For Houston-based Camden, lingering supply and eviction moratorium issues provided headwinds in the third quarter, with the REIT lowering 2024 same-store revenue guidance by 20 basis points.

“Camden cited new supply in certain core Sun Belt markets (Austin), as well as new ‘inventory’ from [the] removal of non-paying tenants (Atlanta, Los Angeles) as key culprits,” wrote Haendel St. Juste, managing director of REITs for investment bank Mizuho Securities in an analyst note earlier this month.

Like other REITs, Camden saw new and renewal lease rates drop through Q3 and into Q4 as it prioritized occupancy heading into the colder months. Camden’s blended lease rate growth fell from 1.2% in July to -0.8% in October, according to St. Juste.

“What you saw in the third quarter was absolutely a drive more toward occupancy, and you’re seeing that impact roll over into the fourth quarter,” Camden CFO Alex Jessett said on the Q3 earnings call earlier this month.

However, Camden was boosted by strong absorption, hitting a high that was only bested once — in 2021 — over the past 20 years.

“Camden markets are growing faster than the U.S. … and fewer consumers [are] choosing homeownership,” Camden CEO Ric Campo said on the earnings call. “Apartment rents continue to be more affordable than buying a home.” 

Demand shrinks on the West Coast

On the property revenue front, Southern California; Washington, D.C.; Southeast Florida; Denver and Houston led the way in Q3 with revenue growth ranging from 1% to 5% — above the portfolio average of 0.6%. Those metros were also top performers in Q2.

However, according to Campo, Camden has seen issues in Los Angeles stemming from eviction-related delinquencies and demand, with the metro losing 16,000 jobs since February 2020. In the same timeframe, San Francisco lost 50,000 jobs, he said.

“Even though you have low supply in those markets, and their revenues are growing a bit better than the supply markets, they are basically just growing because they went down so much to start with,” Campo said. “So, they had a bigger hole to climb out. And the demand is the real issue there. And long-term, I don’t see that changing dramatically.”

By comparison, Dallas added 467,000 jobs, and Houston has gained 268,000 positions since February 2020. Still, Camden would like to lower its exposure in Houston, along with Washington, D.C. When its hometown’s economy suffers, the REIT’s stock price suffers.

“We’ve been painted with Houston,” Jessett said. “When oil prices fall, people … either buy or sell Camden based on Texas and oil prices, and that’s been a challenge over the years.”

The fourth quarter and beyond

In Q4, Camden will continue pushing occupancy, which means rental “rates are going to come down a little bit,” according to Jessett.

“Keep in mind, we started the year thinking that at the midpoint … revenue was going to be up 1.5%, and we’re within 20 basis points of our initial guidance despite record levels of supply. So we feel very good about the way that we’ve worked through this year,” Jessett said.

In October, Camden’s effective new lease rates were down 4.4%, and effective renewal rates were up 3.4%. “When you get to November and December, you start to have more renewals than new leases,” Jessett said. “And so the blend changes a little bit.”

In 2025, Campo, citing numbers from Dallas-based consulting firm Witten Advisors, expected job growth of about 440,000 across Camden’s markets. However, new competition will continue to be an issue.

“On the supply side, ‘25 is going to look a lot like ‘24 across most of [our] markets in terms of new deliveries,” Campo said. “So, supply-demand dynamics in 2025 are going to look fairly similar to what they have been in 2024.”

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