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Good morning, and welcome to Camden Property Trust's Fourth 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 fourth 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 one, and 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.

Good morning. The theme for today's on-hold music, uncertainty, could not be more fitting for the state of the multifamily REIT sector. It's no exaggeration to say that the words uncertain or uncertainty have echoed through the conference call transcripts during 2025. And why wouldn't they? The operating environment last year was uncertain. Every sign suggests that the first half of 2026 will be marked by the same cautious tone as last year. The song that you've heard this morning reference uncertain times. However, the song verse that best captures the current uncertain vibe for us is from The Doors classic Roadhouse Blues. Well, I woke up this morning and I got myself a beer. The future is uncertain and the end is always near. The end of uncertainty that is, here's what we are certain about. We are certain that we finished 2025 strong, exceeding our original guidance for core FFO by $0.13 a share. We are certain that people need a great place to live, and we provide that. We are certain that new supply has peaked and is falling like a knife in our markets. We are certain that 2025 had one of the highest levels of apartment absorption in the last 20 years. We are certain that our Sunbelt markets will continue to grow faster than the rest of the country, prompting us to market our California properties for sale. The sale allows us to expand our Sunbelt footprint, simplify our operating platform and buy our shares at a significant discount to net asset value. We are certain that our residents are resilient and the financial prospects are strong with rent payments at only 19% of their income. We are certain that apartments are significantly more affordable than owning a home and will be for the foreseeable future. We are certain that new lease rates and net operating income will grow in the future. We are certain that Camden has one of the strongest balance sheets in REIT land. We are certain that we have one of the best teams in the business, providing living excellence to our residents. And finally, I'm certain that Keith Oden is up next.

Thanks, Ric. As we reported last night, Camden's same-property revenue growth for 2025 came in at 76 basis points, which represents a 1 basis point beat to the midpoint of our most recent guidance. And our operations teams are celebrating like they've just won the Super Bowl. In putting together our projections for 2026, we reviewed supply forecasts and job growth estimates from several third-party data providers, and we budgeted from the individual property level up, taking into account each community's historical performance, current submarket dynamics and other relevant factors. On the supply front, it is clear that deliveries in almost all of our markets peaked during 2024 and continued to decline in 2025, setting up 2026 and 2027 to be below average years for new supply. Completions as a percentage of inventory peaked at nearly 4% for our portfolio in 2024 and are expected to be less than 2% this year and closer to 1.5% in 2027. Regarding 2026 job growth, I'll echo Ric's comments that uncertainty is still a key theme in the markets this year, but we are certain also that whatever jobs are created this year will predominantly be in Camden Sunbelt markets, which continue to attract corporate relocations and growth as a result of their affordable business-friendly environments. In 2026, we expect operating conditions will improve over the course of the year with modest acceleration in the second half of 2026. The midpoint of our 2026 same-property revenue guidance range is 75 basis points, basically the same that we achieved last year, with half of our markets falling between 1% and 2% revenue growth and most others flat to up 1%. The two outliers with slight revenue declines will likely be Austin due to continued supply pressure and Denver due to recent regulatory changes affecting income from utility rebilling. As many of you know, we have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of each year and providing outlooks of improving, stable or moderating for their expected performance during 2026. We currently grade our overall portfolio as a B with a stable but improving outlook. Our first three markets are rated either A- or B+ and should achieve revenue growth in the 1% to 2% range this year. Washington, D.C. Metro ranks as an A- with a moderating outlook. Despite all of the conversations around D.C., DOGE and politics last year, D.C. Metro clearly outperformed our expectations with 3.5% revenue growth in 2025 and heads into 2026 well positioned with 96% occupancy. Houston is next with a B+ rating and a stable outlook, the same grade as last year. Supply has been quite limited in Houston for the past couple of years, allowing it to place # 4 for revenue growth in 2025, and we expect Houston to exceed our average portfolio growth again in 2026. Our Southern California markets earn a B+ grade with a moderating outlook for 2026. Like D.C. Metro, Southern California outperformed our original expectations, posting mid-3% revenue growth in 2025, in large part due to declining levels of bad debt. Supply has not really been an issue in most of our California markets, but we do expect less of a tailwind from reducing bad debt as we move through 2026. Denver was our #3 revenue growth market in 2025 and receives a grade of B+ with a moderating outlook. Market conditions in Denver are fairly stable, though slightly more challenging in a few of its urban submarkets. But as I mentioned earlier, revenue growth is expected to decline year-over-year due to lower levels of utility rebilling and other income anticipated in 2026. Our next four markets earned a B letter grade with improving outlooks. Nashville, Atlanta, Dallas and Southeast Florida are all expected to improve over the course of 2026 as existing supply is absorbed. We have begun to see the proverbial green shoots in some of these markets and have budgeted between 1% and 2% revenue growth for each market this year. Orlando, Raleigh and Charlotte received B ratings this year with stable outlooks and budgeted revenue growth of 0% to 1% compared to relatively flat growth last year. Demand has been solid in all of these markets, but it will take a few more quarters to see any meaningful improvements given the higher-than-average supply delivered, particularly in the two North Carolina markets. We grade Tampa B with a moderating outlook and Phoenix of B- with a stable outlook and expect relatively flat revenue growth in both markets this year. Tampa benefited from above-average occupancy in 2024 and much of 2025, but has since returned to more normalized levels around 95%, tending to slow the revenue growth there. Phoenix still faces elevated levels of supply, mainly on the Western side. So we expect pricing power to be limited for most of 2026. And finally, Austin earns a C+ this year with an improving outlook after being stuck for a C- for the past 2 years. New supply is finally slowing and there is light on the horizon. But given the overwhelming amount of new apartment homes delivered in 2024 and 2025, it will take a little while longer for market-wide occupancy to improve and concessions to burn off. Stay tuned as we're fully expecting Austin to receive a B or better in 2027. And now a few details of our -- on our fourth quarter '25 operating results. Rental rates for the fourth quarter had new leases down 5.3% and renewals up 2.8% for a blended rate of negative 1.6%, which is fairly in line with what we saw in the fourth quarter of '24 and what we expect for the -- expected for the fourth quarter of '25. Renewal offers for first quarter expirations were sent out with an average increase of 3% to 3.5%. And as expected, move-outs to purchase homes remain extremely low at 9.6% for the fourth quarter and 9.8% for the full year of 2025. I'll now turn the call over to Alex Jessett, Camden's President and Chief Financial Officer.

Thanks, Keith, and good morning. I'll begin today with an update on our recent real estate and financial activities, then move on to our fourth quarter results and our guidance for 2026. During the fourth quarter, we disposed of three communities located in Houston and Phoenix for a total of $201 million, acquired one community in Orlando for $85 million and stabilized Camden Long Meadow Farms, one of our two build-to-rent communities located in suburban Houston. Our transaction activity for full year 2025 included the sale of seven older, higher CapEx communities with an average age of 22 years for $375 million and the acquisition of 4 newer assets with an average age of 5 years for $423 million. We recently began marketing for sale our 11 California operating communities. Obviously, the market will dictate final pricing, but preliminary indications of value and market chatter range from $1.5 billion to $2 billion. We are assuming this transaction closes midyear. Additionally, we are assuming that approximately 60% of the sales proceeds will be reinvested through 1031 exchanges into our existing high-demand, high-growth Sunbelt markets. And the remainder of the proceeds, modeled at $650 million will be used for share repurchases. We have already completed nearly $400 million of the $650 million of share repurchases associated with the planned asset sales, and we expect to complete the remaining buybacks in early 2026. In anticipation of this additional buyback activity, our Board recently approved a new $600 million share repurchase authorization. The just over $1 billion of 2026 acquisitions from the California sales proceeds are projected to occur during the summer months. Based upon this timing of asset sales, asset purchases and share repurchases, we are assuming no accretion or dilution in 2026 from this strategic transaction. Variability in transaction timing is considered in our core FFO guidance ranges. Turning to financial results. Last night, we reported core funds from operations for the fourth quarter of $193.1 million or $1.73 per share, $0.03 ahead of the midpoint of our prior quarterly guidance, driven entirely by higher fee and asset management income from our third-party construction business as we favorably closed out several jobs, which came in well under budget. Property revenues, expenses and NOI were exactly in line with expectations. Turning to guidance. You can refer to Page 24 of our fourth quarter supplemental package for details on the key assumptions driving our 2026 financial outlook. We expect our 2026 core FFO per share to be in the range of $6.60 to $6.90 with a midpoint of $6.75, representing a $0.13 per share decrease from our 2025 results. This decrease is anticipated to result primarily from an approximate $0.04 per share decrease in fee and asset management income as the outperformance we experienced in this category, particularly in the fourth quarter of 2025, is not anticipated in 2026, an approximate $0.045 per share or 3% increase in general overhead and other corporate expenses and an approximate $0.045 per share decrease in same-store net operating income. The growth in operating income from our development, non-same-store and retail communities is entirely offset by the impact of our disposition of older, higher FFO yielding communities in 2025. At the midpoint, we are expecting same-store net operating income of negative 50 basis points with revenue growth of 75 basis points, in line with 2025 and expense growth of 3% versus 1.7% in 2025. Each 1% increase in same-store NOI is approximately $0.09 per share in core FFO. Our same-store guidance includes California for the full year, and California is accretive to our numbers by approximately 25 basis points on revenue and 40 basis points on NOI. The midpoint of our 2026 same-store revenue growth of 75 basis points assumes 55 basis points of growth attributed to rental income and 20 basis points of growth from other income. We expect market rent growth of approximately 2% for our portfolio over the course of the year, with most of that growth occurring in the second half of the year, recognizing a portion of this rental rate growth with our slightly negative earn-in, flat occupancy and a slight improvement in bad debt results in expected growth of approximately 55 basis points for rental income. Other income which is primarily comprised of utility rebilling and fee income represents 10% of our total property revenues and is expected to grow around 2% in 2026. Adding approximately 20 basis points to same-store revenue growth. Page 24 of our supplemental package also details other guidance assumptions, including the plan for up to $335 million in development starts at the end of the year and approximately $200 million of total 2026 development spend. Noncore FFO adjustments for the year are anticipated to be approximately $0.14 per share and are primarily legal expenses and expense transaction pursuit costs. We expect core FFO per share for the first quarter of 2026 to be within the range of $1.64 to $1.68. The midpoint of $1.66 represents a $0.10 per share decrease from the fourth quarter of 2025, which is primarily the result of an approximate $0.05 per share sequential decline in same-store NOI driven by an increase in sequential same-store expenses resulting from the timing of quarterly tax refunds, the reset of our annual property tax accrual on January 1 of each year, and other expense increases, primarily attributable to typical seasonal trends, including the timing of on-site salary increases. An approximate $0.04 per share decrease in fee and asset management income from the large outperformance we recorded in the fourth quarter, an approximate $0.04 per share increase in interest expense from higher debt balances resulting in part from our actual anticipated share repurchases and an approximate $0.02 per share decrease in non-same-store NOI due to our late 2025 and anticipated first quarter 2026 disposition activity. This $0.15 per share cumulative decrease in quarterly sequential core FFO is partially offset by an approximate $0.05 per share increase in core FFO related to our share repurchase activity. And finally, we plan on launching a new $400 million to $500 million bond transaction later this quarter. At this time, we will open the call up to questions.

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

It's Nick Joseph here with Eric. Just on the Southern California portfolio sale. Can you talk about why now is the right time to do that, just given obviously the considerations of California right now? I think over the past few years, you've thought about kind of that portfolio exposure relative to the rest. And so essentially why now?

I would say why now is because we think there's going to be a pivot point in the Sunbelt growth story, we want to be in front of that rather than behind that. That's number one. So we think Sunbelt is going to grow. And when it turns, it's going to turn, it's going to turn pretty strong and pretty hard, I believe. So that's number one. Number two is if you look at the transaction volume across America, the coasts have been the most vibrant transaction environment. When you think about -- if you're a developer, you want to -- you need to sell your development deal you did, you'd rather not sell it in Austin today, but in fact, California has had a really decent revenue growth. So you don't have to -- buyers are not having to kind of pick the point when they think the market is going to turn and go up. It continues to be a pretty vibrant market. So those are the two main reasons. And I guess the last would be when we think about the ability to execute the transaction in a very buoyant buyer market. We also look at the opportunity to redeploy the capital not only in the Sunbelt, but also to buy the shares. And so when we can sell the California portfolio at a cap rate that's substantially less than our implied cap rate in our -- that's implied in our stock. That's what kind of drove the decision of those three things.

And then you're marketing that portfolio, but how are you thinking about either splitting up into smaller portfolios or individual assets? Or is the goal really to sell it all at once?

Well, the good news is that there's lots of buyers and there are lots of different permutations of the portfolio and how it can be either done in a portfolio deal or individually. And what we're going to do is maximize the purchase price, whether it's individually or separate or combinations of thereof.

And the next question comes from Jamie Feldman with Wells Fargo.

Great. Thank you. I guess just going back to some of your guidance and the thoughts on the pickup in the second half. Can you just walk us through your thoughts on new and renewal rents and blends as you go throughout the year? And are there any markets that are more or less concerning as you think about hitting your numbers?

Yes, absolutely. So what we're expecting in the first quarter is slight improvements versus the fourth quarter of '25 in both in terms of new leases and renewals, which obviously will translate to slight improvement on a blended rates for the first quarter of '26. As we go through the second quarter and beyond, we're going to have a lot more visibility because we'll start to get into our peak leasing season. And at that point in time, we'll give you some more color on exactly what we assume for new lease renewals and blends for the rest of the year. But I will tell you, obviously, included in our numbers is an improvement and is an improvement at the back half of the year, which is what I said in the prepared remarks. When I look at individual markets, as Keith walked through when he gave his letter grades, certainly we've got quite a few markets that are improving. And really, we don't have any markets that are declining. So based upon that, there's nothing that really sort of jumps out to us as a big concern. We're absolutely seeing green shoots in some of our markets that have been a little more challenged throughout last year and the year prior. So we feel like we're in good shape. But obviously, we need to get into the peak leasing season and see how the rest of this year unfolds.

And the next question comes from Yana Galan with Bank of America.

A question on the guidance, and thank you for covering some of this in your prepared remarks, but can you clarify how to think about the timing of the 1031 exchange acquisitions? And I think some of the miss relative to the Street, maybe that you're net seller this year, but it does also sound like some of the share buyback activity is front-end loaded. So if you could kind of help me kind of walk through that.

Yes, absolutely. So for the full year, when we look at California, and when I say California, I'm picking up the California sale, the redeployment of about $1.1 billion of capital into the Sunbelt, the redeployment of about $650 million of capital into share repurchases. When we look at all of that combined, effectively, we're saying it has no net impact whatsoever to 2026 guidance. When you think about timing, the anticipation is, is that California closes midyear, the anticipation also is, is that the $1.1 billion of redeployment happens in the summer months, so call that midyear as well. So there may be some slight little delays where we may sell before we buy. But we're trying to get as efficient as we possibly can on that entire process. And then when you look at share repurchases. At our stock price today, we think we're a screaming buy. And so we're certainly going to be doing the share prices earlier as soon as we can get them done. So that's how it lays out for the full year. As it comes to differential between our numbers and the Street, I really don't think a part of it is California because as I said, it's just -- it's a net neutral.

The next question comes from Steve Sakwa with Evercore ISI.

You guys are obviously penciling in some development starts this year. Could you maybe just talk about your expectations for stabilized returns. What are you seeing on costs? And how are you underwriting rents today in those development projects?

Yes, with the cost. Go ahead Alex.

Yes. So on a cost basis, here's the good news, is costs are coming down. We're seeing anywhere between 5% to 8% reduction in costs. But clearly, developments are still hard to pencil. And if you can -- you look at our activity in '25 and it was more muted and you look at the guidance that we have for '26, and we're saying that any starts are going to be in the latter half of the year. We do have a couple of land sites that we own, and we have a couple of other land sites that we control that we clearly could close on and could start this year. But developments continue to be a challenge. When we look at rental rates, obviously, the way we sort of think about things is we try not to look at trended too much. We try to look at what everything looks like on an untrended basis, and we're seeing really sort of in line with, call it, 5%, 5.5% on an untrended basis, which can get you up to sort of a 6% on a trended basis.

And the next question comes from Alexander Goldfarb with Piper Sandler.

Can we just get a bit more color on the $14 million of legal expenses. And I know that you guys switched to core from a NAREIT, but still across the industry, these legal expenses, settlement political advocacy, whatever, in aggregate, is all becoming more a regular part of the business. So if you could just talk; one on the $14 million and two, how you guys are thinking about legal, political advocacy and stuff on a go-forward basis?

Yes. So I'll hit the first part. So the first part is, is that $14 million is the combined number of noncore adjustments, which includes legal and costs associated with development and acquisition activity, et cetera. But legal costs, I mean, it's well known, the legal battles that we're in the middle of and legal cost is becoming a significant number. And the good news is that it will go away at some point, right? This is some very specific actions that you guys know about. Those things will resolve itself, and we'll return to a more normal cadence when it comes to that category. In terms of how we're thinking about activation, Ric?

Sure. So when you think about the -- let me just talk about the political action issues, and this is a pretty simple math. So in the last 5 years, our political action activity was primarily dominated in California, 92% of our spend on political efficacy was in California. And so once we close that portfolio, the political efficacy in the Sunbelt is pretty much 0. .

The next question comes from Michael Goldsmith with UBS.

This is Ami on with Michael. What gives you confidence that you can redeploy the capital received from the asset sales within the 1031 window given some of the increased competition that we've been seeing and pretty low cap rates across the Sunbelt. And then if you can't redeploy it, what's the potential impact to earnings? Is there a tax implication here that you would have to pay? Thanks.

Yes. So we just came back from NMHC. And I will tell you, we talked to quite a few sellers that absolutely have portfolios, have individual assets, et cetera, that they would love for us to buy. Camden is a fantastic buyer, and sellers recognize that, because we don't have financing contingencies, because they know we're real, because we have been doing this for 33 years. So we are the type of buyer that sellers want. So I don't think we're going to have an issue of redeploying this capital and not to mention that we've got one of the best acquisition teams in the business spread across the country, tasked with doing this on a full-time basis. So I'm not very concerned about that. But I will tell you that if you look at the way we're doing our math is that we are -- there are tax consequences. And if we cannot redeploy this capital, then we would likely have to do some type of a special dividend.

The next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Just going back to the acquisition opportunities. Just wondering the types of deals that you're looking at? Are these development deals that are in lease-up, are they mostly stabilized transactions? And then could you just also talk about some of the specific markets you're evaluating and whether there's any new markets included in that?

This is Stanley. So on the acquisition front, we are evaluating -- we're already evaluating a number of opportunities across all of our markets, and those are stabilized opportunities, both on and off market. So look, we're going to continue to leverage all of our relationships to find opportunities to redeploy the proceeds from the California sales. So, like Alex said, our investment team is up to the task. We did $423 million in acquisitions in 2025, and we certainly could have upsized that if we had wanted to. So we're very sanguine about the opportunity in front of us and are already making some headway with that.

And at this point, we're not anticipating any new markets.

And the next question comes from Haendel St. Juste with Mizuho.

Another one on the SoCal portfolio trade. I guess, a bit of a 2-parter. First, it looks like those assets are still in the same-store pool, and that taking them out would be about a 15 basis point drag to annualized same-store revenue forecast. So first of all, is that fair? And then secondly, if you're able to actually achieve closer to the upper end of the range that you outlined, closer to the $2 billion. I'm curious how you think about the incremental capital deployment of that if they would also be earmarked for acquisitions or any tax limitations there?

Yes. So as I mentioned in the prepared remarks, the impact of California coming out of same store will be about 25 basis points on revenue. So that's how you need to think about it.

And I think on the issue of if we -- if the portfolio sells for $2 billion, which we would really enjoy, we would increase the 1031 exchange pie and then probably increase the buyback. .

And the next question comes from Brad Heffern with RBC.

Yes, [ everybody ], demand question. There've obviously been a lot of issues with the job market for college graduates. I'm wondering if you've seen a noticeable impact on your business from that. And is that something that's a potential upside lever if that proves to be just a 2025 phenomenon?

The job prospects for college graduates has been -- in 2025 was kind of the worst in a decade. And if you look at the unemployment rate, for people in their -- in 18 to 24, it's at 10% right now. The other part of the equation, too, is if you look at those same -- that same cohort living at home. It's back to pre-COVID levels, meaning like in 2019 -- we're back to 2019 levels, and it was down big time over the last couple of years. So on the one hand, it is definitely a tough market for those folks coming out of school, which could be a tailwind if in fact, you have some sort of reasonable job growth in the second half of the year. And there's a fair number of folks that are pretty constructive about better job growth in '26 versus '25. When you think about the tailwinds of the Big Beautiful Bill, the tax refunds people are going to get as a result of that and kind of the wind down of tariffs and some of those other things that have been a drag on the uncertainty aspect of the economy in 2025. Because I think what happened then is right after Liberation Day, companies like us and many, many others just didn't know how to react, right? What's going to happen? And how is it going to be? And so you had this sort of hiring freeze that happened. And the question will be whether that freeze [indiscernible] in 2026 when you have a pretty stimulative construct with the economy. So I think it remains to be seen. I look at it as a potential tailwind when those -- when that demand is released because most of those people want to be on their own and run an apartment from Camden.

And the next question comes from John Kim with BMO Capital Markets.

Alex, you gave the impact on same-store revenue from California in '26. I'm wondering if you could provide that same figure for '25, just to get an apples-to-apples where same-store revenue is going for your remaining portfolio? And then going forward, how do you think that impacts same-store expenses? Just to get in California really helps mitigate property taxes? What's the going-forward impact on same-store expense growth?

Yes. So if you look at 2025, the impact on revenue would have been the same 25 basis points. So it's consistent in '25 as it is in '26. If you look at expenses for 2026, it doesn't really have any impact whatsoever to our expense numbers. On a go-forward basis, you are right that Prop 13 does limit taxes, which is helpful to -- which is helpful to the growth rate in California. That being said, one of the things that we've absolutely experienced in our other markets when it comes to property taxes as they go up, but they also come down. If you look at our 2025 results, our property tax total growth was 0. And so California was up, but most of our other markets were, in fact, down. So I don't really think it's going to have that much of an impact on expenses on a go-forward basis.

Let me add to that. That if you take the sort of portfolio cost, and I mentioned our political advocacy group expenses in California, if you take the last 5 years -- or 6 years, say, and these costs, by the way, are not in same-store numbers. So they wouldn't be in your same-store occupancy numbers. But if you average the cost over that period of time, it's 80 basis points off of your net operating income. So said another way, if California is growing at a 4% NOI and the rest of our portfolio is growing at a 4% NOI and we said we have to subtract that 80 basis points off of California, because that's included in our corporate G&A. California really delivered a 3.2% NOI opposed to our -- compared to our rest of our country that didn't have those same kind of operating costs embedded in our G&A. So we were -- we actually -- when you look at the overall Sunbelt portfolio outperformed California by 80 basis points because of that excess cost. But it's not embedded in the NOI growth.

And the next question comes from Rich Hightower with Barclays.

I think since Keith brought up 2027 as it relates to Austin specifically in the prepared comments. I'm going to assume '27 is in play for this call. So maybe as we think about a lot of your core markets going forward, just give us a sense of kind of what that deepness of the recovery curve, that exit velocity, whichever metaphor you want to use, where do the market stack up in your current forecasting as we think about the end of '26 and then into 27?

So now we have to say we're not going to give the guidance for 2027, but we will talk about it, Rich. So our guidance...

It's a rank order, right?

Yes, exactly. So one of the things that's kind of interesting about where we are, and it gives us some additional degree of optimism about what the Sunbelt markets may look like, not only in 20 -- at the end of '26, but into '27 and beyond is the fact that if you look at Camden's rents for properties in our portfolio that have been built in the last 5 years. We are -- as we sit here today, we are back to the rent levels that we were achieving at the end of 2021. So we are about to start year 5 of basically no rental growth. And this is unprecedented. I mean in our 35 years of doing this -- almost 40 years of doing this, we have never had a 3-year period where rents were flat to down. And not even in the GFC, not even in COVID. So we are already 4 years in. We're beginning 2026, and you see our guidance for 2026. If all this works out the way we expect it to, we will be 4.5 years down wind of basically 0 rental growth. And that's just not sustainable long term. And we've seen it coming out of the GFC, coming out of COVID. When you get a turn and a pivot that Ric was talking bout, it's not -- it doesn't go from 1% to 2.5%, because it's -- if you think about our average renter over that same period of time, our average renters wages, their actual household income has gone up an average of 4% a year over that 5-year period. So the income is up 20%. Their rent is basically flat. We've got -- so our residents are incredibly financially healthy. And when it turns, it usually turns pretty hard. So it's hard to -- it's always hard to pick that point, but it just feels like we are way, way down the trail of flat rent growth and do for something different.

The only thing I would add to that is that when you think about markets, we talk -- Keith gave Austin a C plus, right? And the issue there is you've got really good drop growth, but you just had a whole lot of supply. They added more than 15% of the supply in 3 years. And so Austin and Nashville are probably the ones that are a little slower to come out of the system. But all the rest of the markets are pretty much positioned for when that supply gets taken up over the next 12 months that they're going to be -- you're going to have a situation where simple supply and demand economics work. Which means that we'll have more demand and supply and rental go up. The other thing to think about is -- is that if you think about the way concessions work, right? So when people are leasing up, they get a month free, they get 2 months free if it's really tough, maximum is 3 months free, but I don't think there's not very many places where it's 3 months free. And so what developers do then or operators is once they get to the point where they don't need to give that month, they stop giving the month or the 2, right? And so what happens then -- and that's -- if you stop giving a month, that's an 8.3% increase immediately in the rent roll by eliminating one month. So that's where -- that's the Keith's point that it doesn't just all of a sudden, you go from flat to 1%, 2% growth. When you stop the concessions, it's immediately if it's a one month free, it's immediately an 8.3% increase in the rent roll on the next lease. So -- and then it just takes time to roll the leases over and get that revenue growth. So -- and that's going to happen. It's because of simple supply and demand. And if you think about -- when rents went up big time in 2021 and '22, it was a function of not enough supply and huge demand, and you had increases that were unprecedented. If you go to [ St. Pete ] for example, we had a 50% increase in rents in a 3-month period there. And the reason was we were at 98% occupied. We had a tiny number of units that were available and the market price just skyrocketed as a result of that. And that's simple supply and demand economics. And I think we have the recency effect that's going on in the market today, meaning that three years of flat rent growth, it's probably going to be another 5 years or 6 years of flat rent growth. And that just doesn't happen long term. The market will work and supply and demand economics will move in our favor over the next few years.

And the next question comes from Rich Anderson with Cantor Fitzgerald.

And just file this one away for 2027 on hold music Austin Powers theme song, just throwing it out there. So my question is on new lease rate growth. Alex, you mentioned you'll give an update as you get closer to the spring leasing season. But what I see from fourth quarter '24, it was negative 4.7%, fourth quarter '25 is negative 5.3%. I get it. It takes some time for these things to happen even though that was post-peak deliveries as you described it, Keith. So I'm wondering if you were to -- I think it's an important metric to get that above the kind of the 0% threshold eventually for multifamily to work again, particularly in the Sunbelt. Do you think how probable possible or maybe even unlikely is it to see new lease rate growth this year somehow get above that 0% threshold. I know you perhaps want to be careful about setting expectations at this point, but probable, possible, unlikely, what do you think?

Yes. So clearly, that inflection point is very important. You're exactly right. And my belief is, is that as soon as we all hit that inflection point, I think a whole lot of generalists that have been out of our stocks are going to come flooding into our stocks, and we're all going to see massive pops. So it's just a matter of when, definitely not if, because it will occur. I think it's probable. I think it's probable that it could happen this year. Now obviously, we're going to continue to update you guys as we get each quarter's worth of activities as we see what's happening on site. But I certainly think it's probable.

And the next question comes from John Pawlowski with Green Street.

Forgive me if I missed, I joined the call late, but I wanted to talk a little bit about the change in the Denver regulation around utility rebilling and reimbursements and then any other income. So maybe if you could talk about for a minute, the specific legislation. And is there any other concerning draft legislation in other states or markets you're in that might drive downward pressure on your ancillary income, just given how proactive you've been over the years and with bundling services and there's a lot of -- there's a lot of non-rental income for each unit. So I'm concerned about longer-term risk to your other income streams.

Yes. So we didn't talk about it in the prepared remarks, but what you're referring to is House Bill 25-1090 and yes, this is a new legislation that was put in place in Colorado effective January 1 of this year, which no longer enables us to bill for common area utilities. It is a significant item for us. The total value of this is about $1.8 million. If you extrapolate that out, that's close to 19 basis points of same-store NOI. So it certainly is an issue. It's something that we're having to account for. And obviously, we certainly do make sure that we monitor regulations that are out there. The good news is, is that most of our markets, the reason why they grow so fast is because they're pro business pro growth and obviously, putting the legislation like that in place is not pro business or pro growth. So not really worried about it in other places, but we're certainly paying attention to Denver. I don't know, Laurie, do you have anything to add?

I mean I would just add, you asked about some of the specifics of Colorado. And I mean the key impacts are no hidden rental fees. So it's full transparency. We're seeing this across the country. We're all kind of mobilizing as an industry to ensure that there is transparency and that our residents know exactly what they're paying for. But in this particular Bill, the landlords have to show the tenants the full cost of renting before they sign anything, and that includes this common area maintenance and giving some estimates of what their utilities would be. And so that's some of the impact here trying to average out what you assume each renter's utilities bills will be. So that's the impact we're seeing. There are some things you are not allowed to charge back to our residents. So sub-metering is important. Because of this restriction, we have submeter all of our properties. And we did it fast and furious at the end of the year to make sure that we were able to capture as much of the information we needed. But it did eliminate any unclear utility pass-through charges and just really requires more disclosures. And so that's [indiscernible] the impact overall. And as Alex said, I don't think we're expecting in any of our other markets something similar to this, but we are closely monitoring that within Camden as well as at the industry level. And I play a big role with the National Multi-Housing Council and this is something we're paying attention to across the country.

And the next question comes from Alex Kim with

Do you talk about if you're seeing any difference in performance or rent growth between your urban and suburban assets and kind of your expectations through the balance of the year as well?

Yes, absolutely. So it's interesting our urban assets are absolutely doing better and really starting to gap out just a little bit in terms of what we saw in the fourth quarter '25 revenue. And my gut is -- and the way we've modeled it is that's probably going to continue as we go throughout 2026. This is a sort of a turnaround from what we saw, obviously, for about 3 or 4 years. So today, what we're seeing is Class A urban is doing a lot better. But of course, it's and they got impacted worse at that point in time. So they had a little bit of gas in the tank to get back to where they were and go from there.

The next question comes from Julien Blouin with Goldman Sachs.

I think you mentioned you're expecting market rent growth of around 2% in markets this year. I think on the third quarter call, that was in the sort of 3% to 3.5% range, maybe 2 quarters ago, I think third parties were maybe talking more over 4%. I guess what has changed the most in that outlook to sort of drive that revision downwards? And then as we think about that 2% expectation for this year, what does that assume in terms of job growth? And sort of how do you think of maybe sort of the down case scenarios to that?

Yes. So if you think about the way Ric started this call as he talked about uncertainty. And this is clearly a time of uncertainty and what all the economists and obviously, what we're doing is we're talking about what economists are telling us, what the economists we're looking at in mid-2025 is they were looking at the simple math that supply is falling off the cliff. And everybody recognizes that the last time you got to the level of the supply that we're expecting, everybody had some really, really large outsized growth. It's just a matter of when does that actually happen? And how quickly is all of the excess supply being absorbed. And so obviously, it's taken a little bit longer to absorb some of that excess supply. I think we've hit on some of the reasons earlier in the call, if you look at the hiring of May grads, that was obviously very weak. There's -- obviously, the job growth hasn't been as great as everybody had expected. And I think that's been putting some pressure on it. But back to one of my earlier comments, it's not a matter of if, it's a matter of when, it's absolutely going to occur that we're going to see this momentum come back to us, but it's just pushed back a little bit.

Yes. And just specifically on the employment growth outlook, 2025 Wheaton originally had job growth across Camden's markets closer to 350,000. That -- this is -- everybody knows that got revised dramatically down. I think he ended up the year at 170. His forecast for 2026 is 257,000 jobs across Camden's markets. So part of the head fake for forecasters and everybody that looks at this data was that 1 million jobs sort of evaporated that were reported as created in 2025 that as it turns out after all the revisions, it was not anything close to that. So some of it was probably just in the data set, people like that look at this and use the BLS statistics or we're using numbers that got revised away. So hopefully, we're on track with better data for 2026. And 257,000 jobs across Camden's platform would be a really good year for us, particularly in light of what Alex described as we got -- we're about to keep getting close to the end of this outsized development pipeline that we've had to work our way through for the last 3 years.

And the next question comes from Alexander Goldfarb with Piper Sandler.

Just want to go back to the comments on lack of rent growth. Certainly, in the past number of years, everything else has gone up, Uber rides, groceries, everyone has streaming services, et cetera. So Ric, do you think the traditional sort of 20% rent to income still holds? Or do you think because of inflationary pressure on people's lives, plus all their other activities and subscriptions that maybe that number is no longer 20%, maybe it's something lower than that?

No, I don't think so. I think that, that number is still a really good number. At 20, people are very -- it's a very affordable thing. If you look at the real job growth or real wage growth over the last 3.5 years, 4 years, it's 4% to 5%. And that's real. That's after inflation, right? So the thing that's interesting when you think about -- when I think about our customers, we spend a lot of time getting -- trying to get inside their financial heads and also and what their preferences are for apartments and things like that. And you look at the -- like the forward consumer confidence numbers and stuff like that. And affordability is like the big question today. But when you look at our demographic, average income of $121,000 for our resident base. Their earnings are going up 4% to 5% on a real basis for the last 3 to 5 years. Then you go, well, what's really happening to them? Why are they unhappy? Why are they -- why is the consumer confidence at low levels. Part of it is just the psychology that you have high inflation and price everything kind of went up. And then I think the bigger psychological issue, and this gets to the overall housing market, which includes single-family for sale market. And the inflation numbers really haven't caught the -- haven't -- didn't include this kind of concept on housing. So COVID with low interest rates, and increased demand drove housing prices up dramatically. Interest rates doubled on the 30-year mortgage. So the attainability of a single-family home today is so expensive relative to what it was pre-COVID. But that's hanging on the -- I think, on the consumer's mind a lot. And so even though their financial picture is pretty good they still feel really bad about the economy and about because of this single-family house price issue and just the narrative that's going on. Because if you think about other big-ticket items like the price of gasoline. And I filled up my suburban the other day, and it was $2.17 a gallon. So even though you have food prices that are continuing to be elevated and some other costs that went up because of inflation. Gas prices are down, rents are flat. So I think it's a psychological issue that we have with American consumers today that isn't as real from a pure dollars and cents perspective, from an apartment perspective, it's more of an overarching issue. And unfortunately, that overarching issue makes people think everything is more expensive, even though their finances are pretty good.

And the next question comes from Mason Guell with Baird.

Looks like your revenue enhancing and repositioning CapEx guide is down from last year. Can you talk about why this has guided lower and what initiatives you are working on in this category?

Yes. So on the reposition side, it is down slightly, but you have to keep in mind, we're now -- this is something that we do every year. And we are reaching the point in time where we've done probably 70% to 80% of our portfolio, and there's a little less opportunities to be there this year. But I will tell you, I still believe this is one of our absolute best uses of capital, absolutely plan to continue to do it. And I will tell you that I have no doubt that our repositioning team is listening to this call, and they're probably very excited that somebody else is noticing all their good work that they're doing. So yes, we will continue to do this. It's a good use of capital for us.

And the final question comes from John Pawlowski with Green Street.

I want to go back to the development economics question. So the four properties that you have in the pipeline today on current market rents, could you give me an estimate on like where these would be yielding today? Or is it in that low -- that 5% to 5.5% range? Alex, you quoted on the shadow development pipeline. I'm just wondering how these four assets are kind of trending given the malaise in market rent growth in the last few years.

Yes. If you look at our development pipeline that we've actually put out there, it's two deals, which is Baker in Denver and Gulch in Nashville. And then what I told you is that we've got a couple of other sites that we control and those sites that we control that we could close on this year. And in fact, start this year, when I look at those sites, those returns are a little bit better. Those returns are penciling on those couple of sites to sort of call it the mid-5 on an untrended basis. Baker and Gulch are more challenging. This is why if you look at our math, originally, we had them as 2025 starts. And now I've got them as potentially late 2026 starts. So the math is -- I think everybody pretty well aware of what's going on in Denver, at least downtown Denver. It's a tough place to develop today. I do think the economics are going to get better, but we're certainly waiting to see if those economics get better before we get started. We talked about buyouts. Buyouts are absolutely coming down 5% to 8%, but maybe they'll come down a little bit more, which makes that economics better. And then I would say the same thing about our deal in downtown Nashville. Nashville is a fantastic market, but everybody knows that downtown Nashville is very oversupplied. And so we're waiting to see a little bit more clarity. And when we see some more clarity in that market and we can take a look at the economics and make sure it makes sense to start. But if we can't do it in a way that's accretive to our shareholders, we're not going to. But right now, we're patient, and we're going to find the right time to start, which is penciled to be towards the end of this year.

This concludes our question and answer session. I would like to turn the conference back over to Ric Campo for any closing remarks.

Thank you. We appreciate you being on the call today, and we'll see you soon -- or talk to you soon, I'm sure.