Camden Property Trust (NYSE:CPT) Q4 2022 Earnings Call Transcript

Ric Campo: I would say that based on the numbers I said earlier, where you had a negative absorption in the fourth quarter of 181,000 units in America, that’s consumer behavior. Those are people staying home for Christmas. Those are people who got paid, all kinds of big stimulus money, had cash coming out of, because of forced savings and decided to go out and run apartment and then they spend that cash and now they are going, what am I going to do, maybe the economy is uncertain, and I am going to go back to a live with mom and dad or double up and try to save money again. And I think that consumer behavior is clear that, that has happened and we went from, like I said, 600,000 positive net absorption in 2021 and it was 50,000 in 2022 and the 50,000 when you think about it was all in the first half of the year.

And if you look at the positive absorption was all in the first half and the second quarter you started having kind of flat, third quarter you had negative some and then in the fourth quarter you had a big negative. And so I would say that is a definite consumer behavior issue that’s out there and I don’t think you can ignore it. Our view — and that’s why we came out with occupancy falling and rent being moderated and it’s just — and it is based on also a less robust economy in 2023.

Keith Oden: And Rich on the consumer behavior

Rich Anderson: Okay.

Keith Oden: side, one of the stats that we gave in our prepared remarks was people moved out to purchase homes, which was about 13.8% for all of last year. Just to give you a refresh on that number in the month of January, that number dropped 10% — just over 10% move outs to purchase homes. And my guess is it falls below — falls into single digits by next quarter and we have only seen single digits on that staff for maybe two consecutive quarters during the middle of the great financial crisis. And so, I mean, we are getting to some pretty uncharted territory in terms of housing affordability and the willingness and ability of people to move out of apartments to buy homes and I don’t think that’s — I think we are at the beginning of that cycle.

Ric Campo: It’s clearly a positive on side

Rich Anderson: Okay.

Ric Campo: obviously. Go ahead, Rich.

Rich Anderson: Yeah. I am sorry. I mean

Ric Campo: Okay.

Rich Anderson: I anxious to get through the call here. One real quick question for Alex, if I am doing the numbers right, you are variable rate debt exposure went from 6% last quarter to 15%. I know that you had the deal, the $550 million of secured debt. Is that a number 15% that we should be expecting for the full year or do you expect something to maybe right-size your rate debt exposure in the coming months and quarters? Thanks.