CAMDEN PROPERTY TRUST 3Q26 CONFERENCE CALL - CAMDEN PROPERTY TRUST

Explicit Guidance:

• Core FFO: Maintained full-year 2026 core FFO midpoint of $6.75 per share; updated range to $6.73–$6.77 (prior midpoint $6.75).
• Q4 2026 Core FFO: Provided guidance of $1.63–$1.67 per share (midpoint $1.65).
• Same-Store Revenue Growth (Full-Year 2026): Revised midpoint to 0.0% YoY (prior: 0.5%).
• Same-Store Expense Growth (Full-Year 2026): Revised guidance to 1.75% YoY (75 bps improvement over prior 2.5% midpoint; 125 bps improvement over original 3.0% guidance).
• Same-Store NOI Growth (Full-Year 2026): Revised guidance to -1.0% YoY (vs. prior -0.6%).
• 2027 Outlook: Explicitly stated no 2027 guidance will be provided; management expects flat earn-in for 2027 based on current projections, similar to the start of 2026.
• Share Repurchases: $248 million remaining under current authorization; plan to prioritize share buybacks over acquisitions if shares trade at a clear discount.
• Dividends: Do not anticipate paying a special dividend from California disposition proceeds based on current tax analysis.
• Acquisition Activity: No further acquisitions anticipated in 2026.

Business-Segment Outlook:

• Rental Rate Trends: Blended effective lease rates showed 120 bps sequential improvement in Q3 2026 and are projected to be slightly positive (mid-3% renewal growth) in Q4 2026; new lease growth expected to be slightly negative or flat seasonally, with Q1 2027 expected to be stronger than Q1 2026.
• Pricing & Concessions: Concessions described as "sticky" due to merchant builders; expected to remain persistent through the shoulder season (Q4) but anticipated to dial back in 2027 as peak supply recedes and traffic normalizes.
• Market Performance: Expected narrowing of revenue performance dispersion across markets in 2027 as peak supply clears; Denver and Nashville underperformance expected to resolve once legislative impacts and capital projects conclude.
• Occupancy: Q4 2026 occupancy targeted in the low 95s (vs. mid-95s in Q3); Q1 2027 renewals (December/January expirations) issued at +4.5%.
• Development Pipeline: Camden RTP (398 units, $130M, Raleigh) under construction; Camden Gulch II (Nashville) and Camden Baker (Denver) development projects cancelled due to unfavorable returns; no new development starts expected in Nashville/Denver at this time.
• Land Bank: Proceeds from California sale ($1.625B) used for debt repayment, acquisitions, and share buybacks; no remaining assets in California; focus shifting to less dense developments for better returns.

Market and Competitive Outlook:

• Supply/Demand: Apartment completions in Sunbelt markets at 7-year lows; new construction starts depressed to mid-2010s levels due to rates, labor, and commodity costs; "long runway" of low future supply anticipated.
• Competition: Merchant builders acting as "reluctant operators" maintaining concessions to achieve 95%+ occupancy; management anticipates these players will eventually reduce concessions as absorption leads supply.
• Transaction Volume: Market muted by rising rates; acquisition activity suspended for 2026 but potential for acquisition opportunities in 2027 at better pricing (cap rate expansion of 15–40 bps anticipated by management to be necessary for deals).
• Competitive Advantage: Camden is the only S&P 500 multifamily REIT with sequential acceleration in new and blended lease rates in 2026; occupancy trends improving in Atlanta, Southeast Florida, Dallas, and Houston.

Macro / Industry Outlook:

• Interest Rates & Construction: Rising rates, commodity prices, and labor shortages continuing to hamper new construction; timeline for 30-year-olds to reach milestones lengthening, supporting future rental demand.
• Economic Fundamentals: U.S. economy described as "healthy"; wage growth outpacing rent increases for nearly four years; median rent-to-income ratio declining.
• Political/Risk Environment (Texas): Following recent election results, management expects no dramatic operational changes in Texas; predicts a "shift to the center" requiring bipartisan support; optimistic regarding young voter demographics.
• Regulatory Impact (Florida): Concern regarding Florida Amendment 3 reducing homestead exemptions; engaging with state leadership to assess potential commercial property tax shifts, though no concrete impacts determined yet for 2027.
• Cap Rates: Management estimates cap rates have expanded 15–40 basis points; seeks expansion closer to 40 bps before resuming acquisitions.

Strategic Initiatives:

• Capital Allocation: Shifted focus from acquisition to share repurchases and debt reduction (leveraged $500M senior notes redeemed in Oct 2026); debt-to-EBITDA target range remains 4.0x–5.0x.
• Cost Discipline: Continued focus on expense containment via property tax savings and lower repairs & maintenance; expects expense growth to remain disciplined in 2027.
• Liquidity: Maintaining ample liquidity ($1.2B credit facility, $55M cash); no significantly dilutive debt maturities over next eight quarters.
• M&A Status: Cancelled two operating community acquisitions and one land parcel in Q3 2026; acquired three communities ($305M) and one land parcel YTD; no further 2026 acquisitions expected.

Risks and Headwinds to Outlook:

• Concession Stickiness: Persistent concessions from merchant builders in key submarkets (Raleigh-Durham, Nashville, Denver) could delay rental rate normalization.
• Seasonality: Greater-than-anticipated September seasonality driven by lower traffic forced temporary price reductions, impacting Q4 revenue guidance.
• Development Risks: Impairment charges recorded on cancelled projects (Nashville, Denver, LA); potential for future development delays or cost overruns in remaining pipeline.
• Regulatory & Tax Uncertainty: Potential property tax changes in Florida and Texas following elections could impact operating expenses.
• Interest Rate Sensitivity: Continued elevated rates may keep transaction volumes muted and construction starts low, limiting acquisition inventory.

Management Tone on the Future:

• Confidence Level: "Optimistic" regarding long-term supply/demand dynamics and the end of the "peak supply" era; "very proud" of team execution on balance sheet management.
• Hedges: Management explicitly hedges 2027 expectations by stating they will not guide until Q4 2026 earnings; emphasizes that "luck favors the prepared" regarding the timing of the California sale.
• Shift in Sentiment: Transition from defensive (cancelling deals, preserving cash) to opportunistic (prioritizing buybacks) as share valuation is deemed superior to asset pricing.
• Guidance Changes: Willing to revise guidance down slightly (revenue/NOI) to ensure accuracy, but maintains confidence in core FFO stability via expense discipline.

Miscellaneous:

• Leasing Velocity: October results showed "signed leases improving from September to October" with new lease, renewal, and blended rates trending better YoY.
• Resident Dynamics: Annualized net turnover rate improved to 42% (Q3 2026) from 44% (Q3 2025); move-outs for home purchases remain low at 9.5%.
• Financial Metrics: Q3 Core FFO $1.71/share (beat guidance midpoint by $0.02); Leverage at 4.0x net debt to EBITDA.