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

Ric Campo: We just got back from NMHC and it was interesting, there were 8,500 registered people there are record for NMHC and that doesn’t include couple of thousand that don’t want to pay the fee, they just hang around the hoop, trying to have meetings with people trying to understand the market. And we sort of — it was interesting because you had sort of three camps. You have the camp where the capital like — people with capital like us and other portfolio managers and others and we were all kind of — we are kind of waiting to see what’s going to happen. Then you had merchant builders who still are kidding themselves that they are going to start as many properties that they thought they are going to start this year. And there are some that are that are realistic, that are actually betting on a lower number than as projected.

And then you have the brokers who are all very excited about getting back to work. When you look at some of the numbers that we heard January numbers, I heard one of the national brokerage group said they did about $1 billion of sales in January of 2022 and this year they have done $80 million. And so there is definitely a — the market is frozen to a certain extent because you have this bid ask spread and I think as the market develops, capital, we will look to try to get reasonable rates of return. Like I said earlier, I think it might be where you are buying by the pound and knowing that, ultimately, you will be able to make a reasonable rate of return, but maybe not initially in terms of you might buy lease-ups and things like that, that don’t really have great return ship, you might buy at substantially below what we could replace it for today.

So I do think that there is definitely a wait and see attitude and that, that will continue probably until there’s just more clarity. I mean, when you think about the Fed’s meeting this week, they — I think most people believe like the 25% basis points, market like it. Interest rates came down and then all of a sudden ,you have 500,000 jobs a day and 10 years back to 350 and now we are back to talking about, well, what’s the Fed going to do now, right, a 50-year low on unemployment rate. And so there’s just so much uncertainty that it’s hard to get conviction and when I think the market gets conviction, then you will start seeing there’s plenty of dry powder out there and the question is who will blink first and I think it’s going to be the sellers that have to blink first.

I am hoping that anyway.

Haendel St. Juste: I agree with that. Yeah. No. I agree too. I agree with your comments. I was at housing too and I did speak to a handful of people in the minority who thought that, well, maybe a better spring selling season and lower interest rates in the back half of the year could result in lower cap rates. Is that a scenario that you can envision, I mean, how do you think about potentially that outcome?