Key facts
- Camden Property Trust sold its 11-property California portfolio for $1.63 billion.
- The portfolio comprised 3,620 units across the Los Angeles-Orange County and San Diego-Inland Empire markets.
- The sale price averaged approximately $450,000 per unit.
- Proceeds will be used to pay down debt and reinvest in Sun Belt markets via 1031 exchanges.
- Camden also acquired 2,061 units in new developments and land across several Sun Belt states in Q2.
- The REIT's portfolio ended Q2 with 167 properties and 56,695 units, with 95.7% occupancy.
Camden Property Trust has completed a significant strategic divestment by selling its 11-property, 3,620-unit apartment portfolio in California for $1.63 billion. The Houston-based real estate investment trust (REIT) announced the sale alongside its second-quarter earnings, approximately seven months after initially disclosing its intention to leave the state. The buyer, who remained undisclosed, paid an average of $450,000 per unit for the portfolio, which spanned the Los Angeles-Orange County and San Diego-Inland Empire markets.
Camden had put the properties on the market in January with JLL, seeking an asking price around $1.5 billion. CEO Alex Jessett stated that the sale proceeds were in line with expectations. The company intends to utilize the funds to reduce debt and reinvest in new Sun Belt investments through 1031 exchanges, a tax-deferred method of exchanging like-kind property. Chief Financial Officer Ben Fraker highlighted the disposition as a strategic milestone, enabling the repurchase of shares at an attractive discount and increasing exposure to growth markets in the Sun Belt.
In addition to the sale, Camden acquired five apartment developments and two land parcels totaling 2,061 units in the second quarter for $645.4 million. These new investments are located in Georgia, Florida, Tennessee, Texas, Arizona, and North Carolina. The REIT's overall portfolio now consists of 167 properties with 56,695 units, excluding projects under development, with occupancy holding steady at 95.7% year-over-year. However, same-store net operating income declined by 1.4% from the previous year, and core adjusted funds from operations decreased by 8% year-over-year and 1.2% quarter-over-quarter to $145 million.
Camden also repurchased 1.4 million shares during the second quarter at an average price of $100.78 per share, with $298 million remaining under its share repurchase authorization. The company's stock saw a decline of over 2% in early trading. Alex Jessett was appointed CEO in March, succeeding Ric Campo, who transitioned to executive chairman. Jessett noted that exiting California is expected to save Camden approximately 80 basis points on its annual net operating income due to reduced regulatory costs. This move aligns with a broader trend of developers shifting focus away from California, though some new multifamily units are still breaking ground in the Los Angeles area.