Good day, and welcome to the 4th Quarter 2019 Earnings Conference Call. All participants will be in a listen only mode. Also, 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, ma'am.
Good morning, and thank you for joining Camden's Q4 2019 earnings 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 Q4 2019 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 Rick 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 1 hour, So we ask that you limit your questions to 2, 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 e mail after the call concludes. At this time, I'll turn the call over to Rick Campo.
Good morning and welcome to the beginning of the new decade. Our on hold music today featured 5 seemingly random songs, but there's always a method to our madness. There's also a contest, but with a twist. We know that our success is driven by our Camden colleagues, so the contest is for them. The 5 songs were selected by our Who is on the call today, Kim Callahan, Alex Jessett, Malcolm Stewart, Keith Oden and me.
Each was asked to select their favorite song The last decade that just ended. Five songs were Call Me Maybe by Carly Rae Jepsen Humble and Kind by Tim McGraw Uptown Funk by Bruno Mars The Fighter by Keith Urban and Carrie Underwood Can't Stop the Feeling by Justin Timberlake. The first person to e mail Kim correctly matching the executive with the song they selected In order to move forward into the next decade, I think it's always important to look back and take stock of our accomplishments In the last decade, here are a few highlights. We improved the quality of our portfolio and created value for our stakeholders through $3,000,000,000 sales of properties with an average age of 23 years, dollars 2,300,000,000 of acquisitions with an average age of 4 years, $3,000,000,000 of development, creating $1,100,000,000 of value for stakeholders $500,000,000 of redevelopment and repositioning chain of 40,000 of our apartment communities creating $525,000,000 of the value. We improved our debt to EBITDA from over 8 times to just under 4 times with all assets unencumbered and all debt unsecured.
We doubled our AFFO per share and nearly doubled our dividend. We built an amazing culture of employee excellence that was included on the Fortune 100 Best Companies to Work For list every single year in the decade with a number of top ten finishes. Team Camden ended the decade with a remarkable performance in 2019, exceeding all of our established goals, and we are positioned for a strong start To this new decade as we continue to improve the lives of our employees, our customers and our stakeholders one experience at a time. The best is yet to come.
Thanks, Rick. Consistent with prior years, I'm going to use my time on today's call to review the market conditions that we expect to see in Camden's markets during 2020. I'll address the markets in the order of best to worst by assigning a letter grade to each one as well as our view on whether we believe that market is likely to be improving, stable or declining in the year ahead. Following the market overview, I'll provide additional details on our Q4 operations and our 2020 same property guidance. We anticipate same property revenue growth this year in the range of 2% to 4% in each of our markets, with the exception of Phoenix, which remains our top market and should produce revenue growth in the 5% to 6% range.
The weighted average growth rate is 3.2% at the midpoint of our guidance range, And all of our markets received a grade of C plus or higher this year. As I mentioned, our top ranking for 2020 goes to Phoenix, Our number one performer in 2019 with a 5.9% revenue growth and a 3 year average revenue growth of 4.9%. We give Phoenix an A rating and a stable outlook. Supply and demand metrics for 2020 look strong with estimates calling for nearly 50,000 new jobs and only 6,000 new apartments coming online this year. Up next are Raleigh and Atlanta, both earning an A- rating with stable outlook.
In Raleigh, new developments have been coming online steadily with 5,000 new units delivered last year and another 6,000 expected this year. Job growth has also been strong and 20,000 new jobs are projected for 2020. Employment growth was also strong in Atlanta last With approximately 70,000 new jobs added and projections call for 45,000 additional jobs in 2020. Completions remain steady with 9,000 new apartments delivered last year and 11,000 more scheduled for this year. Denver received an A- rating with a Our Denver portfolio has been a strong performer, averaging nearly 5% annual same property revenue growth over the last 3 years, But we expect the market conditions to moderate over the course of 2020 given the somewhat elevated levels of new supply.
Over 30,000 new jobs are expected in 2020 with around 9,000 new units scheduled for delivery. Orlando makes our top 5 cut again this year, receiving a B plus rating with a stable outlook. Job growth has been strong in Orlando over the years and that trend should continue. However, the strength of the Orlando market has attracted more new development activity, so the level of supply is rising. 35,000 new jobs are expected there in 2020 with 8,000 to 10000 completions.
We gave Southern California and D. C. Metro each a B plus rating with a Planning outlook. Our portfolio in Southern California faces healthy operating conditions with balanced supply and demand metrics. After several years of relative outperformance, we expect some moderation in pricing power this year.
Job growth should be around 130,000 with completions of 25,000 expected in 2020. Our DC portfolio placed in our top five for revenue growth last year, But elevated levels of supply coupled with uncertain employment growth forecast, political risk and an election year make us a bit more cautious on our outlook for D. C. This year. Supply should remain steady with completion of around 13,000 units in 2020, but most job forecasts We're predicting a noticeable slowdown in D.
C. This year, which could impact our pricing power in that market. In Tampa, conditions are currently a B with an improving outlook. Tampa's new supply should come down slightly to around 4,000 units with 20,000 new jobs projected, putting the jobs to completion ratio at a healthy level of around 5x. Our Tampa portfolio posted 3.1% same property revenue growth last year, and and we believe their growth rate could accelerate during 2020.
Austin and Charlotte both moved up in our rankings this year from B- grades to Bs with stable outlooks. Our 2019 budgets for Austin and Charlotte originally called for revenue growth in the low 2% range. However, market conditions firmed over the course of the year, resulting in actual revenue growth of over 3% for 2019 in each of those markets. We believe that the revenue growth for 2020 will be in a similar range to last year. New supply remains steady in Austin with approximately 10,000 new units anticipated this year, But the economy is strong and the city should add over 30,000 new jobs again this year.
Conditions in Charlotte are similar with 25,000 new jobs projected And 8,000 new units expected for 2020. Conditions in Dallas firmed a bit since last year's report card and the market Earned a B- with a stable outlook again this year. New supply has been persistent in Dallas with 20,000 completions recorded in both 2018 in 2019 and another 20,000 units projected to deliver this year. Job growth continues to be a bright spot with 50,000 to 60,000 new jobs the expected. But given the current supply and demand metrics, we think the Dallas market will remain very competitive in 2020.
In Southeast Florida, market conditions rate a C plus but with an improving outlook. New supply and job growth have remained steady over the past few years And 2020 estimates call for over 30,000 new jobs and 9,000 new units. Competition from for sale and rental condominiums is still an issue in that market, But we expect slightly better operating conditions in 2020 and an improvement from the 1.4% same property growth achieved revenue growth achieved last year. And Houston receives a C plus rating with a stable outlook as we expect to see limited revenue growth again this year. Estimates for new supply in 2020 vary widely from low of 9,500 to over 20,000 units coming online this year.
So the market is definitely going to see an increase over the roughly 6,000 units delivered in 2019. Annual completions in Houston have range anywhere from 5,000 units to 22,000 units per year over the past 20 years. So 2020 supply levels will be moving back towards historical long term averages. Houston's job growth may also revert to its long term average of around 45,000 new jobs per year, resulted in limited pricing power and revenue growth for our portfolio this year. Overall, our portfolio rating is a B plus again year with most of our markets expected to moderate in revenue growth during 2020.
As I mentioned earlier, all of our markets should achieve between 2% and 4% revenue growth this year with the exception of Phoenix budget slightly higher. And we expect our 2020 total portfolio same property revenue growth to be at 3.2% at the midpoint of our guidance range. Now a few details on our 2019 operating results. Same property revenue growth was 4.1% for the 4th quarter with and 3.7% for the full year. Our top performers for the quarter were Phoenix at 6.3%, Raleigh at 6%, San Diego Inland Empire at 5.3%, DC Metro at 4.8 percent and Denver at 4.7 percent.
Rental rate trends for the 4th quarter were as expected with new leases down slightly, 0.2 percent And renewals up 5.1 percent for a blended rate of 2.2% growth. Our preliminary January results indicate 5.4% growth for renewals and 0.8 percent for new leases for a blend of 3.1%, which is consistent with January 2019. February March renewal offers are being sent out on an average increase of over 5%. Occupancy averaged 96.2% during the 4th quarter compared to 96.3% last quarter and 95.8% in the Q4 of 2018. January occupancy has averaged 96.2% compared to 95.9% in January 2019, so we're off to a good start this year.
Annual net turnover for 2019 was 100 basis points lower than 2018 at 43%. Move outs to purchase Homes were 15.9 percent for the quarter and 14.6% for the full year compared to 15.5% for Q4 of 2018 14.8 percent for the full year of 2018. At this point, I'd like to turn the call over to 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 and capital markets activities. As mentioned on our prior quarter's call, during the Q4, we stabilized our Camden McGowan Station development in Houston, Texas, And we began construction on Camden Atlantic, a 269 Unit, dollars 100,000,000 new development in Plantation, Florida. Late in the Q4, we acquired Camden Carolinian, a recently constructed 186 home apartment community located in Raleigh, North Carolina And Camden Highland Village, a 552 home apartment community with an adjacent 2.25 acre development site located in Houston, Texas. The combined purchase price of $222,000,000 for our 4th quarter community acquisitions with significantly below replacement costs and we expect these acquisitions to produce a stabilized yield of approximately 5%. For full year 2019, we completed acquisitions of 4 communities with 1380 Apartment Homes for a total cost of approximately $440,000,000 and we acquired 3 undeveloped land parcels for a total cost of approximately $37,000,000 Also, late in the Q4, we completed the sale of our Corpus Christi, Texas portfolio and exit of that market.
The assets sold included 2 wholly owned communities with 632 apartment homes and 1 joint venture community with 2 70 apartment homes. Our net proceeds were approximately $75,000,000 This portfolio had an average age of 22 years with average monthly revenue of $1300 per door and annual CapEx of approximately $2,000 per door. Using actual CapEx, this disposition was completed at a 5.5 percent AFFO yield, generating a 12.75% Unleveraged IRR over a 20 year hold period. Based on a broker cap rate, which assumes $3.50 per door in CapEx And a 3% management fee on trailing 12 months NOI, the cap rate would have been 6.25%. Our time in Corpus definitely put sunshine in our investors' pockets.
Subsequent to quarter end, we acquired 4.9 acres of land in Raleigh for For approximately $18,200,000 for the future development of approximately 355 Apartment Homes. On the financing side, as previously disclosed, during the Q4, we completed a $300,000,000 30 year senior unsecured bond offering with an all in interest rate of 3.4%. We used the proceeds for the early redemption of our existing $250,000,000 4.8% bonds due June of 2021 and the prepayment of our $45,000,000 4.4 percent secured mortgage the due 2,045. These transactions locked in 30 year debt at near all time low yields and extended the average duration of our debt by approximately 3 years. After taking into effect these transactions, 100% of our debt is now unsecured and all of our assets are now unencumbered.
In conjunction with the redemption and prepayment, We encourage during the Q4 a one time charge to FFO of approximately $0.12 per share. Our balance sheet remains strong with net debt to EBITDA at 3.9x and a total fixed charge coverage ratio at 6.4x. We ended 2019 with only $44,000,000 outstanding on our $900,000,000 unsecured line of credit. Our current line of credit balance after the January 2020 payment of our 4th quarter dividend and the payment of property taxes, which are disproportionately due in January, is approximately $180,000,000 At quarter end, we had $772,000,000 wholly owned development currently under construction with only $359,000,000 remaining to fund over the next 2 years. Moving on to financial results.
Last night, we reported funds from operations for the Q4 of 2019 of $125,600,000 or $1.24 per share, exceeding the midpoint of our prior guidance range by $0.01 primarily from higher same store net operating income, resulting from higher levels of occupancy and other property level income and continued lower turnover costs, lower taxes and general cost control measures. For 2019, we delivered Full year same store revenue growth of 3.7%, expense growth of 2% and NOI growth of 4.7% as compared to our original same store guidance of 3.3% for revenue, expenses and NOI. You can refer to Page 27 of our Q4 supplemental package for details on the key assumptions driving our 2020 financial outlook. We expect our 2020 FFO per diluted share to be in the range of $5.30 to $5.50 With a midpoint of $5.40 representing a $0.36 per share increase from our 2019 results. After adjusting for the $0.12 non core prepayment penalty incurred during the Q4 of 2019, The midpoint of our 2020 guidance represents a $0.24 per share core increase resulting primarily from an approximate $0.19 per share increase in FFO related to the performance of our same store portfolio.
At the midpoint, We are expecting same store net operating income growth of 3.3%, driven by revenue growth of 3.2% and expense growth of 3%. Each 1% increase in same store NOI is approximately $0.575 per share in FFO. An approximate $0.17 per share net increase in FFO related to operating income from our non same store properties, resulting primarily from the incremental contribution of our 4 acquisitions completed in 2019 and our 10 development communities in lease up during either 2019 and or 2020, partially offset by the recently completed disposition of our 2 wholly owned Corpus Christi communities and an approximate $0.04 per share increase in FFO due to an assumed $300,000,000 of pro form a acquisitions spread throughout the second half of the year at an initial yield of 4.5%. This $0.40 cumulative increase in anticipated FFO per share is partially offset by an approximate $0.02 per share decrease in FFO from an assumed $200,000,000 of pro form a dispositions at the end of 2020. An approximate $0.04 per share decrease in FFO resulting primarily from the combination of lower interest income, resulting from lower cash balances and higher corporate depreciation and amortization due to the implementation of a new cloud based accounting and human resources system.
Our combined general and administrative, property management and fee and asset management expenses are effectively flat year over year. An approximate $0.07 per share decrease in FFO due to higher net interest expense, resulting primarily from actual and projected 2019 2020 net acquisition and development activity, partially offset By the 2019 accretive refinancing of debt. At the midpoint, our guidance assumes $300,000,000 of new unsecured debt issued in the first half of the year. And finally, an approximate $0.03 per share decrease in FFO due to the additional shares standing for full year 2020 following our Q1 2019 equity issuance. At the midpoint of 3% for our expense growth, we are anticipating that most of our expense categories will grow at approximately 3% With the notable exception of property insurance, which is anticipated to increase at approximately 20% Due to the currently unfavorable insurance market, property insurance only comprises 3% of our total operating expenses.
Property taxes represent a third of our total operating expenses and are also projected to increase approximately 3% in 2020, The previously discussed savings on Texas property tax rates as a result of the passage of Texas House Bill 3 At Texas Senate Bill 2, which reduced school district tax millage rates by approximately $0.07 in 20 19 And an additional $0.06 in 2020 and capped local government's tax revenue increases at 3.5% for cities and counties and a 2.5% for school districts without voter approval are offset by property tax increases in other markets, including Washington D. C, North Carolina, Georgia and Florida. Page 27 of our Supplemental package also details other assumptions, including the plan for $100,000,000 to $300,000,000 of on balance sheet development starts spread throughout the year. We are finalizing our pilot of Chirp, our mobile access solution, and we'll update you further as we firm up our deployment schedule. Our 2020 guidance does not assume any incremental FFO impact from this initiative, which we expect to be meaningfully accretive in 2021 and beyond.
We expect FFO per share for the Q1 of 2020 to be within the range of $1.29 to $1.33 After excluding the $0.12 per share Q4 2019 prepayment penalty, The midpoint of $1.31 represents a $0.05 per share decrease from the Q4 of 2019, which is primarily the result of an approximate $0.02 per share decrease in sequential same store net operating income, resulting primarily from the reset of our annual property tax accruals on January 1 each year and other expense increases primarily attributable to typical seasonal trends, including the timing of on-site salary increases. An approximate $0.015 per share decrease in FFO due to a combination of lower interest income resulting from lower cash balances and lower fee and asset management income, an approximate $0.01 per share decrease in FFO due to higher interest expense. An approximate $0.01 per share decrease From our previously disclosed Q4 2019 business interruption insurance recovery and an approximate $0.01 per share decrease From our wholly owned Corpus Christi dispositions. This $0.065 per share aggregate decrease in FFO is partially offset by an approximate $0.015 per share incremental increase in FFO from our recently completed Houston and Raleigh acquisitions. At this time, we'll open the call up to questions.
Yes. Before we start our first question and answer, we let our Camden folks know that we do have a winner to our Camden contest. The first person to correctly identify the songs with the person that submitted them is Loris Brooks, who is our Senior Benefits Administrator here in She correctly identified Call Me Maybe by Carly Rae Jepsen with Kim Callahan, Humble and Kind by Tim McGraw with Mr. Malcolm Stewart, Can't Stop the Feeling by Justin Timberlake with Alex Jessett, Uptown Funk by Bruno Mars, Mr. Campo and shockingly, The Fighter by Keith Urban And now we'll turn it over to open it up to questions.
Thank you.
We will now begin the question and answer session. And our first question will come from Nick Joseph with Citi. Please go ahead.
Thanks. Maybe just You did 2.1% same store revenue in 2019. It sounds like you're expecting a similar level of growth this year. Given the increasing supply and the job growth comments that you made, just wondering how you can tie those 2 and what you're seeing more from your
Yes. Nick, you're correct. Our original guidance last year for Houston included right at 2.1% growth, and that's about where we are this year. So the one of the challenges on the Houston data As you have estimates from our providers that range all the way from new completions of a low of about 9,500 apartments 2 on the high end almost 20,000 and that's a meaningful difference in that spread. We took the average or we're sort of planning our game plan around the average of those 2 outliers.
We have 5 data providers, the average is about 14,000 to 15,000 apartments. So even that so that doesn't seem that Unmanageable in an environment where we think we're still going to get 45,000 to 50000 new jobs and the estimates on the job growth are much more tightly bunched than the new supply. My guess is the new supply number is still there's still a lot of fair amount of uncertainty as to the timing of deliveries And which seem to always be getting extended further and further out. So we think that and then the second part of that is that Our portfolio has a pretty decent mix of urban, core and suburban assets. And even though the a fair amount of the supply is More so this year than in previous years is coming in the suburbs.
We still think that our balanced portfolio is well positioned, Probably going to see a little bit more impact as we did last year in the urban core just because that's where the current lease ups are happening. Probably going to get a little bit more impacted late in the year from some of the suburban assets. But overall all in all, we still feel pretty good about our ability To grind out another 2% in a Houston market that's going to continue to be challenged. And there's Nothing new or even very interesting about Houston being countercyclical to the rest of our portfolio. This is about the 7th or 8th time in 30 years that We've seen results like this where Houston is definitely it's just countercyclical.
And people dig into and try to put a lot of analysis around it, but I I don't think you really need to overthink it too much. The reality is that and it's just as stark as this, is that low oil prices are Really good for everybody else in the country and not good for Houston, and the reverse is also true. So we've been we had a lot of times in the past Where Houston was an outlier to the top end of the range, and right now it's an outlier to the bottom.
Let me just add that I I think the interesting thing, this will apply to all markets, including Houston, but I think it supports it's really supported better in Houston than the other markets maybe. When we talk to our data providers like Ron Witten, for example, I'm going to paraphrase what Ron said on his Last client call with us, which we did last week. The he said that apartment demand is just Proportionally strong versus the underlying economy. If you just look at the underlying economy and you look at job growth slowing At supply at all time highs, you would say, well, how can you have revenue growth in apartments When you have supply with a backdrop of job growth falling year over year. And the answer Is that we just have this really interesting demographic tailwind and that tailwind is the term That Ron uses and I think it applies to Houston as well.
You have continued growth in young adults who have a high propensity to rent apartments And you have lifestyle folks, non couple types that have a higher propensity to lease and there's more of them today. And then when you look at propensity to rent for every demographic age group, all the way up into the 60s, those Cohorts have grown dramatically in terms of propensity to rent. When you think about People that were in their 50s before it's like, well, they're going to buy houses, stay in houses, they're already in houses, but they're actually selling houses and renting. And so The renter population is increasing at a faster rate than we would ever expect given the backdrop of job growth. One of the other really interesting studies that came out was Freddie Mac, their housing summary in 2019.
There was some data and it was reported in the Washington Post just recently that 40% of renters say they will likely never buy a house. And And that's up from 23% of renters saying that in 2017. And then 80% of those folks that 80% of the 40% It says that rent fits them better for their lifestyle. They don't want to be they don't want a mortgage. They want flexibility and the optionality of being able to move whenever their lease is up.
And so I think that continues to drive all the markets, including Houston. Houston It does have more supply coming in on a relative basis than it did in the last few years. So it's keeping that revenue growth Muted. But ultimately, I think the demand side of the equation is definitely far greater than the economy would Thanks. That's very helpful.
And then maybe just quickly on D. C, you had mentioned political risk in an election year. What have you seen in D. C, I guess, In election years and then maybe the following year that's maybe different than other years? Well, we have done some analysis on election years versus the overall economy in D.
C. And interestingly enough, it sort of picks up during the election year. And then it sort of depends on who gets elected because If you have an incumbent that gets elected, what happens is you don't have a flurry of changes, right? So you don't have Lobbyists now that need to retool because they have a new administration. So that tends to be if you have a new administration, you tend to have More growth in D.
C. During that period because you have sort of the existing incumbent lobbyist and business people Sort of having to retool and figure out how to improve their position visavis the new administration. So Generally, it's good in the year leading up to it helps the economy in D. C. And the economy nationally Leading up to an election, then it DC actually benefits if there's a change of administration.
Thank you.
And our next question will come from John Kim of BMO Capital Markets. Please go ahead.
Thank you. Regarding Phoenix, it continues to be a strong market as you're forecasting this year as well. When do you think development will pick up in the market to meet that demand? And why hasn't this occurred yet?
Well, we've got in our Phoenix numbers, John, we've got completions Picking up slightly in 2020. We were at about 6,800 delivered units last year. Looks like we're projecting about 7,600 units this year. So that's about a 10% increase. That's probably still not sufficient to get ahead of the demand.
One of the things about Phoenix that's just different than a lot of other markets that we operate in is just the lack of competition that we have from public companies and probably fewer merchant builders that are indigenous to Phoenix than you have in some of the other cities that we build in. So you just you just got a different embedded base, a little bit Different competitive profile and then you got to work I'm not aware of any other public companies that have anything currently under construction in Phoenix. There may be 1 or 2, but it's minimal, if any, as opposed to some Some of our more well traveled markets, that would Washington, D. C, Southern California, the Florida markets and even Denver and Dallas. So just A different profile, but my guess is that if you look at what projected job growth is again in Phoenix next year, Where the consensus number is somewhere in the 34, 35,000 jobs.
If we get 7,500 apartments, that's roughly equilibrium. But I just don't think the capacity is there to ramp up the way Some of the other markets can and have historically, but good results like that ultimately will attract competition. I think the good test case of that is Denver, which we operated in with very little outside competition from the public companies for a number of years, and that's changing as well. So I'm guessing it will ramp up.
I agree with Keith in the sense that the pipelines in these markets are pretty much As full as they can get. When you look at the permit data and what have you, we're at peak times in most of these markets. And the challenge that we have and other developers have is that it's just really hard to make numbers work in lots of markets including Phoenix. Construction costs continue to go up higher faster than rent rental rate increases go and it's Hard to make those numbers work and I think most people would like to ramp up their business, but they really have a hard time ramping up from this high level already.
Okay. And my second question is to the JT Fan, Alex. What are your views on moving to a core FFO per share guidance
It's interesting because I heard yesterday that Probably one of the last hanger on to not having core FFO has gone over to the dark side. So at this point in time, we plan on reporting FFO based On the NAREIT white paper, I think there's a lot of importance around doing that. If you think about it, the SEC enables NAREIT to have a non GAAP measure as long as it's consistently applied. And so we're going to keep with that and we're going to consistently apply it based
And our next question will come from Shirley Wu of Bank of America. Please go ahead.
Hey, guys. Thanks for taking the question. So my first question is actually a follow-up to Nick's question on Houston. I think in your last Quarter call, you mentioned that historically 40% to 50% of your demand in household formation was driven by jobs, but that capture rate actually fell last year to 15%, but you were actually seeing a more positive turnaround. Could we give a little bit of extra color in terms of how that Has continued to play it out or if that turnaround has continued to improve?
We have seen a higher capture rate Of multifamily versus single family. And I think when we made that comment on the last call, It was interesting because we've dug down into this data and it was very unusual For single family demand to exceed multifamily demand in Houston and in any market because it's Multifamily demand has continued to outstrip single family demand from a rental perspective. And it was just an aberration. We had our data providers look at it. And part of it was that when the job growth that happened, the people are already here because Houston did have a the downturn with the energy business.
So you had 80,000 plus jobs that were lost in the energy business and those people a lot of those people lived in homes. And then when the new jobs were created, those people took those jobs that were already in either a rent home Or an owned home and the demand for multifamily or the competition for those housing units went to single family as the multi family. That has turned around now because we've added more jobs that and we've also seen the in migration rate For people moving into Houston improve and to go up During 2014 through 2016 timeframe, people used to come well, before that, they were coming here because you get a job easy. Then during that energy downturn, it wasn't as easy. They weren't as plentiful.
We did have negative job growth, but people Sure heard about that and then didn't come to Houston didn't move to Houston to take a job. The other thing that was happening at the same time Is that you are having we have a historically low unemployment rate in every city. And So a young adult can get a job in pretty much any city in America if they want to stay there. So there's a little bit of a decline And migration rates because of that as well. And I think just migration rates overall in the country are down Because of this very tight labor market, there's so if you can get a job in the city you live in, you don't necessarily move out of the other city You still do have out migration in California and New York and other places for tax reasons and high cost of living reasons and things like that.
But we have definitely seen the capture rate for multifamily demand increase this year, and We think it's going to increase next year. We're not going to have a we'll continue to outstrip single family the demand versus multifamily.
Got it. That's helpful. And so my second question has to do with turnover. So I I think turnover has been continuing to trend down across the board for all your competitors. And it's gotten so low to a point where do you think There will be a continued deceleration in turnover or do you think it's going to kind of taper off or pick back up?
I don't know, Shirley, for the last 5 years, it's ticked down in our portfolio. And every year, I've kind of mused out loud that we've got to be Approaching the limits of what the turnover rate can fall to, but it fell again last year. And it's I think a lot of the factors that Rick mentioned about just the demographics have we just have to change our thinking about what turnover rates Are likely to be in the future because it's 5 years is more than enough to call a trend. So I think we're in a probably in a permanently lower turnover Part of the cycle and this is likely to continue. It's hard to know where this This is like the falling homeownership rates.
It's hard to know where it stops, but at some point, you got to believe it will reach some logical
And our next question will come from Rich Anderson of SMBC. Please go ahead.
Thanks. Good morning. I'm still picturing Rick at a Bruno Mars concert, but anyway.
We have seen it. We had him Here
for Super Bowl and we brought them in Friday night of Super Bowl and we went to that concert.
Okay.
Anyway,
so the year last year started from a same store NOI and just look at the NOI line 3.3 percent and you ended the year full year 4.7%. It's precisely the same number This year to start for again NOI not revenue at 3.3. I'm curious How much is 2020 perhaps going to look like 2019 where you set a reasonable but perhaps beatable Same store profile as we go through the year? Or do you feel like 2020 is different than 2019 at least in that regard?
Rich, I'm going to answer your question on the revenue side of things because there are a lot of things that happen on the expense side of property. I don't know. They're just sort of random walk sometimes. On the revenue side of things, you're right. We went out last year with guidance original guidance was 3.3%.
And we were Basically, our forecasting and our modeling had occupancy rates pretty much level on same store that we've ever had. So if you go back 20 years, our 20 year average for same store Occupancy is about 94.6 percent and all of a sudden we get this increase in occupancy rate. We had a peak in what we thought would probably be a peak of 95.8% in 2018. Those were kind of We felt like kind of crazy high numbers and then we sort of repeat but we thought maybe we can maintain that. So that's what we modeled In 2019, so that the 3.3 had an expectation of somewhere around 95.7%, 95.8%.
Well, as it turns out, Occupancy rate over the course of the year ticked up. We end up averaging 96.1% occupied for the full year of 2019, Which explains the lion's share of the difference between a 3.3 revenue growth and a 3.7 revenue growth for the year. There were few other ins and outs, few out performances. But the lion's share of that was the increase in the occupancy rate. So question really is that Are you taking a 30 year high occupancy rate and saying that's going to be repeatable?
And in our world, it looked like The 96.1 percent occupancy rate was a little black swanish. And so naturally, there's a little bit of reluctance to repeat that And as far as modeling for next year. So we moderated the occupancy rate a little bit In light of 2 primary facts, we know that deliveries in Camden's portfolio of new supply Are going to be up about 15,000 apartments over last year. That's about a 10% increase. So we know we're going to get more new units than we had last year.
The flip side of that is we also know that based on the job growth estimates in Camden's portfolio, job growth in across our platform is coming down somewhere in the 100,000 jobs over the course of the year range. So you're going to get fewer jobs, you're going to get more supply And it just feels to us like we're probably going to have a little bit different supply demand challenge in 2020 than we had last year. So the flip side of that is, is that if we end up catching lightning on a bottle again and we average something in the 96.1 range, That's captured by the high end of our revenue range for this year at 3.7%. So that's how we ended up settling on our guidance for this year.
Okay. And then could you then based on what everything you just said there, fewer jobs, more supply and in your world Decelerating revenue at least from your standpoint today, yet you're ramping development, I think $100,000,000 more of projects sequentially versus the Q3 on tap now. How does that reconcile based on what you just said? You're showing some confidence in the development side and yet you're kind of playing it a little closer to the vest on the operating side?
It's primarily because the development starts are kind of lumpy, right? You put property under contract. It takes you a while to get Especially in California to get permits and what have you. And so we've been consistent in saying that we'll be at 200 $300,000,000 a year development start company. And if you go back to our peak development, we definitely have throttled it back a bit.
But on the other hand, when you look at sort of going forward, the 200 to 300 I think is sort of a steady state Kind of a not a bullish not necessarily an overtly bullish view, but just a more moderate view. And when you look at what's happening In the acquisition market, cap rates continue to compress at levels that I can imagine that I never thought I could imagine when people are paying the sub-four cap rates in Dallas and Austin and other markets like that. And so it really makes it makes our Spread between what we can where we can invest our capital via if we do acquisitions versus the development, that development still gets paid very well From a premium perspective compared to acquisitions.
Okay. Fair enough. Thanks very much.
You bet.
Our next question will come from Austin Wurschmidt of KeyBanc Capital Markets. Please go ahead.
Thank you and good morning. The other income per occupied unit accelerated this quarter and I'm interested if that was driven primarily by Parking fees and the rollout of the smart home technology initiatives you've discussed. And then what do you spec other income growth could look like in 2020?
Yes, absolutely. So we didn't really pick up much from the Smart Access. We You have our parking initiatives, which we're starting to get some traction on, and we're also getting a slightly higher amount of recapture on our utility income, Kevin, that's what you're seeing in the Q4. If you go into 2020, we are basically assuming that non call it non apartment rental income will be in line with our apartment rental income. So you've got other income, Which is what we all think about.
But we also do have parking revenue, which we're not calling other income, we're calling rental revenue. But when you put that acceleration in there as well, It should all be in line. So there should not be a dilutive impact in 2020 from other income.
And then maybe sticking with you, Alex, as far as the balance sheet, where do you guys expect to finish the year from a leverage perspective? And what would get you more comfortable levering up from the current levels of around 4x, call it?
Yes. I mean, so we've always said that we're comfortable in the 4x to 5x range. And so we're here today at 3.9x. So obviously, we've got a little bit of capacity. When we look at our models, we've got ourselves sort of In the mid four times by the end of the year, but obviously we'll keep watching that closely and make sure that we understand what our capital raising alternatives are throughout the year.
Our next question will come from Alexander Goldfarb of Piper Sandler. Please go ahead.
Hey, good morning. Morning down there. So just two questions, but first, I mean, On the NAREIT FFO versus core preference would be NAREIT FFO, it just makes comparability easier. And the core FFO, everyone Sort of picks their own metric makes it tough for comparison.
Hopefully, you got my answer that I agree with you.
That was pretty darn clear. So, question 2 questions. First, going back to Nick's question on Houston. I hear you Keith that Houston has gone through booms, busts and great market over time, but still since the oil bust it has lagged. And to Rick's point on cap rates and where things are trading, it would seem like there's an arb here where you can Maybe trim some of your Houston exposure and reinvest that in other markets at an accretive spread, whether it's either Maybe markets with faster growth, so same cap rate, but faster growth or maybe development.
So can you just talk about whether almost north of 11% Of Camden and Houston makes sense just given how the market has performed maybe 8%, I don't know. I mean, I don't know what the number is, but maybe something lower is better And put that money in markets that are showing more consistent growth?
Well, when I think of growth, I look at it over a long It's not the variability from year to year in a portfolio like ours is not That's concerning to me. It's more what's the long term growth been. And if you go back to a 20 year history, Houston has outperformed most of our other markets over that period on To pure NOI basis. So it tends to be a little bit more volatile for sure. But in the context of what we're trying to achieve, which is a total Shareholder return, grow NOI over a long period of time.
It still fits our it fits what we're trying to do very well. Now With regard to the timing and what's your exposure today, where is it going, I think that somewhere around given the size of the Houston market, somewhere around 11%, 12% makes sense for a long term target. Market somewhere around 11%, 12% makes sense for a long term target. But that having said that, it Behoves us to be opportunistic as to when we put money to work in these markets, not necessarily in tune with The underlying is the market one of the at the top of the peer group today, It's more where will it be over the next 10 years. So if you think about from a timing standpoint, we just bought an asset in Houston at the end in the Q4 that We think it was an extraordinary value play.
We think we bought that asset at a roughly 30% discount to replacement cost At a 5% kind of stabilized yield, those are numbers that you can't get in most of our certainly the replacement cost numbers, you can't touch that in any of our other markets. So if you're thinking about this as a 10 year sort of a 10 year horizon, 5 to 10 years, that's an incredible play. So To your point of could you be selling Houston now, lightening up and redeploying the capital, sure, you could do that. But If Houston right now screens as one of our most attractive and I think in 2020 also will screen as one of our most attractive acquisition opportunities, Then it's sort of it's almost it would hurt my brain in a really bad way To be thinking of Houston as a fantastic acquisition market and then disposing assets into that. It's just hard for me to think of it being a great Buy market and a great sell market at the same time.
Having said that, we clearly have the opportunity when Houston is in a more recovered state And your and people are trading not necessarily on at discounts replacement costs to sell some of our older assets in Houston At an appropriate time, which is we don't think is now, but to do that, to bring our exposure back down to the level that we want it to be at and End up with a newer higher quality portfolio in Houston and just live with the timing aspects that are associated with that.
Okay. That's helpful. And then second is on development, you just bought the Raleigh site, you also issued some ATM. So maybe you can talk about where you see new development yields today when you're starting projects. I think Your stabilized stuff you said was sort of 5 ish, but maybe where you're underwriting development yields today and Just understanding how that compares to where you raise capital in the spread?
Well, the development yields that we're targeting today are we're still targeting suburban development deals in the 6 range and the urban development deals In the low 5. And the in terms of the spread to I don't think it might Spread to issuing capital today. We think of it on a more broad basis. So the way I think about and we think About our cost of capital is it's our long term weighted average cost of capital. And with a balance sheet that's about a 75 percent equity, 25 the 6% debt spread.
When you do a sort of capital asset pricing model analysis of what is your What is Camden's cost of capital? It's around a little slightly higher than 6%. So when we look at a development transaction or an acquisition, we We look at what our unlevered IRR would be over a 7 year period on that development and that needs to be higher than our cost of capital and it needs to be 150 basis points wide of our cost of capital plus or minus. Acquisitions can be tighter than that because you don't have the development risk. So how we manage our balance sheet in the short term is sort of take being opportunistic with debt rates, being opportunistic With equity issuances to try to keep our balance sheet in the right place given where we are in the market cycle, but I don't think about incremental cost of capital on whether I'm doing a 30 year bond deal or issuing equity on the ATM.
Thank you, Rick.
Our next question is coming from Rob Stevenson of Janney. Please go ahead.
Good morning, guys. Given that California is roughly 12.5% of your NOI across 12 properties With the legislative, regulatory, ballot issues, etcetera, how are you guys thinking about capital deployment there beyond the one project you have under development And potentially the one that's in the Shadow Pipeline?
We still like our California portfolio in spite of legislative issues because Where our portfolio is in probably some of the less risk markets in terms Rent Control. The statewide rent cap really doesn't affect us That much because we're you're talking about a CPI plus 5 kind of number, which we're right now not getting. And so I think I would be a little more nervous, especially with the renewed Costa Hawkins Ballot legislation that's likely to be on the ballot in 2020 that would allow cities to get more aggressive. Our portfolios the Sure. Not in the cities that are more militant when it comes to rent control.
And even with all The sort of negative aspects of California with cost of living and all that, it's still a pretty good market to be a multifamily owner And I like the exposure there.
Okay. And then Keith, you were talking before about the turnover Being low and can't get much lower, etcetera. I mean, how much I mean, there's obviously positives to that from a the same store perspective. But is that putting a drag on your redevelopment given the fact that you're getting access to fewer units on an annual basis? And how are you guys working around that?
Yes. At the margins, it matters a little bit, but you're talking about the difference between 43% and a 44% turnover rate year over year between 2018 2019. If you had a 5% or 10% delta in any given year. Yes, that would probably affect the repositions. But the reality The fact is, as Rick gave the numbers in his opening remarks, we've done almost 40,000 apartments.
And so We are down to I think the active reposition pipeline right now is only about 2,900 apartments. So it's The vast majority of the reposition activity that was available to happen in our portfolio has already happened.
Our next question will come from Rich Hightower with Evercore. Please go ahead.
Hey, good morning, everybody.
Good morning. Good morning.
I guess we've covered a lot of ground on the call so far, but Just along the topic of very low acquisition cap rates and compressing development yields out there. Rick, you've done a good job in the past Sort of laying out what the competitive landscape looks like just in the sense of the typical capital stack for a developer Or maybe competitors on the acquisition side, hurdle rates and lender requirements. Can you maybe just walk us through What the average math looks like nowadays and maybe how that compared to where we were a year ago?
Well, a year ago rate interest rates were higher Right, than they are today. So the capital stack has improved for the acquisition folks because the interest rates are seriously are much lower than they were Last year at this time, and you did have a really interesting situation last year when you had coming out of the 2018 cycle, right? And so we thought that you would have some pressure on merchant builders and pressure on others just to where you'd have the buy side It's in some unusual situations that we've been able to uncover, but cap rates continue to be very, very sticky, if not going down. And primarily because of the capital is very, very available. And I even though if you look at Private Equity trying to raise funds from pension funds, those numbers are pretty are down and getting the new funds being raised in that way is definitely down, but there's still a massive amount of capital that's already been raised that's unfunded that needs to the Find a home.
And so I don't think we lack any capital from the equity or the debt side of the equation. It's actually improved and created more pressure Then you would think.
Yes. Just to follow-up on that, we were I was in we were in Multi Housing Council National Housing Council Annual Meeting in Orlando last week. And just to give you an interesting data point is with regard to how many The amount of capital and the amount of participants, that is brokers and companies that are in the multifamily field and chasing deals right now. 2 years ago at the NMHC National Meeting comparable meeting, there were 5,500 credentialed participants. This year, there were 8,000 credentialed participants at the same exact conference.
So in 2 years, An additional 2,500 people paid a pretty healthy price to show up and spend 3 days at the NMHC. So I'm inclined to call peak NMHC and we'll see if it where it goes from there. But it's there is The amount of people interested in the space has grown dramatically. The amount of capital, there's no end in sight. So I think there's more of the same in store for on transactions.
Yes. I mean that's helpful color guys. I mean Any quick commentary maybe on LTVs or lender requirements, debt service coverage, those sorts of things, just to kind of get a sense of that?
Yes. LTVs are 70% to 80%. And one thing that's been interesting is as the banks Have sort of tightened their areas. Debt funds have expanded dramatically. Debt funds are now over 20% of the multifamily fundings are coming from debt funds, Both development and acquisitions.
And 2 years ago, debt funds were maybe 5% of the market, now they're 20%. And so it's not just banks or insurance companies, it's these debt funds. So there are mezz programs out there too. So, I know developers here putting in 10% equity, 20% mezz and 70% construction loans from debt funds or banks. And so you can get up to 90% financing with a mezz piece and the mezz competition is as Aggressive as we've seen in a long time too.
It's definitely much wider Then treasuries, but it's 500 basis points, 600 basis points above the 10 year. You can get a mezz piece to get you to 90% financing.
Fascinating. I'm confident it's all going to end well. Thanks.
Well, we have a balance sheet that is Structured that if it doesn't, we'll be doing very well.
Absolutely. Thanks again.
Our next question will come from Nick Yulico of Scotiabank. Please go ahead.
Thanks. Hi, everyone. So I just I just want to go back to the leverage topic. Your leverage is clearly the lowest in the sector. And you look at the rest of the multifamily REITs, they tend to have debt to EBITDA And so I guess I'm just wondering why you feel the need to have it that low.
If this was put in place Years ago as a performance metric to get your leverage down, it's come down. Why do you still feel a need to have your leverage so much lower than the peer group?
It's primarily based on sort of where we are in the cycle. We have called the top of the market a couple of times the The last few years and missed that mark, obviously. But I would point you back to the Q4 of 2018 When the world was changing dramatically and the tenure was over 3 and all of a sudden people started talking about prices falling and Our stock price fell pretty dramatically along with others. And so we're 10 years into the longest U. S.
Recovery in the history of since the Great Depression or maybe even the history of America. I'm not sure it's the history of America, but I think with The unusual and maybe it's usual now with low interest rates and maybe it's going to be low forever, I don't know. But your peak supply, the longest recovery ever, I think you need to be cautious in this area and our Board feels that way and we're going to keep our debt to EBITDA at the low end of the range until there's Maybe signs for us that there may be clear sailing, but I can't imagine not having a recession in the next 5 years. And so if we do, I want to be positioned I want Camden to be positioned to take advantage of what could be Interesting opportunities and the discussion that we just had on the last question, when you think about people who are rushing into the space today paying the sub-four cap rates and leveraging the 90% with mezz. I'd like to know who they are in the future when we have a recession.
Yes, that's a fair point, Rick. I guess I'm just wondering though why it needs to be as low as 4 times, right, which is clearly It is a performance metric that you guys hit max payout on that if you keep it at 4. Why is that the magic number? And Does at some point the company revisit this and think about, hey, maybe now is the time to be doing more development. And so we can do that and we don't need to Keep our leverage that low.
Yes. So Nick, just a point on the performance metric. The metric is 4% to 5 percent, which is the range for debt to EBITDA. So it mirrors our guidance to the Street. And I think in Alex's answer earlier in his commentary.
If we have a bond transaction model, then if we do our book of business as we currently have it Laid out with acquisitions, development funding, etcetera. We'll end the year at 4.5%. And that's right in the middle of the range that we've given guidance to Not only the performance metric, but also guidance to The Street. So I don't I think by the end of the year, all things being equal, we should be Somewhere in the middle of the near the middle of the range of the 4.5x, 4x to 5x, which we think is still appropriate given all of Rick's commentary.
Our next question will come from Drew Babin with Baird. Please go ahead.
Hey, good morning.
Good morning. I know
it's been a long call, so just one for me. A follow-up on Houston Supply. It does look based on the data I'm looking at like the number of deliveries or the quantity of deliveries picks up kind of as the year goes on this year. And so Given that there's visibility on the 1st part of 2020, do you maybe worry a little bit more about kind of the back half of the year and how things might shape up for 2021? Or do you look at it as supply kind of naturally spreading itself out a little more kind of as things are delayed?
Just curious how you're thinking about that.
Yes. So the way we look at Houston, you have to remember Houston is a vast market, 650 miles square miles, right? And so one of the things that's really interesting about the Houston supply, and this kind of just shows you what lenders and merchant builders have done. They are Moving out of the core, the urban core and moving into the suburbs pretty dramatically. To give you an example, in Katy, there are 3,000 units that will come online this year in Katy.
We have 2 joint venture properties in Katy and nothing else. There's 3,000 units coming online in The Woodlands. We have 2 joint venture properties that are up towards The Woodlands, but are not Woodlands proper. So that's 6,000 units that are coming online in Houston that are really not competitive with our submarkets. So the way we look at Houston, so number 1, I think that it's always Clearly, the back half of the year is going to be more pressure than the front half of the year, just always is with the especially with the ramp up of the development Starting sort of beginning of last year, they'll bring products on and it's and we also have clearly continued slippage of ones that We're supposed to be in the 1st and second quarter that go into the 3rd Q4.
So with that said, the back half The Europod probably be a little more difficult in the front half, but keep in mind that the key is where is that product and how does it affect Our product in the suburbs and we think that we're reasonably insulated from a lot of the supply because Houston is so big.
Okay. And from a timing perspective, you kind of look at it as maybe more of a general overhang that will persist for a certain period of time rather than anything potentially Lumpy given how spread out the market is.
Yes.
Okay. That's all for me. Thank you.
Our next question will come from Neil Malkin of Capital One Securities. Please go ahead.
Hey, guys. Hopefully, we can keep this Call going to like 1 East Coast time.
Why not?
Yes. I feel like I'm in the Senate.
Oh, boy. Just given the types of delays and labor constraints such that even though permits might be picking up, We're continuing to see so many delays like is this kind of the most that we can physically produce and we shouldn't really expect anything the severely acute the rest of the cycle?
So if you look at our data providers and you look out to 2020 completions versus 2019, both in Camden's markets and nationally. Completions are expected to be up about 10% And then if you look at their and these are not obviously, they have a less of a less Certainly to them, but in the 2021 numbers, there's a slight uptick from that. So not major, but so the answer to your question is, I'm not sure it's I don't know if it's a structural capacity, but it could very well be that it's a Financial wherewithal and call it developer capacity. You do reach a point where even if money is relative certainly relatively plentiful, there are aggregate limits on what Lenders are willing to how much they're willing to play with any particular sponsor. So I think it's I don't know if it's structural in terms of the construction providers.
We clearly have had Getting the existing book of business completed for everybody in every one of our markets has been challenging for the last 5 years. And I just don't know how that gets any better in an environment where you have a constraint on skilled labor, but more the Projected completions. I just think it gets worse.
Yes. Okay. That makes sense. And the last one is, in your Operating expense guidance, do you bake in any successful real estate tax appeals?
You actually do. So if you look at 2019, We got refunds in of about $2,900,000 In 2020, we are anticipating $2,600,000 of refunds. So pretty close to what we received in 2019.
Thanks, guys.
Our next question will come from John Pawlowski of Green Street Advisors. Please go ahead.
Just one for me. I wanted to go back to your cautious comments on DC for 2020. I guess, Are you seeing anything on the ground today in terms of foot traffic, concession trends that suggest that the 3rd party Forecast for selling job growth could come to fruition, because the declining outlook from 2019 level, from the mid-four percent revenue growth, down from the 4.8% you did this quarter seems to be like a pretty sharp pivot in terms of the trajectory of pricing power. So is it just caution versus the 3rd party forecast or are you seeing it happen today?
Well, if you take so there's 2 things on the forecast. Our primary Providers, Ron Witten, as everybody knows. And he's got 2020 employment growth at 13,000, Which is at the low end of everybody else's range, and we've challenged that number and because it doesn't seem consistent with What we're seeing, but if you look at the average of the data providers that we have, it includes CBRE, RealPage and Mark's Millichap, it's close So it just it certainly seems like the average is probably It makes more sense when you look at the numbers. But if it's closer to the lower end of that range, then it's going to be a challenging market we're going to get 11,000 to 12,000 additional apartments in D. C.
Metro. Now again, the D. C. Metro story is always a little bit tricky because you got to think about Where the footprint is and our footprint is different than most of our competitors and it includes Northern Virginia and Maryland and some of the suburban assets that We continue to just have incredibly strong results from, where we do the only place we do have challenges This is where there's a submarket where we've got immediate construction or lease up going on and that we get impacted like anyone else does. But So I don't I think our game plan next year reflects a fair amount of realism in terms of what we expect to see.
Obviously, 2019 was an unexpectedly good year for us in the D. C. Market, and I'd love to see it repeat. I'm just not sure that based on The data that it makes much sense to be particularly bullish, more bullish than we are in our forecast.
Sure. Understood. But on the ground today, the team has not really seen any recent changes in terms of renewal pricing or concessions or foot traffic?
No. And in fact, in our market update call the other day, I would describe them as very optimistic In terms of their game plan for 2020, we ask everybody to give us their On a scale of 1 to 10, how achievable is this? And they were in the 9% to 10% range. So they feel very comfortable with their game plan. So no change, no concerns based on current conditions in D.
C.
Okay, great. Thank you.
You bet.
Our next question will come from Hindal St. Juste of Mizuho. Please go ahead.
Hey, good morning out there.
Hey.
So a couple of quick ones for me. So first, I guess I'm curious on any updated perspectives on rent control in some of your Sunbelt markets for this year. Per National Multi Housing, it looks like Florida introduced measures last year that would remove the state preemption of rent control And those bills are put to consideration here. And then there's also been some chatter in Atlanta, while Georgia too has a state level preemption against rent control. It looks like the city council there Briefly introduce a resolution encouraging the state to allow cities in that state to pass rent control legislation.
Yes. And handle that There's talk and there's chatter and there's activism around the idea of some form of rent control In almost every state that we operate in. The question is how far advanced is it? What's the traction? The market that I would say is more on my radar Screen as far as actionable, legislation that could impact us would be Denver.
I mean, they're Pretty there's been a lot of conversations. There's been a lot of local initiatives around the idea of rent control. I'm not overly concerned about The other ones you meant, Florida, for example. It's possible that some that there might be something introduced. It's hard for me to Get my head wrapped around a statewide initiative in the state of Florida around rent control at this point.
But it's something you got You got to be aware of. I mean, the ground is shifting on this for sure. And having conversations in states That 5 years ago, you probably would have said that's not ever going to be a conversation in the state of Florida or Atlanta or Texas. But it's just something you got to be really aware of. And ultimately, the how many of them progress to the point where you're In a firefight like you are in California over specific initiatives, it remains to be seen.
Yes. And I just don't see it happen in those markets. As Keith pointed out, in Houston, for example, there has been discussion of rent control here because housing prices, apartment price the Gone up and affordable housing is really tough here. And the interesting thing is they'll talk about it and then when you get people in a room That understand the politics of the area. They know it's never going to happen.
And so I think that there's a lot of talking, But you don't have the same kind of political polarized sort of hardcore blue Folks like you do in California, New York and some of these other markets. When you get to the ultimate and these are Red states and pretty much going to be that way for a long time and which would preempt a lot of state stuff.
Got it. Appreciate that. And can I get you to talk a little bit more about the Chirp mobile servicing platform that you're planning to roll out here? How should we be thinking about that incremental costs, what are the key features or focus areas? And then maybe can you talk broadly about the expected benefits and put some Maybe some broad numbers around potential expense savings or NOI and margin benefit.
You mentioned no accretion this year. Curious what that could look like maybe in 2 or 3 years' time?
Yes, absolutely. So what it is, is it's a mobile access solution that would enable both the residents and vendors to Using their smartphone to enter the premises and also enter the locks of the individual communities. We are in the middle of our pilot. The pilot is going very well, and we will have more information for you as we get a real deployment schedule. I will tell you We have done a lot of studies around this.
And when you really look at what our consumers are willing to pay for, there are a lot of Smart home technologies out there that are getting a lot of press. But the reality is what our consumers are most interested in is access. And so that is what we are primarily focusing on. And in addition to the fact that we know that Our residents are willing to pay for this amenity and it truly is an amenity. We believe that there is going to be efficiencies on the operating side.
If you think about the amount of time that we spend either rekeying locks, letting vendors in, Dealing with lockouts, etcetera, there should be some fairly meaningful savings on the expense side. But once again, we're firming all of this up. As I said, 2020 is really our year for a rollout and deployment. And our pledge to you guys is that we will
Our next question will come from Hardik Goel of Zelman and Associates. Please go ahead.
Hey, guys. Thanks for taking my question. I'll keep it quick. Just wanted to dig into the other income effect specifically in the Q4 And just where different things are accounted for. I think Alex mentioned briefly parking as you guys account for it a little differently than other traditional other income.
If you could share the breakdown of where parking is, maybe the cable bundles and all these other things are accounted for, that would be good.
Yes, absolutely. So if you are on Page 7 of our supplemental package, you'll notice that we have property revenues as one line item. If you go down to our footnote, which is footnote A, we try to break out rental revenue versus other revenue that is tied with Contractual obligation. So if you sort of think about rental revenue, we deem parking revenue because you're effectively renting parking space to be rental revenue. But we certainly think about our tech package, valet waste, etcetera, That would fall into the other income category.
Got it. And then at the market level, I guess, for the same thing, if I'm looking at the rental rate sequentially. It's up roughly 70 basis points, but the revenue per home is up So is that just a drag from other income? How do I interpret that at the market level?
Well, I think what I would look at is if I go to the Q4 comparison and I would say that monthly average monthly rental rates were up 3.4%, Yes. Revenue per occupied home was up 3.7%. So if you look at the monthly rental rates of up 3.4 and then you add your occupancy of 0.4 that gets you to 3.8, which is pretty much in line with the 3.7. 7. So I would tell you there's really not a drag there from any of our additional other income categories.
This concludes our question and answer session. I would like to turn the conference back over to Rick Campo, CEO for any closing remarks. Please go ahead, sir.
We appreciate you being on the call and Morning, Camden, for last decade and look forward to being with you for the next decade. So take care and thank you.