Camden Property Trust (CPT) Q3 2017 Earnings Report, Transcript and Summary

Good afternoon, good morning and welcome to the Camden Property Trust Third Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that today's event is being recorded. At this time, I would like to turn the conference call over to Ms. Kim Callahan, Senior Vice President of Investor Relations. Ma'am, please go ahead.

Good morning and thank you for joining Camden's third quarter 2017 earnings conference call. 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 2017 earnings release is available in the Investor section of our website at camdenliving.com and it includes reconciliations to non-GAAP financial measures which will be discussed on this call. Joining me today are Ric Campo, Camden's Chairman and Chief Executive Officer; Keith Oden, President; and Alex Jessett, Chief Financial Officer. We will be brief with our prepared remarks and try to complete the call within one hour. We ask that you limit your questions to two, then rejoin the queue if you have 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 email after the call concludes. At this time, I'll turn the call over to Ric Campo.

Thanks, Kim. Between hurricanes Harvey and Irma, Camden communities in nine of our 15 markets sustained some damage. For four days of Harvey, we're were riding out the storm in Texas and wondering who'll stop the rain. Just when we could say, I made it through the rain, Irma came along to Rocky like a hurricane reminding us that when it comes to mother nature, we are all just riders on the storm. I want to thank all of our Camden team members who helped our customers, coworkers and neighbors make it through the storms. Our commitment to improving the lives of our customers, team members and shareholders one experience at a time was on full display during and after the storm. Despite the vast destruction of homes in Houston, the storm brought our community together. Camden and other apartment operators had apartment homes ready for displaced people to move into. Many apartment owners followed our lead by freezing rents to pre Harvey levels, leaving moving fees and other expenses. Occupancy levels at our Houston communities increased from 93.5% before the storm to 97.6% today. These occupancy levels should be maintained throughout the fourth quarter and into next year. Apartment fundamentals continued to be good across our markets. Demand is strong driven by job growth and growing demographics at favorable rental markets. Revenue continues to slow as supplies absorbed. We expect supply to peak this year in most of our markets. During the quarter, we finished the lease up on Camden Victory Park in Dallas, we completed construction on Camden Lincoln Station and started construction in Camden RiNo both in Denver. Our development pipeline continues to add significant long term value to Camden. We took advantage of the strong market conditions and issued 445 million in equity during the quarter. The equity offering was all about growth. Last year we saw 1.2 billion of non-core properties at attractive prices, which improved the quality of our portfolio. We're going to use the equity to fund our developments and acquire properties while seeking to keep our balance sheet strong. At this point in the real estate cycle, we expect to see attractive acquisition opportunities as merchant builders move to sell their completed development. I'll turn the call over to Keith Oden.

Thanks Ric. We're really pleased with our third quarter results, despite all the disruption caused by the two storms, our teams managed to get back to business as usual more quickly than we thought possible. They focused on helping each other, our residents and our neighbors returned to normal. Alex is going to walk you through the details of the financial impact of the hurricane on our results. It's perfect to say that from our perspective when you adjust our results for the impact of the storms, we had a very solid third quarter, which should carry over into the fourth quarter. In terms of our same-store performance, revenue growth was 2.5% for the third quarter and 1.1% sequentially. Year-to-date the third quarter was 2.8% and we expect full year 2017 to be around 2.9%, primarily due to the recent occupancy gains in Houston. Most of our markets had revenue growths in the 3% to 5% range in this quarter, led by Atlanta at 5.1%, Orange County at 4.8%, Denver at 4.7%, San Diego at 4.6% and Orlando at 4.5%. As expected and as we discussed on our last conference call, we saw relatively weaker revenue growth this quarter in Austin at 2.1%, Charlotte, at 2% even and South Florida at 1.3%. Houston remained negative, with a 3.1% decline for the quarter, but we expect to see significant improvement in the fourth quarter in Houston, as occupancy has been trending over 97% for the month of October. During the third quarter, new leases were up 1.3% and renewals up 4.8% for a blending growth rate of 2.7 and so far in October it is trending three tenths of a percent up for new leases and up 4.6% on renewals, which is slightly better than what we achieved last October. November and December, renewal offers were sent out at an average increase of 5%. Occupancy averaged 95.9% in the third quarter of '17, versus 95.8% in the third quarter of last year and 95.4% in the second quarter of this year. So far occupancy is trending at 96% versus 95% last October. Net turnover rates remain slightly below the levels that we saw last year with third quarter '17 net turnover rates of 55% versus 57% last year and year-to-date 49% versus 51% last year. Move-outs to home purchases were 14.6% in the third quarter versus 15.6% last quarter and 14.7% in the third quarter of '16. The top reason for residents moving out remains re-location, that is moving out of the city or state or across submarkets at 35%. Obviously, Houston has been on no one's radar screen this year, particularly after the impact of Hurricane Harvey. As mentioned earlier, we saw a significant increase on occupancy rates going from 93.5% pre-hurricane to over 97% now, and we expect occupancy to remain elevated during the fourth quarter and into 2018. New leases in Houston started the year at a negative 8% in the first quarter that improved to negative 4% to 5% during our peak leasing season. As Rick mentioned, we rose pricing for the month of September, but are now seeing leases signed in the negative down 1% to 2% range with renewals up in the up 1% to 2% range. We currently have a very limited inventory of apartments available to lease, and we're entering the traditionally slower time of the year per traffic, so the main driver of same-store revenue growth this quarter should be occupancy rather than rates. We will provide more color on our 2018 Houston outlook in conjunction with our fourth quarter 2017 earnings release and 2018 guidance release schedule for early February. At this time I'll turn the call over to Alex Jessett, Camden's Chief Financial Officer.

Thanks, Keith, before I move on to our financial results and guidance, a brief update on our recent real estate activities. During the third quarter, we reached stabilization at Camden Victory Park an $85 million development in Dallas, completed construction at Camden Lincoln Station, a $56 million development, and started construction at Camden RiNo, a $75 million development both in Denver. Additionally, as a result of Hurricane Harvey, we extended the anticipated sales date for Camden Miramar, our only student housing community from October 1to December 1. Closing of this sale is not guaranteed and is subject to among other items the satisfactory due diligence and financing by the purchaser. As I will discuss later, we have included the impact of this delayed sale in the midpoint of our revised earnings guidance. On the financing side, during the third quarter, we completed a public offering of 4.750 million shares at a net price of $93.18, generating net proceeds of $443 million and issued approximately $2 million of additional shares through our ATM program. We intend to use the net proceeds for general corporate purposes including financing for acquisitions and funding for development activities. Our current 660 million-development pipeline has approximately $200 million remaining to be spent over the next two and a half years, and we are projecting another $125 million of development to begin construction before year end. We anticipate being more active on the acquisition front targeting recently developed, well located assets in our existing markets. We ended the quarter with no balances outstanding on our unsecured line of credit, $350 million of cash on hand, and no debt maturing until October of 2018. Our current cash balance is approximately $300 million. As a result of our equity issuance, the midpoint of our current earnings guidance no longer assumes an unsecured bond transaction in the fourth quarter of 2017. Moving on to financial results, last night, we reported funds from operations for the third quarter of 2017 of a $103 million or a $1.11 per share. Included in these results, were approximately $5 million or $5.5 of hurricane related expenses as a result of Hurricane Harvey and Irma. In August 2017, hurricane Harvey impacted certain multifamily communities within our Texas portfolio. In September 2017, hurricane Irma impacted our multifamily communities throughout the State of Florida and in the Atlanta, Georgia, and Charlotte, North Carolina areas. Our wholly-owned multifamily communities impacted by these hurricanes incurred approximately $3.9 million of expenses with no insurance recoveries anticipated. Accordingly, our operating results for the third quarter included a corresponding charge in property operating and maintenance expense to reflect these hurricane damages. These expenses have been excluded from our same-store results. We also incurred approximately $700,000 in other storm related expenses related to these hurricanes, which are recorded in general administrative expenses. Additionally, we recognized our ownership interest of hurricane-related expenses incurred by the multifamily communities of consolidated joint ventures of approximately $400,000 which is recorded in equity and income and joint ventures. Excluding these non-recurring storm-related charges, our third quarter of 2017 FFO per share would have been $1.16 in line with the midpoint of our prior guidance range of $1.14 to $1.18 per share. Contained within the $1.16 per share of FFO, which excludes storm-related expenses were $0.005 and higher than anticipated net operating income from our development and non-same-store communities resulting primarily from each of our development communities leasing ahead of schedule and $0.005 from a combination of lower than anticipated overhead cost due to the timing of certain corporate-related expenditures, higher interest income on investment cash balances, and lower interest expense to the lower line of credit balances. This $0.01 improvement was entirely offset by the impact of a higher than anticipated share count as a result of our 4.750 million share equity offering which closed on September 14. Our same-store operating results were in line with expectations for the third quarter as the increased occupancy in Houston did not occur until late in the quarter. We've updated and revised our 2017 full-year same-store and FFO guidance based upon our year-to-date operating performance and our expectations for the fourth quarter. Entirely as a result of increased levels of occupancies throughout our Houston portfolio, we've increased the midpoint of our full-year revenue growth by 10 basis points from 2.8% to 2.9% and tightened the range from 2.8% to 3%. As Keith mentioned, we are currently over 97% occupied in Houston, up from 92.3% for the fourth quarter of last year. As a result of anticipated general expense savings for the fourth quarter, we have reduced the midpoint of our same-store expense guidance by 5 basis points from 4.1% to 4.05% and tightened the range to 3.95% to 4.15%. As a result of our revenue and expense guidance adjustments, we've increased our 2017 same-store NOI guidance by 25 basis points at the midpoint to 2.25% and tightened the range to 2.1% to 2.4%. Last night, we also adjusted and tightened the range for a full-year 2017 FFO per share. Our new range is $4.51 to $4.55 with a midpoint of $4.53. This new midpoint represents a $0.04 per share reduction from our prior midpoint of $4.57; this $0.04 per share reduction is the result of the $0.055 of hurricane related expenses recognized in the third quarter and a $0.06 per share full-year impact from additional shares outstanding as a result of our recent equity offering. This $0.115 combined reduction is partially offset by a $0.015 per share increase from our 25 basis-point increase in same-store net operating income, a $0.02 per share increase from the previously mentioned delayed disposition of our Camden Miramar Student Housing Project in Corpus Christi, Texas, a $0.025 per share increase due to lower interest expense, primarily as a result of the removal of the planned $300 million bond transaction originally planned for late October, combined with lower line of credit balances as a result of the equity offering, a $0.01 per share increased primarily due to higher interest income earned on invested cash balances as a result of the equity offering and a $0.005 in higher net operating income from our development in non same-store communities which we recognized in the third quarter. Last night, we also provided earning's guidance for the fourth quarter of 2017. We expect FFO per share for the fourth quarter to be within the range of $1.16 to $1.20. The midpoint of $1.18 represents $0.07 per share increase for our $1.11 report in the third quarter of 2017. This increase is primarily the result of $0.055 share decrease in hurricane-related expenses, $0.04 per share or approximate 3% expected sequential increase in same-store NOI, driven primarily by our normal third to fourth quarter seasonal decline in utility, repair and maintenance, unit turnover, and personnel expenses, and the timing of certain property tax refunds. In the fourth quarter, we anticipate approximately $1 million of prior-year property tax refunds resulting from our successful property tax appeals, primarily in Houston,$0.015 per share increase from our non-same-store and development communities, primarily driven by the normal third quarter to fourth quarter seasonal increase in revenue from our Camden Miramar Student Housing Community, partially offset by the planned December 1 disposition of this community and an approximately $0.01 per share increase from a combination of lower interest expense and higher interest income as a result of lower debt outstanding and higher cash balances. This $0.12 per share net increase of FFO will be partially offset by sequential $0.05 fourth quarter impact from the 4.750 million shares issued late in the third quarter. Our fourth quarter guidance assumes no acquisitions are closed by year-end. At this time, we will open the call to questions

Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instruction] Our first question today comes from Nick Joseph from Citi. Please go ahead with your question.

Thanks. You mentioned to be more active on acquisitions using the proceeds from the equity deal, so in both markets, you have seen most opportunities today and how are cap rates trending?

Sure. So, we definitely are focused on acquisitions with the current strength of our balance sheet for sure. Most of the markets that we operate in have pretty good opportunities; what we are really looking for are Merchant Builders products where we can buy at a discount to replacement cost. Cap rates are definitely very sticky on the low end; to give you an example, in June, we bought Camden Buckhead Square; it was a 12% discount with current replacement cost, and it was about 4.5% cap rate in the sort of a four to 12month period. We don't see cap rates moving at all if not they're going down, not up; you just have a significant amount of capital that still is trying to be - find a home in multifamily.

And if these deals started to materialize, or are you expecting them to going forward?

Absolutely, I think that when you think about the Merchant Builder model, they have a meter on the equity, and in order to internally to return hurdles, they need to sell their assets. In addition, in order to reload their capacity to do new transactions, they need to sell those assets as well, so I think we will have a healthy Merchant Builder pipeline. We have seen some already this year but I think next year is going to be a big increase in that pipeline.

Thank you. Do you want to use all of your own capital for that or would you partner the biggest question is how big is the pipeline, how big is this opportunity, how much is in the hopper today, and are you going to use all of your own capital, or if the opportunities are so significant, do you use joint venture capital to do it.

Sure. We tend to avoid use our own capital. We do have a remaining balance from the fund with Texas Teachers, so bottom line is we have a capacity if you keep a moderate debt EBIDTA number of over a billion dollars to acquire, so we will not do any additional joint ventures other than our current relationship with Texas Teachers; we just think it makes more sense to own a 100% of the assets or in the joint venture that we have already but not create any new joint ventures at all. We found during the last downturn that deep pocket joint venture partners don't always dip into your pocket during tough times and so we want to keep her balance sheet clean and very simple to understand, so with that said, our capital in Texas Teachers

Nick we're focused also on market where's there's been where we know we have an oversupply condition that's either ongoing right now or it's already coming into focus or we expect to see it in 2018 and obviously those markets are the Charlotte's and at some point Houston, Dallas, Austin, and Orlando, and so it's really a matter of looking at individual submarkets, and to Ric's point about the capacity and the use of our own capital. Obviously, some of those markets I just mentioned, Houston being a good example, we're at a point from a from Camden's overall exposure in the Houston market, long-term, we would want to add a bunch of net exposure in Houston so the opportunity would be finding really attractive assets that we could partner with on an 80/20 basis with Texas Teachers not increasing our exposure a bunch but taking advantage of the investment opportunities that we think are coming.

Thanks.

Our next question comes from Rich Hightower from Evercore. Please go ahead with your question

Good afternoon, guys. First question on Houston can you give us a sense of the composition of new leases signed after the hurricane how many of those were short duration leases versus sort of a traditional, year-long lease, and then, where do you see market rents today versus where your portfolio is positioned, just so we sort of have an idea of what's left in the tank so to speak.

Yeah, so we obviously had a pretty big component in the weeks and days immediately after the storm; we did accommodate short-term leases. The reality is that we just didn't have all that many apartments to lease because we're going into the storm in the 94% occupied range, so we did accommodate that although we were cautious and we were warning people and trying to get them to understand that the magnitude of this storm if you had flood damage in your home that three months is just not realistic, and as it turns out, our advice was sound and well-reasoned because I think most people have had water damage in their homes and having to go through the process of approvals and then ultimately finding a contractor and getting the work done. I think they're coming to the realization now that it's going to be more likely six to nine months before they can actually get everything put back together and get back in their home and have the work be completed, so we did these in some short-term leases. It didn't have a huge impact on our overall the length of our lease term in Houston, we've accommodated the people who did the original short-term leases, and we have allowed them to re-extend if they want to on a three- or six-month lease, but most people now that are coming in were not impacted by the storm; those people already found a permanent housing solution, it's really not a big issue within our portfolios, it is a pretty small number. So the second part of your question which is where are we on market rents as Ric mentioned we froze rents at pre Harvey prices, and we did that throughout the month of September and we are gradually getting back to what we would think of is regular order. The only thing that we're doing right now is that we do have a cap on renewal increases in Houston of 5% and we expect to move that cap to 10% on renewal increases by November 15, and just a point of reference, 10% renewal cap is what we use in all of our other markets, so it's sort of our standard operating procedure, so we will get back to regular order here pretty quickly. We do have the ability, it seems like it would be a simple thing to do to turn off revenue management, but as it turns out, it's really not, so what we ended up doing is sort of running parallel with our revenue management system and then doing manual pricing for the apartments that were released in the period where we had frozen rental rates. We think that if you kind of look at where our market averages are or market comps relative to our rental rates we're still below market rental comps and that number is somewhere in the 2% range we think across our platform, so we do think there will be additional rental increases as we go back to regular order. One of the things that will certainly happen as we roll in to 2018 and we are fully back on our revenue pricing model and pricing according to just normal supply and demand dynamics is that the model will work really hard to get the occupancy back down to 95% to 96% and the only leverage point that you have to do that is through adjusting price, so over some period of time, I would expect to see a trade-off between a lower occupancy rate 97.7 is pretty close to being minus frictional move in move out; that's pretty close to being a 100% occupied if the model doesn't like that condition, so the only way to remedy that is to is to deal with pricing so I would expect that over time some period of time in 2018, you're going to see our occupancy rate trend back down but the offset to that will be higher run rates.

Keith, that's great color. Thanks for that. My second question here since I've got two. I wanted to go back to Ric's prepared comments on supply peaking in 2017 in Camden's market I think it depends on the source one consults for this sort of thing, but we sort of see it as an '18 event in many of the Sundown markets and I'm just it that a commentary on submarket specifically or is there something else, just different data sources in your view.

The different data sources we used two different data sources for the multifamily completions. If you look at Witten's numbers, he has supply peaking in 2017 at about 139,000 apartments over or 140,000 apartments Camden's footprint, and he has 2018 at about 137,000, so, yes, it's peaking but on his metrics, there is still a lot of supply that is coming in 2018 and I think the wild card there on the data providers is how much of that - do we still determined yet how much of the '17 originally scheduled completions get rolled over into 2018 because if people are just having trouble getting their jobs completed with all the labor shortages, so there's a question if you look at Axiometrics' numbers, they have a much clearer view of a peek - in 2017, they have 162,000 apartments being delivered and if you roll that over in to 2018, their numbers 136,000, and if you go out to '19, their number falls under a 100,000, so Witten's number looks like it's a little more smooth than Axiometrics. I think the difference is probably in how they're handling the shifting of projected deliveries between '17 and '18.

Thanks for the color, Ric.

Our next question comes from [indiscernible] from Bank of America / Merrill Lynch. Please go ahead with your question.

Hi, thanks for your time. Just following up on Richard's question on Supply, hoping you could give your views on may be the top five or six markets you see maybe not Houston we know that LA, Atlanta, South Florida, Dallas, where you expect supply to be '18 verse '17.

Sure. The Dallas '17 completions, we have at 22,000 apartments rolling over to 19000 in 2018; Houston, we have at 15,000 apartments in '17 and that drops to about 6,000 apartments in '18; LA 14,000 apartments in '17, stay pretty flat in '18; and another 14,000 apartments between Miami and Fort Lauderdale, you add those together and what we call our Southeast Florida Market, that's 10,000 apartments this year and that rolls down to about 6,000 next year. By the way, I'm giving you Witten's number, not Axiometrics numbers which is the one that the data provider that we put a little bit more emphasis on what are the market - Washington DC 9000 apartments, it goes to about 10,000 apartments in 2018.

May be, Atlanta.

Atlanta, 11,400 apartments , going to 11,200 in '18, so basically flat year-over-year.

Okay and then just on maybe Dallas and Atlanta, both kind of higher supply markets what are you seeing on the concession front, any spike; one of your peers talked about particularly in the Uptown Dallas some higher concession levels recently, if you could just give it to your sense of what you're experiencing in your specifics of markets.

I think when you think about concessions, merchant builders are very rational players; when they have empty buildings, they rushed to the door to get as much free rent as they can to grab market share. The worst thing you can do is a merchant builder during a concessionary period is to be the last one to get to the biggest concession, and so in certain submarkets you are seeing a month to two months free we haven't seen three, but generally it's a month to two months and some of the markets that are leasing up substantial number of units. In Dallas, we are fairly insulated with some of our properties because we have fair amount of sort of last cycle BB plus properties as opposed to direct competition with new development. Yes, on Dallas, I don't speak to anybody else's the results, but in Dallas and Atlanta, we certainly see a small amount of deceleration between third quarter and fourth quarter but it's - you're talking you know 30 basis points plus or minus between those two markets, we're not seeing that kind of impact and it could be supply and could be submarket-driven, as to where somebody else's assets are located, but we clearly have not seen that so far this year and we're not forecasting that in the 4th quarter.

Thank you

Our next question comes from Austin Wurschmidt from KeyBanc Capital Markets. Please go ahead with your question.

Hi, good morning, thanks for taking the question. Just wanted to touch the supply a little bit again and when you look at some of these markets that are a little bit of flatter in terms of supply, any of that you think that could be a risk of turning negative in 2018.

No. I think that when you think about the markets that have the supplies, they are also the markets that have the jobs, and if the supply in most of these markets are - and Dallas is just knocking the ball out of the park in terms of job growth, Atlanta the same thing. Are you saying you think you're going to have negative revenue growth in '18 in these markets?

Any specific markets, like in Austin or Dallas.

No. We don't think so, but we are obviously not prepared to give guidance at this point.

So we are not enough sharp we haven't gotten there yet, but I can tell you based on Ron Witten's work for the 2018 forecast across Camden's platform, he's actually got revenues reaccelerating in to 2018 relative to 2017 and I'm just glancing over the numbers I don't [indiscernible] see anything below 2.5% revenue number on Witten's numbers and that's not are our numbers but that's just a data point for you, he actually has taking into consideration - of a big chunk of that is - in our portfolio is the turnaround in Houston from a negative number in '17 to probably what would be a solid positive number in 2018, so we don't see it and certainly Ron Witten does not see it in the work that he does.

Yeah, that's helpful. Thanks for the color, Keith, and then second question just was hoping that you could just give us your thinking on getting more offensive on the front on the investment side at this point in the cycle and then maybe a little bit more color as to may be the number of units that your underwriting today are they mostly one off's or are you saying some portfolio opportunities out there.

So, the reason that we're getting more constructive about buying today is because the type of property that's out there in the marketplace is merchant-builder very high quality property, really hasn't been around much in terms of being able to buy those properties. If you look at the investor appetite, today, value-add properties have the highest bid, 20-plus bidders on every property and we start getting into merchant-builder product, that is definitely being impacted by supply, free rent embedded in the portfolios; there are just fewer buyers for those, and so we like to play in that space. There's no question about that. We have a long list of pipeline. I mean, you were always looking at even when we're not major on offense acquisition wise. We always have a list of several billion dollars' worth of property that we are underwriting. In terms of portfolios, there are few portfolios out there and we look at those as well the challenge there is generally a portfolio may have kind of cats and dogs and we are more oriented in taking specific rifle shots for submarkets that we really like, and if there's a portfolio that has more of what we like and less of what we don't like, then we'll definitely take a look at that. We clearly have done portfolios in the past and they've worked out pretty well, but I think there's a combination of one offs and portfolios out there and there's no shortage of product.

So just small enough, so is it fair to assume they have given the quality of product in some of these newer development or even lease-up deals, the initial accretion could be limited out of the gate.

Yeah, absolutely, I think if you look at what we did at Camden Buckhead Square, you know the 12-month forward cap rate we think is 4.5 but that means you start out probably slightly less than that, and you have to then move it up by brand concessions off, but when you think about being able to buy at other replacement cost in all high quality markets with embedded concessions, you're starting out at a lower number than you would otherwise like, but that's part of the underwriting mechanism you need to do. Now, over time, your unleveraged IR is really good, but you do have to sot of suffer through a lower cash flow return initially.

Thank you.

Our next question comes from Alexander Goldfarb from Sandler O'Neill. Please go ahead with your question.

Good morning down there. Two questions first, I think it was something like 46,000 Bacon apartments or something of that sort before the storm. Can you just give us an update sort of where the broader Houston market stands right now; you guys spoke where your occupancy is, but as far as the competitive set, can you just give us some color there.

Sure, so the market just to put in perspective for folks is 638,000 apartments in Houston. It's a very, very big market and the region, by the way, is 1700 square miles, so it's not like ones across the street from another right. There was about 16,000 units plus or minus that we were actually taken out of the inventory, so that increased the occupancy rate of a little bit, and the occupancy rate, if you take the entire market, it was somewhere in the high 80s percent and it went up to the low 90s, maybe a 150 to 200 basis points up, but I think we have to be very careful with these broad numbers because when you take sort of the A,B,C, D level properties, if the A properties that are under construction probably have the most vacancy and then there's a lot of older properties that probably have pretty little bit low occupancies as well. If you go to the pockets where there was disruption for the single-family homes, there's about five or six areas where the homes were really affected, and in those areas, the occupancy have gone from low 90s to high 90s. There's really no inventory in those markets and where you see the vacancy, it tends to be in the urban core interestingly enough the downtown area, River Oaks, West University did not flood as much from a residential perspective. This flood was a residential flood; it wasn't a commercial flood, and so all the businesses have got back to business really quickly and dislocation of those - they went to places that were close to their home and close to their work and not necessarily towards - say new downtown properties, and even though they all got a lift, the Westside, Eastside, Northside got a bigger lift than the areas that didn't flood.

Okay so, and then just going to the - you said that all of the home repair people the people are flooded out of their home, that traffic all came and now the tenants that you're seeing are more regular tenants, but you're saying that the portfolio should do well or Ron Witten is saying the portfolio should do well next year, so is the demand for apartments are now being driven by people coming to Houston to help rebuild or why is the overall market suddenly going to do better if the immediate demand for displaced people has already been satisfied?

So, Alex, if you see look at Witten's work, he has total job growth in 2018 in Houston at that about 79,000 jobs, and then he has deliveries of new apartments in Houston at about 7000 so that's the better than 10:1 ratio of jobs. Now he has a lower number for 2017 job growth than what we've been using, s there may again these different data sources giving you different results, but directionally, he's got a much bigger job growth number than what the Greater Houston partnership is carrying, and I think some of it is just as for the mismatch between '17 and '18 growth, but even if you put the two together we are looking at pretty decent job growth next year for Houston, a real rebound, and in terms of new deliveries, it's going to be pretty limited and we have about run the course on these apartments, so happened in the flood event is that you pull forward a tonne of demands that probably would have naturally occurred over 2018, you pulled it forward into the third and fourth quarters of 2017, and I think it's the other people who we were here or in apartments because they were affected by the flood, it's going to be longer rather than they may imagined and so you're probably going to get a continued effect of the carryover of the flood victims, but you're also going to get a fair amount of new job growth in Houston next year.

I think the key is to make sure when you think about the flood folks that thought initially they be able to get their house fixed in three months, it's more likely to be six or nine, but those are folks that have means those are folks that have insurance; and 80% of the people that were flooded didn't have insurance. When you look at the overall impact of a storm like Harvey is going to last not 9 months or 6 months but really two years or three years of pressure on housing because of all the complicated piece of the equation how much government funds come in and what they do to deal with some of the flood mitigation issues and that might I think most people think it's going to boost job growth above what normally would have been by at least 5000 or 10,000 jobs just because of the fixing of the infrastructure and the homes over the next couple years, so you really did pull the man forward but you also added the man to what was already thought to be a recovery market in 2018.

Okay. Thank you.

Our next question comes from Jeff Bill [ph] from Goldman Sachs. Please go ahead with your question.

Hi, just turning to DC, just have a question on same-store revenue growth if you can comment on that by submarket

We can we can get you our submarket stats and we will send them to you offline.

Is there any submarkets or you're kind of still worried about supply in to '18.

We are worried about supply generally in DC because we have got probably another 10,000 apartments that are going to be delivered next year which is roughly what we got this year, so it's not like we're going to get a big relief on the supply side of things, but we do forecast next year job growth, and about what it was this year; it was somewhere around 50,000 to 60,000 jobs, so as long as those numbers are okay, if 10,000 of the apartments get 50,000 jobs, that's pretty close to equilibrium. The real question for operators is where is that supply being delivered, and so far, the footprint of our portfolio has fared better than most and as we talked about last call, we think that has to do with our geography within the DC Metro, Northern Virginia has held up really well, Maryland's held up really well. We are just about to complete a lease up in the DC Metro area, if not in the district and it's gone extremely well for us, so first and second quarter in DC were actually a better than our original expectations. We think that for the year we end up somewhere around 3% revenue growth in DC, and if you go back to what our originally guidance was we had DC rated B-rated market and improving and that's kind of what we've gotten this year. So, I think it can roll forward 2018; it looks a lot like 2017; if we get the job growth as projected and we absorb another 10,000 apartments and then again where the pressure comes is where those 10,000 apartments are being delivered.

Thanks and just my second question on Houston, your Camden downtown project what conditions do you need to start construction there and when could that potentially happen?

What was interesting about that project is we announced it before Harvey and we are going down the trial trying to start it by the end of the year, and we think it's going to be a great timing in terms of being able to deliver product in to the market that doesn't have a lot of supply.

Great, thanks.

Our next question comes from Drew Babin from Robert W. Baird. Please go ahead with your question.

Thanks for taking my question; a quick question circling back to DC, I may be phrasing it a little differently I was curious what the gap is between What Camden's rents are and the effective rents on the supplies being delivered, and what that gap looks like.

Well, it depends - so when you think new products being delivered, it's all the way from sub urban, Walkup Garden apartments to high rises in the districts and the spread on that would be anywhere between, so the low end of that range, the surface part apartments in the Meshfalton area, you probably in the $65 to $70 range for high rise products in the district. You note that $3 is quite afford, it's just, to answer that question I'll have to kind of know, what area counter we're talking about and then what advantage of product. But in Camden's we are all at the tie end of that, about $3 plus would be our new lease up in the district. Our normal product in the average method is roughly $27, 000 a door and average to that will be our entire portfolio, across the districts about $19, 000 ramp. So, again unit mix matters a lot, depending on how large the units are, but broadly speaking $3 plus in the district, call it $60, $70 in the suburbs would be the lowest end of the rounds per square.

Okay that helps. And then the question at Miami, were exactly further I would say, quite a bit of deceleration in the quarter. Was there any top line in the ways from Irma? Been impacted the numbers or not, and then there goes my question is, kind of a supply timing is this for the most part, when I better deviate?

Yeah, so the easy part of that question is, the knowledge from Irma and it turns out, there's no really no knowledge from, in our portfolio. We had relatively minor damage in the steamer things, we have one of our high risers that get some water from the storm surge, it's but honestly, we had all units available, all working units that were available to be least within three days of that , we are back available Ivy, so there's really no impact of that. It's got to be photos one of those three markets that we talked about on our last call. I specifically kind of called out Austin, Charlotte and Southeast Florida as places where the supply in the competitive is really, we are really starting to feel it in those three markets. So, we are deceleration in Southeast Florida, it's likely they continue into the fourth quarter. You know you got some different things that are going on I Southeast Florida, one of which is this incredible glut and air large of new condominium projects. Many of which are struggling to do, you know, take up your sales numbers and ultimately as we all know, at some point the condominium permanent home ownership during becomes a rental, a rental scenario. And there is no questions that are two biggest inner light and contributors which will contribute in [indiscernible], are going to be impacted by that.

I think the wild card for Florida in general, this will include Orlando and Southeast Florida, and this is not Irma but Maria. If you look there's been about 75, 000 Puerto Ricans that have been helped, come to Florida already. And, they rather Miami, when you look at the concentration of Puerto Rican's where they live in Florida, Orlando, is actually the largest market for Puerto Ricans. There seems some increase in demand from what's going on in Puerto Rico and I think that given the scale, of the disruption there and the time it's been taken to, give that back on line Florida could have an increase in demand that we don't expect, that we haven't expected, as a result of you know Puerto Rican's trying to find a place with electricity.

That's very helpful thank you.

Our next question comes from Michael Lewis from SunTrust. Please go ahead with your question.

Hi, thank you, my first question is on your new strength, I guess, I realize there's some Governor's in place, but I might have expected the rent squares to be a little higher already. And, I was wondering if you could put some numbers around, market rents there? Do you think, next year it could go up 10% or more than that or less than that? If it's helpful, what is the management sort though, the revenue management sort will tell you to do today, it's that kind of nonsensical I know, you know in an environment like this?

Sure, if you the revenue manger system, if it were, if it wouldn't permit this, the direct recommendations initially, it will be looking at our cost at, we think there's probably about 2%, 2% to 2.5% gap that resulted from us, kind of saying we are not going to freeze pricing prior on that. Again we are back, by November 15, perform new release in renewals, we'll be completely back to regular order and whatever the pricing is, the pricing is. At some time, we have to find a market clearing price for these ramps, which we will do. And so I think, as you think about, is we think about and look forward into 2018. And just kind of estimate the impact. Again we are not, anywhere close to the point where we are prepared to talk about individual markets, or individual rent levels. But, I think it's instructive to look again at what our data providers are telling us, and if you are looking where Ron Witten's numbers were for rents, the delta between rents in 2018 from the pre Harvey and post Harvey, what is now I am still saying is, there's about a 5% higher in what he was forecasting pre Harvey. So, I think that's those are constructive in the sense of the magnitude, now just keep in mind, that he always what he forecast or that effective run rates, and that doesn't, you got to separate that from revenue growth. Because, our portfolio rolls over on average 8% of it per month over the course of the year, so even if the rains strike at the beginning of the year, you've got leases in place that are not going to be affected, till that lease comes up. So, you have to be careful with using the difference between rental rates and revenue growth. But, I think regardless you pass it, 2018 is going to be substantially different than what it would have without Harvey. Now, I can't give you the exact our forecast around there, but will certainly provide that to you as part of our guidance for 2018.

And just to give you a chance you wouldn't have Susan ad the number one market for growth in America next year? My second question, the sales survey guidance, but if I look outside the Houston and Florida, which are most effected by hurricanes, every market except their land, or same store revenues or decelerate in front of you. You know, my question is, when you high point from the storm, almost nine years from the Florida market trending ahead or behind of what you're previous expectations were?

They are trending to Ryan accordance of what our budgets are. When you think about deceleration, I mean, our markets and I think generally the markets across the country have been decelerating for last two or three years. And it's a function of you have plenty of demand; you know we have the same job broke issues; we are leisure, the issue in the supply. That's why we point out the supply, appears to be peaking the show next year and so, it's really that the pressure that the market is getting because of the new supply list in the market place. So, the markets are performing exactly the way we thought they would.

That's brilliant thank you.

Our next question comes from Nick Yulico from UBS, please go ahead with your question.

Oh thanks, just one question, I think last quarter you talked about some new initiatives you are looking at for ancillary revenue growth since the tech package is rolling off. Any update on these initiatives and you know what type of same-store revenue benefit you might be able to get next year from those since the tech package is rolling off?

Yeah, I'm not, haven't really come up with what we talked about last quarter but I can tell you this, there's not anything that we can share with you right now, that would be meaningful material to achieve 2018 results. We are looking at all kinds of things around the home of the future, and there's Amazon is doing all kinds of interesting things but form a revenue impact standpoint in 2018 nothing specific.

Okay and the tech package fully rolls off this year that benefit.

Yeah, this is the year where you'll see really the last incremental major impact.

Okay got it, thanks.

Our next question comes from John Polaski from Green Street Advisors. Please go with your question.

Thanks, our question on pricing barrier seem that existing panel, outside Houston there is a low growth accelerate in any market in third quarter, or is it currently accelerating early fourth quarter? First of the year is okay.

Yeah, I don't have that stat in front of me John, and I'd be glad to send it to you offline, when we do pass that by markets, I just don't have it in front of me.

Yeah, that's fine. And one last one on the acquisition opportunity, hypothetically if you would buy a $1 billion in product next year, and you can opine on that number probably realistic it could be, if you held today's market pricing personal resources of funds how would you be , how would you find that $1 billion in acquisitions in terms of disc decisions exactly and that?

So, we would when you think about that, we use part of our fund which is about $400 million plus and minus. And then we would use the equity offering, obviously the cash from that and give him where our debt to EBITDA ratio, having a combination of borrowing and then probably somewhere in the $100 million dispositions to fund that as well. And we also have roughly 350 million in cash, our balance sheet today so that would obviously be part of that. In addition to that, we have to fund our development pipeline, to spend on our development pipeline, which is a couple of 100 million next year.

Okay thanks.

Our next question comes from Wes Golladay from RBC Capital Markets. Please go ahead with your questions.

Hello everyone, we are looking at the pipe pressure as the competitive said, how do you see that progressing into 2018, while still remain Charlotte in the South east Florida where with the other markets?

I think the supply pressure in, will continue to be with us, in Charlotte, and Houston, if you just look at job growth verses projected deliveries in both of those markets, it's hard to say that things are going to get much better from the supply standpoint. I think that you are likely to see, just going based on projected job growth in the number of deliveries that you have to run to the system, probably spreads some of the supplies user, probably already affecting parts of Dallas. That makes it probably more widespread and in 2018, you probably have, you are starting to see, the early stages of supply pressure in Denver and gain in based in 2018 numbers that probably gets a little bit more pronounced in 2018. Those would be the markets that will continue to be on the right offspring for supply. Pressure all the rest of our markets, you know, roughly equilibrium based on the supply and projected job growth next year, some better than others, but those would be the worry spots for 2018.

Okay and then looking at job growth, irrespective, lot of people want to hire, but it's really hard to find the correct laborer and skill match, you are taking any more conservative underrating when you look at job broken markets when you're buying.

When you look at, I think that's definitely a big concern right? How can the economy grow, if you encourage jobs as you can't find people who sell those jobs? I mean, if you look at, if you go out, I don't think that effects '18 much, but when you start going out into '19 and '20, you'll start getting into what do you see, most economists are showing job growth falling pretty substantially and in '19 and '20. So we definitely look at those metrics when we are deciding which sub-markets and which markets we want to buy them.

Yeah, just to put some numbers around that, again Witten's forecast in this company, you can even talk there's sometime, which is just a little straight in the labor market, that you are at 4.2% unemployment now. And that's likely to go drip a little bit lower, but, so we at 2018, total employment growth coming down from 2.1 this year in '17 drops to 1.9 the following year, and it's dropping to 1.5 in 2019, the Ric's point. So, we are not forecasting your session in that, he's just saying, that's his view of the constraint that we are going to be up against. Fortunately, since Camden's markets produce jobs at a higher, in population growth at higher markets than the national average, we don't see as bigger than impact from the follow off, we got total jobs in our, across our canvas platform. In 2017, it's 610, 000, he has that actually going up to 641 in 2018. And then, he's gotten coming back down to 560, 000 in 2019. So, yes, that's a real, I mean we think it's a real thing and our data providers are giving us data input that's a real thing.

Okay, thank you.

Our next question comes from Vincent Chao from Deutsche Bank. Please go ahead with your question.

Hey, I know you talked Houston a lot here on the call, but I just curious to obviously put some freezers in place immediately following the hurricane, I don't want to in to be perceived to be gauging the market, I'm just curious as we think that 28, do you think that the optics will come in to play at all., if we get to a certain level of rentals, would you just cap and or you would say that the renewables would be kept at 10? Can I just take you to the market average for the rest of the country, but is there any other thought on how you'll manage the optics of rent growth.

Yeah, I think that we have been gone above and beyond being good neighbors and we continue to do that. I guess, we sort of taken this in three steps to get back to market rate pricing, but ultimately, it doesn't serve anybody's interest and I have market killing pricing on little housing. And so, we need to be, we do need to get back to regular order and we will do that. We also have to put this in context that you take the entire Houston market because of the oversupply in the oil, plus that we've experienced for last three years, we had negative, our rental declined. For two and a half years going into the Harvey, so the focus we are paying rent at market rates, is somewhere around a team motive of 7% or 8% down on top line rents going in the Harvey so, we got 8% rent growth day one, we are back to rent that people were paying two and a half to three years ago. So, we don't think that there's going to be optical question, which does not, you are charging market rate runs for the apartments that you are renting. I think just to put it in the context; we were at 3.1% down on top line revenues in Houston in the third quarter. And, in order to get to the a lot of pick up that we are going to see, we are going to see higher going from 2.8 for the three quarters and the portfolio to 2.9. So somewhere it has to be positive, pretty positive math, and the plug is really Houston. And so we think, we're going to see, and our portfolio alone a shift from a negative 3.1 in the third quarter to plus 2.4 up in the fourth quarter. And that's the sort of magnitude of the sheer, so I don't - by the time that your income comes along; we will be back to market rates pricing, relative to our comp set and will probably be rent will be up 5% plus/minus form where they were in the second quarter. And my guess that extend into 2018, and in our case it has to, because we've got a, we have to get a market including price to get our, to get equilibrium back in our inventory and burn it at 97.7% occupied is nowhere to run an airline.

Right, okay, thanks for your perceptive and just another answer question on DC. I want to make sure how the numbers ride, I think you said, expectations for 2017 are about 3%, which seems to suggest another deceleration in the fourth quarter, is that the way to be thinking about that particular market.

Yeah, I think that's right, I think that's right. And gain we have performed pretty handily all that concept in the first and second quarter, my guess is that the supplies shifts around when the deliveries are coming, that's going to impact us a little bit more on the third and fourth quarter and we are all set out for 3% of the right number for the year and aging if you had asked me in the December of last year, based on all of our bottom up analysis, I would say you know, 3% top line sounds about right for the saying.

This sounds like the specific of some market deliveries that's driving the up forms earlier verses back up.

Yes, but you also, I mean third quarter, third, fourth quarter seasonally is always lower analysis in 9 or 10 years of lower third to fourth quarter in our growth. So, that's you know, you probably get 50 basis points and our entire portfolio historically between third and fourth quarter gross rate.

Okay and thank you.

Our next question comes from [indiscernible] from Zelman & Associates. Please go ahead with your question.

Hey guys thanks for taking the time, just on Houston little quick, separating your assets out there, what are inside the lop and what's outside the loop, it seems like you guys, games more occupancy on the assets that were inside the loop, and you know it's less comparatively on those outside loops. Could you see - how did that work? Was there any tension that kind of pre- events in one place and kind of boost occupancy over rent frozen across the board, in you know every asset that you have in Houston? Can you just talk about how the dynamics are worked?

Yeah I could see, when I am across the board, to your question that's freezing, runs with frozen lines everywhere, so we didn't make any distinction, we are talking inside and outside, high rise, low rise. They were frozen for the same period of time and at the same pre Harvey rates across our entire platform. So if you think about where the weakness was prior and the greatest that we had in our portfolio would have been our down town and mid town inside the loop apartments where new rents were down 8% to 10% across those assets. So it makes sense that now necessarily the occupancy because we always had pretty high occupancy in those units, but we had adjusted our pricing to maintain that. So it makes sense to me that the recovery in the rents - in the top line would happen this disproportionally inside the loop and that's what happened. We had asset that through this third quarter in some of our suburban assets that still were 1% negative, 1.5% negative year-to-date but we also had assets that were 8% to 9% negatives and so in those assets makes sense to me that we would see more recovery and that's what happened.

I see and that makes sense. Just one more question to Ric on your equity issuance. Was there did the overall allotment get for the exercise I didn't catch that I didn't see in the supplements and also you guys capture ATM. Can we expect more equities since going forward and just a little I am trying to figure out how you guys view your different sources of capitals today with this your debt is pretty much at all time low level if you look at net debt to EBITDA and yet you are choosing to issue equity. How would you think about that?

Sure, so we issued 4.750 million of shares that was the full issuance of the equity. Prior to that we did a very small amount on the ATM and where you can expect going forward the reason we did that many and we raised roughly 445 million was we didn't want to be in the market all the time and the challenge we have with an ATM program is that you are subject to block out and you are subject sort of dribbling that out over a long period of time and so we chose to take advantage of the market conditions, strengthen our balance sheets so we could go in the offensive from an acquisition perspective. So you won't see us until we get to the point where we spend this cash on our balance sheet you won't see us very active in the equity markets.

And on your question regarding the issue, the underwriters elected not to take up their option under the [indiscernible].

Got it and just a last follow up from me, is there anything in particular that you guys have in the pipeline in term of the acquisitions that this capital could be deployed towards or is that as you said just an opportunistic issuance because you know there is going to be things you want to do with it.

As I said earlier, we are constantly looking at properties and we don't have anything specific to discuss today about that.

Alright, thanks a lot guys. That's all from me.

Ladies and gentlemen with that we will conclude today's question-and-answer session. I'd like to turn the comments call back over to Ric Campo for any closing remarks.

Great, thanks for your time today and we will see a lot of you in Dallas in the next couple of weeks, so thank you.

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your lines.