CAMDEN PROPERTY TRUST 3Q26 CONFERENCE CALL - CAMDEN PROPERTY TRUST

Financial Performance:

• Reported third quarter 2026 core FFO of $1.71 per share, beating the $1.69 midpoint guidance by two cents, driven by higher third-party construction fees and interest income.
• Same-store revenue growth guidance reduced to a midpoint of 0.0% (from 0.5% previously) due to stronger-than-expected seasonality and sticky concessions; expense growth guidance improved to 1.75% (from 2.5%).
• Full-year core FFO midpoint maintained at $6.75 per share, with an updated range of $6.73 to $6.77.
• Same-store NOI growth revised to -1.0% (from -0.6%), primarily reflecting lower seasonal revenues offset by improved expense discipline.
• Closed $1.625 billion sale of California portfolio in July, with proceeds allocated to debt repayment ($900M), acquisitions/land ($125M), share repurchases ($50M), and note redemption ($495M).
• Leverage ratio stands at 4.0x net debt to EBITDA, providing significant financial flexibility.
• Annualized net turnover rate improved to 42% in Q3 2026 from 44% in the prior year.
• Recorded non-cash impairment charges on the Nashville "Camden Gulch II" and Denver "Camden Baker" development projects, plus a minor impairment on a Los Angeles land parcel sold for $10.7 million post-quarter.

Guidance and Future Outlook:

• Q4 2026 core FFO guidance set at $1.63 to $1.67 per share (midpoint $1.65), reflecting a $0.06 sequential decline due to seasonality, full Q4 impact of California dispositions, and lower construction fees, partially offset by debt cost reductions and acquisition NOI.
• Expects full-year 2026 same-store revenue growth midpoint to remain within the 0.0% range, with expense discipline continuing to drive NOI resilience.
• Projects 2027 blended rent growth to remain flat compared to 2026 entry levels, with Q4 2026 renewals averaging 4.5% and expected to hold in the mid-3% range.
• Anticipates Q4 2026 occupancy to settle in the low 95s, a modest decrease from Q3's mid-95s, prioritizing leasing velocity over aggressive rate hikes.
• No acquisitions anticipated for 2026; focus remains on share repurchases and opportunistic development in the Sunbelt.
• 2027 guidance to be provided at the Q4 2026 earnings call, based on current budget processes and economic assumptions.

Business Segments and Product Lines:

• Construction/Developed: "Camden Builders" team delivered outsized fee income, a key driver of core FFO outperformance.
• Acquisitions/Development: Acquired three communities for ~$305M in Q3 (YTD $755M); started construction on the 398-unit $130M Camden RTP in Raleigh; canceled development of Camden Gulch II (Nashville) and Camden Baker (Denver) due to unfavorable economics vs. acquisition alternatives.
• California Dispositions: Completed sale of entire California portfolio, leaving zero assets in the state and eliminating the need for special dividend payments.
• Operations: Blended effective lease rates improved 120 bps sequentially in Q3, with new leases down 2% and renewals up 3.6%, resulting in a positive 1% blended rate growth.

Market and Competitive Landscape:

• Sunbelt apartment completions have fallen to a 7-year low, with peak supply "firmly in the rearview mirror."
• Market absorption remains robust, exceeding expectations in many markets; vacancy rates are gradually normalizing after four years of increases.
• Competitive concessions remain "sticky," driven largely by merchant builders reluctant to reduce incentives despite peak supply passing; concessions range from 3 weeks to 2 months in various submarkets.
• Wage growth has outpaced rent increases for nearly four years, improving the median rent-to-income ratio for renters.
• Regional variance is expected to narrow in 2027 as peak supply impacts fade, with Denver underperforming largely due to specific legislative utility restrictions rather than broad market weakness.

Risks and Challenges:

• Concessions: Persistent and sticky concessions in key markets (notably Denver, Nashville, Raleigh-Durham, and parts of Texas) limit pricing power and revenue growth.
• Interest Rates: Rising rates have muted transaction volumes and led to the cancellation of two acquisitions due to sellers unwilling to adjust prices to current valuation standards (cap rate expansion of 15-40 bps).
• Construction Economics: High labor, commodity, and financing costs have halted new construction starts to mid-2010s levels, though this also limits future supply.
• Regulatory Environment: Potential impacts from the Florida Amendment 3 (property tax changes) and the recent shift in Texas state elections on future tax liabilities and housing policies.
• Seasonality: Greater-than-anticipated softness in September traffic and rent collections led to downward revisions in Q4 and full-year outlooks.

Management Commentary and Tone:

• Tone is cautiously optimistic but disciplined, emphasizing that "happiness or recovery is becoming closer at hand" while acknowledging a partial, not full, recovery.
• Management expressed pride in the team's execution, particularly regarding the California sale timing and expense containment.
• Emphasized that current share prices represent the best value for capital allocation compared to acquisitions in the current environment.
• Highlighted the shift from "merchant builders" as competitors to potential buyers of Camden's assets if construction economics diverge further.

Analyst Questions and Answers:

• Acquisition vs. Buyback: Management confirmed they would prefer share repurchases over acquisitions at current prices, citing a lack of required tax efficiency for the California dispositions and seller price inflexibility.
• Concession Stickiness: Analysts noted persistent concessions; management attributed this to merchant builders' reluctance to transition from operators to landlords and the need to maintain traffic in shoulder seasons.
• Market Variance: Management explained that Denver's underperformance is largely legislative (utility restrictions) and Nashville's is due to capital projects, with expectations of convergence in 2027.
• Texas Election Impact: Executive Chairman Rick Campo characterized the Texas election result as a "shift to the center" rather than hard leftism, citing the need for bipartisan legislative support, and expressed optimism that young renter demographics may favor a more moderate political environment.
• Expense Outlook: No 2027 expense guidance provided, but management expressed hope for continued favorable insurance renewal trends and aggressive property tax advocacy.

Other Key Points:

• Liquidity: As of November 4, 2026, the company had $55M in cash investments and $0 outstanding on its $1.2B credit facility, providing ample liquidity for development and corporate needs.
• Share Repurchases: $50M repurchased in Q3 at an average price of $105.34; $248M remaining available under the current authorization.
• Debt Management: Redeemed $500M of senior notes (5.2% floating) post-quarter end using proceeds from the California sale, eliminating significantly dilutive maturities over the next eight quarters.
• Occupancy Trends: Signed leases improved dramatically in October compared to September, signaling a potential bounce-back in leasing momentum.
• Developer Strategy: Camden is prioritizing asset acquisition over ground-up development in high-cost markets (Nashville, Denver) where the "math didn't work," shifting focus to lower-density, higher-return land sites in the Sunbelt.