Camden Property Trust Reit (NYSE: CPT) Q2 2025 Earnings Call dated Aug. 01, 2025
Corporate Participants:
Kim Callahan — Senior Vice President of Investor Relations
Ric Campo — Chairman and Chief Executive Officer
Keith Oden — Executive Vice Chairman
Alex Jessett — President and Chief Financial Officer
Laurie A. Baker — Chief Operating Officer
Unidentified Speaker
Analysts:
Eric Wolfe — Analyst
Jamie Feldman — Analyst
Haendel St. Juste — Analyst
Austin Wurschmidt — Analyst
Steve Sakwa — Analyst
Jeff Spector — Analyst
Alexander Goldfarb — Analyst
John Kim — Analyst
Brad Heffern — Analyst
Robert Stevenson — Analyst
Rich Hightower — Analyst
Adam Kramer — Analyst
Michael Goldsmith — Analyst
Unidentified Participant
Linda Tsai — Analyst
Mason Guell — Analyst
Omotayo Okusanya — Analyst
Alex Kim — Analyst
Presentation:
Kim Callahan — Senior Vice President of Investor Relations
Good morning and welcome to Camden Property Trust’s Second Quarter 2025 Earnings Conference Call. I’m Kim Callahan, Senior Vice President of Investor Relations. Joining me today for our prepared remarks are Ric Campo, Camden’s Chairman and Chief Executive Officer; Keith Oden, Executive Vice Chairman and Alex Jessett, President and Chief Financial Officer. We also have Laurie Baker, Chief Operating Officer and Stanley Jones, Senior Vice President of Real Estate Investments available for the Q&A portion of our call. Today’s event is being webcast through the Investors section of our website at camdenliving.com, and a replay will be available shortly after the call ends. And please note, this event is being recorded.
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 second quarter 2025 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. We would like to respect everyone’s time and complete our call within one hour, so please limit your initial question to one, then rejoin the queue if you have a follow-up question or 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.
Ric Campo — Chairman and Chief Executive Officer
Thanks, Kim. Today’s On Hold music featured the Beach Boys as a tribute to Co-Founder, Brian Wilson, who passed away in June. The Beach Boys upbeat musical themes included Good Vibrations, Surfing USA, and fun, fun, fun, all fit with Team Camden and our culture to a T, a deeper[Phonetics] that is good vibrations continue for our Sunbelt markets, and we should be back to fun, fun, fun next year. Second quarter apartment demand was one of the best in 25 years, following a strong first quarter.
Apartment affordability continued to improve during the quarter with 31 months of wage growth exceeding rent growth. This expands affordability and increases apartment demand creating new apartment customers. Camden’s sector leading resident rent to income ratio also continues to improve and are better than pre COVID levels. The historic high cost of homeownership continues to support apartment demand and lower move outs to purchase homes. Resident retention has been strong across our markets as a direct result of the living excellence provided by our on-site teams who have achieved our highest customer sentiment score ever.
Great job, team Camden. All other apartment macro demand drivers, including the outsized population growth and job growth remain intact for our markets. New additions to supply have peaked in our markets. New developments are leasing at a decent pace given the record demand. As projects continue to lease up through the balance of 2025, rental rates should firm by the beginning of 2026, leading to better than average rent growth.
Witten Advisors projects better than 4% rent growth in Camden’s markets in 2026 accelerating to 5% in 2027 and beyond. We look forward to getting back to a more normal market and growth profile after the excesses of the post COVID supply environment end. Camden is positioned well with one of the strongest balance sheets in the industry with no major dilutive refinancings over the next couple years. I want to give a big shout out to team Camden for their steadfast commitment to improving the lives of our teammates, our customers, and our stakeholders one experience at a time.
And next up is Keith Oden.
Keith Oden — Executive Vice Chairman
Thanks, Ric. Operating conditions across our portfolio are still playing out as we expected. Rental rates for the second quarter had effective new leases down 2.1% and renewals up 3.7% for a blended rate of 0.7%. This was in line with our expectations for the quarter and reflected an 80 basis point improvement from the negative 0.1% blended rate we reported in the ’25 and a 60 basis point improvement from the 0.1% reported in the 2024. Our preliminary July results are also on track and showing improvement versus the second quarter of 2025.
Occupancy for the second quarter averaged 95.6% versus 95.4% in the first quarter of ’25, and we expect occupancy to remain relatively stable in the mid 95% range for the remainder of the year. Renewal offers for August and September were sent out with an average increase of 3.6%. Turnover rates across our portfolio remained very low with the second quarter of ’25 annualized net turnover of only 39%, a testament to strong resident retention and satisfaction along with continued low levels of move outs for home purchases which were 9.8% this quarter.
I’ll now turn the call over to Alex Jessett, Camden’s President and Chief Financial Officer.
Alex Jessett — President and Chief Financial Officer
Thanks, Keith, and good morning. I’ll begin today with an update on our recent real estate activities, then move on to our second quarter results and our guidance for third quarter and full year 2025. This quarter, we continued to be active on the asset recycling front, purchasing for $139 million Camden Clearwater, and 360 unit waterfront community built in 2020 in the Tampa market, and during and subsequent to quarter end, disposing of four older communities for a total of $174 million. Three of the four disposition communities were located in Houston, and the fourth in Dallas. These disposition communities were on average 25 years old and generated a combined unlevered IRR of over 10% over our average hold period of 24 years. These older, higher CapEx communities were sold at an average AFFO yield of approximately 5.1%.
During the quarter, we stabilized Camden Wood Mill Creek, one of our two single family rental communities located in Suburban Houston. Additionally, we continue to make leasing progress on our other two development communities, which completed construction during 2024. Camden Long Meadow Farms, our second single family rental community, which we now anticipate will stabilize in early 2026, and Camden Durham, a traditional multifamily community located in the Raleigh Durham market of North Carolina, which will stabilize in the third quarter.
In addition, lease up continues at Camden Village District, a 369 unit new development in Raleigh, which is currently 37% leased and 29% occupied. At the midpoint of our guidance range, we are still anticipating $750 million in both acquisitions and dispositions. This implies an additional $412 million in acquisitions, and an additional $576 million in dispositions this year. We are actively marketing additional communities, but clearly, in the aggregate, our 2025 dispositions will be more back end loaded. Our original guidance for development starts in 2025 was $175 million to $675 million and to date we have started $184 million.
We will continue to monitor market conditions and may start additional projects later this year. Turning to financial results. Last night, we reported core funds from operations for the second quarter of $187.6 million or $1.70 per share, $0.01 ahead of the midpoint of our prior quarterly guidance, driven primarily by the combination of higher property tax refunds and lower interest expense resulting from the timing of capital spend.
Property revenues were in line with expectations for the second quarter. We continue to be pleased with how well our property revenues are performing, considering the peak lease up competition we are facing across many of our markets, illustrating the depth of the Sunbelt demand. And we are pleased with our continued property expense outperformance, particularly in property taxes and insurance. As a result, we are decreasing our full year same store expense midpoint from 3% to 2.5%, and correspondingly increasing the midpoint of our full year same store net operating income from flat to positive 25 basis points. Property taxes represent approximately one-third of our operating expenses and are now expected to increase by less than 2% versus our prior year assumption of 3%.
This is primarily driven by favorable settlements from prior year tax assessments and lower values from our Texas markets. Also, we are anticipating that full year property insurance expense will actually be slightly negative versus our original budget of up high single digits. Almost entirely as a result of the 25 basis point increase in same store net operating income, we are increasing the midpoint of our full year core FFO guidance by $0.03 per share from $6.78 to $6.81. This is our second consecutive $0.03 per share increase to our 2025 core FFO guidance. We also provided earnings guidance for the third quarter, we expect core FFO per share for the third quarter to be within the range of $1.67 to $1.71 representing a $0.01 per share sequential decline at the midpoint, primarily resulting from the typical seasonal increases in utility and repair and maintenance expenses.
Non core FFO adjustments for 2025 are anticipated to be approximately $0.11 per share and are primarily legal expenses and expense transaction pursuit costs. Our balance sheet remains incredibly strong with net debt to EBITDA at 4.2 times. We have no significant debt maturities until the fourth quarter of 2026 and no dilutive debt maturities until 2027. Additionally, our refinancing interest rate risk is the lowest of the peer group, positioning us well for outsized growth.
At this time, we will open the call up to questions.
Questions and Answers:
Operator
Thank you. [Operator Instructions]. Today’s first question comes from Eric Wolfe with Citi. Please go ahead.
Eric Wolfe
Hey, thanks for taking my question. I know you want to stay away from giving specific July data, but I think the market is trying to understand how the back half of this year could accelerate so much when it seems like your peers saw shorter peak leasing season here, reducing their expectations. So, could you maybe just tell us to the degree of acceleration you saw in July and if you have an expectation around blends for the third quarter?
Kim Callahan
Yeah. Absolutely. So, the first thing I’ll tell you is that our blend actually increased monthly April through July. So, the trend is exactly in line with what we’d like to see. Now that being said, last night, we maintained our full year revenue growth at 1%, but we did change some of the components of how we get there. So, we’ll talk about those components in a second, but the first thing you need to know because you guys are going to ask is we are now anticipating that our second half blended rates will be just under 1%, that will get you to a full year blend of about 50 basis points to 75 basis points. So, the way that we are still getting there is through lower bad debt, higher occupancy, and higher other income than we originally had intended. Now as I’ve talked with many of you guys at various conferences, I’d like to point out that, this is a forecast and it’s certainly not a directive to our teams. We give our teams leeway, to get to our revenue budgets any way they can and so this is how we’re going to do it.
But I would like to take this moment to point out that we’re very proud of our teams, for managing the delinquency, and also managing the rollout of our new Vero screening, which is helping delinquency and has effectively got our bad debt back to pre COVID levels. Keep in mind that we were assuming that we were going to have bad debt of about 70 basis points in 2025. And today, it looks like 55 basis points is probably a pretty good number. Also, really proud of our teams for what they’ve been able to do on occupancy, they’re converting guest cards on new leases, and they’re also making sure that through the excellent customer experience that our resident retention is the highest level that we’ve ever seen. So, really proud of what our teams are doing, and that is how we can get to our to our full year numbers.
Laurie, do you have anything you’d like to add?
Laurie A. Baker
Sure. Yes. This is Laurie Baker, and hello to all of you. It’s great to be on the call with you today. Camden’s ability to continue to maintain strong performance in this environment is just a testament to the strength of our operating platform and the agility of our team, our culture of care and responsiveness helps reduce this resident turnover, and we continue to turn, residents into satisfied customers and remain within the Camden family. So, this commitment is translating directly into our performance with strong renewals, as Alex just, covered, and a customer sentiment score of 91.6. So, I want to point out that this is the highest score we’ve received since we started measuring customer sentiment in 2014.
And then last quarter, we shared with you that our customer sentiment score was 91.1 and celebrated the fact that this was the first time that we had surpassed the score of 91. So, the fact that today, just a quarter past that we are once again raised the bar another 50 basis points with the score of 91.6 just demonstrate that our employees are deeply committed to providing an outstanding customer experience, leveraging our platform, and improving lives, one experience at a time.
Operator
Thank you. And our next question today comes from Jamie Feldman at Wells Fargo. Please go ahead.
Jamie Feldman
Great. Thank you for the color. Our team was debating whether it would be the Beach Boys or Ozzy Osbourne. I guess you went to the beach.
Ric Campo
We debated that as well. It’s just.
Jamie Feldman
All right. Little more upbeat…
Unidentified Speaker
I guess. Brian Wilson went first.
Ric Campo
Yeah.
Jamie Feldman
Right. There you go.
Ric Campo
Stay tuned next quarter.
Jamie Feldman
All right. Well, hopefully, we don’t have another option by then. The — so, I guess just following up on your last answer. Can you talk about the markets, like, what drove the change, where things have moved the most? I think some of your peers have talked about slower lease up on development, developers getting more aggressive on concessions. Just maybe more color on what’s going on in the markets?
Ric Campo
Yeah. I mean, we certainly are seeing some of our peer group get a little bit more competitive on the concession side. And what we’re doing is that we’re making sure that we are positioned appropriately in each of the markets. What I will tell you is when you sort of go through each of our markets, what you’ll find is that some markets have done have done much better than we hadn’t originally anticipated. And the market that I point out for that is DC.
And then some of our markets have just continued to be a little bit softer, I’ll tell you that Austin long-term, we think is going to be an absolutely fantastic market for us, but it is going through just a huge amount of supply. And once that supply gets absorbed, the demand is so strong, it’ll be great. But today, it is continuing to be softer than we had anticipated.
Keith Oden
I think that, one of the of the issues that — and we’ve listened to the other calls, obviously, and this has been the discussion for the last two days. And that is that, I think that people and just businesses in general, and let’s talk about multifamily operators specifically, people have been, instead of pushing rate, they’ve been pushing occupancy. Under the — kind of, and if you think about all the like, Fed came out and didn’t raise, but, I’m on the board of the Dallas Fed, the Houston branch of the Dallas Fed. And the discussion we had prior to those meetings was, all this uncertainty around tariffs and uncertainty around the economy, and are you going to have a recession and all that. And so, I think that what operators are doing is they’re looking at their occupancy and saying, okay. I don’t know what’s going to happen in the future, so they’re not pushing.
And that is a really interesting issue because it’s not that you can’t push, it’s that they aren’t pushing because they’re worried about the future. And so, I think this uncertainty around everything that’s going on in our economy and politically and all that has caused people to be more cautious and go gone to a more occupancy led push. And when you do that, that means you don’t push your new lease rates as much, and you try to keep the existing residents as long as you can, right? And so, I think that’s kind a the industry mindset right now, and the consumer itself is healthy.
I mean, we’ve had 31 months of wage growth and apartment rents have been flat. The customer is healthy, the customer’s out there, and it’s not a customer issue as much as it’s a mindset of the operators trying to protect themselves for the back half of the year probably.
Operator
Thank you. And our next question today comes from Haendel St. Juste with Mizuho. Please go ahead.
Haendel St. Juste
Hey, guys. Good morning. Just to follow-up on the last question. I was hoping you could dig a bit more into the DC and LA, portfolio performance, there is, some concerns about the near term outlook, given some recent weakening trends there, so, maybe some color on how they performed year-to-date on blend, what you expect them in the back half of year. And then also maybe how — maybe explain how your DC portfolio has held up so well. It seemed to be a bit of an outlier? Thanks.
Ric Campo
Yeah. Absolutely. So, I’ll just walk through some highlights around DC. So, DC had the second highest quarter-over-quarter revenue growth in our portfolio at 3.7%. Interestingly, after listening to some of our peers, our actual highest quarter-over-quarter revenue growth market was LA.
In addition, DC had our highest second quarter occupancy at 97.3%, our highest second quarter rental rate growth at 4.1%, our highest sequential rental rate growth at 1.2%, our highest second quarter blended rate growth at 5.8%, and we’re seeing absolutely no slowdowns in guest cards. So, I will tell you, I would take every one of our markets to be behaving like DC today, and when you sort of break it down into its components, remember that we have most of our exposure is in Northern Virginia, and then it goes from Northern Virginia to Maryland and then to the district. And Northern Virginia is the one that’s performing the best. Followed though this quarter by a little bit of a flip, the district is actually doing slightly better than Maryland.
So, I think a lot of it is where we’re positioned in the markets and I also think a lot of it is that the sort of the doge concerns are probably pretty overstated currently for what we’re seeing inside the district.
Operator
Thanks. And our next question today comes from Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.
Austin Wurschmidt
Hey. Good morning, everybody. I guess, Ric, just given your comments about affordability, the strong wage growth, and supply moderating the coming years, I mean, how good do you think rent growth could be in the coming years and is there a period of time that, historically that this reminds you yet?
Ric Campo
It does. It reminds me of after the great recession, in 2008 or 2009 to 2010. I think we came out in 2010 when people were still very bearish about the apartment markets, and we made a pretty bold statement at the time and said that the next three years is going to be the best three years of apartment revenue growth that we’ve had in the last two decades, and it turned out to be correct. And you had the same kind of — and I obviously, the COVID scenario is very different than the financial crisis scenario, but the what drove things, where you had oversupply and then demand got crushed during the financial crisis. In this case, we have oversupply because of the COVID, exuberance because of the rent snapback we had post COVID, and then you had free money for a long-time, so you had this massive increase in supply, a 50-year high.
And so, what’s happening now, the interesting part of that is we haven’t had a demand fall off. Our demand in the last two years has been the highest it’s been in 20 years, and so you have, this interesting issue where we have big time supply, and then we have big time demand. And I would say, in the face of big time demand or big time supply, when our top line growth is flat or up a little, I would we’re cheering that. Because usually, when you have massive oversupply, you have massive declines in rents and occupancy, and it’s another big picture for the multifamily group.
In this case, our flat NOI growth and call it flat at 1% is really a blessing in the face of the supply. So, what’s happening now, and if you look at the starts, I mean, starts are down 76% in Charlotte, Denver, Austin, Atlanta, and DC. They’re down 60% to 76% in Tampa, Orlando, Phoenix, and Nashville. They’re down 45% to 65% in Dallas, Houston, West Palm Beach, and Fort Worth. So, when you look at those supply numbers, clearly, the supply is not is down significantly. It’s going to be down significantly. As I said in my original, opening comments, the Witten Advisors has a kind of an on average 4% growth in 2026 for Camden markets and five plus in 2027 and then more and beyond. And some of the markets, are going 6%, 7% up, but and it’s kind of like, when you think about Austin and Nashville, those markets are down significantly and so as you what you’re going to have is a snapback when and then the snapback is going to be pretty strong.
And we’ve seen this historically over the years when you have excess supply in markets that continue to grow. Because Austin continues to grow, it’s one of the best job growth markets in America, so, is Nashville. The problem is you got all the supply to take up and so, I think that ’26, ’27, and ’28 could be as good as ’11, ’12, and ’13.
Operator
Thank you. And our next question today comes from Steve Sakwa of Evercore ISI. Please go ahead.
Steve Sakwa
Yeah. Thanks. Good morning. Ric, could you maybe talk about the development outlook? You said that you’ve got a bunch of starts penciled in for the back half of the year. I’m just curious given kind of the weak job report we got this morning and still uncertainty over tariffs. I realize development is a long-term game, but like how are you thinking about that? How are you adjusting some of the inputs? And I guess what yields are you targeting on new potential starts?
Ric Campo
So, we are definitely caught more cautious just because of the uncertainty in the marketplace today for sure. And the developments — and some of the developments we have, like one of the big ones is in Nashville. And the Nashville, downtown market, which this one would compete with, is definitely still weak and still highly concessionary. The suburbs are a lot better in Nashville, like, we acquired a property in the suburbs, and it’s actually doing really well compared to our budget.
So, we are going to be a developer, there’s no question about it, we’ll start our developments at some point, but we want to make sure that the yields are reasonable and from a yield perspective, we’re looking at the low 5s to the high to the low 6s to call it up five and three quarter to a six depending upon whether it’s urban or suburban or and what the nature of the property is. But that allocation of capital to development today is important, and, that’s why we’re kind of waiting on to see how the economy unfolds on the other two developments that we have, one in Denver and one in Nashville, that could start by the end of the year. What’s happening on cost is interesting, so, we’re buying out we’re doing a more suburban Nashville deal right now, the Nashville nations, and we’re doing our buyout now and our buyout looks really good, we’re looking maybe to save anywhere from 2% to 3% or 4% on the original budget on the cost.
And, I think that the good news is from a — good news on if you’re a developer is that your, the cost structure is not going up, but it is kind a flattening or coming down a little, but at the same time the input pressures are still very difficult for developers to get deals done, and so, I think that when you look at the potential start numbers in ’26 and ’27, they’re going to be down, 50% to 60% from what they were at the peak in ’23 and ’24. So, you should have a decent supply, construct in ’27, ’28, ’29 when you’re delivering these deals, but that’s kind a, how we’re thinking about it. Thank you. And our next question comes from Jeff Spector of Bank of America. Please go ahead.
Jeff Spector
Great. Thank you. Appreciate the comments. In particular, in ’26, we don’t receive the Witten data. So, I’m just curious if you could share with us maybe what kind of — some of the underlying assumptions that they’re making in terms of the job market in ’26 over ’25, given the weaker report this morning.
And then, do you I guess, your thoughts on that, specifically because you’ve mentioned some, rental projections for Camden’s markets in ’26, I know you don’t do your own forecast, but is that achievable? Do you think it’s just simply lower supply or, again, I guess if you could share with us what Witten’s assuming for jobs next year? Thank you.
Keith Oden
Yeah. So, I’ll just give you the progression on Witten’s numbers for completions. So, in 2024, Witten and these are just for Camden markets, Camden’s 15 operating markets. Witten had, completions in 2024 at about $2.50. He’s got — he has completions in 2025 down to $1.90, and then they fall further to about $1.50 in 2026 and if, Ric’s — when Ric is talking developments, you’re really out to ’27, and we have Witten numbers out in ’27. And the total completions in 2027 across Camden’s platform would be about a $120,000. So, if you think about that progression from 2024, which was the peak in Camden’s markets, we expect that to be down to from $2.45 to $1.20 between 2024 and 2027. So, clearly, you’re at that level, and when you strip out the subsidized piece of that puzzle, you’re down to market rate apartments somewhere around — starts of somewhere around $70,000 to $80,000 across Camden’s entire footprint, which is astonishingly low relative to historical norms.
So, we’re clearly headed in the right way and the one thing about supply, even though you’d — even though it’s maybe hard to pinpoint, is it back half of a year or beginning of the year? Is it does it fall into ’25 or ’26, the reality is they’re over a three or four year period. It’s absolutely knowable what the supply, what the deliveries are going to be in Camden’s market.
So, we’re very encouraged by that and we think that we will have opportunities to either to continue our acquisition program or to make some of the look at some of these developments that we have in from on our legacy land. So, anyway, it looks very constructive based on Witten’s data looking out for the next couple of years. Yeah. And on the job side of the equation, Witten has job growth coming down, and most of the — so, job growth in his model in their model, shows, slowing job growth, because if you look at job growth, in 2024 was higher than job growth in 2025 so far. And he’s — and they have taken those numbers down, and they have those numbers coming down again in ’26 and I think he has — I think they have less than 1 million jobs being formed in 2026. And I think the when you think about the multifamily demand component, jobs are important and as long as we’re continuing to have some job growth, you’re going to continue to have decent multifamily demand because you’re not going to have unless you have massive interest rates going down or something that sparks the homebuilding market, you still have the apartment rents are still the most affordable they’ve ever been relative to homeownership and relative to wage growth and all that. So, we don’t need as much job growth because we have so much less supply coming into the market to drive those numbers that witness put out, the 4% the 5% 2026 and the 5% plus in ’27 and ’28.
Operator
Thank you. And our next question today comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Alexander Goldfarb
Hey, good morning, down there. Ric, just a question on private credit. Certainly been a growing theme and in speaking to people, sounds like for banks, it’s much more lucrative from a credit reserve perspective to make loans to private credit versus construction loans. But given there’s no free lunch in real estate and we’ve had blowups in the past, do you think the growth in private credit as it pertains to funding real estate development is something to be worried about or your view is right now because of how much they the coupons in those loans and the fact that merchant guys are having trouble anyway putting deals together that you’re not too concerned about the private credit sort of flooding real estate development and causing issues down the way?
Ric Campo
No. I don’t think so at all. I think because when you think about the private credit, I mean, somebody getting a mezz loan, if you’re — you can get a construction loan at a reasonable number. The mezz loans are, double digit returns, and I that just puts pressure on the numbers, for a developer to get their deal done. So, I don’t look at that as I mean, if it was, like 6%, 7% money or 8% money maybe, but not if it’s 10% to 13%.
Operator
Thank you. And our next question today comes from John Kim of BMO Capital Markets. Please go ahead.
John Kim
Thank you. On the revised blended guidance of a little bit under 1% in the second half of the year, suggests — that suggests an acceleration in new lease rates in the second — from the second quarter, given — renewals being sent out at 3.6%. So, I was wondering how much visibility you have on new lease rates, for this quarter and how you compare third quarter versus the fourth quarter in terms of blended?
Ric Campo
Yeah. Absolutely. So, if you look on a blended basis for the second quarter, we were positive 70 basis points and we are assuming a slight deceleration from that in the third quarter to call it just under 1%. What I will tell you is keep in mind that we’re now through July and remember that new leases are generally about 25 days ahead of schedule and renewals are about 60 days ahead of schedule. So, we’ve got pretty good visibility all the way through the third quarter.
The other thing that we know is we know where we are occupancy and we’ve got very good visibility of where occupancy looks for 60 days out. So, that positions us pretty well to understand what the fourth quarter should look like. So, feel very good about our assumptions and very good about the visibility that we have to ensure that we can make these numbers.
Operator
Thank you. And our next question today comes from Brad Heffern with RBC Capital Markets. Please go ahead.
Brad Heffern
Yeah. Hi, everybody, thanks. Ric, do you think the high levels of supply and attractive pricing and concessions are pulling forward any demand from the future? Obviously, that’s the whole point of lower prices. So, I’m just wondering if some component of the record demand we’re seeing is due to prices being so attractive and if maybe that might tail off if there was a pricing recovery?
Ric Campo
No. I don’t think so, because, when you think about it, if you look at our new lease rent income ratio is 18.9%. And so, there’s a big room between for people getting really cheap rent today on a relative basis, right? And so, I don’t a — I don’t think we’re pulling demand forward because the apartment demand doesn’t really operate that way.
Household formation is created when you people move out of with out of their parents’ homes or they get a new job or something different like that. And so because of the affordability of apartments today, I think we have room to run. So if you think about a $2,000 a month lease and you put a 4% increase on that, it’s not a massive number. And on a relative basis, since the consumers are getting a quote, unquote, really good deal today on apartments because of supply and demand dynamics, They’re — they have a capacity to pay more in rent and as long as our teams are delivering the kind of customer service that they have been, then the folks are going to go, I’m living here. I like it, you’re taking care of me well.
And yeah okay, I get it. You have to — I need a 4% or a 5% rent increase, you’re talking about a small amount of money on a relative basis to a very, very, well heel — healed consumer and as long as they as long as we provide the service to them, I think we can get those kind of rent increases in the future. So, I don’t think we’re pulling demand forward, and I think our customers are definitely well positioned to pay more.
Operator
Thank you. And our next question comes from Rob Stevenson of Janney. Please go ahead.
Robert Stevenson
Good morning, guys. How aggressive are you pursuing kitchen and bath renovations as well as the larger scale redevelopments at this point in the cycle? Can you talk about what you’re going to be spending in ’25 on that bucket? What, the expected yields are?
Ric Campo
Yeah. Absolutely. What I’ll tell you is we continue to go after repositions. It just makes a ton of sense to us. If you look at, what we’re doing this year, this year, we’re going to do around almost 3,000 units. And we’re generating an 8% to 10% return, which works out to be about a $150 per door in additional rent. And so this just makes so much sense to us. And in addition, it makes sense no matter where you are in the cycle, but when you’re in a in the point of cycle where you’ve got a lot of excess supply, realize that if you can go in and you can do a kitchens and bathrooms program, you can effectively make an asset that’s 15 years old look like it’s brand new. And that is a huge competitive advantage when we’ve got brand new assets directly next door to us because that brand new assets got a much higher basis than we have, and therefore, they’ve got to charge much higher rent.
Our asset has a lower basis, but it looks just like a brand new asset because we’ve gone in, we’ve refreshed that kitchen, we’ve refreshed the bathroom. And then generally, when we build assets, we make sure that they have timeless exteriors. And so when we do all of that, we’re able to compete really well against that brand new asset. So, yes, this is something that you will continue to see us do. It is one of the best returns we can have out there, and then, by the way, we’re really good at doing it. We’ve done so many of these, over the past 10 years, 15 years that it just makes sense for us to continue.
Operator
Thank you. And our next question comes from Rich Hightower at Barclays. Please go ahead.
Rich Hightower
Hey. Good morning, guys. So, I think, if you decompose rent growth is at least over the past couple years, obviously, a lot of it’s come on the back of renewals and high retention rates. And so, if you were to sort of unwind that and think of what could cause that to go in the other direction, what do you think it would be? I mean and some of it’s been referred to whether it’s jobs or mortgage rates declining and the housing market opening up again. But what would you say?
Ric Campo
I would say it’s a recession where the consumer definitely gets stressed and you have job losses and things like that. That clearly would be something that would be a negative, for the apartment markets. Generally, in recession, if it’s a easy one or a very shallow one, you have hunker down mentality. So, a lot of people don’t leave if they don’t have to. But if you lost your job and you have to then downsize and readjust your budget, to whether you move in with a roommate or a friend or family or whatever, that’s probably the biggest issue. I don’t think home — the home ownership issue is so far away now. I mean, the math I’ve been spending a lot of time looking at this, you need a 150 basis points of reduction in the long-term rate in order for the housing market to get serious legs.
And so, I don’t think that’s going to be a big issue, but I think it’s really just the overall economy.
Operator
Thank you. And then our next question today comes from Adam Kramer of Morgan Stanley. Please go ahead.
Adam Kramer
Hey, thanks for the time here guys. Just wanted to ask, I know we’ve talked about the Witten Advisors forecast for the next few years and it’s really helpful to sort of hear their assumptions underlying. If you think about their rent growth, right, 4%, 5%, I think you said as early as 2026 even. Wondering sort of what your view is in terms of achievability of that, do you think that sort of supply deliveries lease up will be in a good enough spot that rent growth could average, legitimately average 4% in 2026, or do you sort of take the under on that and maybe that’s more of a ’27, ’28 story?
Ric Campo
Well, if the economy holds up the way, it is, and Witten has been a pretty good, forecaster over the years. Obviously, we have, a few months to go to 2026, but, that’s why we use Witten, they’re pretty good. So, I can’t I’m not going to pound the table right now and say, I know what ’26 and ’27 is going to be, but I do know the facts are the facts. Supply is down, and deliveries are down 50% in our markets by 2026 compared to ’23 and ’24.
Demand continues to be strong and unless the — we the economy unwinds or something really crazy happens, ’26 should be a really good year and should be an inflection point for the Sunbelt markets to start having reasonable growth compared to the past. And, if you think about it this way, San Francisco is one of the better markets today in growth, right? And the reason is it went down so far.
They’re still digging out of a hole that they dug during COVID and are still not back to 2019 rents yet. And so we are kind a treading water in the Sunbelt markets because of this excess supply situation. But once that supply goes away, all the setup is just really good. And so unless the economy unwinds or something dramatically weird happens, I think those are pretty good projections.
Michael Goldsmith
Thank you. And our next question comes from Michael Goldsmith at UBS. Please go ahead.
Unidentified Participant
Hi. Thanks. This is Amy. I just wondering, was there anything that surprised you about the construction and lease up process for the SFR communities? And are you looking at more projects within the SFR space? Or are there any takeaways that may apply to apartments? Thanks.
Ric Campo
Yeah. So, what I would tell you about the SFRs, obviously, we have two of them and just as a quick reminder, one is in, Far Northern Suburbs Of Houston, one is in the Far Southwest Suburbs of Houston. The one that is in the Northern Suburbs of Houston, we actually just stabilized that asset this year — excuse me, this quarter. It was, as I’ve talked about on several calls, an incredibly slow lease up.
We were warned that this particular product type is a slow lease up, but I think it did surprise us a little bit. This particular demographic, shows up on a Saturday, takes a tour, comes back the next Saturday with their friends, takes a tour, comes back the next Saturday with a tape measure and starts measuring bedrooms, etcetera, to make sure that their furniture can fit. The good news though is if it takes you that long to make a decision, I think you’re probably going to be pretty sticky, and so you’ll stay with us for quite some time. And so, that is certainly our hope. If you look at our asset, which is in Far Southwest Houston, and that’s our, Long Meadow Farms community, that one’s a little bit further behind just because they got started later.
And it is having very similar lease up trends that we saw with the other assets. So, we think that’s just pro just unique to that this particular product type. So, I don’t think there’s really any look through at all in terms of in terms of leasing. And the proof to that is if you think about our Camden Village District community, which we’re in the middle of leasing up today, this that particular community has averaged 27 leases a month in the second quarter. When we underwrite a lease up, we assume 20 leases a month.
So, to have 27 leases a month is far outpacing what we expected, and it just goes to show that there is still incredible demand for traditional multifamily.
Operator
Thank you. And our next question today comes from Linda Tsai with Jefferies. Please go ahead.
Linda Tsai
Yes. Hi. If you were to hit the high end of NOI growth this year, do you think it’s more likely you see it from higher revenues or lower expenses or some combo?
Ric Campo
I think it’s likely going to be from some combo. That being said, we still are waiting to finalize, some appeals on the tax side, which could end up being a positive to us. We continue to be pleasantly surprised by how low our insurance claims are. And so if that trend continues, that could absolutely be a positive to us. But by the same token, incredibly happy with how well we’re managing occupancy and very happy with how well we’re managing delinquency.
So, I think it could be a combination.
Operator
Thank you. And our next question comes from Mason Guell with Baird. Please go ahead.
Mason Guell
Hey. Good morning, everyone. When you’re looking at acquisitions currently in lease up, are you assuming maybe a longer lease up period now versus the start of the year?
Ric Campo
No. Not really. I mean, if you think about the acquisitions that we have, so we have one in Austin, which is our Camden Leander community, this was bought in lease up. We knew that it was going to be a slow process just because of the amount of competition that is in Austin and by the way, we talk about the competition in Austin so much. We cannot forget that the demand in Austin is just extraordinary. But we knew that was going to be slower, feel very good about how that’s progressing. And then our other community that has a little bit of a lease up need is our Nashville community, and that’s going just fine.
I don’t know, Laurie, if you want to add anything about Leander
Laurie A. Baker
.I mean, I think for, our Austin deal, overall story is still being shaped by supply. There’s just a lot of competition in that submarket. So, it’s just a near term supply challenge that we’ll work through and long-term great asset in a growing job market of Austin and just a compelling play our teams are fully engaged and we’ll work through this quickly.
Operator
Thank you. And our next question comes from Omotayo Okusanya with Deutsche Bank. Please go ahead.
Omotayo Okusanya
Hi. Yes. Good morning, everyone. I just wanted to go back to assumptions around blended lease rates for the second half of ’25. Again, obviously, you’re one of the few apartment REITs that’s expecting acceleration in that number. And while a lot of your peers are not or even downgrading that number.
So, just trying to understand a little bit better why you’re expecting acceleration. I would — I was just not looking at the data on enough of a micro market basis such that your geographic exposure is a little bit different? Is there anything happening from an operational perspective? Just trying to understand that because it’s so — it’s such an outlier versus everybody else?
Ric Campo
Yeah. I mean, so, what you have to look at once again as I talked about earlier is we’ve got pretty good visibility into the third quarter. And so we’re assuming that our blend for the third quarter is just under 1%. Keep in mind that our blend from the second quarter was 70 basis points. So, we’re not talking about that significant of an acceleration.
And then when we take this out into the fourth quarter, we’re assuming that the fourth quarter blend looks a little bit like the second quarter blend. Remember that the reason why we haven’t had more pricing power in our markets is not a demand issue, it’s a supply issue. And we know that we are rapidly working through the excess supplies in our market. That is why Witten and others believe that 2026 is going to be so strong. So you obviously have to start heading towards that direction of having pricing power as in order to make those type of ’26 numbers.
And you’re going to start seeing that as we continue through the third quarter and the fourth quarter because supply is coming down at such a rapid level. And keep in mind, we keep talking about record levels of supply, we’re also setting records for absorption. And as we continue to absorb all that excess supply, it becomes easier and easier on a comparable periods for us.
Operator
Thank you. And our next question comes from Alex Kim at Zelman and Associates. Please go ahead.
Alex Kim
Hey, guys. Good morning. Thanks for taking my question. I just wanted to ask about the trajectory of rent growth recovery so far. What’s been different about the leasing environment this year, just compared to historical norms or even your own expectations? Looking across the sector, uncertainty has certainly been a common theme, and so is it just about the lingering effects from the record high supply or something else? Thanks.
Ric Campo
Well, the term uncertainty is probably the most overused, term in the last two earnings calls, season. So, I’m going to try to stay away from that. What I will tell you is that we are seeing the typical peak leasing, which is in the second quarter and third quarter, that is playing out as normal. So, that’s not much of a distinction between what we typically see in other years. And then when we get to the fourth quarter, the fourth quarter looks a little bit stronger in our estimate today than it would in a typical year.
But keep in mind, once again, as I just mentioned, you’ve got supply that is getting absorbed at record paces and so, that does make sense that you would see a little bit higher of, or a little bit increased pricing power in the fourth quarter than typical. So, there’s nothing that it’s a little more muted in terms of the swing from the first quarter to through the peak leasing seasons than we typically see, but it does follow the same curve.
Operator
Thank you. And our next question is a follow-up from Alexander Goldfarb of Piper Sandler. Please go ahead.
Alexander Goldfarb
Hey, just going back to the back half, Alex, you mentioned that you expect third quarter to be a little bit better. But if we look at your implied fourth quarter versus the Street, fourth quarter implied for you guys is below the street. So, is this a function of the dispositions weighing down or is it also just how the rents are trending as well?
Ric Campo
No. It is absolutely a function of dispositions. So, keep in mind, that we are still forecasting that we’re going to hit the midpoint of both our acquisitions and dispositions guidance, which is $750 million for each. Keep in mind that there is a sort of short-term dilution that comes from those transactions as we’re trading out, some of our oldest most capital intensive assets for newer assets. Although they are — although there is some dilution, we anticipate that the newer assets will grow faster and so they will overtake that dilution in relatively short order.
But you certainly are going to see a slight drag in the second half of the year highly — entirely driven by the recycling program.
Operator
Thank you. And our final question today comes from Rich Hightower at Barclays. Please go ahead.
Rich Hightower
Hey, guys. Thanks for the follow-up. Actually, a question for Ric. I was just curious, given your, I guess, inroads at the Dallas Fed, do you find that your counterparts there are any smarter than the rest of us as far as the economy goes in making predictions?
Ric Campo
That’s a loaded question. I would — I am definitely impressed with the data, I’m impressed with their independence too because, if you about how the Fed and the FMOC work is that they do so the district Fed the district offices, including the Dallas Fed, they do a bottom up analysis of the economy. And so I serve on the board with a lot of diverse groups, whether it’s airlines or universities or chemicals, oil and gas. And what we primarily do in our meetings is we talk about what’s going on in our actual businesses, right? And so, I bring to the table, obviously, multifamily, and I think most of that I’m they sit on the board of the and of the largest privately held home builder in America. And I’m also the Chairman of the Port of Houston. So, I have a broad view of the economy now. What they do is they take that broad view, and then they just fill it into an economic forecast and use a lot of anecdotal discussions that we have.
So, I would say, generally, I’m definitely impressed with their analytical capabilities but when we’re debating, what’s happening in the economy, I mean, it it’s a mixed bag, right? I mean and so I think I don’t know that they’re any smarter than anybody else, but I think they are definitely meticulous in how they go through their data and how they go through their analysis. And their each district is independent and they have their own kind of group and their own economists.
And then they take that to DC when they’re at the FMOC meeting, and they all debate everything that’s going on in the districts with the committee, and then they reach their decisions. I think they’re pretty smart people, and they’re very methodical, and they’re they — and they definitely are apolitical. So, the discussion of raising interest or lowering interest rates because a political figure wants them lowered, that’s probably never going to happen, because they are independent, right? And you you’ve seen that through some of the discussion with them.
So, it’s definitely been an interesting thing for me because I get a lot of really good economic data from other sectors that really helped me and helped Camden navigate these interesting times and waters.
Operator
Thank you. This concludes today’s question-and-answer session. I’d like to turn the conference back over to Ric Campo for closing remarks.
Ric Campo
Great. Well, I appreciate the time today that every body’s spending with us. And, if you have any other questions, you can call Kim or Alex or me or Keith, Laurie. So, we’re available, for follow ups, and we will see you in the fall. Have a great rest of your summer.
Operator
[Operator Closing Remarks].