CEO Spotlight: Fundamentals Remain Strong for Camden, According to Campo
11/20/2013 | by Sarah Borchersen-Keto

Ric Campo, chairman and CEO of Camden Property Trust (NYSE: CPT), joined for a CEO Spotlight video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

Camden marks the 20th anniversary of its initial public offering this year, and Campo described the event as a “great milestone.” Campo said the anniversary is a good time to look back at the past two decades, during which the company posted total returns of 13.5 percent, as well as a time to look forward. “We think the future’s pretty bright,” he said.

Reviewing the long-running strength of the apartment sector, Campo remarked that “overall, the fundamentals are really good… but trees can’t grow to the sky.” He noted that in 2012, Camden had its best same store net operating income (SSNOI) growth in 20 years.

“Coming out of the recession, we were really strong, but we have seen a moderation in our NOI growth,” Campo noted. However, current growth is still 350 basis points above the company’s 15-year trend, he said, and Camden’s markets are all seeing above-trend revenue growth.

Campo remarked that Camden has not seen a lot of pushback in terms of rent increases.

“Generally, the markets are strong, and I think next year’s going to be a really good year for the apartment business,” Campo said. “Over the next couple of years, it should be good business and above trend.”

Turning to supply conditions, Campo explained that during the recession, the industry actually had a negative supply situation: “Today, while the supply is up, it’s still not up above peak levels, and we’re still sort of filling the hole… that we created during the downturn.”

Campo also pointed out that while the company is still getting development yields of about 78 percent, “I’d say we’re probably dialing down our development portfolio just a bit.” Campo explained that this is not due to market conditions, but rather the volatile stock market.

“We’re funding a lot of our development with equity issuances, and you can’t really do that today when stocks are trading at below net asset value (NAV),” he said. However, Campo stressed that “it’s still a pretty good development environment for us to create pretty decent increases in NAV that way.”