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Camden Property Trust’s Geographic Diversification Strategy

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Geographic coverage

Camden Property Trust (CPT) is present in some of the high-growth coastal markets of the United States. This includes the booming cities where people prefer to live and work. Camden’s geographically diverse portfolio of assets has fared well for the healthy growth of the company.

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High exposure to Houston

Although Camden is present in some high-growth markets, it has a heavy concentration in the slowing Houston market. In addition, the company has substantial exposure in Washington, DC, which is also likely to show some moderation in the coming years. During the last three years, Houston has led the company’s net operating income and revenue growth.

However, geographic diversification has served the company well over the years. As Houston and Washington, DC moderate, Atlanta, Denver, and Austin will lead the way for the company’s revenue and NOI (net operating income) growth. Camden’s top five markets in terms of the number of apartment units are as follows.

  • Houston, Texas – 14.3% (8,434 apartment units)
  • Washington, DC Metro – 10.9% (6,405 apartment units)
  • Dallas, Texas – 8.9% (5,243 apartment units)
  • Las Vegas, Nevada – 8.3% (4,918 apartment units)
  • Tampa, Florida – 8.3% (4,880 apartment units)

Portfolio diversification

The distribution of properties in the attractive US markets reflects Camden Property Trust’s geographic diversification strategy to take advantage of the growth in prime regional markets. Ric Campo, chairman and CEO (chief executive officer) of the company, recently said, “We have built our portfolio based on a philosophy that geographic and product diversification in markets where population growth and job growth lead the nation will produce long-term net operating income growth with lower volatility.”

Other major players in apartment REITs such as Equity Residential (EQR), Essex Property Trust (ESS), and AvalonBay Communities (AVB) are also following the same portfolio diversification strategy. The iShares US Real Estate ETF (IYR) invests 0.79% of its portfolio in Camden Property Trust.

We’ll look at Camden Property Trust’s development and redevelopment projects in the next part of this series.

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