Camden's Q3 2025: Contradictions Emerge on Supply-Demand Dynamics, Rent Growth, and Economic Uncertainty

Date of Call: November 7, 2025

Financials Results

• Revenue: Same-store revenue growth: 0.8% for Q3; 0.9% year-to-date; sequential +0.1%. Full-year same-store revenue guidance reduced from 1.0% to 0.75% (75 bps).
• EPS: Core FFO: $186.8M for Q3 or $1.70 per share; full-year core FFO midpoint increased to $6.85 (from $6.81); Q4 core FFO guidance $1.71–$1.75 (midpoint +$0.03 sequential).

Guidance:

• Full-year core FFO midpoint raised to $6.85 (up $0.04), third consecutive increase.
• Q4 core FFO expected $1.71–$1.75 (midpoint +$0.03 sequential).
• Full-year same-store revenue guidance reduced from 1.0% to 0.75%; same-store NOI midpoint maintained at +25 bps.
• Full-year same-store expense midpoint lowered from 2.5% to 1.75% (property taxes down vs prior assumption).
• Q4 occupancy assumed 95.2%–95.4%; Q4 blended lease trade-out ~ -1% and bad debt ~60 bps.
• Anticipate ~$425M acquisitions and ~$450M dispositions for 2025 (midpoint), noncore FFO ~ $0.11.

Business Commentary:

• Demand and Supply Dynamics:
  
• Camden Property Trust reported strong apartment demand, making 2025 one of the best years for apartment absorption in 25 years.

• The demand was driven by high occupancy rates, with third-quarter occupancy averaging 95.5%, along with a 25% reduction in blended rate growth due to a slowing in pricing and increasing renewal offers.

• Public and Private Market Disconnect:

• The company noted a significant disconnect between public and private market valuations, with the stock trading at a 30% discount to consensus net asset value.

• This disconnect is attributed to lower public market values despite private market sales of high-quality properties landing in the 4.75% to 5% cap rate range.

• Share Buyback and Dispositions:

• Camden repurchased $50 million of its shares during the quarter, representing a 6.4% FFO yield and a 6.2% cap rate.

• The buyback was funded by the sale of older, higher CapEx properties, indicating potential for continued buybacks if market conditions remain favorable.

• Regional Demand and Supply Impact:

• Demand was particularly strong in the Sunbelt markets, with the D.C. Metro region being the top performer.
• However, supply pressures were pronounced in markets like Austin and Nashville, necessitating concessions and impacting rental pricing.

Sentiment Analysis:

Overall Tone: Positive

• Management raised full-year core FFO midpoint to $6.85 and described balance-sheet strength (net debt/EBITDA 4.2x), completed $50M buyback and said they will continue repurchases with $400M authorization remaining; commentary emphasized improving 2026 setup and declining deliveries supporting recovery.

Q&A:

• Question from Eric Wolfe (Citigroup Inc., Research Division): I was just wondering if you could provide any early thoughts on 2026 in terms of the building blocks earning -- any thoughts on other income or whatever else you can share about how you're thinking about 2026 at this stage?
  Response: Not providing 2026 guidance yet; expect earn-in roughly flat to 2025 and view 2026 as more constructive with less uncertainty and significantly less multifamily supply to absorb.

• Question from James Feldman (Wells Fargo Securities, LLC, Research Division): You talked about the public-private disconnect around apartment valuations. I was hoping to get your thoughts on the current broader appetite for investment in apartments from private investors... any specific markets that stand out?
  Response: Private capital is abundant (multifamily leads dry powder) but few assets for sale; cap rates have stabilized (Class A ~4.5%–5%, Class B ~5%–5.5%); more coastal sales than Sunbelt today with a likely pivot in mid-2026.

• Question from Adam Kramer (Morgan Stanley, Research Division): How do you see the fourth quarter shaping up relative to normal seasonality ... how do you see the fourth quarter shaping up in terms of lease spreads relative to typical seasonality?
  Response: Q4 should resemble a traditional seasonal quarter; blended rent expected down ~1%, and the Q3→Q4 deceleration was modest (only ~10 bps), indicating stabilization in Sunbelt markets.

• Question from Austin Wurschmidt (KeyBanc Capital Markets Inc., Research Division): With this reacceleration in lease rate growth, would you expect that to carry into early next year... And then is it occupancy that's the driver of that 25 basis point decrease to 2025 same-store revenue growth guidance?
  Response: Not commenting on 2026; the small reduction in full-year top-line guidance was occupancy-driven—management lowered rates to hit occupancy targets.

• Question from Steve Sakwa (Evercore ISI Institutional Equities, Research Division): How big are you willing to lean into share buybacks and dispositions given the public-private disconnect?
  Response: Willing to lean in materially while the ~30% discount to consensus NAV persists; will fund buybacks via asset sales without increasing leverage.

• Question from Michael Goldsmith (UBS Investment Bank, Research Division): Can you talk about the impact of direct supply? How much of your portfolio is directly competing with new supply now vs last year and next year?
  Response: Supply is pervasive across the portfolio (biggest in Austin and Nashville); share of assets directly competing with new supply fell from ~20% last year to ~9% today and should continue improving into 2026.

• Question from Jana Galan (BofA Securities, Research Division): Can you provide commentary on greater D.C. given its strong performance?
  Response: D.C. Metro is the top market—strength driven by government return-to-office—still the best-performing market and no resident-level impact observed from DOGE.

• Question from Richard Anderson (Cantor Fitzgerald & Co., Research Division): When supply delivers what's the typical tail of disruption — 18+ months — and when might Camden's real growth materialize?
  Response: Typical lease-up for a ~300-unit suburban project is ~10–12 months from initial deliveries; platform-wide deliveries are falling (190k→150k→110k), which supports meaningful improvement in 2026 and 2027.

• Question from Alexander Goldfarb (Piper Sandler & Co., Research Division): Over 40 years public vs private dynamics — what's missing for REITs to deliver relative performance?
  Response: Gaps between public and private are cyclical; Camden values public access to capital and expects market dislocations to eventually resolve, restoring alignment with private values.

• Question from Wesley Golladay (Robert W. Baird & Co., Research Division): On sales are you able to shield taxable gains? And how material are property tax refunds/headwinds for next year?
  Response: Using 1031s and reverse deals where appropriate; can absorb ~$400M of gains to fund buybacks without 1031s; property tax refunds were modest ($5.5M in 2025 vs $6.5M in 2024) and not expected to create a headwind.

• Question from Richard Hightower (Barclays Bank PLC, Research Division): What's the impact of concessions and how do they affect market rent comps next year?
  Response: High-supply markets show elevated concessions (~5 weeks, ~10%); concessions are largely upfront (not prorated) and need to burn off in 2026; Camden limited concessions and prioritized occupancy via targeted price actions.

• Question from John Kim (BMO Capital Markets Equity Research): Why haven't you restarted development projects this year and will you accelerate starts as previously indicated?
  Response: Preferring acquisitions at discounts to replacement cost today; construction costs are falling (5%–10%) and Camden will resume development when returns exceed buy/acquire alternatives.

• Question from Linda Yu Tsai (Jefferies LLC, Research Division): With Q3 blends down only 10 bps and Q4 blends expected down 1%, is that driven by new-lease spreads or conservatism and any markets showing notable softness or strength?
  Response: Q4 blended -1% mainly reflects a July occupancy push that traded off new-lease rate; some markets softened but others improved—Dallas, Charlotte, Nashville and Atlanta showed quarter-over-quarter blended rent improvements and faster lease-up.

• Question from Michael Lewis (Truist Securities, Inc., Research Division): Given recent macro signals (layoffs, weaker manufacturing), why shouldn't one be concerned about demand and could same-store revenue fail to improve next year?
  Response: Macro risks are real, but higher retention, less supply and Camden's demographics reduce required job-driven demand; management hasn't seen move-outs tied to layoffs and expects relative resilience.

• Question from Omotayo Okusanya (Deutsche Bank AG, Research Division): Any big differences in performance Class A vs Class B or urban vs suburban?
  Response: Performance is supply-driven: Class A modestly outperformed Class B; urban assets outperformed suburban in Q3 because earlier waves of supply were urban-focused and later waves were suburban.

• Question from Julien Blouin (Goldman Sachs Group, Inc., Research Division): Witten Advisors previously projected >4% market rent growth in 2026 — is that path intact?
  Response: Witten moderated expectations—now around 3%–3.5% for 2026 and over 4% in 2027, with growth skewed to the back half of the year.

• Question from Alex Kim (Zelman & Associates LLC): Marketing expense has been elevated—reflective of weaker front-end demand requiring more advertising or other factors?
  Response: Elevated marketing spend driven by higher SEO/search costs amid intense competition for traffic and a high-supply environment; expect SEO costs to decline as supply is absorbed.

Contradiction Point 1

Supply and Demand Dynamics

It involves differing perspectives on the impact of supply and demand dynamics, which are crucial for understanding market performance and revenue projections.

How is the current appetite for apartment investments among private investors, particularly large-capacity groups, evolving amid growing concerns about jobs, immigration, and the government's focus on housing market reforms? - James Feldman(Wells Fargo Securities)

2025Q3: We are seeing the benefit of fewer concessions than they were expecting this time last year, which is good for the operating side. - Richard Campo(CEO)

Is private credit growth an impact on real estate development? - Alexander Goldfarb(Piper Sandler)

2025Q2: We are not in a business where we can offer significant concessions to get rents to where we want to be without it being a marketing strategy that's a long-term strategy to drive rents. - Stanley Jones(CRO)

Contradiction Point 2

Rent Growth Projections

It concerns the company's outlook on rent growth, which is a critical factor for revenue projections and investor expectations.

Can you share early thoughts on 2026, particularly regarding earnings components, other income, or any other relevant insights at this stage? - Eric Wolfe(Citigroup)

2025Q3: We're not giving guidance for 2026 quite yet. The earn-in is probably going to be pretty much flat, which is consistent with 2025. - Alexander Jessett(CFO)

What are the job market assumptions for 2026 compared to 2025 and how do they affect rental projections? - Jeffrey Spector(BofA Securities)

2025Q2: We're very satisfied with the performance of the third quarter and the way it sets us up for the full year. The key driver is we think we'll have a 50 basis point to 75 basis point blended rate increase for full year '25. - Alexander Jessett(CFO)

Contradiction Point 3

Job Market and Economic Uncertainty Impact

It reflects differing views on the overall economic uncertainty and its impact on job markets, which are critical factors affecting rental demand and REIT performance.

Can you share early thoughts on 2026's revenue components, including other income or additional insights? - Eric Wolfe (Citigroup Inc., Research Division)

2025Q3: We're not giving guidance for 2026 quite yet. The earn-in is probably going to be pretty much flat, which is consistent with 2025. We think about the broad environment, and it does shape up much better than '25 based on the uncertainty of tariffs, taxes, and issues like a significant amount of multifamily supply that was absorbed in 2025. - Alexander Jessett(CFO)

Would you have raised same-store revenue or lowered same-store expenses without macro uncertainty? How is the environment affecting your guidance? - Eric Wolfe(Citi)

2025Q1: The current environment causes uncertainty, affecting the company's head spinning. Without more clarity on market conditions and job long-term prospects, Camden is cautious and maintains a wait-and-see mode. However, they feel the business is strong, and there's no sign of cracks. The uncertainty affects their ability to change guidance without more clarity. - Ric Campo(CEO)

Contradiction Point 4

Supply and Demand Dynamics

It highlights differing perspectives on the supply and demand dynamics in the multifamily housing market, which directly affects rental rates and occupancy levels.

What is the impact of direct supply on your business? What percentage of your portfolio is directly competing with new supply, and how does this compare to last year? - Michael Goldsmith (UBS Investment Bank, Research Division)

2025Q3: Every part of our portfolio is directly competing with supply. This year, we expect the largest number of supply in our portfolio in the last 45 years. However, we expect a 25% decline in deliveries next year, which should make a difference for absorption. - Keith Oden(EVP)

How are you managing construction costs and rents amid tariffs, and what adjustments are you making on the expense side? - Steve Sakwa (Evercore ISI Institutional Equities, Research Division)

2025Q1: This year, we expect the largest number of supply in our portfolio since we have data, and we feel good about our ability to compete with that. We expect supply to be a headwind all year. We still feel like the markets that have the highest supply are going to be the ones we are concerned if we don't have a rent increase this year. - Ric Campo(CEO)