Investor Presentation March 2017

Transcription

1 Investor Presentation March

2 Table of Contents Company Overview & 2016 Highlights 3 6 Multifamily Fundamentals 7 11 Camden s Portfolio Real Estate Transactions Capital Structure & Liquidity Summary Appendix Guidance Non-GAAP Financial Measures Definitions & Reconciliations Forward-Looking Statements 2

3 Company Overview & 2016 Highlights 3

4 About Camden Publicly traded since 1993 S&P 400 Company Net Asset Value (NAV) $88 per share * Total Market Capitalization $10.3 billion Over 52,000 apartment homes located in 14 major markets across the U.S. *Average NAV per covering analysts 4

5 Camden s Strategy Focus on high growth markets (employment, population, migration) Operate a diverse portfolio of assets (A/B, urban/suburban) Recycle capital through acquisitions and dispositions Create value through development and redevelopment Maintain strong balance sheet with low leverage 5

6 2016 Highlights Completed nearly $1.2 billion of dispositions Average age of 23 years Average AFFO yield of 5.1% (based on trailing 12-month NOI and capex) Unleveraged IRR of 11% with average hold period of 17 years Paid special dividend of $4.25 per share with portion of proceeds Stabilized $425 million of developments $100 million of value creation Received upgrades from two major credit rating agencies Moody s now A3 with stable outlook Fitch Ratings now A- with stable outlook 6

7 Multifamily Fundamentals 7

8 Strong Demand for Multifamily Rental Housing Growing Echo Boom population with high propensity to rent Large share of jobs going to the age cohort Pent-up demand from young adults living at home or with roommates Young adults choosing to marry and have children later in life, delaying homeownership decisions Echo Boom Population Aged (millions) Favorable Demographics Trends* Over 60% of this age group choose to rent Year-Year Change in Employment (000) Young Adults Steadily Finding Employment* Annual Change in U.S. Population Aged (millions) Pent-Up Demand From Young Adults Living At Home* Annual Change in Population Estimated Home Move-Backs Potential Pent-Up Move-outs from Home 2016: 1.5M more young adults than usual living with parents *Witten Advisors data through January

9 Negative Sentiment Toward Home Ownership Many people choosing to rent rather than buy Moveout rates from apartment residents purchasing homes remain low (23% at peak vs. 15% in 2016 for Camden s portfolio) Strong credit scores and significant down payments required by mortgage lenders Young adults carrying significant amount of student debt Homeownership Rate Share of U.S. Households Who Own Home 70% 68% 66% 64% 62% 4Q16 * 63.5% 1Q70 1Q72 1Q74 1Q76 1Q78 1Q80 1Q82 1Q84 1Q86 1Q88 1Q90 1Q92 1Q94 1Q96 1Q98 1Q00 1Q02 1Q04 1Q06 1Q08 1Q10 1Q12 1Q14 1Q16 *Witten Advisors seasonally adjusted homeownership rate; pre-1980 not seasonally adjusted 9

10 Manageable Levels of Supply Multifamily starts peaked in 2016 and are expected to decline in 2017 Construction loans becoming more expensive and difficult to attain due to more stringent banking regulations Rising construction costs and reduced availability of construction loans make future development starts more challenging 5+ Rental Starts, trailing 12 months 400, , , ,000 0 Actual Starts Projected Deficit of 450,000 starts from Q92 1Q93 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20 Source: Witten Advisors 10

11 Demand Projected to Absorb Supply in Most Markets 3-year average ratio of estimated job growth to multifamily completions ( ) Long-term Equilibrium Ratio of 5:1 Ratio of Jobs to Completions 0.0 Washington, DC Phoenix Orange County San Diego Orlando Tampa SE Florida Los Angeles CPT Average Raleigh Atlanta Denver Charlotte Dallas Houston Austin Source: Witten Advisors and Axiometrics 11

12 Camden s Portfolio 12

13 Portfolio Statistics 4Q16 Operating Communities 152 Apartment Homes 52,793 Total Monthly Revenues per Occupied Unit $1,632 Average Age of Portfolio (years) 12 Development Communities 7 Development Apartment Homes 2,573 Value per Home * $213,500 *Green Street Advisors as of 2/28/17 13

14 Camden Resident Profile Median Age 30 years 74% of Residents are Single Average Annual Household Income $95K Average Rent-to-Income Ratio 18% 50% 40% 30% Total Number of Occupants per Apartment Home 50% 40% 30% Age Range of Camden Residents 20% 20% 10% 10% 0% %

15 Geographic Diversity & Market Balance Portfolio Statistics (as of 12/31/16) Total (1) Total Monthly 4Q16 (1) Apartment 4Q16 (2) Revenue per 4Q16 (1) Homes % of NOI Occupied Home Occupancy Washington, DC 5, % $1, % Houston 8, % 1, % Southern California 4, % 2, % Southeast Florida 2, % 2, % Atlanta 4, % 1, % Dallas 5, % 1, % Denver 2, % 1, % Charlotte 2, % 1, % Orlando 2, % 1, % Phoenix 2, % 1, % Tampa 2, % 1, % Raleigh 3, % 1, % Austin 3, % 1, % Corpus Christi, TX 1, % 1, % Overall 52, % $1, % (1) Includes joint venture communities (2) Includes pro-rata share of NOI from joint venture communities 15

16 Focus on High-Growth Markets Employment Growth (in thousands) Rank Metro Gain 1 New York-Jersey City-White Plains NY-NJ Dallas-Plano-Irving TX Los Angeles-Long Beach-Glendale CA Atlanta-Sandy Springs-Roswell GA Phoenix-Mesa-Scottsdale AZ Houston-The Woodlands-Sugar Land TX Washington-Arlington-Alexandria DC-VA-MD-WV Orlando-Kissimmee-Sanford FL Chicago-Naperville-Arlington Heights IL Seattle-Bellevue-Everett WA Tampa-St. Petersburg-Clearwater FL Denver-Aurora-Lakewood CO Anaheim-Santa Ana-Irvine CA Las Vegas-Henderson-Paradise NV Austin-Round Rock TX Minneapolis-St. Paul-Bloomington MN-WI Portland-Vancouver-Hillsboro OR-WA San Diego-Carlsbad CA Riverside-San Bernardino-Ontario CA Charlotte-Concord-Gastonia NC-SC Warren-Troy-Farmington Hills MI Fort Worth-Arlington TX Miami-Miami Beach-Kendall FL Oakland-Hayward-Berkeley CA Fort Lauderdale-Pompano Beach-Deerfield Beach FL 97.1 Population Growth (in thousands) Rank Metro Gain 1 Atlanta-Sandy Springs-Roswell GA Houston-The Woodlands-Sugar Land TX Phoenix-Mesa-Scottsdale AZ Dallas-Plano-Irving TX Orlando-Kissimmee-Sanford FL New York-Jersey City-White Plains NY-NJ Los Angeles-Long Beach-Glendale CA Austin-Round Rock TX Charlotte-Concord-Gastonia NC-SC Las Vegas-Henderson-Paradise NV Tampa-St. Petersburg-Clearwater FL Fort Worth-Arlington TX Washington-Arlington-Alexandria DC-VA-MD-WV Riverside-San Bernardino-Ontario CA Raleigh NC San Antonio-New Braunfels TX West Palm Beach-Boca Raton-Delray Beach FL Seattle-Bellevue-Everett WA Denver-Aurora-Lakewood CO Minneapolis-St. Paul-Bloomington MN-WI Miami-Miami Beach-Kendall FL Fort Lauderdale-Pompano Beach-Deerfield Beach FL San Diego-Carlsbad CA Oakland-Hayward-Berkeley CA Jacksonville FL Over 97% of Camden s NOI is derived from these markets Source: Moody s Analytics October 2016; Estimated Gains: ; Highlighted represents Camden markets 16

17 Focus on High-Growth Markets (cont.) Top 10 Markets for Domestic Net Migration Rank Metro Actual 1 Houston 106,688 2 Phoenix 99,176 3 Dallas 81,341 4 Tampa 80,427 5 Atlanta 75,297 6 Denver 68,309 7 Austin 67,388 8 Orlando 63,947 9 Charlotte 54, San Antonio 51,912 Rank Metro Estimated 1 Phoenix 143,263 2 Atlanta 118,357 3 Orlando 101,093 4 Tampa 98,720 5 Denver 95,299 6 Dallas 93,559 7 Charlotte 81,238 8 Austin 75,398 9 Las Vegas 74, San Antonio 68,448 Source: Witten Advisors; Highlighted represents Camden markets 17

18 Earnings & Dividend Growth Funds from Operations ( FFO ), Adjusted Funds from Operations ( AFFO ) and Dividends $5.00 $4.00 $3.00 $2.00 $ * Dividends per share AFFO per share FFO per share *Excludes special dividend of $4.25 per share paid on 9/30/16 18

19 Camden s Same Property Growth Revenue Growth 8% 6% 4% 2% Long-term Industry Avg ~3% 0% NOI Growth 10% 8% 6% 4% 2% Long-term Industry Avg ~3% 0%

20 Same Property Revenue Growth by Market Over 3% Under 3% 2016 Actual 2017 Forecast Atlanta Atlanta Austin Austin Dallas Dallas Denver Denver Orlando Orlando Phoenix Phoenix Raleigh Raleigh South Florida South Florida Southern California Southern California Tampa Tampa Charlotte Washington, DC Houston Washington, DC Charlotte Houston 20

21 New Leases & Renewals Average change in same property new lease and renewal rates vs. expiring lease rates when signed 8% 6% 4% 2% 0% -2% 1Q16 2Q16 3Q16 4Q16 1Q17* New Leases Renewals Blended Rate *1Q17 data through 2/28/17 21

22 Real Estate Transactions 22

23 Capital Recycling Since 2011 we have significantly improved the quality of our portfolio with minimal cash flow dilution, using disposition proceeds to fund development and acquisitions Increased total monthly revenues per occupied unit from $1,042 to $1,632 and maintained average age of 12 years $2.9B Total Dispositions $1.6B Total Development (1) $1.3B Total Acquisitions $757M $2,119M $261M $1,322M $635M $644M Wholly-owned Joint Ventures Wholly-owned Joint Ventures Wholly-owned Joint Ventures Average Age of 23 years (2) Average Age of 2 years (3) Average Age of 6 years (2) (1) Market value of developments (2) Average age at time of purchase or sale (3) Current age of developments 23

24 Development Value Creation Completed/ Stabilized Current Combined ( ) Pipeline Total Communities Apartment Homes 6,179 3,283 9,462 Total Cost $1.1B $0.8B $1.9B Market Value * $1.6B $1.1B $2.7B Value Creation $440M $251M $691M NAV Creation (per share) $4.78 $2.73 $7.51 *Value assuming current market cap rates ranging from 4.0%-5.25% for new product in our markets 24

25 Current Development Pipeline ($ in millions) Estimated Total Total Initial Construction Stabilized % Name Location Homes Budget Occupancy Completion Operations Leased (1) The Camden Hollywood, CA 287 $134 2Q16 4Q16 2Q17 91% Camden Victory Park Dallas, TX Q16 3Q16 4Q17 83% Camden Gallery Charlotte, NC Q16 1Q17 2Q17 87% Camden Lincoln Station Denver, CO Q16 2Q17 1Q18 34% Camden NoMa II Washington, DC Q17 4Q17 4Q19 6% Camden Shady Grove Rockville, MD Q17 1Q18 4Q19 4% Camden McGowen Station Houston, TX Q17 2Q18 3Q19 - Camden Washingtonian Gaithersburg, MD Q18 4Q18 4Q19 - Camden North End I Phoenix, AZ Q18 2Q19 2Q20 - Total 3,283 $848 Development pipeline 72% funded with $234M remaining to complete (2) (1) As of 3/2/17 (2) As of 1/31/17 25

26 Current Development Pipeline The Camden Los Angeles, CA Camden Victory Park Dallas, TX Camden Gallery Charlotte, NC Camden Lincoln Station Denver, CO Camden NoMa II Washington, DC Camden Shady Grove Rockville, MD Camden McGowen Station Houston, TX Camden Washingtonian Gaithersburg, MD Camden North End I Phoenix, AZ 26

27 Future Development Projects ($ in millions) Total Projected Estimated Project Location Homes Cost Camden Grandview II Charlotte, NC 28 $21 Camden Buckhead Atlanta, GA Camden RiNo Denver, CO Camden Gallery II Charlotte, NC 5 3 Camden Arts District Los Angeles, CA Camden Conte (1) Houston, TX Camden North End II Phoenix, AZ Camden Atlantic Plantation, FL Camden Paces III Atlanta, GA Total 2,473 $753 (1) Project anticipated to be developed in two phases; Estimates above represent both phases 27

28 Redevelopment Activity Target well-located year old assets Update kitchen & bath areas, appliances, flooring, fixtures, lighting, etc. $250 million spent to date through ,065 apartment homes completed to date Average cost of $11,700 per unit Average rental rate increase >$100 per month Over 10% cash-on-cash return 2017 budget of $26 million Before - Kitchen Before - Bath After - Kitchen After - Bath 28

29 Capital Structure & Liquidity 29

30 Strong Capital Structure ($ in millions as of 2/28/17) Mortgages $867 Senior Unsecured Notes $1, x net debt-to-ebitda 4.4% weighted average interest rate on all debt 92.9% fixed-rate debt Equity* $7,804 Total Market Capitalization = $10.3 Billion 64.6% unsecured debt 4.6 years weighted average maturity of debt Manageable debt maturities over next several years *Based on closing share price of $84.65 on 2/28/17 30

31 Manageable Debt Maturities Future scheduled maturities excluding Credit Facility (as of 2/28/17) ($ in millions) $700 $644.1 $600 $500 $500.0 $400 $350.0 $300 $246.8 $250.0 $250.0 $200 $175.0 $100 $0 $0.0 $

32 Liquidity (as of 2/28/17) $232M cash on hand No amounts drawn under $600M unsecured credit facility $315M equity issuance available under ATM program Sufficient liquidity to meet near-term capital needs Unencumbered asset pool of approximately $5.9B Strong credit ratings o Moody s: A3 Stable o Fitch: A- Stable o Standard & Poor s: BBB+ Stable 32

33 Summary 33

34 Why Camden? Experienced management team with sound business plan and proven history of performance Consistent long-term focus and commitment to high-growth markets Strong balance sheet with ample liquidity and solid credit metrics Well-positioned to capitalize on future opportunities Ranked by FORTUNE Magazine as one of the best workplaces in America #9 #13 #13 #8 100 BEST COMPANIES TO WORK FOR 100 BEST WORKPLACES FOR WOMEN 20 BEST WORKPLACES FOR GEN XERS 10 BEST WORKPLACES FOR LATINOS #15 50 BEST WORKPLACES FOR DIVERSITY #28 50 BEST WORKPLACES FOR PARENTS # BEST WORKPLACES FOR MILLENNIALS 34

35 Appendix 35

36 2017 Guidance * EARNINGS LOW MIDPOINT HIGH EPS per share $1.59 $1.69 $1.79 FFO per share $4.46 $4.56 $4.66 SAME PROPERTY PERFORMANCE Revenue Growth 2.3% 2.8% 3.3% Expense Growth 4.0% 4.5% 5.0% NOI Growth 0.8% 1.8% 2.8% TRANSACTIONS Acquisitions $0 million $100 million $200 million Dispositions $0 million $100 million $200 million Development Starts $100 million $200 million $300 million *2017 Guidance provided 2/7/17 36

37 Non-GAAP Financial Measures Definitions & Reconciliations This document contains certain non-gaap financial measures management believes are useful in evaluating an equity REIT's performance. Camden's definitions and calculations of non-gaap financial measures may differ from those used by other REITs, and thus may not be comparable. The non-gaap financial measures should not be considered as an alternative to net income as an indication of our operating performance, or to net cash provided by operating activities as a measure of our liquidity. FFO The National Association of Real Estate Investment Trusts ( NAREIT ) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America ("GAAP")), excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, impairments of depreciable assets, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of operating properties, and depreciation, FFO can assist in the comparison of the operating performance of a company s real estate investments between periods or to different companies. A reconciliation of net income attributable to common shareholders to FFO is provided below: Three Months Ended December 31, Twelve Months Ended December 31, Net income attributable to common shareholders $40,893 $60,593 $819,823 $249,315 Real estate depreciation and amortization 61,214 60, , ,966 Real estate depreciation from discontinued operations 4,202 4,327 16,138 Adjustments for unconsolidated joint ventures 2,250 2,364 9,194 9,146 Income allocated to non-controlling interests 1,187 1,209 18,403 8,947 Gain on sale of operating properties, net of tax (18,870) (294,954) (104,015) Gain on sale of discontinued operations, net of tax (375,237) Funds from operations $105,544 $109,582 $425,464 $414,497 37

38 Non-GAAP Financial Measures Definitions & Reconciliations Adjusted FFO In addition to FFO, we compute Adjusted FFO ("AFFO") as a supplemental measure of operating performance. AFFO is calculated utilizing FFO less recurring capital expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs. A reconciliation of FFO to AFFO is provided below: Three Months Ended December 31, Twelve Months Ended December 31, Net income attributable to common shareholders $40,893 $60,593 $819,823 $249,315 Real estate depreciation and amortization 61,214 60, , ,966 Real estate depreciation from discontinued operations 4,202 4,327 16,138 Adjustments for unconsolidated joint ventures 2,250 2,364 9,194 9,146 Income allocated to non-controlling interests 1,187 1,209 18,403 8,947 Gain on sale of operating properties, net of tax (18,870) (294,954) (104,015) Gain on sale of discontinued operations, net of tax (375,237) Funds from operations $105,544 $109,582 $425,464 $414,497 Less: recurring capitalized expenditures (15,475) (17,429) (59,084) (64,169) Adjusted funds from operations $90,069 $92,153 $366,380 $350,328 Weighted average number of common shares outstanding: EPS diluted 90,844 90,418 89,903 89,490 FFO/AFFO diluted 91,926 91,502 91,794 91,386 Total earnings per common share - diluted $0.45 $0.67 $9.05 $2.76 FFO per common share - diluted $1.15 $1.20 $4.64 $4.54 AFFO per common share - diluted $0.98 $1.01 $3.99 $

39 Non-GAAP Financial Measures Definitions & Reconciliations Expected FFO Expected FFO is calculated in a method consistent with historical FFO, and is considered an appropriate supplemental measure of expected operating performance when compared to expected earnings per common share (EPS). Guidance excludes gains, if any, on properties not currently held for sale due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales. A reconciliation of the ranges provided for diluted EPS to expected FFO per diluted share is provided below: 1Q17 Range 2017 Range Low High Low High Expected earnings per common share - diluted $0.36 $0.40 $1.59 $1.79 Expected real estate depreciation and amortization Expected adjustments for unconsolidated joint ventures Expected income allocated to non-controlling interests Expected FFO per share - diluted $1.06 $1.10 $4.46 $4.66 Adjusted EBITDA Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, including net operating income from discontinued operations, excluding equity in (income) loss of joint ventures, (gain) loss on sale of unconsolidated joint venture interests, gain on acquisition of controlling interest in joint ventures, gain on sale of operating properties including land, net of tax, and income (loss) allocated to non-controlling interests. The Company considers Adjusted EBITDA to be an appropriate supplemental measure of operating performance to net income attributable to common shareholders because it represents income before non-cash depreciation and the cost of debt, and excludes gains or losses from property dispositions. A reconciliation of net income attributable to common shareholders to Adjusted EBITDA is provided below: Three Months Ended December 31, Twelve Months Ended December 31, Net income attributable to common shareholders $40,893 $60,593 $819,823 $249,315 Plus: Interest expense 23,209 23,740 93,145 97,312 Plus: Depreciation and amortization expense 62,767 61, , ,944 Plus: Income allocated to non-controlling interests from continuing operations 1,187 1,209 18,403 8,947 Plus: Income tax expense ,617 1,872 Plus: Real estate depreciation from discontinued operations 4,202 4,327 16,138 Less: Gain on sale of operating properties, including land (19,096) (295,397) (104,288) Less: Equity in income of joint ventures (2,073) (1,681) (7,125) (6,168) Less: Gain on sale of discontinued operations, net of tax (375,237) Adjusted EBITDA $126,396 $131,189 $509,702 $504,072 39

40 Non-GAAP Financial Measures Definitions & Reconciliations Net Operating Income (NOI) NOI is defined by the Company as total property income less property operating and maintenance expenses less real estate taxes. NOI is further detailed in the Components of Property NOI schedules on page 11. The Company considers NOI to be an appropriate supplemental measure of operating performance to net income attributable to common shareholders because it reflects the operating performance of our communities without allocation of corporate level property management overhead or general and administrative costs. A reconciliation of net income attributable to common shareholders to net operating income is provided below: Three Months Ended December 31, Twelve Months Ended December 31, Net income $42,080 $61,802 $838,226 $258,262 Less: Fee and asset management income (1,641) (1,916) (6,864) (6,999) Less: Interest and other income (836) (289) (2,202) (597) Less: Income/(loss) on deferred compensation plans (730) (1,607) (5,511) 264 Plus: Property management expense 5,978 5,632 25,125 23,055 Plus: Fee and asset management expense 987 1,318 3,848 4,742 Plus: General and administrative expense 12,579 13,113 47,415 46,233 Plus: Interest expense 23,209 23,740 93,145 97,312 Plus: Depreciation and amortization expense 62,767 61, , ,944 Plus: Expense/(benefit) on deferred compensation plans 730 1,607 5,511 (264) Less: Gain on sale of operating properties, including land (19,096) (295,397) (104,288) Less: Equity in income of joint ventures (2,073) (1,681) (7,125) (6,168) Plus: Income tax expense ,617 1,872 Less: Income from discontinued operations (4,918) (7,605) (19,750) Less: Gain on sale of discontinued operations, net of tax (375,237) Net Operating Income (NOI) $143,463 $139,927 $565,092 $534,618 "Same Property" Communities $124,414 $118,336 $482,333 $460,246 Non-"Same Property" Communities 15,233 12,683 53,603 37,427 Development and Lease-Up Communities 2, ,036 (7) Dispositions/Other 1,053 8,907 24,120 36,952 Net Operating Income (NOI) $143,463 $139,927 $565,092 $534,618 40

41 Forward-Looking Statements In addition to historical information, this presentation contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which Camden (the Company ) operates, management's beliefs, and assumptions made by management. Forwardlooking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Factors which may cause the Company s actual results or performance to differ materially from those contemplated by forward-looking statements are described under the heading Risk Factors in Camden s Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission (SEC). Forward-looking statements made in this presentation represent management s opinions as of the date of this presentation, and the Company assumes no obligation to update or supplement these statements because of subsequent events. 41

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