Camden (CPT) Q4 2025 earnings review
Pricing Power Evaporates as Supply Peaks
Camden's Q4 results and 2026 guidance reveal a market still choking on supply. While management points to a 'bottoming' process, the data shows deterioration: Same Property NOI growth stalled at 0.0% in Q4, and new lease rates plummeted to -5.3%. The outlook for 2026 turns negative, with NOI guided down 0.5% and Core FFO expected to contract. The strategy has shifted to defense—prioritizing occupancy (95.2%) over rate—while aggressively buying back undervalued stock.
🐂 Bull Case
The worst of the supply wave is hitting now. Starts have plummeted in key Sunbelt markets. Management expects 2026 deliveries to drop 25% and 2027 to see a further decline, setting the stage for a strong pricing rebound in 18-24 months.
Management believes the public market valuation is disconnected from private asset values. They repurchased $220.6 million in stock in Q4 alone and authorized a new $600 million program for 2026, actively arbitraging the NAV discount.
🐻 Bear Case
New lease rates degraded significantly, falling from -2.5% in Q3 to -5.3% in Q4. This creates a painful 'earn-in' effect for 2026 revenue, as shown by the tepid 0.75% revenue growth guidance.
While revenue is stalling, expenses are re-accelerating. 2026 expense guidance of 3.0% (driven by insurance and taxes) significantly outpaces revenue growth (0.75%), causing negative operating leverage.
⚖️ Verdict: 🔴
Bearish near-term. The long-term supply alleviation story is credible, but the immediate reality is harsh. Negative NOI growth, shrinking FFO, and -5% new lease spreads suggest the bottom hasn't been reached yet. 2026 will be a 'grind-it-out' year.
Key Themes
New Lease Rates Collapse
Pricing power took a sudden hit in Q4. Effective new lease rates dropped to -5.3%, a sharp deterioration from -2.5% in Q3. This indicates that to maintain occupancy at ~95%, Camden is forced to offer significant concessions, particularly in oversupplied markets like Austin and Nashville.
Sunbelt Oversupply Drag
The 'Sunbelt Boom' has become a temporary glut. Markets like Austin and Nashville are facing historic supply deliveries. While absorption is high, it is coming at the cost of rate. Q4 revenue in Austin fell sharply, and management's portfolio-wide revenue guidance of 0.75% for 2026 confirms these headwinds will persist throughout the year.
Aggressive Share Buybacks
Camden is aggressively deploying capital into its own stock. In Q4, they bought back 2.1 million shares for $220.6M. Another $120.7M was purchased in Jan 2026. This signals management's strong conviction that the stock is undervalued relative to the underlying real estate, providing a floor for EPS.
Expense Pressure Re-emerging
After a year of moderating expenses (up only 1.7% in FY25), inflation is returning. 2026 guidance calls for 3.0% expense growth. With revenue flatlining, this creates negative operating leverage, pushing NOI growth into negative territory (-0.5%). Insurance and property taxes remain the primary culprits.
Development Pipeline Leasing Up
Despite market headwinds, development remains a future growth engine. The pipeline includes $492M in ongoing construction (Charlotte, Nashville) and recently completed projects in Raleigh. However, with impairment charges hitting land parcels ($12.9M in Q4), the company is proceeding cautiously with new starts.
Other KPIs
Beat guidance midpoint of $1.73. Driven primarily by lower-than-expected expenses in the quarter and share count reduction from buybacks. However, the quality of the beat is low given the revenue stagnation.
Stable. Down slightly from 95.5% in Q3 and 95.3% a year ago. Management is clearly choosing to sacrifice rate (new leases -5.3%) to hold this occupancy line, avoiding a 'vacancy spiral' in competitive markets.
Stable. Remains within the conservative 4.0x-5.0x range, despite heavy share repurchases. This balance sheet strength allows CPT to play offense (buybacks) while peers are defensive.
Guidance
Decelerating. The midpoint ($6.75) represents a 1.9% decline from FY25 actuals ($6.88). Drivers: Negative NOI growth and higher interest/overhead expenses outpacing the benefit of share buybacks.
Reversing. The midpoint is -0.50%, a deterioration from +0.3% in FY25. This marks the bottom of the cycle, driven by an inability to push rents fast enough to cover 3% expense inflation.
Stable/Low. Midpoint of 0.75% is roughly in line with the weak 0.8% seen in FY25. This confirms that the heavy concession environment will persist for at least another 12 months.
Key Questions
New Lease Rate Bottom
With new lease rates falling to -5.3% in Q4, have we seen the trough, or does the peak supply delivery schedule in H1 2026 imply further downside to -7% or -8%?
Austin & Nashville Exit Strategy
These markets are clearly the drag on the portfolio. At what point does the supply absorption translate to pricing power—are we looking at 2027 for positive rent growth in these specific metros?
Expense Inflation Stickiness
Guidance assumes 3% expense growth. Is this driven by non-controllable items like insurance/tax, and do you see any path to getting expense growth back below 2% to protect margins?
Buyback Sustainability
You spent ~$340M on buybacks recently. Given the negative NOI outlook, are you willing to lever up above 4.5x EBITDA to continue aggressive repurchases if the stock stays at these levels?