call. I'm Kim Callahan, Senior Vice President of Investor Relations. Joining me today for our prepared remarks are Rick Campo, Camden's Executive Chairman, Alex Jessett, Chief Executive Officer, Laurie Baker, President and Chief Operating Officer, and Ben Fraker, Chief Financial Officer. Keith Oden, our Executive Vice Chairman, and Stanley Jones, Senior Vice President of Real Estate Investments, will also be available for the Q&A portion of our call. Today's event is being webcast through the Investors section of our website at camdenliving.com, and a replay will be available shortly after the call ends. 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 second quarter 2026 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. We would like to respect everyone's time and complete our call within one hour so please limit your initial question to one then rejoin the queue if you have a follow-up question or 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. Our on-hold music today featured a song about each of the five Camden markets which recently hosted World Cup soccer games, Houston, Dallas, Miami, Atlanta, and Los Angeles. Now that the World Cup has been completed, the host cities are celebrating the success and the economic benefits that the games produced. The last time the US hosted the World Cup was 32 years ago in 1994, the year after Camden joined the New York Stock Exchange. That year, nine cities hosted the games, and only two Sunbelt cities were included, Dallas and Orlando. This year, 11 cities hosted the games, and the Sunbelt representation doubled. Camden has significant presence in all four Sunbelt host cities. Sunbelt cities have led the nation in population growth, employment growth, and in domestic and migration over the last three decades. During this time, the Sunbelt has gained stature and recognition as confirmed by its prominence in this year's World Cup. We believe these trends will continue to make the Sunbelt an attractive place in which Camden's residents can live, work, and play. As you know, we made the decision this year to improve our market concentration in the Sunbelt markets through the sale of our California properties and the reallocation of the proceeds to our Sunbelt markets. The plan was straightforward. Sell the California properties, for $1.625 billion, acquire a billion of newer properties in our existing markets, and spend the remainder to buy back Camden shares. Sounds simple. Execute $3.25 billion in transactions in six months or so. At the same time, continue to operate our California properties at a high level, ensuring the sales success. Easier said than done, trust me. As it turns out, The execution has been nearly flawless with only $200 million of acquisition properties left to identify. This is a direct result of our amazing team at Camden, including our West Coast Property Operations 100-member team led by Carter Powell, our National Operations and Asset Management teams led by Laurie Baker, Travis Oden, and Mike Zimmerman, our Real Estate Investment team led by Stanley Jones with Lanham Bass leading the California sales effort, our legal team led by Josh Lebar, our HR team led by Allison Dunavant, our IT and marketing teams led by Kristy Simonette, our construction team led by Steve Hefner, our investor relation team led by Kim Callahan, and our finance, treasury, tax, risk and accounting teams led by Ben Fraker and Kevin Necas. Truly a great team effort. Job well done, Camden. We operated in California for 28 years. Saying goodbye is truly bittersweet. I want to thank Team Camden California for a job well done and all the best in the future. I hope our paths cross again soon. Up next is Alex Jessett.

Thanks Rick and good morning. As just mentioned, our time in California came to a close this week. As we've often said, Camden exists to improve people's lives. Over the years, we improved the lives of our Camden team in California by providing a great workplace where they could do their best work and have fun. We improved the lives of our residents by providing quality homes, which were expertly maintained and managed by some of our industry's finest professionals. And finally, we are, and we will, continue to improve our investors' lives through the reinvestment of the California proceeds into both faster-growing, newer Sunbelt communities and Camden stock. The biggest negative of the sale was having to part ways with approximately 100 Camden team members, many who have been with Camden for 10 plus years. I want to acknowledge the loyalty and professionalism they exhibited throughout our years together, which continued through Wednesday's closing. Thank you for all that you did to make our years in California fun, meaningful, and rewarding. The California sales proceeds were in line with our expectations, and I would like to thank the buyers for their professionalism throughout the process. The $1.625 billion of consideration for this 19-year-old portfolio represents for Camden a trailing 12-month FFO yield of 5.6% and an AFFO yield of 5.2%. The Prop 13 adjustment for the buyer should represent an approximate 30 basis point reduction from these numbers. In addition to the $694 million of Camden shares we repurchased at an FFO yield of 6.4% and an AFFO yield of 5.5%, we closed on $645 million of acquisitions with an average age of 5 years and an FFO yield just under 5% and two land sites for a total of $45 million. Additionally, we have been awarded two other acquisitions and an additional land site for a total of $195 million. We are actively underwriting several other acquisition opportunities and remain confident we can effectively deploy the remaining 1031 proceeds from the California sale. As mentioned previously, this strategic market rebalancing is FFO neutral in year one and anticipated to be accretive in short order as the newer Sunbelt communities we acquire should grow faster than the older California assets we disposed of. In addition, We will no longer be subject to high levels of regulatory and advocacy spend in California. This spend, which we booked a property management expense, would have reduced our California portfolio's annual NOI by approximately 80 basis points. Camden already has the youngest portfolio in the multifamily REIT sector, and the sale of our California assets, combined with our 2,026 new acquisitions, further reduces our average age by one year. In addition, we expect our future recurring capex spend per unit to decline by 5%, and our bad debt to be reduced by 10 basis points after the sale. At the beginning of the year, we gave core FFO guidance of $6.75 per share at the midpoint of our guidance range. Last night, despite all of the moving parts this year, we reaffirmed that midpoint of $6.75 per share. Our initial guidance for same-store growth contemplated 50 basis points for revenue and negative 90 basis points for NOI when excluding the California portfolio. We are maintaining that full-year same-store revenue guidance and increasing our full-year same-store NOI guidance on better expense control. I know we are all looking for green shoots and they're becoming plentiful. Sequentially, signed blended lease rates improved 160 basis points in the second quarter as compared to a 70 basis point sequential increase this time last year. In July, Almost 50% of our communities had positive signed new leases, up from only 20% in March. Looking across our markets, the majority of our communities in Atlanta, Charlotte, Dallas, Raleigh, and Southeast Florida achieved positive signed new lease growth in July. And approximately half of our communities in Houston, Orlando, and Washington, D.C. did as well. Additionally, signed renewal gains have increased by 170 basis points from March to July. And finally, on an effective basis, 50% of our communities had positive blends in the second quarter, increasing to 65% in July. On a blended signed basis, 55% of our communities were positive in the quarter, increasing to 75% in July. The trend is our friend. And finally, one of the questions I've been asked the most over the past couple of years is when Camden will start registering positive signed new lease growth. As you know, we have dynamic pricing which changes daily, and I'm happy to report that system-wide average signed new leases have been positive a handful of days this month, including at least two days this week. And that is a very green shoot. Camden has been extremely busy this year, and I echo Rick's shout out and thanks to our fantastic team members who have worked tirelessly to make all this happen. I will now turn the call over to Laurie Baker, our President and Chief Operating Officer.