Camden Property Trust — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Camden is a U.S. multifamily REIT. At quarter-end, it owned, operated, or was developing 178 properties with 60,652 apartment homes, including seven properties under construction.
Financial performance and key metrics
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Property revenue | $373.8 million | $294.1 million | $1,046.8 million | $838.2 million |
| Net income attributable to common shareholders | $29.8 million | $29.5 million | $607.9 million | $91.0 million |
| Diluted earnings per share | $0.27 | $0.29 | $5.62 | $0.90 |
| Property NOI | $240.9 million | $184.1 million | $675.9 million | $524.3 million |
| Net cash from operating activities | — | $576.5 million | $436.0 million |
- Same-store revenue rose 11.7% in Q3 and 11.6% for the first nine months; same-store NOI increased 16.3% and 16.0%, respectively. Higher rental rates were the main driver.
- Q3 average occupancy was 96.5%, compared with 97.7% a year earlier. Average monthly property revenue per apartment home increased to $2,132 from $1,922.
- Q3 property expenses rose 20.7%, slower than property revenue growth of 27.1%; expenses included $1.0 million of Hurricane Ian costs.
- Cash and cash equivalents were $62.0 million at September 30, down from $613.4 million at year-end 2021; restricted cash was $6.4 million. Nine-month investing cash outflow was $1.35 billion, principally reflecting the Funds acquisition and development spending.
Debt, liquidity, and capital
- Total notes payable were $3.688 billion: $3.173 billion unsecured and $514.8 million secured. Weighted-average debt maturity was 6.4 years; weighted-average interest rate was 3.7%.
- In August, Camden expanded its revolving credit facility from $900 million to $1.2 billion and added a $300 million delayed-draw unsecured term loan. Neither facility had borrowings outstanding at quarter-end; letters of credit totaled $14.2 million. Management said it was in compliance with covenants.
- Management described liquidity as sufficient for anticipated needs and scheduled debt repayments of approximately $595.7 million over the next 12 months. Interest coverage was 7.6 times for Q3 versus 6.6 times a year earlier.
- Camden issued 2.9 million shares in an April public offering, receiving approximately $490.3 million net, and issued approximately 0.2 million ATM shares for $26.2 million net during the first nine months. The 2022 ATM program had up to $500 million remaining. No share repurchases occurred in Q3; October authorization reset the remaining repurchase capacity to $500 million.
Material changes and unusual items
- On April 1, Camden acquired the remaining 68.7% interest in two investment funds for approximately $1.1 billion in cash and assumed approximately $515 million of secured debt. It consolidated 22 communities with 7,247 homes, previously accounted for under the equity method.
- Nine-month net income included a $474.1 million noncash gain from remeasuring Camden’s previously held interest in the funds and a $36.4 million gain on sale of a property. These gains explain much of the increase in reported earnings; nine-month diluted EPS was lower than basic EPS partly because of dilution.
- Interest expense increased 16.8% in Q3 and 13.8% year to date, primarily due to assumed mortgage debt and higher average credit-facility balances. Depreciation and amortization increased 42.5% in Q3 and 41.3% year to date, mainly reflecting acquired properties and completed developments.
- Camden sold one 245-home property in Largo, Maryland, for approximately $71.9 million during the first nine months. It reported no impairment charges for the periods presented.
Outlook, risks, and contingencies
- Management expected U.S. economic and employment growth to continue during 2022 and multifamily supply to remain manageable, while cautioning that weaker economic conditions could hurt operating results. The filing gives no specific earnings or revenue guidance.
- Seven developments totaling 2,219 homes were under construction, with estimated remaining costs of $348.4 million. Management also estimated additional 2022 spending for new development, repositioning and redevelopment, and recurring capital expenditures.
- The declared Q3 dividend was $0.94 per share, paid October 17, 2022. Management stated that a similar quarterly rate for the remainder of 2022 would imply an annualized $3.76 per share; this is not presented as formal dividend guidance.
- Risks highlighted include economic and capital-market volatility, rising interest rates and refinancing, competition and rent regulation, development and acquisition execution, severe weather, cybersecurity, and maintaining REIT qualification. Management reported no material risk-factor changes, no material litigation, and no outstanding guarantees or other off-balance-sheet arrangements.
Important facts for investors to verify
- Underlying operating performance excluding the $474.1 million acquisition-related gain and $36.4 million property-sale gain; review FFO and AFFO alongside GAAP earnings.
- Whether rent growth and occupancy remain resilient, and how operating costs, taxes, insurance, and interest expense affect same-store NOI.
- Funding and refinancing plans for the stated $595.7 million of debt repayments over the next 12 months, plus the $348.4 million remaining construction commitment.
- Actual lease-up, cost, and completion progress for developments, including exposure to construction-cost changes and local market conditions.
- Effects of Hurricane Ian and future weather events; the filing reports $1.0 million of Ian-related expense and no expected insurance recovery.