HOUSTON – (Realty News Report) – Houston-based apartment owner and manager Camden Property Trust reported lower earnings and reduced profits in the fourth quarter as rental rates softened amid the ongoing pandemic and economic uncertainty. Camden, which owns interests in and operates 167 multifamily and mixed-use properties across more than a dozen U.S. markets, recorded fourth-quarter revenue of $261.6 million, down from $263.5 million in the same period of 2019. Net income declined to $29.2 million, or $0.29 per share, compared with $95 million, or $0.95 per share, a year earlier.
Houston Multifamily Glut
Houston, Camden’s largest market with more than 5,900 units, logged the company’s lowest average apartment occupancy at 92.3 percent. A weakened energy sector combined with COVID-19 disruptions has weighed heavily on the region’s economy. At the same time, a surplus of rental units has intensified competition among landlords in the area.
“We’ve got way too much supply,” Executive Vice Chairman of the Board Keith Oden said during a Friday morning earnings call. “It’s hand-to-hand combat on downtown or close-in assets.”
Hand-To-Hand Combat
Some 20,000 apartments came online in Houston during 2020, and developers are expected to deliver another 20,000 units this year. According to Camden leadership, that level of new supply would require significant employment growth to sustain healthy occupancy and rent levels. “The bottom line is 40,000 apartments being delivered in Houston would require 200,000 jobs to be able to take up that slack. It obviously hasn’t happened,” Oden noted.
Despite near-term headwinds, Camden officials anticipate operational improvement in the second half of the year as more businesses reopen. The company also plans to sell select older properties in Houston and Washington, D.C., in the latter half of the year.
Across Camden’s entire portfolio, overall occupancy was 95.5 percent in the fourth quarter, down from 95.6 percent in the third quarter and 96.2 percent during the final quarter of 2019.
The company reported several COVID-19-related financial impacts. These included a $3.5 million adjustment to retail rent receivables in the fourth quarter and a $14.8 million charge tied to COVID-19 relief efforts, such as resident and employee assistance as well as bonuses for on-site staff. Funds from operations (FFO) were $122.4 million, compared with $125.6 million a year earlier. Camden’s stock closed at $101.80 per share on Friday, down $1.82.
Feb. 5, 2021 Realty News Report Copyright 2021
File: Houston Multifamily Glut Pinches
Caption: Camden Vanderbilt multifamily property on Buffalo Speedway was built in the 1990s. Photo credit: Ralph Bivins, Realty News Report Copyright 2021
File: (2) REIT. Houston Multifamily Glut Pinches Camden Property Trust. CPT. 4Q 2020 Earnings.