CPT Camden Property Trust
Sunbelt supply glut is peaking; a conservative balance sheet lets Camden wait for rent recovery at a discount.
The story
Camden owns about 58,000 Sunbelt apartment units in Houston, Atlanta, Dallas, Phoenix and Austin, where job growth and migration support demand. Record new supply from 2023 to 2025 has held back rent growth, but deliveries are falling quickly. The balance sheet is investment grade and conservative (net debt/EBITDA about 4x, mostly fixed-rate debt with long maturities), so higher rates hit the stock mainly through cap rates and valuation multiples, not refinancing costs.
I set first-year growth at 2% because new leases are still absorbing excess supply, with flat to slightly positive same-store growth and only modest development. The 0.78 AFFO ratio is below the typical 0.85 for apartments because headline FFO here (net income plus D&A, about $1.0B) is likely inflated by gains on asset sales; recurring capex is also around $3,000 per unit. Terminal growth of 2.5% is inflation-like and well below the 5.31% risk-free rate, and beta matches the 0.9 multifamily anchor.
Value drivers
| AFFO growth (Y1) | 2.0% |
| Terminal AFFO growth | 2.5% |
| AFFO / FFO ratio | 78.0% |
| Beta | 0.90 |
| Failure probability | 1.0% |
| Cost of equity | 9.4% |
Valuation bridge
| PV of AFFO (explicit) | 5.46B |
| PV of terminal value | 5.95B |
| Equity value | 11.30B |
| ÷ shares → per share | $97.62 |
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 1.02B | 795.49M | 2.0% | 727.40M |
| 2 | 1.04B | 811.84M | 2.1% | 678.81M |
| 3 | 1.06B | 828.98M | 2.1% | 633.81M |
| 4 | 1.09B | 846.94M | 2.2% | 592.11M |
| 5 | 1.11B | 865.76M | 2.2% | 553.46M |
| 6 | 1.14B | 885.48M | 2.3% | 517.61M |
| 7 | 1.16B | 906.14M | 2.3% | 484.35M |
| 8 | 1.19B | 927.79M | 2.4% | 453.47M |
| 9 | 1.22B | 950.47M | 2.4% | 424.79M |
| 10 | 1.25B | 974.23M | 2.5% | 398.14M |
Key risks
- Sunbelt supply takes longer to absorb, keeping rents on new leases negative into 2027
- Long rates stay high or rise, pushing cap rates and the cost of equity up
- Weaker jobs and migration in Texas and Florida, plus rising insurance and property tax costs
Catalysts
- Deliveries drop sharply in 2026-2027, bringing back pricing power and same-store NOI growth
- Buybacks or development funded by asset sales at a discount to NAV, plus any easing in long rates