Camden Property Trust announced operating results for the three and nine months ended September 30, 2016 to positive reviews from Sandler O’Neill Research:
Expense savings drove the beat and guidance increase. While CPT faces headwinds in Houston and Corpus Christi, the company experienced muted expense growth in 3Q driven by reductions in on-site personnel costs, R&M, insurance, and marketing. Management noted favorable real estate tax decisions will mostly occur in 4Q16.
Here’s the full release from Camden:
Net Income Attributable to Common Shareholders (“EPS”), Funds from Operations (“FFO”), and Adjusted Funds from Operations (“AFFO”) for the three and nine months ended September 30, 2016 are detailed below. A reconciliation of EPS to FFO is included in the financial tables accompanying this press release.
| Three Months Ended | Nine Months Ended | |||
| September 30 | September 30 | |||
| Per Diluted Share | 2016 | 2015 | 2016 | 2015 |
| EPS | $3.21 | $0.41 | $8.60 | $2.09 |
| FFO | $1.13 | $1.14 | $3.49 | $3.34 |
| AFFO | $0.92 | $0.94 | $3.01 | $2.83 |
| Quarterly Growth | Sequential Growth | Year to Date Growth | |
| Same Property Results | 3Q16 vs. 3Q15 | 3Q16 vs. 2Q16 | 2016 vs. 2015 |
| Revenues | 3.7% | 1.6% | 4.2% |
| Expenses | 2.2% | 1.4% | 3.2% |
| Net Operating Income (“NOI”) | 4.5% | 1.7% | 4.7% |
| Same Property Results | 3Q16 | 3Q15 | 2Q16 |
| Occupancy | 95.8% | 96.2% | 95.5% |
“We are pleased to announce another solid quarter of performance,” said Richard Campo, Camden’s Chairman and CEO. “Our earnings were better than expected primarily due to lower operating expenses and the timing of certain dispositions, and we have raised our full-year guidance for both FFO and same property NOI as a result. In addition, we have now successfully completed all dispositions planned for 2016, for a total of nearly $1.2 billion in asset sales year-to-date, and we paid a special dividend of $4.25 per share to our common shareholders.”
The Company defines same property communities as communities owned and stabilized as of January 1, 2015, excluding properties held for sale. A reconciliation of net income to NOI and same property NOI is included in the financial tables accompanying this press release.
Development Activity
Lease-up was completed during the quarter at Camden Glendale in Glendale, CA, and construction was completed at Camden Victory Park in Dallas, TX. The Company also commenced construction at Camden Washingtonian in Gaithersburg, MD.
Development Communities – Construction Completed and Projects in Lease-Up ($ in millions)
| Community Name | Location | Total Units | Total Cost | % Leased as of 10/26/2016 |
| Camden Chandler | Chandler, AZ | 380 | $67.8 | 87% |
| Camden Victory Park | Dallas, TX | 423 | $84.8 | 67% |
| TOTAL | 803 | $152.6 |
Development Communities – Construction Ongoing ($ in millions)
| Community Name | Location | Total Units | Total Budget | % Leased as of 10/26/2016 |
| Camden Gallery | Charlotte, NC | 323 | $58.0 | 69% |
| The Camden | Los Angeles, CA | 287 | 145.0 | 70% |
| Camden Lincoln Station | Denver, CO | 267 | 56.0 | |
| Camden NoMa II | Washington, DC | 405 | 115.0 | |
| Camden Shady Grove | Rockville, MD | 457 | 116.0 | |
| Camden McGowen Station | Houston, TX | 315 | 90.0 | |
| Camden Washingtonian | Gaithersburg, MD | 365 | 90.0 | |
| TOTAL | 2,419 | $670.0 |
Acquisition/Disposition Activity
During the quarter Camden acquired approximately 2.4 acres of land in Denver, CO for $15.0 million for the future development of approximately 230 apartment homes. The Company also sold one dual-phased community and five operating communities comprised of 2,906 apartment homes for approximately $484.4 million. Year-to-date, dispositions totaled nearly $1.2 billion.
Earnings Guidance
Camden updated its earnings guidance for 2016 based on its current and expected views of the apartment market and general economic conditions, and provided guidance for fourth quarter 2016 as detailed below.
| Per Diluted Share | 4Q16 | 2016 |
| EPS | $0.40 – $0.44 | $9.00 – $9.04 |
| FFO | $1.12 – $1.16 | $4.61 – $4.65 |
| Same Property Growth | 2016 Range | 2016 Midpoint |
| Revenues | 3.9% – 4.1% | 4.0% |
| Expenses | 2.3% – 2.5% | 2.4% |
| NOI | 4.8% – 5.0% | 4.9% |
The Company’s revised 2016 same store expense guidance is the result of lower projected operating expenses, including lower than anticipated property taxes due to both lower rates and valuations combined with better than expected resolutions to several prior year property tax appeals. The majority of the tax refunds from these prior year appeals will be recognized in the fourth quarter of 2016.
Camden intends to update its earnings guidance to the market on a quarterly basis. Additional information on the Company’s 2016 financial outlook and a reconciliation of expected EPS to expected FFO are included in the financial tables accompanying this press release.
Special Dividend
In addition to the regular quarterly dividend, Camden declared a special dividend of $4.25 per share to its common shareholders of record as of September 23, 2016. The special dividend, consisting primarily of gains on dispositions completed in 2016, was paid on September 30, 2016.