Good morning, welcome to the Camden Property Trust first quarter 2021 earnings. All participants will be in listen-only mode. Should you need assistance, signal a conference specialist by pressing star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Kim Callahan, Senior Vice President of Investor Relations. Please go ahead. Good morning. Thank you for joining Camden's first quarter 2021 earnings conference call. We hope you will enjoy our new, more interactive call format today, which includes a brief video presentation, as well as slides detailing some of the remarks from our executive team. Today's webcast will be available for replay this afternoon, and we are happy to share copies of our slides upon request. If you haven't logged in yet, you can do so now through the investors section of our website at camdenliving.com. 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 first quarter 2021 earnings release is available in the investors section of our website at camdenliving.com, and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call. Joining me today are Ric Campo, Camden's Chairman and Chief Executive Officer, Keith Oden, Executive Vice Chairman, and Alex Jessett, Chief Financial Officer. We will attempt to complete our call within one hour, as we know that another multifamily company is holding their call right after us. 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. The theme for our earnings call music was "Have Fun." We've always believed that our Camden teammates do their best work when they're having fun. That's why 25 years ago, we chose Have Fun as one of our nine core values. Having fun is an essential ingredient of maintaining a great workplace. When your team is having fun, they have smiles on their faces, which puts smiles on our residents' faces, which ultimately makes our shareholders smile. It's a formula that has allowed us to earn a place on Fortune Magazine's 100 Best Places to Work list for 14 consecutive years, with seven top 10 finishes. Just recently, we're pleased to announce that Camden placed number eight on this year's list. Creating a culture that encourages folks to have fun requires consistent, intentional focus, especially during the pandemic. Over the years, we have created traditions that support having fun, from skits and lip-sync contests to fun videos that deliver important messages to our teams. The pandemic allowed us to come up with new ways to maintain our culture in the new work environment. Camden's culture is our superpower that allows us to consistently perform at the highest level. As Peter Drucker famously said, "Culture eats strategy for breakfast." Our earnings call platform allows us to share videos and enhance our messaging. Here's an inside view of one of the many cultural messages that we shared with all of our Camden teammates this year, and now with you. Culture is really key to Camden. Culture is who we are. Culture is about how we treat each other, how we feel about each other, and without the culture, we would not have been able to do the great things we did in 2020 during the pandemic. Hopefully, that culture will take us forward through 2021 when we get past the pandemic, and then throughout the next few years once we're done with the pandemic. So there was one last culture video that's called Pass the Culture, and I get called by Keith Oden, and he goes, "You know, what we need to do is we need to make a big ending." I happened to be in Lake Tahoe. It was 45 degrees out. He said, "The big deal is at the end of the video, you gotta jump in the lake and spike a football." I was like, "What? Are you kidding me? Why do I always have to jump in the lake or do something like that? I did it because it's all about culture. It's all about having fun, and it's all about taking care of each other, providing peak experiences, making sure that we know that it's not just a job. We're taking care of each other, our customers every single day. Here's the Pass the Culture video, and it was 45 degrees in the water. It was very cold. [Presentation] Wow, wasn't that an interesting video and nice spike right into the cold water. It's all about culture. It's all about making sure we're having fun at the same time as we're doing what we need to do every single day, taking care of each other first, taking care of our customers, and ultimately having fun while we do it. During the first quarter, we saw operating strength building in most of our markets. Clearly, the opening of the economy, driven by the speed at which the COVID-19 vaccinations have been distributed, has improved our results for the first quarter and our outlook for the rest of the year. This has led us to increase our net operating income and our FFO guidance. As tough and strange as the pandemic made last year, we've used the time to advance many initiatives that will drive revenues, lower expenses, and improve performance in key areas. To list a few, our investments in Chirp, Funnel, and other AI opportunities will accelerate self-guided tours, virtual leasing, in-apartment package deliveries, and keyless communities, all driving better customer experiences while increasing revenues and lowering expenses. Our investments in our cloud-based ERP systems have made remote working seamless. It streamlines data mining, moving us closer to the Internet of Things. It creates for a more robust ESG analysis and reporting on our ultimate carbon footprint reductions that we'll publish later in the year. We will be publishing a more expanded ESG report in the fall. I began the call with a discussion and a video on culture. We continue to do the right thing at Camden, moving forward on the journey to a more diverse, equitable, and inclusive workplace. Last summer, when there was great uncertainty, we advised our teams to focus on things they could control, get in the best health of their lives, embrace their friends and family as true partners with masks, proper social distancing, and vaccinations, of course. We also asked our team members to take care of our residents and each other and not to listen to the noise around them. We told them that the pandemic would pass, and the years after would be great for our teams, their families, and our business. We see the light ahead, and it's not a train. I want to thank our team, Camden, your families, for helping us get from there to here. Thank you, and I'll turn the call over to Keith. We're very proud of the fact at Camden that we have been included on Fortune Magazine's list of 100 best companies to work for 14 years. It's an incredible accomplishment that reflects the fact that each of you takes pride in the workplace and continues to work hard to make Camden a great place to work. A lot of people think about the Fortune list and Camden's culture and all the things that we do to support being a great workplace. A lot of people look at that and they say, what they see is expense and cost. What we see is investment. We're investing in our brand, we're investing in our people, we're investing in our culture. Ultimately, we think those things are far more important than the small amount of impact that the expenses that we have around maintaining Camden as a great workplace actually matter. One of the ways to look at that is that we track our Camden's 20-year investment return against the S&P 500. It's proof positive that creating a great workplace also creates great results for your shareholders. Over the last 20 years, Camden Property Trust has produced an annual return for our shareholders of over 11%, and the S&P 500 was about 7.5%. Almost 4% per year better than the S&P 500 for a 20-year period. That's pretty incredible. We think it's directly attributable to the investment that we make in our culture, in our people, and making Camden a great place to work. Thank you for all you do, and thank you for being a part of this great company for all this period of time. A few details on our first quarter 2021 operating results. Same property revenue growth was down 0.4% for the quarter. As expected, our top performers were located in our Sun Belt markets, with Phoenix at 5.8%, Tampa up 4.0%, Atlanta 2.2%, Raleigh 1.9%, and Denver rounding out the top five list at 1.3% up. Rental rate trends for the first quarter were slightly ahead of plan, with signed leases down 0.8%, renewals up 3.4%, for a blended rate of 1.2%. For effective leases, which were generally signed in the fourth quarter or early in the first quarter, the blended rate was 100 basis points lower at 0.2%. Our preliminary April results indicate improvements across the board for signed new leases, renewals, and blended growth, averaging 4.5%, 4.7%, and 4.6% respectively. Future renewal offers are being sent out on average at over 5%. Our blended rental rates moved up from 1.2% in the first quarter to 4.6% in the month of April. This 340 basis point improvement exceeded our budget and was the primary reason for raising our full-year revenue guidance. It's worth noting that Houston showed the fifth-best improvement in revenue reforecast among all of Camden's markets, and we now expect Houston revenues to be only about 1.5% down from last year. Occupancy averaged 96% during the first quarter of 2021, which matched our performance in the first quarter of 2020, and was the highest quarterly level achieved since the pandemic began. April 2021 occupancy has accelerated to 96.6%, exceeding our original budget and expectation and setting us up well for our peak leasing season, which has begun and generally runs through early September. Net turnover for the first quarter of 2021 was 200 basis points lower than 2020 at 35% versus 37% last year, marking yet another quarter of high resident retention and fewer residents choosing to move. Move-outs to purchase homes dropped to 16.9% for the quarter versus 19% last quarter, which is in line with our seasonal patterns we usually see from the fourth quarter to the first quarter of each year. Next up is 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 first quarter of 2021, we commenced construction on Camden Durham, a 354-unit, $120 million new development in Durham, North Carolina. We began leasing at both Camden Lake Eola, a 360-unit, $125 million new development in Orlando, and Camden Buckhead, a 366-unit, $160 million new development in Atlanta. Subsequent to quarter end, we began leasing at Camden Hillcrest, a 132-unit, $95 million new development in San Diego. In the quarter, we collected 98.4% of our scheduled rents, with only 1.6% delinquent. This compares favorably to the first quarter of 2020, when we collected 97.9% of our scheduled rents, with a higher 2.1% delinquency. Turning to bad debt. In accordance with GAAP, certain uncollected revenue is recognized by us as income in the current month. We then evaluate this uncollectible revenue and establish what we believe to be an appropriate reserve. This reserve serves as a corresponding offset to property revenues in the same period. When a resident moves out owing us money, we typically have previously reserved all past due amounts, and there will be no future impact to the income statement. We reevaluate our reserves monthly for collectibility. For multifamily residents, we have currently reserved $9.2 million as uncollectible revenue against a receivable of $10.2 million. For retail, we are fully reserved against our $2.3 million receivable. In mid-February, Texas experienced a significant winter storm, resulting in widespread power outages, which led to, among other issues, corresponding water damage from broken water pipes. Less than 5% of our Texas units experienced any type of damage, with only 1/4 of 1% requiring the resident to temporarily vacate their home. Today, the vast majority of the damage has been fully repaired and operations have returned to normal. We are extremely proud of the efforts of Team Camden in responding to this unprecedented event. Last night, we reported funds from operations for the first quarter of 2021 of $125.8 million, or $1.24 per share, $0.01 above the midpoint of our prior guidance range of $1.20-$1.26. The $0.01 per share variance to the midpoint of our prior quarterly FFO guidance resulted primarily from both higher occupancy and higher rental rates at our same store and non-same store portfolio, partially offset by the timing of certain property tax refunds in Washington, D.C., and Los Angeles, which we expected in the first quarter and will now likely not receive until the second half of the year. Contained within our first quarter results is approximately $900,000 of expenses directly associated with the Texas winter storm. Two-thirds of this amount is property-level insurance, overtime, and repair and maintenance expense. The remainder is corporate-level and tied to relief efforts, including meals provided to our residents. The additional property-level expenses were entirely offset by greater than anticipated amounts of unrelated insurance subrogation proceeds. Last night, based upon our year-to-date operating performance, our April 2021 new lease and renewal rates, and our expectations for the remainder of the year, we have increased the midpoint of our full-year revenue growth from 0.75%-1.6%. We have increased the midpoint of our same-store expense growth from 3.5%- 3.9%. This increase is entirely to account for additional property-level salary expenses now anticipated to result from our reforecasted full-year revenue outperformance. As a result, we have increased the midpoint of our 2021 same-store NOI guidance from - 0.85% to + 0.25%. Our 3.9% revised expense growth at the midpoint assumes insurance expense will increase by approximately 22% due to the continued unfavorable insurance market. Property insurance comprises approximately 4% of our total operating expenses. Additionally, our revised expense growth assumes that salaries and benefits will increase by 3.5% as a result of additional compensation tied directly to the now reforecasted revenue outperformance. The remainder of our property-level expense categories are anticipated to grow at approximately 3% in the aggregate. Last night, we also increased the midpoint of our full-year 2021 FFO guidance by $0.09 per share. $0.07 of this increase results from our revised same-store NOI guidance, with the remaining $0.02 per share increase expected to be generated by our non-same-store portfolio. Our new 2021 FFO guidance is $4.94-$5.24, with a midpoint of $5.09 per share. We also provided earnings guidance for the second quarter of 2021. We expect FFO per share for the second quarter to be within the range of $1.22-$1.28. The midpoint of $1.25 represents a $0.01 per share increase from our $1.24 in the first quarter of 2021. This increase is primarily the result of an approximate $0.01 per share expected sequential increase in same store NOI resulting from higher expected revenues during our peak leasing period, partially offset by related compensation expenses, the seasonality of certain repair and maintenance expenses, and increases from our May insurance renewal. As of today, we have just over $1.1 billion of liquidity, comprised of approximately $260 million in cash and cash equivalents and no amounts outstanding under our $900 million unsecured credit facility. At quarter end, we had $358 million left to spend over the next three years under our existing development pipeline, and we have no scheduled debt maturities until 2022. Our current excess cash is invested with various banks, earning approximately 25 basis points. Finally, as I have discussed on prior calls, in 2019 and 2020, we set in play important technological advancements. 2021 will be the transition year that will lead to realized efficiencies in 2022, 2023, and beyond. From cloud-based financial systems to virtual leasing, to mobile access to AI technologies that allow us to meet residents on their schedule, we are poised very well for the future. At this time, we will open the call up to questions. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question today will come from Alua Askarbek with Bank of America. Please go ahead. Hi, everyone. Congratulations on a great quarter. I just wanted to start off a little bit big picture, asking more about the transactions market. I know you guys were guiding to about $400 million-$500 million. How are you guys thinking about that now that we are about four or five months into the year, and what opportunities are you seeing out there in the market? Well, definitely, we are seeing opportunities. The challenge, however, is the pricing is way beyond what we expected. The good news is, since we have a balanced disposition and acquisition program, we expect to get higher prices for our properties that we're going to sell, and so we're going to try to make that trade. To go back to our last big acquisition disposition programs in the last cycle, we sold a lot of properties, bought a lot of properties, and we were able to upgrade the quality of the portfolio over time. I will tell you, I've never seen cap rates this low in my business career. I'll give you an example of real-time, a property that we were working on last week in Tampa, or this week in Tampa. I just got the email yesterday. The original price talk for this reasonable property in Tampa, it's a middle-of-the-road, new development, decent property. We'll call it an A-. Price talk at the beginning of the process was $77 million plus or minus, which would have been in the low 4% cap rate, kind of right at 4%-ish. The price of the property was awarded at a little over $90 million, which is a going-in cap rate of 3.2%. With a 3% growth in revenue over a seven-year period, the only way you get to a 6% IRR is to have a 3.75% exit cap rate. That's what properties are trading for in every major market in America today. I think we'll be able to sell properties and buy properties, but the spread, I think, between older and newer is definitely going to be really tight, and it's a good trade for us, and we'll continue to do that. Pure acquisitions are pretty tough if you don't have a disposition behind it to try to capture that newer property and capture the lower CapEx part of the equation. That's why we would be doing it in the first place. Got it. Thank you. I think you guys commented a lot on how you wanted to enter Nashville. What are you guys seeing there in terms of cap rates on the transaction market? Same. The cap rates are pretty tight in Nashville, too. Nashville is an interesting market because when you look at its supply side, it has probably the second-most supply coming into the market. I think that of any other city in the country. We're looking really hard in Nashville, and our teams are going to be out there next week, and we're actually going out to look at a few properties next week as well. We think we'll be able to move into Nashville this year. Again, you can acquire properties and we can acquire properties. You just have to pay up today. Again, as long as we're selling properties at really high prices and buying properties at really high prices, I'm okay with that, and I think we'll be able to execute in Nashville. Okay, great. Thank you. Good luck with that. Mm-hmm. Thanks. Our next question comes from Neil Malkin with Capital One Securities. Hello, everyone. First question, can you just talk about what you're seeing in terms of in-migration in some of your markets, your kind of larger Sun Belt markets? Obviously, COVID has kind of been the great accelerator for that. Just wondering if your people on the ground are telling you that they continue to see that in earnest, if it's accelerating, if it's kind of steady. Any commentary on kind of where that's coming from, what markets are the biggest beneficiaries? Yeah. Neil, we continue to see elevated levels across our platform, but it's not new. We've had in-migration going on, and it has been exiting the Northeast and parts of California, mainly Northern California, for the last decade. Clearly, it's accelerated. I would say the markets that it's the most impact and most visible right currently are in Atlanta, everywhere in Florida, and again, that's mostly a Northeastern phenomenon. In Austin, Texas, I would say that's the place where anecdotal evidence of out-of-state license plates, in particular, California, is pretty incredible. The trends in some of our markets around home prices that I think exhibit characteristics of kind of people coming in and being willing to pay up. In Austin, Texas, as an example, it has the highest spread between asking price for a single-family home and selling price. In the last 12 months, the average sales price in Austin, Texas, for a single-family home is 7% above what the asking price was. These are kind of crazy numbers historically that we've never seen before. I think it continues to be indicative of people finding incredible housing value in our markets relative to the markets that they're exiting. I think it's just a continuation of what's been going on. Clearly, it's accelerated, and a lot of people I think, or some people think that this is strictly a COVID-related increase. I'm not so sure that that's true. I think the trend that's been in place a long time is going to continue and probably at elevated levels. If you look at the census numbers that came out, Texas gained two congressional seats. California lost one. New York lost one. You go up into the Rust Belt, a lot of those states lost, and Florida gained. I think we have seen an uptick in Phoenix and in Florida for sure. I think this is just a continuation. I agree with you totally that the pandemic is the great accelerator. I think what will really be interesting will be once these states are open. California, talks about being open, but it's really not open yet. I mean, fully. When we get to a real pandemic is in the rearview mirror, the question will be what happens over the next couple of years when people actually do have the ability to work from home and just use their laptop as their office. I think we're in a good position, and we've always wanted to be in these markets because they are pro-growth markets and great weather and low housing prices that drives migration. So I would add to that- If you look at most of our new residents come from Sunbelt markets, but if you think about non-Sunbelt markets, New York is our number one non-Sunbelt provider of new Camden residents. Okay. Thanks for that. Other one for me is maybe bigger picture. Talked about cap rates coming down. We've talked to brokers pretty much in all of your markets and, sub four is like the name of the game. Yep. When you think about your portfolio, it's a great aggregated, diversified portfolio, ridiculously low leverage compared to anything private. A lot of growth avenues there. Do you think there should be a re-rating, or is it fair to say that cap rates on the public side need to come down or they're justified being lower, and if nothing else, the spread between Coastal and Sunbelt should be compressed, at least, over the next several years, not the cycle? Well, if you calculated Camden's NAV based on the current cap rate environment, we have a spreadsheet that shows sort of various cap rates, and what we think our NAV is. If you use the Tampa number, we don't have that number on our spreadsheet. Okay? We go to like three and a half cap rates, and we stop. Clearly, the question will ultimately be, who's right? Is it the private market that's right, or the public markets are right? We've had this debate forever that the public markets sometimes act as real estate and sometimes act as stocks. When the stocks get hammered, it's not because somebody's thinking about their NAV relationship to the private market. They're just selling a stock because they have an ability to buy some other stock that's going to go up faster, or have whatever their reason for that trade is. I think we're trading more like stocks today for sure, and less like real estate. Yeah. When you think about why somebody's paying a low three cap rate in Tampa, I think it's pretty basic. Number one, the tenure is at a very low rate. You still have positive leverage when you finance using a tenure at, say, 2.5, or a 10-year mortgage at 2.5 or two and some change, and compared to a three and a quarter cap rate. You have 100+ basis, maybe a 90-100 basis points of positive leverage on that trade. You think about the worry that people have with the current sort of trajectory of a $1 trillion here, a $1 trillion there, Fed and government stimulus and everything else that's going on out there. You hear the word inflation, you hear the word, oh gee, what happens long-term inflation-wise? Well, multifamily, we price our leases every single night, and our leases roll over. We're the fastest roller of lease type other than hotels. 8%+ of our leases roll over every month. It's a great inflation hedge if you're worried about that. When you think about private capital looking for a yield, multifamily is a pretty good place to be, and the supply and demand side of the equation is pretty much balanced. You have great job growth going on in most of these markets, and once the markets are opened up, I think the coastal markets will do fine. It'll just take more time for them to get better than it does the markets that have opened up. I think that's why cap rate's really low. I wouldn't say that the private side is crazy right now, clearly, the gap between real cap rates in the private sector versus the public sector is there's a biggest spread I've probably ever seen in my business career at this point. Who's right? Could you get humorous. Yeah. Well, I was going to say, could you get humorous and what does the three and a half cap translate into? Oh, well, you can look at just the NAV. The consensus NAV right now is like $119 a share, and it's like a four and three-quarter cap rate or something like that. For every 10 basis points in cap rate, it's like two dollars a share. You do the math. I'm not going to put a number out there, it's about that. Two dollars a share for every 10 basis points. Do we have another question? Our next question comes from Alexander Goldfarb with Piper Sandler. Hey, good morning. Morning down there, and Keith Oden, nice job DJing this morning on the tunes. Two questions. First, [been] obviously, there are a lot of articles about the impact of the unemployment, the extended enhanced unemployment benefits. Was talking to a guy who does business across a lot of different states, and there's feedback that people won't take a job because they're getting paid more to sit at home. In your portfolio, and I don't know how much of that was a driver of your need to increase the property level payroll, but are you seeing across your markets that sort of the economy is being held back because people aren't taking jobs? We should read into it that the 4.5% rent increases that you guys got in April is an indication that it's two different groups, and the impact of the extended unemployment benefits has really no real impact on your guys' ability to perform. Basically, what I'm asking is, as these benefits expire, would we see an acceleration of your portfolio, or the two are not related? I think the two are related, but not directly. If you think about the people that are unemployed today that are receiving government benefits, those are people making, I think a vast majority of them make under $50,000 a year, and those are folks that are working in hospitality areas and things like that. They're making 30% more by staying home than they are going back to work. Restaurants, for example, I was driving out yesterday afternoon, I saw a restaurant that had help needed in every position, $500 signing bonus if you come in. Right? That is holding back some of the economy from that perspective. Our average income is over $100,000. Most of our folks are working, they're continuing to work and doing well. The biggest issue holding us back from a higher revenue growth are restrictions on increasing rent in certain markets, like in California and in Washington, D.C. Our top-line number would be higher by at least 50 basis points if we didn't have those restrictions in place, in my opinion. I think that once the economy opens more in these other markets, and we get past this CDC restriction and the cap on renewals and things like that, then the multifamily business should be really good in the next six, eight, 10 months, once we get past that piece Okay Our increase in cost for salaries today are not so much driven by we can't find employees, but it's by outperforming the original budget. We have to increase our bonus accruals for them. We definitely like hearing about bonus accruals going up. That's a good thing. The second thing is, on the development side, obviously, you guys have pared back your program tremendously over the years. As you look at new markets like Nashville or just try to deal with rising construction costs, are you guys seeing more opportunity to put Camden capital to work, like funding other developers, third party, do it as a takeout? Does that sort of mitigate risk or allow you to broaden your net? Your view is that you really want to do development on your own because from start to finish, you feel that holistically it's a better risk proposition? I think that doing anything that isn't 100% Camden-owned with Camden control adds more risk, not less risk to the process. You can't really move the needle on, at least our opinion is, driving revenue and driving new development deals really by doing JVs or doing equity programs or whatever you want to call them. We still have the sting from a $3 billion joint venture program during 2008 and 2009, where our partners wanted us to default on debt so we could buy the debt back cheaper. When we did those joint ventures, the $3 billion didn't really move the needle for Camden, but what it did is it created more risk when the market turned down and we had challenges with dealing with our partners. Even though they were all deep-pocketed, they didn't want to bring any cash out of their pocket. We're going to keep our balance sheet pristine. We're not going to do deals like that. Other companies have different views of that, I get it, but that's not Camden. Alex, just on your point about the size of the development pipeline. If you take what's in lease-up currently, plus what's under construction, we're close to $1.2 billion in new development. We think we've been very opportunistic about taking advantage of delivering these yields into a declining cap rate environment that's going to create a ton of value. I think $1.2 billion is about equivalent to our all-time high in terms of a development pipeline. We definitely see opportunities. Everything that we're working on right now based on kind of cap rates that are in play for acquisition assets look like they're going to be really accretive. Okay. Thank you. Our next question comes from Nick Joseph, Citi. Thanks. Maybe just sticking with construction. What are you seeing on the cost side, both for the in-place development pipeline and also as you price out future starts? Prices are up big time. Let's take two periods of time. Take this year, April of 2019 versus April 2020. Costs were up 2% or 3% maybe, in some markets actually flat. In the last 12 months since April of 2020 versus 2021, multifamily costs in total are up about 12.5%. It's all primarily driven by Well, there's three big drivers. One is just commodity prices. If you look at soft lumber prices in the last 12 months, soft lumber is up 83%, plywood's up 53%, OSB board is up 65%. Even fuel, when you think about gas, fuel, diesel, gasoline is up 50%, 60%. Labor issues are there. Supply delays or supply chain backups are making products more difficult to get. The speed at which you can develop is slower. It's a tough environment out there when it comes to cost. Good news for us is we did lock in lumber packages on several jobs that we had, so we don't have a lot of exposure on lumber at this point. We did lock in about 70% of the package. I really give kudos to our construction folks and our commodity consultants for helping us navigate this tough water here. Camden doesn't have a big exposure to this big price increase, but it does affect the way we underwrite new transactions, obviously, and it becomes more and more difficult. I guess on the one hand, with cap rates compressing as much as they are, the spread on what you can buy an asset for versus what you can build it for today, even with a cost increase, is still pretty wide. That's why you're going to continue to see new developments continue, even though the going and yields are going to be down, the spread between what you can sell and buy for is still pretty robust. Thanks. That's very helpful. Just on the rental assistance plans, how do you think that impacts Los Angeles and Orange County specific to you? So far it hasn't affected us in a positive way at all. Part of it is that all of the various qualifying elements that you have to go through, and so far experience has been that our resident base does not qualify or has not qualified for any meaningful amount of rental assistance, in particular in California. It's a little bit different market to market. We do have some markets where we've gotten a couple of hundred thousand dollars in rental assistance. Overall, if you take the effect of delinquency, the effect of not being able to get people moved out who are not paying their rent, overall, the whole event has been a pretty significant net negative for us around the margins. By that I mean, we're now at about $9 million in receivables, and that's about $8 million than what we would normally carry in our receivables. We hope that over time, a couple of different things will happen. We hope that if the CDC mandate is not extended, which it's currently out to June 30, and I guess it's anybody's guess as to whether it will be or not, but if that is not extended, then we should be in a position to start getting back control of our real estate. We think that's going to be very helpful in kind of whittling away at that $9 million in receivables. Overall, in our portfolio, the ERAP has not been particularly helpful because of the average income of our resident base. We'll see if in this next tranche, there's fewer restrictions on how that gets used, but I'm not terribly optimistic about that. One of the challenges that you have with all this is that Federal Government puts this money out. In the last two stimulus, the one in December and the one that happened in February, $46 billion was allocated to rent assistance, which is a huge number, obviously. To date, there's been just a minute fraction of that money going out. Part of it is that the government requirements to check the box. We were having a meeting with our California folks, and I think the last number I heard, Keith, was that we've had to send out 10,000 pages of documents to our residents in California, and it's like, "What." It's all this massive just government requirements to say, "You got this right, this right, this right, this right, and here's what you can do." When he starts talking about 10,000 documents, what do you think those people are doing in those apartments? They're picking that document up, looking at it for the first paragraph, and throwing it in the garbage. The challenge you have is that government requirements are tough. In Houston, for example, we were involved in designing the first set of programs for apartment rent relief here, and we streamlined it. We gave out $70 million of money in Houston, Texas, and did it really fast. At the end, we ended up with $10 million more by the end of the year. We couldn't give the $10 million out, so we had to give it to the food bank. Otherwise, based on government regulations, you'd have to give it back to the Federal Government if you didn't spend it. The challenge you have with all this stimulus and these things is that it's really hard to get the money out to people. The people that are hurting are not the $100,000 households. The people that are hurting are the $30,000, $40,000, $50,000 players that are in C and D properties that aren't back to work or are not getting stimulus money and what have you. Those are the ones that are the hardest to get. Check the box on. Once they go through a website and you don't have all their information, they just leave, and so you're losing them. It's a challenge, and those items, I think our industry's done a great job of trying to help the most vulnerable people in the multi-family space, but they just don't live at Camden, and they don't live at most of the public company's apartments. Thank you. Our next question comes from John Kim with BMO Capital Markets. Thank you. You guys look great on video. Thanks. I had a question on the occupancy pickup you had in April to 96.6%. Were there any particular markets that drove that figure higher, and do you expect it to remain at this level for the remainder of the year, or do you expect it to trend back down to 96%, which is where you operated back in 2019? Yeah. I think that if you look at our pre-lease numbers and go out 30, 60 days, the indications are pretty good that we'll stay above 96% for the next couple of months. Obviously, we're coming into the best part of our leasing season. The strength was across the board. Just to put some perspective around it, we obviously did a complete reforecast to support our change in increase in guidance. Of our 14 markets, if you look across our portfolio, the bottom-up reforecast revenue projections went up in 12 of the 14. The only two markets where revenue did not increase was San Diego and Orange County, L.A. The reason for that has nothing to do with the underlying strength of the market, which are both really good right now. It has to do with bad debt. We continue to have a challenge in California with regard to elevated levels of bad debt because of the CDC eviction mandate and all the rent strikers that we have in our portfolio in Southern California. Absent those two, which, by the way, were only slightly negative on reforecast because of bad debt. Without the bad debt in California, we would've been up on all 14 markets. I don't think I've, in my career, ever seen a reforecast done where all 14 markets had a positive revenue impact in a reforecast. I think it's just strength across the board. If you go to the top level of revenues in the new reforecast, out of 14 markets, we have 13 that have positive revenue growth for the year. The exception to that, as we mentioned, call out in the opening comments, is Houston, and Houston is down to 0.5% negative total revenues for the year. I can tell you that our Houston folks are working their tails off to get off that list, because they're the only one that has a negative number for the revenue reforecast. All the other 13 markets are really well-positioned for our peak leasing season. John, we've got seasonality in there, but our reforecast assumes that we're going to have 96% occupancy for the full year. Obviously, it's higher occupancy in the second quarter and third quarter, coming back down in the fourth quarter. To compare that to our original budget, that's a 70-basis point improvement. That's helpful. Thank you. On the cap rate discussion, we saw some of that cap rate compression was offsetting income, but it sounds like that's not the case. On that exit cap rate that you quoted on the example in Tampa at three and three quarters, is the view that cap rates are going to remain low because of rising construction costs, or is it the potential that the rental growth assumption that you quoted of 3% was a bit conservative? Well, I think cap rates are a function not of construction costs going up, because that project, by the way, at the price that I stated, the $90 million price, it's 18% above replacement cost. Replacement cost is not a bogey today that investors are looking at. What they're looking at is what kind of cash-on-cash return am I going to get from this real estate, and a 3.2% cap rate is the competitive market today. When you think about how you do an IRR, right, an unlevered IRR has three components, what you buy in at, what your cash flow grows at, and what you exit at. For years, the question of what is your exit cap rate seven years out? That's like the argument about what's real CapEx, right? In a new development, you put in 250, and you know it's not that long term, but that's what people use. Ultimately, what'll drive the exit cap rate will be the environment at the time. We know what drives price of any asset is first liquidity, how much liquidity is in the market, and we know today that there's massive liquidity in the market, beyond belief liquidity. The second thing that drives cap rates and prices, and these are in the most important order, is supply and demand. What's the business look like? Is it excess supply long term? How you feel about supply and demand dynamics relative to being able to drive net operating income or cash flow growth in the market today? Supply and demand is pretty much in balance. You look at imbalance just from that perspective in most markets. When you look at supply and demand, it's good. The next is inflation. People have this inflation view or worry that you could have inflation, and then the last driver is interest rates. A lot of people think interest rates is the number one driver, but it's actually liquidity, supply and demand, inflation, and then interest rates. With that backdrop, cap rates are where they are because of really the first two issues, I think, and then maybe a little bit of an inflation issue. Who knows whether a 3.75% cap rate is the right number in seven years, but I guarantee you that's the only way if you want a 6% IRR, unlevered IRR, in seven years, that's the only way the math works. Ric, are you concerned that people are underwriting 3.75%s, or it sounds like you think it's rational at this point? No, if you want to compete in the market today and you have capital to place, multifamily is a coveted asset class for lots of reasons we've talked about before. If you have capital that has to go out, and you go, "Where's the alternative investment?" If I don't like a 3.2% in Tampa with the growth profile and everything that we talked about, then where are you going to put your money? We're earning 25 basis points on $300 million right now in cash. The government is penalizing us because of the Fed and everything else going on, penalizing anybody with cash. When you think about a cash flow stream that can grow, can be inflation-protected, where it's a cash flow stream that it's hard to disrupt, right? Because everyone needs a place to live. You can't live on the internet, or you can't disintermediate it by technology or whatever. You can improve it and improve its production with technology, but everybody has to put their head down and go to sleep at night in some place. They may not need a kitchen, but they definitely need a bathroom. With all that said, it's the whole argument about why are asset prices where they are, and what's your alternative from an investment perspective. Right now, multifamily looks good, and people are willing to pay 3.2% cap. As long as your weighted average cost of capital long term is good and you're making a positive spread on your weighted average cost of capital long term, then that's why people are doing it. I don't think it's wrong. I just think it is. Interesting stuff. Thank you. Our next question comes from Amanda Sweitzer with Baird. Thanks. Good morning. To line up on guidance, can you provide an update on the blended lease rates and bad debt assumptions that underlie your increased ranges? Absolutely. I think probably the best way to think about it is if you compare to what we originally thought for blended rates, when we did our original budget, we are increasing that by 50 basis points. The math sort of works like this. Our occupancy is up 70 basis points. Our blended rental rates are up 50 basis points. That gets you to about 120 basis points. The offset to that is we are assuming that we're going to have slightly higher bad debt. That's entirely driven by California and the fact that when we did our original budget, we thought AB 3088 was going to expire in beginning of March. Now it looks like that's the beginning of July at the earliest. You've got sort of an offset from that. We think that our bad debt's going to be about 160 basis points for 2021, which by the way, is in line with what we had in 2020. If you compare it to 2019, which was a normal year, that number would've been about 50 basis points. That's very helpful. On dispositions, are you still targeting sales in Houston and D.C. today? Given some of your cap rate comments, have you changed the assumed cap rate spread between acquisitions and dispositions in your guidance at all? I think you were previously assuming about 150 negative basis point spread. Right. We are still targeting those two markets, yes, in terms of dispositions. I think in our guidance, we're continuing to use that same spread, and hopefully we'll do better than that based on what we're seeing and hearing today, we likely will do better than that spread, but we kept that 100 basis points negative spread in the model. Didn't we, Alex? I'm pretty sure we did. That's correct. Absolutely correct. I think the real variation in the model between the buy and the sell will be timing, right? There may be some timing differences given where things are, and hopefully we will do better than that negative spread. Right now, it looks like we will, but that is what we used in the model. Thanks. Appreciate the time. Sure. Our next question comes from Brad Heffern with RBC Capital Markets. Hey, everyone. I know we're at the top of the hour, I'll just keep it to one. I was wondering if you could just talk through Houston. I was a little surprised to see the sequential rent growth down almost 4%. I know obviously COVID-19 didn't necessarily break that market, COVID-19 leaving isn't going to fix it. Is there anything that you're seeing there that gives you optimism as we go forward, whether it's the energy recovery or supply or anything else? Thanks. The big challenge that we have in Houston right now it's not employment related. Jobs have come back quicker than most people thought. The energy business is definitely getting better. It takes a while, there's a pretty big lag between improvement in the price of crude versus improvement in employment prospects in Houston and the energy business. The issue in Houston is just supply. We've talked about last year, we dealt with about 20,000 new apartments that got delivered in Houston. This year, we're going to get another 20,000 apartments delivered, unfortunately, a lot of those are not distributed geographically very well. They end up, all the merchant builders sort of built in the same places, we definitely are catching a fair amount of shrapnel from the lease-ups of the merchant builders in the downtown area, as well as uptown and midtown. It's more of a supply issue for Houston. We do get some relief next year, thankfully, in terms of new supply. Overall, I would tell you that the general vibe of the recovery in Houston is Houston's open. People are out. Restaurants are busier than I've ever seen them. The feeling right now in Houston is pretty robust. I think we'll do better as the year ensues. I think I shared with you there, our reforecast for revenue growth in Houston is only down 0.5% from last year. If you'd have told me, I certainly wouldn't have made that bet six months ago, and we didn't when we were putting together guidance. That, to me, sounds extremely encouraging for our Houston portfolio relative to original expectations. I think also, just to add on to the Houston story, the winter storm had a bigger effect on Houston than it did on the rest of the state, primarily because of what it did to petrochemicals and the plants in and around the ship channel. There are primary chemical plants that are still offline that are just getting geared up from the winter storm. The winter storm definitely held Houston back. It could've been a whole lot better in Houston, I think, without the winter storm. Like I said, we're just starting to get that back. I think the other thing that's really interesting about Houston is the discussion of energy transition and what's going to happen with big energy and how big energy is going to make the transition from old school energy to more renewables. We've seen a major acceleration of discussions by the large energy companies, part of that is driven by investor activism. If you look at ExxonMobil as an example. I own Exxon stock, I see all the proposals that these activists have put in their votes and what have you. Finally, the U.S. majors are making a major move into this energy transition. Exxon, for example, just announced a $100 billion carbon capture program that could go in and around the ship channel. It's $100 billion to build it. It needs to be part of the government. Maybe it's part of the government stimulus or infrastructure, whatever, in addition to Exxon putting their capital in. I think there's going to be continued huge investments in these alternatives and in wind and solar and carbon capture, Houston's going to lead that. We're going to be in a position where it's not old school energy that drives this market, it's transition energy. Texas already has the largest wind power source of electricity of any state in the country, and we're investing massive amounts of solar. You saw Tesla has a big battery program that they're doing just south of Houston. It's going to be a really interesting thing. To me, the winter storm held us back, but once we get through the supply, Houston should move up to the top quartile of our revenue growth middle to the end of 2022 and into 2023 and 2024, in my view. I'll also point out. Great. Thank you. Sequential occupancy increase, the largest sequential occupancy increase we had was Houston. From fourth quarter to first quarter, it increased 110 basis points. Yeah, fair enough. Okay, thank you. Our next question comes from Austin Wurschmidt with KeyBank. Great. Thank you. Just sticking with the theme there on Houston. Was curious if the positive guidance revision there was more just around that sequential uptick that you just alluded to in occupancy, or are you also seeing a little bit better traction on lease rates as well? Maybe, Ric, to your comment on when you think Houston starts to get better, is it probably mid 2022 by the time we’ve absorbed some of this peak supply? I think that's the peak supply side. You'll start getting better job growth in a more normalized environment. What happened in Houston is you had the normal COVID, unfortunately, you call it normal COVID job losses, right? What's happened, you also had the oil and gas pounding, right? Last year at this time, I think oil and gas were within a few weeks of where it went negative, right? That was a huge issue here, and I think that's over, obviously. Once we get a more normal environment in Houston and a more normal business environment where people are actually traveling for business, then Houston will improve. When you look at visitors to Houston and conventions and things like that, it's more of a business destination than it is a tourism destination. I had lunch with the head of the convention group that markets Houston's convention business last week, and he said that starting in June, there are 18 citywide events. You have the World Petroleum Congress coming in December, which is an international event that was supposed to be last December, but it's going to be in December of 2021. Once we get more momentum from the business side and the business travel side, Houston will move quicker to that recovery. I think that's a mid, the end of 2022 event because of the supply. Yeah. If you look at blended rates for signed leases from the first quarter of 2021 to April of 2021, Houston improved by 420 basis points. Still not an incredibly strong number, but an incredibly strong improvement. Yeah. That's really helpful. Then Alex, just to clarify, on the 50 basis points increase in lease rate assumption in your same-store revenue guidance, does that reflect simply leases signed at this point, or does it also assume higher lease rates kind of through the balance of the year? Yes, it does. It looks at what's effective for the first quarter, signed today, and signed today is obviously going to take you through the second quarter and a component of the third quarter, and then our expectations for the rest of the year. That the lease rates in the back half of the year on both renewals and new leases are also higher than your original expectation. Correct. Okay. Thank you. Our next question comes from John Pawlowski with Green Street. Hey, thanks a lot for keeping the call going. I was just hoping to better understand how the internal dialogue around share repurchases has evolved, call it second half of 2020 and even early this year. You enter the downturn with a really well-positioned balance sheet, suddenly the only real dislocation comes, it's throwing your share price in the private market. You remain rock solid. You still believe you're trading at a substantial discount to NAV, you've got a bit better clarity, really since the summer, on operating fundamentals. Just curious why you haven't taken advantage of the well-positioned balance sheet heading into the downturn on the share repurchase side. Well, the challenge that we have with share repurchases is that the windows that we can buy or buy back shares, is that they're fairly narrow. What happens oftentimes, like when you think about we bottomed at like $62 a share or something like that, of course, we started talking about, okay, let's back up the truck, right? On the other hand, all of a sudden, the shares start moving up and when I think about share buybacks, it's like, okay, I want to be able to buy a lot of shares. I don't want to just go tickle around the edges and do $5 million, $10 million, $20 million or something like that. To me, it has to be persistent down, and we have to have the ability to acquire enough to make a difference. Fundamentally, when you think about REIT balance sheets and how we manage our balance sheet, we're a leaky bucket, right? In the sense that all of our cash flow, or not all of it, but most of it, has to be paid out from dividends. When you're buying stock back in, unless you can make and get a big enough chunk to make a difference, I think it's just kind of a waste of time. If you look back at every time that we've gotten to a point where we looked at the numbers and said, "Hmm, this looks like a really good price," it's gone up dramatically and away from us in the windows that we can acquire the stock. It's not that we don't think about it a lot, we do. On the other hand, the constraints on doing it are oftentimes just not worth the effort, in my view. If it's that investors, if we buy the stock back and people go, "Oh, they think it's cheap," then that's one thing. You can make your own decision whether you think it's cheap or not and buy or sell it. To me, it's a real capital allocation issue. If you think about when we did buy back stock big, it was when we had long-term periods and big open windows. At one point, I think we bought 16% of the stock back at the peak, and that was when the stock was low for months and even years. Today, you don't have that opportunity. I just mean more from the relative decision, right? You put a dollar into acquisition or DAP or a dollar into your stock, it's just a relative decision. I mean, more talking about the second half of 2020. If you believe your NAV is whatever, $130 or above, and you had that visibility on the private market side, there is a good six, seven months where you could be selling assets and repurchasing shares. It's just more that the dollar is fungible, and there's an opportunity cost to not acting. I guess is my question. Yeah. You can always do that, but I just think, at the end of the day, we're long-term owners of multifamily properties. There's a lot of friction that goes in between selling assets. If you wave a magic wand and sell assets immediately, have no risk of the execution, then buy stock and make a spread, yeah. The world doesn't work that way. There's a lot of execution risk involved in it, and it's something that when we start talking about doing it, then I don't want to borrow money or use the current strength of the balance sheet to buy stock and then go sell assets after it. I hear you, though. It's an asset allocation issue, and we think investing in our existing assets, creating returns that we think are pretty attractive, that's what we've been doing Okay. Thank you for the time. Sure. Our next question comes from Alexander Kalmus with Zelman & Associates. Hi, thank you for taking the question. Over the pandemic, we've seen the renewal and new lease spreads pretty wide, and in your April signings, they seem to reach some parity there. Can you talk about the dynamics on the leasing side and how you're approaching that? Obviously, the occupancy has followed through, so it's been a good decision. We use our revenue management system, YieldStar, to price both new leases and renewals. The inputs to the model are similar on both sides. Obviously, we got a little bit of a timing issue in our portfolio because we actually voluntarily froze renewal increases early on in the pandemic, and we kept them frozen through midsummer. Some of the natural renewal increases that would've happened are going to happen maybe in a little bit more robust way as we work our way through midsummer. I think it just, on both sides, it tells you that the model is foreseeing and foreshadowing a lot of strength on both the new lease side and the renewal side throughout the balance of our reforecast period. Got it. Thank you. Just touching on the supply side for a sec. We've talked about Houston. Do you have some updates on some of your other markets and how that's progressing? The start of the year has been pretty strong on the activity front. Has that changed how you're thinking about certain markets? No. If you take Witten's numbers for total deliveries in 2020, across Camden's platform, we were about 154,000 delivered apartments, and his forecast for this year is about 151,000. So there's some movement around, some shifting among our markets, but kind of at 10,000 feet, the supply picture for this year is not going to be much different than it was last year. With the exception of Houston, which obviously took the brunt of the 20,000 apartments last year and then backed up with another 20,000 this year, most of our markets are in really pretty good shape fundamentally. If you just kind of go back to, again, Witten's numbers, he's got job growth this year at 1.2 million. He's got new supply being delivered of about 150,000 apartments. Again, at 10,000 feet, that's eight times new employment growth to delivered supply. Five times is a long-term equilibrium. In the aggregate, those ought to be really supportive for, and look like they are going to be supportive for raising rents and renewals throughout the year. Great. Thank you very much. This concludes our question and answer session. I'd like to turn the call back over to Ric Campo for any closing remarks. Very well. Thanks for being with us today. I understand that the have fun video was a little choppy for the group. In the replay, you'll be able to see it without being choppy. Let us know how you like this new format. I think it's kind of interesting and makes it a little more interactive and sort of helps when you're going through a slug of numbers like we are. It kind of helps you sort of follow that. We look forward to hearing from you on this format, and then we'll see and talk to, I think, most of you in virtual form at Nareit, so coming up in the next couple of months. Take care and thank you. Yep. Take care. Take care. Bye. The conference is now concluded. 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