Camden Braces for Second-Half Challenges

"We expect the second half of 2009 to be more challenging than the first," acknowledged Camden chairman and CEO Richard J. Campo. "The Camden properties continue reacting to the markets, which is what we've expected."

He also said, however, that, all things considered, the results were surprisingly strong. Funds from operations during Q2 2009 totaled $.72 per diluted share. Furthermore, the company continues maintaining the midpoint of both its fund from operations and same-property net operating income guidance issued earlier this year. The third quarter 2009 FFO earnings guidance is $.67 to $.73 per diluted share, with same-property NOI continuing to decline between 2% and 3%.

It's true that the FFO did drop from the Q2 2008 figure of $.94 per diluted share. It's also true that same property NOI declined on a year-to-year basis of 5.8%. However, Campo pointed out, same property NOI declined at a higher rate during the last economic downturn; and that was without the huge job losses that this downturn has brought.

The company continues strengthening its balance sheet through asset sales such as the 671-unit Camden West Oaks for $28.7 million and through completion of a public offering of more than 10 million shares of stock, which brought in $272 million in net proceeds. The REIT also repurchased a total of $182.3 million of its senior unsecured notes and retired close to $82 million of senior unsecured notes. This means Camden has no remaining debt maturities in 2009 and $127.6 million of debt maturities in 2010.

D. Keith Oden, president and trust manager pointed out the key thing in the current environment is to continue strengthening the credit metrics. "We've cut our dividends. We are continuing to de-lever over the next few years and to make sure our coverage is strong. We'll give up a little growth in FFO for de-levering, but are definitely focused on the balance sheet."

That balance sheet will keep Camden on track in the coming months, Campo notes. If the economy plays out as experts believe it will, the GDP should move upward in the remainder of 2009 and pick up in 2010. But multifamily housing lags behind the economy.

"Don't expect 2010 to turn at the beginning," he said. "We think there will be continuing deterioration during the first have, some power returning in the second half, and full power returning in 2011. This would assume a jobless recovery."