Camden Benefits from MF Strength, Increases Earnings Guidance

HOUSTON-Executives with Camden Property Trust expressed surprise and pleasure at the REIT's Q1 2012 earnings. During the company's earnings conference call on April 27, they announced an increase in the 2012 guidance while discussing multifamily property trends.

FFO for the first quarter of 2012 totaled $68.6 million versus the $54.1 million during the same period in 2011. Earnings per share skyrocketed year-over-year as well, totaling $88.8 million, up from $7.3 million. In view of its current balance sheets and anticipated continued strength in the multihousing market, Camden put its full-year, 2012 FFO guidance at between $3.35 to $3.55 per diluted share, with full-year 2012 earnings per share pegged at $1.85 to $2.05. This is an increase from the FFO projected by the REIT during its Q4 2011 earnings call, during which FFO was progged at a range between $3.30 and $3.50 per share.

Camden's CEO and chairman of the board of trust managers Richard Campo spoke to the strength of the general market, pointing out that, despite the fact that the housing market is starting to recover, apartment fundamentals should remain strong.  Part of the reason for that, he went on to say, is because Camden has assets in markets that are starting to do well. "You have to have a positive single family market for a positive multifamily market; it's a long-term driver of the economy," he explained. What happened between 2003-2008, which did impact the multifamily sector somewhat negatively, wasn't necessarily a strong single family market as much as it involved what Campo dubbed as "good renters who became bad homeowners."   

Though occupancy across Camden's portfolio was reported at 95.3%, turnover was up 6% as well, which prompted questions from a couple of the analysts as to whether rent increases were the root of the higher turnover. Camden president and trust manager D. Keith Oden acknowledged that higher rents could have been one reason. As rents go up, people will move out and move into more affordable places. Still, "This does reflect that we pushed the heck out of rents, but the flip side was that we had sufficient traffic to do it," Oden commented.

But Oden also pointed out that turnover needs to be put into perspective. "During the last few years, turnover has been at historic lows, driven by the lousy economy and the fact that people are stuck," Odon said. But with economies in certain parts of the nation improving, there is a pent-up demand for different living situations; roommates may be breaking up and moving into smaller units, with a handful of people leaving to buy homes. As such, "we'd expect more turnover in a more buoyant economy in which jobs are being created," Oden said.