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Good morning, and welcome to Camden Property Trust Third Quarter 2025 Earnings Conference Call. I'm Kim Callahan, Senior Vice President of Investor Relations. Joining me today for our prepared remarks are Ric Campo, Camden's Chairman and Chief Executive Officer; Keith Oden, Executive Vice Chairman; and Alex Jessett, President and Chief Financial Officer. We also have Laurie Baker, Chief Operating Officer; and Stanley Jones, Senior Vice President of Real Estate Investments available for the Q&A portion of our call. Today's event is being webcast through the Investors section of our website at camdenliving.com, and a replay will be available shortly after the call ends. And please note, this event is being recorded. Before we begin our prepared remarks, I would like to advise everyone that we will be making forward-looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations. Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to update or supplement these statements because of subsequent events. As a reminder, Camden's complete third quarter 2025 earnings release is available in the Investors section of our website at camdenliving.com, and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call. We would like to respect everyone's time and complete our call within 1 hour. So please limit your initial question to 1 then rejoin the queue if you have a follow-up question or additional items to discuss. If we are unable to speak with everyone in the queue today, we'd be happy to respond to additional questions by phone or e-mail after the call concludes. At this time, I'll turn the call over to Ric Campo.

Thanks, Kim. Our on-hold music theme today was moving. This week, we completed the move of Camden's Houston corporate headquarters from Greenway Plaza to the Williams Tower in the Galleria. This is a big deal. Camden has been at Greenway Plaza for over 40 years. We are excited about moving on and the new beginnings that it will bring for 2026 and beyond. As I was leaving my office for the last time, the thought that popped in my head was don't look back. And that reminded me of a song by the classic rock band Boston. The first versus of the song captured my sentiment as I was leaving the building. Don't look back, a new day is breaking. It's been too long since I felt this way, I don't mind where I get taken. The road is calling today is the day. Team Camden is not looking back. We look forward to welcoming you to our new offices, and we look forward to the continued success for the next 40 years. Strong apartment demand continued through the third quarter, making 2025 one of the best in the last 25 years for apartment absorption, helping to fill up the record number of recent deliveries. The summer peak leasing season was met with continuing new supply, slower job growth and economic uncertainties that led apartment operators to focus on occupancy instead of rental increases earlier in the season than usual. Apartment affordability improved during the quarter with 33 months of wage growth exceeding rent growth and increased affordability improves apartment residents' ability to absorb higher rents when new apartment deliveries are leased up in 2026 and beyond. Apartments and our shares are on sale, but not for much longer. Resident retention continues to be strong, in large part because of living excellence provided by our on-site teams. Great job, Team Camden. The case for investing in apartments is compelling. Demand is high, supply is falling to below 10-year pre-COVID averages, bringing balance back to the market. Rents are affordable, apartments provide flexibility and mobility to residents. Rent versus buy economics favor renting more than ever. And demographic and migration trends both support new demand going forward. We look forward to moving to a stronger growth profile after the excesses of post-COVID supply environments end. Camden is positioned well with one of the strongest balance sheets and no major dilutive refinances over the next couple of years. Private market sales of apartments have been robust with cap rates for high-quality properties landing in the 4.75% to 5% range. And there is a clear disconnect between private and, and public market values for apartments. In the quarter, we bought back $50 million of our shares at a significant discount to consensus net asset value. If market conditions remain at current levels, we will continue to buy the stock, and we have $400 million remaining in our authorization. This can be funded through dispositions of our slowest growing higher CapEx properties. I want to give a big shout out to Team Camden for their steadfast commitment to improving the lives of our teammates, our customers and our stakeholders, one experience at a time. Thank you. And next up is Keith Oden.

Thanks, Ric. Camden's third quarter 2025 operating results were in line with our expectations with same-store revenue growth of 0.8% for the quarter up 0.9% year-to-date and up 0.1% sequentially. Occupancy for the quarter averaged 95.5%, consistent with third quarter of 2024, and down slightly from 95.6% last quarter. Year-to-date through September, occupancy has averaged 95.5% versus 95.3% last year. Rental rates for the third quarter had effective new leases down 2.5% and renewals up 3.5%. Our blended rate growth was 0.6% declining 10 basis points from last quarter and 40 basis points compared to the third quarter of 2024. Our preliminary October results reflect typical seasonality and a moderation in both pricing and occupancy as we move into our slower leasing season during the fourth and first quarters. Renewal offers for December and January were sent out with an average increase of 3.3%. Turnover rates across our portfolio remain 20 to 30 basis points below last year's levels and move-outs attributed to home purchase were a record low of 9.1% this quarter. Moving into new office space is never easy, especially when it involves 5 floors and several hundred corporate team members. But the end result was definitely worth a significant amount of time and effort invested by our design and special projects team. Our new headquarters look amazing. A big shout out to Venmills, Chrissy Hopper, Luther Alanis, Kevin Neely, Amy Funk,

Thanks, Keith, and good morning. I'll begin today with an update on our recent real estate activities, then move on to our third quarter results and our guidance for the remainder of the year. This quarter, we disposed of 3 older communities for a total of $114 million. Two of the 3 disposition communities were located in Houston and the third in Dallas. These disposition communities were on average 24 years old. These older, higher CapEx communities were sold at an average AFFO yield of approximately 5%. We used the proceeds in part to repurchase approximately $50 million of our shares at an average price of $107.33, which represents a 6.4% FFO yield and a 6.2% cap rate. During the quarter, we stabilized Camden Durham and completed construction on Camden Village District both located in the Raleigh-Durham market of North Carolina. Additionally, we continue to make leasing progress on Camden Long Meadow Farms, one of our two single-family rental communities located in suburban Houston. At the midpoint of our guidance range, we are now anticipating $425 million of acquisitions and $450 million of dispositions for the full year, reduced from our prior guidance of $750 million in both acquisitions and dispositions. This implies an additional $87 million in acquisitions and an additional $276 million in dispositions in the fourth quarter. Turning to financial results. Last night, we reported core funds from operations for the third quarter of $186.8 million or $1.70 per share, $0.01 ahead of the midpoint of our prior quarterly guidance, driven primarily by the combination of higher fee and asset management income and lower interest expense resulting from the timing of capital spend and lower floating rates. Property revenues were in line with expectations for the third quarter. We are pleased with how well our property revenues are performing considering the peak lease-up competition we are facing across many of our markets, illustrating the significant depth of demand in the Sunbelt, and we did adjust our full year 2025 outlook for same-store revenue growth from 1% to 75 basis points, and property expenses continue to outperform, particularly property taxes coming in well below our forecast once again. As a result, we are decreasing our full year same-store expense midpoint from 2.5% to 1.75%. And maintaining the midpoint of our full year same-store net operating income growth at 25 basis points. Property taxes represent approximately 1/3 of our operating expenses and are now expected to decline slightly versus our prior assumption of increasing approximately 2%. This is primarily driven by favorable settlements from prior year tax assessments and lower rates and values primarily from our Texas and Florida markets. For the fourth quarter, we are assuming occupancy will be in the range of 95.2% to 95.4%. Blended lease trade-out will be down approximately 1% and bad debt will be approximately 60 basis points with then 10 basis points of our pre-COVID levels, almost entirely as a result of the decreased transactional activity anticipated in the fourth quarter combined with lower floating rate interest expenses, we are increasing the midpoint of our full year core FFO guidance by $0.04 per share from $6.81 to $6.85. This is our third consecutive increase to our 2025 core FFO guidance and represents an aggregate $0.10 per share increase from our original 2025 guidance. We also provided earnings guidance for the fourth quarter. We expect core FFO per share for the fourth quarter to be within the range of $1.71 to $1.75, representing a $0.03 per share sequential increase at the midpoint, primarily resulting from the typical seasonal decreases in property operating expenses, favorable final property tax valuations and rates and lower interest expense, partially offset by the impact of our anticipated fourth quarter net dispositions. Noncore FFO adjustments for 2025 are anticipated to be approximately $0.11 per share and are primarily legal expenses and expense transaction pursuit costs. Our balance sheet remains incredibly strong with net debt-to-EBITDA at 4.2x. We have no significant debt maturities until the fourth quarter of 2026 and no dilutive debt maturities until 2027. Additionally, our refinancing interest rate risk remains the lowest of the peer group, positioning us well for outsized growth. At this time, we will open the call up to questions.

[Operator Instructions]. Our first question today comes from Eric Wolfe from Citi.

I was just wondering if you could provide any early thoughts on 2026 in terms of the building blocks earning -- any thoughts on other income or whatever else you can share about how you're thinking about 2026 at this stage?

Yes. So certainly, we're not giving guidance for 2026 quite yet. What I will tell you is the earn-in for us is probably going to be pretty much flat, which is going to be consistent with the earn-in that we had for 2025. Everything else we will give you when we have our next earnings release. But I will tell you, if you look at just the broad environment and what's going to be happening in 2026, it certainly does shape up much better than we saw in '25 in terms of uncertainty that's out there. If you think about when we were going through 2025, obviously, there was a tremendous amount of uncertainty around tariffs, around taxes, et cetera, most of that should be worked out as we go through 2026. The other thing that we think about is a significant amount of multifamily supply that was absorbed in 2025 that we will not have to absorb in 2026. So as I said, we're not going to give any guidance, but if you're an optimistic person, there's certainly things to be optimistic about when we look at next year.

Our next question comes from Jamie Feldman from Wells Fargo.

You talked about the public-private disconnect around apartment valuations. I was hoping to get your thoughts on the current broader appetite for investment in apartments from private investors, especially for groups that can write the really big checks, given the growing concerns on jobs, immigration, the government's focused on fixing the housing market? And are there any specific markets that stand out in terms of more interest, less interest or even from your end, more concerned or less concerned given the macro overlay.

So the first thing I'll tell you is there remains robust demand for multifamily. In fact, if you look at the amount of dry supply -- or excuse me, dry powder that is there by asset class, multifamily absolutely leads all asset classes. And so everybody is looking for assets. The challenge is, there's just not a lot out there. Stanley, I don't know if you want to opine on this.

Sure, Alex. Just a little bit of additional color on the current transaction environment. Like Alex said, the market is healthy. There's a ton of debt and equity capital available. There's really good bid depth and thus really strong liquidity in the market. So with respect to volumes, 2025 is trending about the same as 2024, so still well below pre-COVID levels, which is, to some extent being driven by lenders continuing to modify and extend loans. So no meaningful distress in the market. And from a pricing standpoint, cap rates have really stabilized over the last few quarters with cap rates for Class A assets in our markets in the 4.5% to 5% range and in the Class B space in the 5% to 5.5% range.

Let me add to that, that there's probably -- there's definitely been more sales on the coast than there have been in the Sunbelt. And the reason being that clearly coastal revenues, you can predict in terms of positive growth easier than you can in the Sunbelt, given the supply issues that we've been facing there. And when you think about sellers, the seller in the Sunbelt is looking at the market saying we do know that supply and demand will be in balance. The question is when. And so there is a -- to Stanley's point, the lenders are not pressing people to sell. So why would you sell into a market when underwriting future growth is more difficult today just because of what's going on in the marketplace. So there's less transaction volume in the Sunbelt. I think what's going to happen, however, there will be a pivot and that pivot will probably happen sometime in, I would guess, mid-26 and you'll have a combination of lenders finally saying, "All right, we've extended. Now you need to do something." so that's going to put pressure on sellers to sell. But at the same time, once you get to the middle of '26, based on Alex's discussion a minute ago, you should have a more constructive environment, and it should be easier than for people to look out into '27 and '28 and see a very robust rental growth scenario given the supply dynamics that we have today.

Our next question comes from Adam Kramer from Morgan Stanley.

Just wanted to ask about sort of how you see the fourth quarter shaping up relative to normal seasonality. I think one of your peers talked about a sort of a relatively normal 4Q, maybe even a little bit better than normal seasonality in the fourth quarter. I think that was a little bit of a surprise, just given some of the headlines and some of that is a little bit sensational out there. But just wondering, within your portfolio with absorption data that actually, I think, still looks pretty good for the Sunbelt and even nationally, how do you see the fourth quarter shaping up in terms of lease spreads relative to typical seasonality?

Yes. So the first thing I'll tell you is, if you think about our portfolio, and it's important before we talk about the fourth quarter to go back and look at the third quarter, if you look at the deceleration that we saw from 2Q '25 to 3Q '25 on a blended rate, it was only 10 basis points. I think that's the lowest deceleration in the space. And what that tells you is that we're starting to get some footing here in the Sunbelt markets. When we go into the fourth quarter, what we're anticipating and what I said in the prepared remarks is that we think our blend will be down about 1%. If you sort of think about that on a typical seasonality basis, this sort of is what you see in the fourth quarter. And this year, now we did sort of hit the slower leasing period 1 month earlier than we typically would, but the fourth quarter is shaping up like a traditional fourth quarter.

Our next question comes from Austin Wurschmidt from KeyBanc Capital Markets.

Kind of going back and piggybacking on the last question, I mean, so with this sort of reacceleration now in lease rate growth, -- would you expect that to just carry into the early part of next year and into the spring leasing season based on what's going on in the fourth quarter versus what you expect -- what you saw in the third quarter? And then just also -- so is it occupancy that's the driver of that 25 basis point decrease to 2025 same-store revenue growth guidance?

So Austin, thanks again for the '26 guidance question. We're not going to answer '26 guidance questions quite yet. But what I will tell you is -- the main driver that we saw in the reduction, which is a very minor reduction in top line revenue growth, was an occupancy driven. It was rate driven, and that is because we were making sure that we could get the occupancy to the level that we felt comfortable for going into the fourth quarter. And in order to do that, we did have to drop rental rates slightly.

I think the key takeaway that we're going to give you for 2026 is based on Alex's answer to the question, maybe 2 questions ago. And that is there should be less uncertainty in 2026. And the uncertainty that we have today, we know that tax reform is off the table, we know inflation is coming down. We know that Federal Reserve's lowering rates. And we know that there's a midterm election coming, which means that the administration is going to do whatever they can to make sure the economy is good in November of 2026. The big tariff debates will likely be less of a debate during that period for all the obvious political reasons. And we have a 25% reduction in new deliveries in Camden's markets. And so -- with all that said, generally speaking, when you have a midterm election in this environment, you're going to have a -- unless something really comes off the rails, it should be a reasonable environment to improve demand and to create more optimistic scenario in 2026. Now obviously, there could be lots of slips that change that, but we'll see.

Our next question comes from Steve Sakwa from Evercore ISI.

Ric, I guess going back to your question about the disconnect between public and private, I guess, how big are you willing to lean into that on the share buyback and do dispositions. There hasn't been many very large buybacks in the REIT space. And typically, they haven't been overly success, but I'm just curious, how much would you lean into this size-wise?

Well, the -- if you go back in history, in the -- leading up to the bubble and the tech rec in 2000, we bought 16% of the company back at that point. We could sell properties on Main Street for $0.75 or for $1, and we could buy our stock back for $0.75 on the dollar. Right now, with the current stock price today, it's a 30% discount to consensus NAV. It's a mid-6, mid-6% cap rate. And the market today is a 4.5% to a 5% cap rate. So with simple math, that's a 150 to 200 basis point positive spread to sell an asset and buy stock. And we've always said that we would allocate capital in this way if we had a significant discount, I think 30 is pretty significant. And it was persistent, meaning that we had enough time to be able to sell assets to fund the buybacks. We will not increase leverage to do that. And it's very typical capital allocation model. And over the last maybe 7 or 8 years, we've had opportunities to buy stock back, but it's never lasted long enough and with the constraints that we have on how much we can buy in a day and that kind of thing. The opportunity is not lasted long enough to actually make a material difference. Today, we'll see how long it lasts, and we're going to lean in pretty well.

Our next question comes from Michael Goldsmith from UBS.

Can you talk a little bit about the impact of direct supply? And if there's any way to quantify how that will improve like, for example, are you able to provide how much of your portfolio is directly competing with supply now? How does that compare to last year? And if there's an anticipated figure for next year?

So you -- I didn't hear the first part of your question. You said direct supply?

How much of your portfolio is directly competing with some new supply?

Yes. So every part of our portfolio is directly competing with delivered supply. So we're in the -- between last year and this year going into 2026 -- we're going to see the highest number -- the largest number of supply across Camden's portfolio in the last 45 years. So it's pervasive. Obviously, some places are better than others, but all -- everyone is dealing with some level of supply. The highest 2 markets in our world, for supply and the impact thereof is or Austin and Nashville. And to various degrees, all of our markets are dealing with some level of oversupply. California would probably be at the very far end of the range, but still there's supply issues and supply that we're having to deal with there. So to one degree or another, every market has been impacted. The good news is as Ric mentioned, we're likely getting going to see a 25% decline in deliveries next year. If we continue to see good demand that has continued across our platforms, incrementally, it should be better in terms of the absorption making a difference for our ability to push rents and maintain occupancies.

When we look at specific assets that are younger, that are directly in submarkets where there is a tremendous amount of new supply we are seeing significant improvements on that. Last year when we first started talking about this number, we said that about 20% of all of our assets were directly competing with new supply, thanks to the record level of absorption that we've seen in '25. The good news is that number is down to 9% of our portfolio today. And that's just going to continue to improve as we go through '26 and into '27.

I think the other thing you have to think about in -- and I'll just use an example like Austin, which is like the poster child or poster city for excess supply. So in Austin, even the suburban properties that are older and kind of B properties in good locations, are all feeling the supply pressure. And the reason it's not that they're so competitive with the new supply. It's just that consumers in Austin read the paper every day, saying apartment rents are coming down, and they expect a deal. And so you have a consumer sentiment issue in some markets like Austin, Nashville, and a couple of others. And where the consumers, even though there's not as much competition in the suburban B properties, the consumer has this mindset that they have to get a discount and then that just kind of feeds into the market and you end up with a market that -- where you can't actually raise rents because of that sentiment. Once that -- you have that pivot point, it changes dramatically.

And I would just add, Ric, this is Laurie. That if you look at Austin, which does have quite a bit of supply, a great example of a story where the tides eventually will turn is Rainy Street, and it can turn quickly. And so we're going from the lowest occupied community in our portfolio mid-summer to now the highest occupied community. So it's starting to turn. And when it does, I think it will turn quickly.

And our next question comes from Jana Galan from Bank of America.

Congrats on your move. I was hoping, can you provide some commentary on what your team is seeing in greater DC, given it's been such a strong performer this year and into the third quarter, but some of the years noted less activity. If you could just comment on that.

Yes. So D.C. Metro remains our top market. And if you sort of look at how it progressed throughout the year, in the first half of this year, it was just an extreme outlier in terms of new leases and renewals. And we think most of that was driven by the return to office movement, in particular on the government side. As we're progressing throughout the year, obviously, we think most of those folks have returned to office and have now leased their apartments and so now it's gone from being an extreme positive outlier to just being the best market we have, which we'll still definitely take you look at it, it is our -- in the third quarter, it's our top sequential revenue market. It's our top quarter-over-quarter revenue growth market. And -- and it just remains incredibly strong. When it comes to DOGE, because obviously, that's what we talk about so much. I will tell you, we are still not seeing any evidence of our consumer being directly impacted by DOGE. What we're seeing more is a shift in the market of the way our competitors are reacting and concerns about potential impact from DOGE. But we're just not seeing it whatsoever. It remains an incredibly strong market. And as you know, when we're talking about D.C. Metro, we're really talking about the DMD and the trend continues where Virginia is -- or Northern Virginia, which is where we have most of our real estate is incredibly strong followed by the district and then followed by Maryland.

And our next question comes from Rich Anderson from Cantor Fitzgerald.

So I understand the uncertainty or lack or maybe lower uncertainty next year. I'm in the camp that I don't know, I think there will always be a lot of uncertainty in the next few years, but we'll see. But in terms of supply and its impact on 2026, not a guidance question, I just want to know your history is with -- when guidance -- excuse me, when supply delivers what's the typical tail of disruption from that asset or those collections of assets that come to market essentially vacant. Is it an 18-plus month sort of issue and maybe the real growth story for Camden doesn't materialize until 2027? Or is it quicker than that? And maybe you can say something specific about your portfolio that makes it quicker or longer based on your own circumstances. So I just want to get some color on how supply might impact things next year, even though the deliveries are coming down.

They are coming down. I think in our portfolio, if you kind of look at the mix between Whitten and RealPage's numbers, they've got supply in Camden's markets coming down from 190,000 in 2025, down to about 150,000 in 2026. If you roll that forward to 2027 on their numbers, you're going to be somewhere around 110,000 completions across Camden's platform. So the trick and the tail that you're talking about, it's always a little tricky because when something delivers, usually the data providers are talking about building completed buildings, if they have the granularity to say that they've received their certificate of occupancy that becomes supply. The reality is, is that people don't go to that level of detail on when an apartment community delivers actual leasable units. So that -- but if you think about the time it takes from the beginning of first apartments delivered, and I'm talking suburban, walk-up type product, from that point forward on a typical 300 apartment community, average lease-up is going to be somewhere around 25 units per month. So call it, 10 to 12 months if things are kind of at a normal pace, you would expect to see all of those units absorbed over that 10- to 12-month period from the time that you first start turning your apartments. So there's just a lot of gray areas around when does that happen? When does construction end, does that really matter? It doesn't really -- what really matters is leasable apartments that come online for the developer to be able to put to sign a lease on. So that's kind of what we're looking at. So if you think about the average coming down from 190,000 apartments to 110,000 over a 2-year period, it's pretty significant. And if the demand side of the equation stays kind of like it is today, doesn't have to get a whole lot better, just kind of in this zone, then you're going to see a significant impact -- positive impact in 2026. And there's no chance that, that doesn't get better in 2027 because that cake is already baked on deliveries for 2027.

I think we need to talk more about demand than supply because we know what supply is, right? And so when you think about demand, 2025 was the best year in 20-plus years of apartment absorption in spite of the incredibly high supply that came into the market. What's driving that is the same thing that's been driving apartment demand for a long time, migration, demographics. And today, we have even a more interesting one, which is the retention. So retaining more people than we ever have, which means that we don't need as many people coming in the -- to lease new apartments when the people are moving out. And so you have this really interesting situation where people are staying longer everywhere. You have less mobility in America today for lots of different reasons, and it's really helping the apartment markets. And then if you pivot to, to home purchases and think about that, we have 9% of our people moving out to buy homes. That is not going to change anytime soon. If you look at the math on homes, if you look at medium income for a home or medium home price plus interest at current cost, it's $3,200 a month compared to in 2019 when it was $1,750 a month. And what's driving that clearly are 3 major things. One is home price appreciation is up over 50% since in most markets, some doubled in -- since 2019. You had increases in interest rates, obviously, and increases in taxes and insurance. if you had a 0 to 30-year mortgage rate, the monthly cost for a medium price home today would be about $1,900 a month compared to $1,750 in 2019. And the driver of that is not interest rates, the driver is home price cost and insurance and taxes. So it's going to be a long time before you have people moving out to buy houses. The other part of the equation, I think the medium age of first-time homebuyer today is 40 years old before COVID, it was like 34 or 35. So there's been a massive shift and the ability of Americans the demographics continue to be in our direction plus migration. And so I think the demand side is going to be much higher than people believe because of that -- those equations. And so I think we need to focus on demand as much as supply for sure.

Our next question comes from Alexander Goldfarb from Piper Sandler.

Ric, we'll stick with the 40 years of experience that you guys have. I was just looking at a stock chart of Camden and not to -- I'm not picking on Camden, but REITs have had a tough go in the public world. And maybe the private world isn't any better, but it just seems that in the private world, the assets are rewarded more than they are in the public world. I'm just curious, in the 40 years, you and Keith took Camden public, what do you think is missing there? And do you think that the current setup where, as you just described, less home affordability, more propensity to rent, do you think it's finally the time where we will see the REITs actually deliver what they're supposed to?

If you do take a look at the private values and public values, over a long period of time, they're pretty close. We have for 40 years or 33 years as a public company, there's times when the markets get dislocated like they are now. And generally speaking, it hasn't lasted very long because once the market decides that, that the assets are undervalued then smart investors come in and buy the stock, so they drive the prices back closer to NAV. And so for me, being in the public market, I think it's great. We have access to capital that none of our private competitors have. We don't have the same sort of business model, which is I got to sell my properties in order to create value for my shareholders or from my owners. So you're constantly buying and selling and buying and selling or building the selling. And that's a great business model for some, but -- but for us, we buy and hold and create long-term cash flow and benefits for our shareholders. And I think it's a great space.

Yes. So Alex, I kind of think of it like a playing field. And the playing field over our 30-plus years as a public company, sometimes it's been tilted in our favor. Sometimes it's been tilted in the favor of the private guys -- and it can happen pretty quickly. If you think about kind of coming out of the COVID world or in the bottom of that time frame, the playing field got tilted pretty quickly towards the private guys because debt was free and plentiful. And that's never a good -- that's more interesting to private guys than it is to public companies. So for the last couple of years, in my mind, has sort of been tilted our way a little bit on the -- certainly on the debt side, certainly on the balance sheet side of things, the ability to finance projects that private guys probably couldn't have gotten done in the last 18 months. I think there's still some of that out there, and I think that we're going to continue to use that to our advantage.

Let me just add one last thing because oftentimes, people would ask me, especially when we get to a discounting NAV like we are right now, they go, why are you public? And why wouldn't you just go private? Just sell the company. They're like, okay, I got that. So there is a disconnect, and it's significant, right? It's like $3 billion, okay? So if somebody buys the company, then they're going to make an expected rate of return on that asset that they buy. And ultimately, they believe that the prices are going to continue to rise and therefore, we're going to make a reasonable rate of return. And so at the end of the day, if the reason that we are at a significant discount to NAV is because people don't trust management. We are a value trap. We really are a poor operator, and we just are awful and you can't really bridge that gap. And yes, so the company move on because the market is voting you deserve to be a public company and valued at least what your assets could trade for in the private market. On the other hand, if you have a dislocation in the market like we have today, right? So we have slow growth or flat growth and you have uncertainty environment, you have an oversupply condition, and there's a lot of concern about when that supply condition is going to change. That will change. And what will happen, the same thing that's happened over the last 30-plus years is the market will recognize that the stocks are cheap, the stock will go up to or above its NAV, and that you'll be back. And so to me, the issue is what is causing the disconnect and then what -- how do you get out of that disconnect and ultimately, the market will figure that out, and it may take longer or shorter. It just depends on what's out there and what's the du jure of investors today, but we feel pretty comfortable where we are.

Our next question comes from Wes Golladay from Baird.

I just wanted to ask you about selling the assets that you're doing. Are you able to shield the taxable gains there? And then one separate tax question. I believe you mentioned there was a big accrual the big rebate you got from a prior year. How much of a headwind will that be for next year?

Yes. So the first thing I'll tell you is if you look at the sales that we're doing, we are doing 1031 exchanges on those with the acquisitions. We're doing reverses. So we bought the real estate first. And then we're selling the real estate. So that's what we're going to do now. To piggyback to one of Ric's earlier comments about buying back shares, we do have the ability to sell or to absorb about $400 million of gains where we don't have to do 1031 exchanges if we want to use those proceeds to repurchase shares. When you think about property tax refunds, here's the best way to think about it. If you look at 2024, we had about $6.5 million of property tax refunds. If you look at 2025 that number dropped down to about $5.5 million. But we are consistently good in getting refunds. This is something we do. As we've talked about in the past, we contest almost every one of our valuations. If we go through a normal contesting process and we don't win and we don't feel comfortable with where we're settling, we will file lawsuits. And a lot of what you're seeing are -- is the settlement of those lawsuits. We have no reason to anticipate that in '26 and '27 and '28 and going on forward that we won't continue to have the same level of success that we're seeing. And so I'm not anticipating any significant sort of headwinds associated with the refunds that we got in '25. In particular, as I said, because the refunds we got in '25 were actually less than the refunds we got in '24, and we're still showing a negative growth on the property tax side.

Our next question comes from Rich Hightower from Barclays.

Covered a lot of ground this morning, but I believe at Camden sort of has an operational philosophy not to use concessions. But obviously, the market around you, we'll use concessions and flex up or down based on the individual operators. So as you think about -- or as we think about sort of market rents next year comping against sort of the net effective market rents in '25, what's the impact of concessions as far as you can tell. So it's a bit of a sneaky question on '26, but just help us understand.

Well, a little bit of a sneaky question. But I think what would be helpful for you is for Laurie to sort of give a rundown of what we're seeing in the market, not for Camden, but in the market on the concession side.

So in our highest supply markets, we continue to see elevated concessions as operators work through the success inventory. But on average, these markets are offering right around 5 weeks of concessions, approximately 10%. So those key markets include Austin, Nashville, Denver and Phoenix. And so where supply pressures remain most pronounced, that's what we're seeing. But despite these headwinds, we've been able to kind of navigate these markets pretty well, and we're outperforming the market average, each with kind of limited pricing power. But again, those are embedded into our net prices. So beginning in July, we actually initiated incremental price reductions, so that we could prioritize our occupancy, and that strategy has really paid off. So while conditions remain challenging, we are taking a disciplined approach to really position ourselves to remain strong on the occupancy side as we head into next year.

So if you look at the concessionary impact in the market then. So if you look at the highest supply markets, we just talked about Austin, Nashville, et cetera. So they're having 10% concessions or sort of think about effectively 6 weeks, that's what needs to burn off in 2026. Now the good news is, is that those concessions are not being prorated mostly and so they're upfront, which means that the consumer is used to paying the appropriate rental rates. And so when they go to renewals, it shouldn't be a big shock to them. But that is what needs to roll off in those markets.

Our next question comes from John Kim from BMO Capital Markets.

Despite the favorable supply outlook with deliveries going back to pre-COVID levels, you haven't started the development projects since the first quarter. And I'm wondering why projects had not leveled out for you at this time. Or do you plan to accelerate development starts as indicated on the last call?

Yes. I mean what I'll tell you is today, you can buy real estate at a discount to replacement cost. And if you can buy real estate at a discount to replacement cost, then that is a better use of capital. In addition, obviously, as we just talked about, we are using some of our capital to repurchase shares. Now I will tell you, this is going to change. We are already seeing construction costs starting to come down. Depending upon where you're building those costs can be down 5% to 10%, which will certainly help the math. The other thing I would tell you is we are very good developers. And when we find land sites and we are actively looking at additional land sites, we've got land sites under contract as well. when we pulled in a trigger, it's because we believe that we can create value for our shareholders. And we do believe with construction costs coming down, looking at, what, '20 -- call it, '26, '27, '28 could look like in terms of revenue growth. That can make a lot of math work -- and so expect to see us get a little bit more active on the development side. But in 2025, as I said, when you combine a discount to replacement cost, that just seemed like a better use of capital.

Our next question comes from Linda Tsai from Jefferies.

Nice work with your 3Q blends being down only 10 bps quarter-over-quarter. With your 4Q blends expected to be down 1%. Is that all of the new leasing spread side, as it seems like the 4Q comparisons are a bit easier than 3Q. So just wondering if there are certain markets where you're seeing more softness or that somewhat reflects conservatism.

Yes. So the first thing I'll tell you is, I made the comment that as we were going through the end of the third quarter, we did make a push on the occupancy side. And when we made that push on the occupancy side, that was at the expense of some new lease growth. And so when you sign something in the third quarter, you're effectively seen in the fourth quarter. So yes, we are expecting new leases in the fourth quarter to be the primary driver of what we're seeing in terms of having a blended fourth quarter of just negative 1% approximately. So that's where we're seeing it. Markets that we're seeing additional softness, there's no one market that jumps out. I will tell you, that we are starting to see some markets that are doing the inverse that are actually doing better than we had expected. And call out a couple of those markets because I think we focus too much on the ones that are a little softer, let's focus on some of the good ones. And so we absolutely saw second and third quarter improvements in Nashville, in Dallas and Charlotte and in Atlanta. And then Laurie can give some quick entail of what we're seeing on the ground there.

Yes, absolutely. So while we experienced the elevated supply in these markets, we're starting to see really some encouraging signs, signs as demand rises. So on -- or actually, I would say, as the demand really remains strong. But on total rent gain for renewals and new leases, blended rents have actually turned positive in Dallas, Charlotte and Nashville. And we're also seeing improvements in Atlanta. So some specifics just to give you a little color. So in Dallas, for instance, blended rent gains improved quarter-over-quarter, moving from a negative point -- or negative 1.2% to a positive 0.6%. We also saw our average days vacant improved by 7 days. So moving from 38 days in Q2 to 31 days in Q3. If you look at Charlotte, again, blended gains moved from negative 0.2% and to a positive 0.5%. So an improvement there. We also saw 61 more move-ins in Q3 than we saw in Q2 just in Charlotte. Nashville, let's talk about that in another high supply market, but we saw blended gains improve from a negative 1 point -- yes, negative 1.3% to a positive 0.4% in the quarter. And we also saw our renewals and transfers peak in August. So again, that was the highest they've seen in Nashville for the whole year and then I'll end with Atlanta. Blended gains increased from -- it was already positive, but it was positive 0.3% and we improved 2.7% quarter-over-quarter and recorded 96 more move-ins during the third quarter than the second quarter. So just some positive improvement particularly with the blended shift in rents being strong occupancy trends or signaling just progress we're making in managing these challenges in the these concessionary supply-driven markets and positioning ourselves for really a sustained recovery if all things remain the same.

Yes. I just want to piggyback really quick because Nashville is an interesting market. Granted, we only have 2 assets in Nashville. But obviously, it's a market that we talk about supply quite a bit. And Laurie had talked really great about how fast Rainy Street in Austin turned. In Nashville, when you look at the actual lease rates on new leases, that went up $61 from the second quarter to the third quarter. $61 is pretty dramatic, and that tells you how fast things can turn.

Our next question comes from Michael Lewis from Truist.

Great. So I want to go back to the conversation about demand that came up in a few questions. And I want to push back on anything you said, I agree with all of it, but I think you left out at some point. And so -- let's pretend I'm not an optimistic person, and I look at October, the most layoffs in any month since 2003, 22 years ago, manufacturing activity down 8 straight months, inflation is now 3% and Fed's going to be cutting. The ADP drives number came out. It's really just healthcare and education, not really adding jobs anywhere else. So why shouldn't I be concerned about demand as we kind of move forward the next few months? And I know you're not giving '26 guidance, but would it be completely shocking if same-store revenue was not materially better than it was this year? Like would that be stunning?

I think the -- look, I put, I think, a cautionary side of the equation and said the glass is half full, but it's still half, right? And it could be half empty if you don't believe that the economy will hold in there for the midterms. So there are things to be optimistic about. There are also things to be worried about. And you just mentioned a number of them, right? I think at least for us, the good news is we don't need as much demand because we have less supply coming in, and we have a retention rates that are at historic highs, right? So we have fewer people moving out. So we don't need as many people to move in to offset those folks. And so I think these are definitely your points are well taken and are -- and we understand them. But I don't think any of us know what the economy will look like. I think we need fewer jobs than normal to have a reasonable apartment market in 2026 because of the other things we talked about. But it's still an issue out there, obviously.

And just one follow-up, Michael, on the idea of the stats that you gave about layoffs, et cetera. We have a very good barometer in our portfolio given our platform that we know immediately when people start losing their jobs because they move out. I mean it's like almost automatic you lose your job, there's stress, maybe you stay a month, but it's a really quick read-through for us. And we're just not seeing people -- we're not seeing that as an increase as a reason for move out. I lost my job. Obviously, there's always people in the economy who are losing their jobs, but we've not seen what you're talking about, the read-through that would suggest that our residents in Camden's markets are losing their jobs. And that's been -- that's certainly been a hallmark of the past. Our demographic is different. Our markets given the growth profiles of our markets from in migration and the concentration of the jobs that are being created being the preponderance in Camden's markets, I think we've been pretty resilient in the past, and my guess is we will be in the future.

Our next question comes from Omotayo Okusanya from Deutsche Bank.

Just curious, portfolio-wise if you seen any really big differences in performance in regards to your Class A versus your Class B or your urban versus suburban assets?

Yes. I'll tell you, and I think it's entirely supply driven. We are seeing our Class A assets to a little bit better than our Class B -- and then I will tell you that in the third quarter, our urban assets actually did a lot better than our suburban assets. But once again, that makes sense to me because it's just following where the supply is. If you think about -- the first wave of supply was very urban focused. And then the second wave was suburban-focused. And so now you're seeing the supply disproportionately in the suburban markets.

But I believe you said that your Class B is doing -- your Class A is doing better than your B, but a lot of the supply is, A, isn't it?

Well, a lot of the supply is A. But if you think about where most of our B assets are, most of our B assets are in the suburbs where the supply is.

Our next question comes from Julien Blouin from Goldman Sachs.

Alex, on the second quarter earnings call, you mentioned fourth quarter blends would look a lot like the second quarter, but it sounds like guidance now for the fourth quarter is about 150 bps below the second quarter. I guess when you sort of think of all the things you mentioned earlier, slower job growth, supply economic uncertainties. What has changed the most in the last 90 days to drive that? Or is it just the posture of landlords sort of moving more aggressively than anticipated to prioritizing occupancy over rate?

I think you nailed it. That's exactly what it is. And it's really interesting to see because D.C.is a great example of that. As I talked about earlier, D.C. is incredibly strong. The reason why we saw a drop off in the third quarter and an anticipated -- continued drop off in the fourth quarter is just all of the talk about those resulted in some reactionary actions from the competitors out there. And I think when you sort of look at the uncertainty that we've talked about quite a bit on this call already, the uncertainty that confines 2025, I think a lot of competitors when they were looking at where they were and realizing that they're about to hit their slow season, which is the fourth quarter and the first quarter, really tried to go after occupancy. And the way they did that is they drop rates. And I will tell you that even though demand is very strong when you have this amount of supply and you've got competitors that are dropping rates all around you, you do have to sort of move in the same direction, and that's exactly what we saw.

And our next question comes from Alex Kim from

Congrats on the move to the new office here. You're down the street from one of my pocket picks, Kenny and

Yes. I'll tell you what it is. It's really 2 things. It's number one, we're really big into SEO, search engine optimization. And so we are buying -- we're buying the placements when people search for apartments. And with the level of supply that is out there and folks are trying to obviously chase the same traffic that we're trying to chase. What we found is that, that the cost of SEO has gone up pretty dramatically. And obviously, if you've got a lot of folks that are buying and trying to make sure that they are the first name that appears, you're going to expect to see some additional costs on that front. So we're absolutely seeing that. And then the second thing, which is in line with your question is if you sort of look at, although demand is record high, supply is also pretty high. And so we're all fighting for the same prospects. And so because of that, we absolutely are trying to make sure that we can generate as much traffic as we possibly can. So that's what you're seeing now. I would expect that once we get this supply absorbed that the SEO costs will come down pretty dramatically.

Ladies and gentlemen, our final question today is a follow-up question from Julien Blouin from Goldman Sachs.

I just wanted to go back to something you mentioned last quarter's earnings call, which was that Witten Advisors was telling you that 2026, you could see over 4% market rent growth across your markets. I'm just curious, are they still telling you there's a path to that kind of market rent growth in 2016 despite the fact that the second half is maybe playing out a little bit weaker than we had hoped.

The numbers have come down a bit, but they still have 3% or 3.5% in '26 and over 4% in '27, so they have moderated their numbers slightly, but it's not dramatic. And it's likely to be more second half is what they've showed in their model.

And ladies and gentlemen, with that, we'll be ending today's question-and-answer session. I'd like to turn the floor back over to Ric Campo for any closing remarks.

We appreciate you being on the call today, and we will see some of you in Dallas in December for NAREIT. So thanks a lot. We'll see you then.