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

Alex Jessett: Yeah. Absolutely. So, for the full year, we have got renewals up about 4.9% and new leases up 2%. When you blend that out, that gets you to about 3.5% and that 3.5% picks up the market rent plus the about one-third of the loss to lease that we said we would capture. So if you think about the sort of renewal component that you were addressing, that renewal component is what you are going to find and is captured in that loss to lease and so that’s what we are saying is that we are going to get we will get about a third of that based upon timing and then based upon leasing strategies.

John Kim: So when you say market rental growth of 3%, that’s not reflective of the 2% release growth rate? How do those two tie in together?

Alex Jessett: Yeah. So market rental rate is going to be the rental rate that we expect December 31, 2023 as compared to December 31, 2022, right? So you are going to pick up that component. And then the renewals, if renewals are coming up to market, that is effectively what you are picking up in the loss to lease and then the new leases if people leave and you are backfilling them, that’s also getting picked up in the last lease.

John Kim: Okay. Appreciate it. Thank you.

Alex Jessett: Absolutely.

Operator: Our next question comes from Robyn Luu with Green Street. Please go ahead.

Robyn Luu: Good morning. Alex, I noticed Texas and Florida market trended double-digit expense growth this quarter. Are you basically similar expense throughout 2023 for these markets?

Alex Jessett: Yeah. So when you see that, a lot of that is due to the timing of property tax refunds and sort of how that flows through the system and so, no, I would not expect that to be a sort of run rate type item.

Robyn Luu: I mean property taxes are expected to be fairly high. I know you pointed to about 2.5% for the portfolio this year. But Texas and Florida property seem a little bit higher. So if not double digits, do you see the states to print in the high single-digit range?

Alex Jessett: No. And if you think about the states that I specifically called out for having higher property taxes, you do have Florida, but Texas was not one of them. So you have got Florida, you have got Georgia and you have got Colorado. And those are the markets that we are anticipating having higher property tax expense and so that’s where, if we are averaging 5.5% and property taxes make up a third of our total expenses, those markets that are going to have the higher growth in property taxes are going to have the higher expense growth. So, yeah, I would expect that once again in Florida and then Georgia and Colorado.

Robyn Luu: That’s clear. And then I want to talk about the DC market, how is front door traffic in trending in DC relative to the portfolio average? And are you seeing any signs of people starting to migrate to the suburbs or even out of state?