Camden Property Trust (CPT) September 15, 2026 Conference Transcript

Welcome to Bank of America's 2026 Global Real Estate Conference. I'm Yana Gallen, B of A's Residential REIT Analyst, and we're pleased to have with us Camden Property Trust CEO Alex Jessett, CFO Ben Fraker, and SVP Investor Relations Kim Callahan. I'll turn it over to Alex for opening remarks, and then we can jump into Q&A.

Thanks, Yana, and good afternoon, everybody. Thanks so much for joining us today. We've only got about 30 minutes, so I'll keep my opening short and leave as much time as I can for your questions. If you want more detail, our updated investor presentation is up on our website, and it covers a lot of what we're going to walk through today. For anybody who doesn't know Camden well, here's the quick version. We're a multifamily REIT with nearly 57,000 apartment homes in 13 major markets around the country. We're an S&P 500 company. Our total market cap is $15 billion, and we've been public for 33 years now. About 80% of the portfolio sits in the high-growth Sunbelt markets, and the rest is in the Washington, D.C. area, or the DMV, and in Denver. Within those markets, 60% of our assets are in suburban submarkets, and roughly 60% would be considered Class B rather than Class A on price point. And we've got one of the youngest portfolios in the business with an average age of 16 years. Our markets lead the country in job growth, population growth, in migration, and just overall demand for apartments. And that has driven record absorption across our portfolio. New supply hit a 50-year peak in 2024, and deliveries have been coming down steadily ever since. In our markets, completions as a percentage of inventory in 27 and 28 are projected to run below the 20-year historical average of 2.3%. And buying a home is still out of reach for a lot of people, with mortgage rates around 7% and a big premium to own versus rent. Put all that together, and it sets us up a really good operating environment with better revenue and NOI growth in 2027 and beyond. And no, before anybody asks, we are not going to give any 2027 guidance today. So sorry, folks. Our markets are doing what we expected, and third quarter trends so far are right in line with our most recent guidance. Based upon what we actually saw in July and August, plus where we think September lands, we expect to average 95.7% to 95.8% for occupancy in the third quarter, with blended lease rate growth between 1% to 2%. That's consistent with what we talked about on our second quarter call back in July. Our peak leasing season usually runs from March to the end of August, and this year felt a lot more typical or more normal than last year when things slowed down by mid-year and the July 4th holiday. Given the pickup we saw in July and August, we expect the third quarter 26 occupancy and lease rate growth to come in above both last quarter or the second quarter of 26 and last year or the third quarter of 25. That sets us up well heading into the fourth quarter. Retention is still high, turnover is still low, and move-outs to buy a home has averaged 10% since 2023, which is a record low. We'll keep balancing occupancy against asking rents to maximize revenue now that we're in the slower stretch after Labor Day, so expect a slight moderation in sequential occupancy and rent growth in the fourth quarter. As most of you know, we closed the sale of our 19-year-old California portfolio in late July for $1.625 billion. We put approximately $700 million of the proceeds back into share buybacks, and the rest is going towards acquisitions in our high-growth Sunbelt markets. So far, we've completed $750 million of acquisitions, adding newly built communities with an average age of five years across several of our markets, and we're working on a few more deals we'd like to close before year-end. We also added three new development sites to the pipeline, one in Raleigh and two in Tampa, and we expect to start the Raleigh project later this year. Camden has one of the best balance sheets and lowest leverage ratios in the multifamily space, and we are one of only a handful of U.S. REITs with an A-minus or better credit rating from all three rating agencies. Liquidity is in great shape. We've got $1.2 billion available under our unsecured line of credit and commercial paper program, plus roughly $600 million in cash, cash equivalents, and 1031 exchange-related accounts. And we don't have much coming due in the near term. We've got $553 million of debt at an average interest rate of about 5% maturing between now and year end. and we plan to refinance it accretively in the near term using our unsecured credit facilities. So to wrap it up, Camden has the right products in the right markets, high-growth Sunbelt markets that are set up to outperform as new supply keeps declining, and demand for rental housing stays solid. Our balance sheet is strong, leverage is low, liquidity is ample, and we can refinance what's coming due accretively. We've got a proven track record of recycling capital to improve the portfolio and its growth profile, and creating value for shareholders along the way. And over the past 30 years, we've delivered solid long-term total returns, averaging 10.7% a year, which beats several NARATE and broader market indices. With that, let's open up the question from the B of A team and our audience today.

Thanks so much, Alex. That was a fantastic update and summary. And maybe I'll just start big picture before diving into the details of those points you highlighted. So, 2026 has been a pivotal year for CPT with new leadership and exiting California. And then it's also been a year of significant consolidation in the public apartment REIT sector. How are you thinking about markets and scale today?

Absolutely. So, well, I hit the first part, which is new leadership. The great news is, is that what's been working for Camden for the past 33 years isn't changing. I've been at Camden for 27 years. Ben's been at Camden for 26 years. And Kim, we won't say how long she's been at Camden. So the good news is that everything that has been working for quite some time and has delivered outsized results is not changing. The second thing is, so we'll talk about California and the California transaction, and I think that's really the best capital allocation story that we have seen in REIT world this year. If you can trade out of 19-year-old assets in California, and California, by the way, is a market that we do not believe is going to grow as fast as the Sun Belt. If you look back over history, California has not grown as fast as the Sun Belt, and so we're able to trade 19-year-old assets in California for five-year-old assets in our high-core, high-growth Sunbelt markets, and we were able to do that on a net-neutral basis, that is fantastic. And by the way, it's net-neutral in year one, and it should become accretive in year two and go on from that point. So I think that is a really strong example of how to allocate capital in an efficient manner. And by the way, the way we were able to make that work is we bought back $700 million of Camden shares at a significant discount to NAV. And so we are absolutely prepared to do transactions like that, and we think this is a great story. You asked about the M&A transactions that have happened in REIT space, and yes, there certainly has been some M&A transactions, which we will let the investors decide whether or not they think those make sense. But here's what I will tell you on markets. The Sunbelt has outperformed for 30 straight years. If you go look at total shareholder return over 20 years, the top two companies at the top of that list are the two Sunbelt companies, and that is because what drives our business is really simple. It is job growth and it is employment growth, and if you look to see where, excuse me, job growth and population growth, and if you look to see where the job growth and population growth has been and where it's consistently been, it has been in the Sunbelt.

I guess just, you know, on that point, is the Midwest the new Sunbelt?

So I will tell you that we were in the Midwest at one point in time, and we exited the Midwest because what we found, although the Midwest had lower volatility, it didn't really have outsized rent growth. And so it's interesting to see right now you do have affordability that is causing some folks to start to move into more traditional sunbelt markets. But you have to remember that our business, it takes quite a long time to make major capital investments, right? Because you want scale wherever you go. So in any market you go, you want to make sure that you can go into in a meaningful fashion. And it takes more than a year or more than two years or more than three years of a trend before you start to say, yes, this is where we want to go. I will tell you that we do deep dives on markets all across the country constantly. The last deep dive that we did that worked was Nashville, and we entered Nashville probably about six years ago. But we've done deep dives on all sorts of other markets. At this point in time, no other market is screening well for us. Interesting.

And maybe just following up on scale in terms of what's kind of sufficient in terms of, I don't know if you think of it as unicount or, you know, AUM in a certain geography. How do you kind of scale your operations to be most efficient?

Yeah, so we think that we need about five or six communities in a market for it to really work. The good news is that the only market that we have that is sort of below that level is Nashville. The better news is that we bought two assets in Nashville this year, and we started a new development. So we'll get to that point, and then we'll keep growing from there. But that's typically what you need.

Thank you. And then on the updates you provided, you know, you're proving out your expectation that third quarter blends will exceed second quarter blends. Curious how that kind of ties into, you know, this peak leasing season being a little bit more normal or traditional. I guess, like, what is causing that break in the seasonality with the 3Q versus 2Q?

Yeah, so I don't think it's really a break in seasonality. I think what it is is it's a, number one, it's a return to more typical seasonality. If you think about this conference last year, we were all telling you that come the 4th of July, all of a sudden demand just dropped off, right? Well, this year we got not only through the 4th of July, we got a whole other month, all of August. And so obviously that's been incredibly helpful for us on that side. And then if you think about why are we able to have higher blends in the third quarter versus the second quarter, our markets have never had a demand problem. Demand has been incredibly strong in our markets. What we've had is a supply challenge. And if you remember that peak supply or that supply peaked in about the second, excuse me, the third or fourth quarters of 2024. So now we're continuing to work through all that supply. And we're at this point in time where there's much less supply to work through. And that's obviously giving us additional pricing power. That is only going to improve from here.

Maybe if you could talk a little bit about kind of concession usage in your markets, how it's ranging between the still a little bit higher supply markets versus those where the absorption has been incredibly strong.

Yeah, I mean, so concessions seem to be fairly stable in our markets right now. Now, there are certainly pockets where we are seeing concessions just absolutely go away, and we're seeing pockets where they're sticking around. But here's the more fascinating thing to me. The fascinating thing is that when you turn off concessions, you immediately see really outsized revenue growth in that particular sub-market or market. And I'm going to give you an example. So the example I'm going to give you is Austin, Texas. The first thing you need to know is I am so incredibly bullish on Austin, Texas. It has nothing to do with the fact that I'm a longhorn and that we just beat Ohio State. But I'm incredibly bullish on Austin, Texas, because every 25 to 34-year-old in America seems to want to live in Austin. The challenge that Austin has is that if you think about the percentage of stock that should typically be delivered in any one year, that should be around 3% of the stock. Austin delivered 10% of the stock every year for the past three years. What that effectively means is that if you drive around, 25% of everything you see in Austin is brand new. The good news is, is because demand has been so incredibly strong, Austin has been absorbing all of that supply. And here's a great example of what can happen as soon as the supply gets absorbed. So we have an asset in Austin called Camden Rainey Street. And Camden Rainey Street, for those of you who are familiar with Austin, is just south of downtown. It is a cool, hip area where people like me are generally not invited, but I think my kids are invited. But we had really one of the first apartments on Camden, on Rainey Street, once again named Camden Rainey Street. After we bought that, we all of a sudden had a lot of new development all around us. Basically, Rainey Street became a high-rise development mecca, and there were massive concessions offered. and Camden Rainey Street last year had occupancy of 88%. That it was our lowest occupancy system wide. On Friday, I was in Austin visiting with our teams and I talked to our community manager at Camden Rainey Street and I said, what's your occupancy right now? She said, we're over 99% occupied. I'm going to tell you that is the highest occupancy that we have system wide. It also tells me we should raise rents. But if you look at what's happening in terms of new leases, We have actually had periods of time now recently at Camden Rainey Street where we are having low double-digit increases in new leases. That is unheard of, but the reason is is because all of the direct supply right around it leased up and turned off concessions, and as soon as the concessions turned off, leases started popping. Now, by the way, that is absolutely an anomaly in Austin. I'm not going to tell you anybody else is doing that. It does not happen anywhere else in Austin. But it is indicative of how fast new lease rates can increase as soon as you get new supply absorbed, and that's exactly what we saw.

Great. Maybe shifting a little bit to the expense side of things, guidance improved at second quarter earnings. Curious what you're seeing from insurance, property taxes, and then your controllable expenses heading into the back half.

Yeah, sure. So our expenses have been mostly as we anticipated, other than really our outsized, better than anticipated insurance renewal we had. Our policy year runs from May 1st through April 30th. We had a 20% decline in our property insurance premiums, which is leading to more favorability in our expenses for this year. The reason that happens is we had more participants in the reinsurance market. And so we'd seen insurance go up quite a bit, but this allowed it to ratchet back down. And for the back half of the year, the only thing that would be outstanding is tax rates that we anticipate to come in, but we don't anticipate any great surprises there.

Great. And then on the transaction side, you've been very active recycling capital this year, selling $1.7 billion and buying close to $800 million of apartment communities. Can you talk to us a little bit about the cap rates as well as the depth and breadth of buyers?

Yeah. So if you look at our sale, so our sale, once again, was a 19-year-old portfolio in California. We sold that at an AFFO yield of 5.2%. There's a Prop 13 adjustment that the buyer would have to take that's worth about 30 basis points. So effectively, that means the buyer paid about a 4.9 cap rate with real CapEx for a 19-year-old portfolio. Now, whether or not that is representative of what it would be everywhere else, it's hard to say. When we go out and we buy brand new assets, so the average age of the assets we bought is five years old, it's just under 5% in terms of cap rates. So it is still a really robust market in terms of cap rates. Now, Now, the reason why cap rates on new real estate are as low as they are is twofold. It is, number one, there's a lot of money that has been raised to go make acquisition transactions, and you can buy real estate at a discount to replacement cost, which is really attractive to a lot of investors. And then the second thing is, is there's not that much new multifamily assets on the market. So you've got this little imbalance between supply and demand. And that's obviously what's keeping cap rates fairly low for right now. And, of course, because we were able to sell at such a good cap rate, that's why we can buy at low cap rates and still make everything work on a net neutral year one basis.

And not disputing that this is an excellent cap rate, but just curious whether you think that there is a kind of portfolio discount or premium out there.

You know, somebody asked me that question today, and I said if there's a portfolio discount, we certainly didn't see it in California. But, you know, perhaps there is. We're not out looking at portfolios in general, right? My issue with portfolios has always been you have a billion-dollar portfolio, and you look at the real estate, and maybe you like half of the real estate. You don't like all of it. We can go out, and we just proved it because we did it this year. You go out and buy a billion dollars of exactly the real estate you want and exactly the sub markets you want with exactly the amenities you want. And you don't have to settle for anything. Right. So I generally try to stay away from portfolios unless there is a really compelling financial reason for it. I'd rather go out and just pick and put together the portfolio that really serves us and serves our investors the best.

Thank you. And you've also acquired land and have $632 million of developments underway. I'm kind of curious if you could share a little bit of how you're underwriting this. What kind of premium over acquisition cap rates do you require to start a new development?

And then just comment on what's going on with construction costs. yeah uh so the good news is that construction costs are coming down uh we think they're down about five to eight percent now they're not down in commodities they're not down in labor they are entirely down in profit margin for uh for subcontractors that's that's where it is uh the problem with that is you really can't squeeze it much more because at some point in time subcontractors they have to be able to pay their folks right and so i think we're probably at the point where construction costs are the lowest that they're going to go. When it comes to making a decision between an acquisition and a new development, about five years ago, we made the decision. We used to have acquisition personnel, and we used to have development personnel. And about five years ago, I was put over that department, and I said, we're going to stop all that. We're going to have real estate investment professionals. And the reason why I wanted real estate investment professionals is I didn't want somebody to come and talk their own book, right? I wanted somebody to come and say to me, the best investment option for Camden and its shareholders is X, whether that's a development or whether that's an acquisition. So here's how the conversation typically works when our folks bring us a new development. The first question I ask them, I say is, can you buy it for less? And if you can buy it for less, then the answer is just go buy it, don't build it, right? And then the conversation then moves on from that point in time. So we did buy three new land parcels this year, but I will tell you, we probably looked at 100 in order to get to the three that actually makes some sense, because we are trying to make sure that we are as disciplined as we possibly can. Camden is a prolific developer. We are really good at doing this. We've created billions of dollars of values for our shareholders by development, but we are absolutely not one of those people that says we're a developer, therefore we must always develop. We will only develop if it makes sense, if it makes sense for our shareholders. Now, by the way, if we can develop something and it's going to be a stabilized six, and I compare that to Camden's share price, which is right now like a 6.4 or 6.5, but Camden's share price represents a 16-year-old asset because that's the average age of our portfolio. A brand new asset is obviously zero years old. If I can look at that and say, yes, I think that a 6 on a brand new asset is going to grow faster than a 6-4, 6-5 on a 16-year-old asset, then that can make some sense. But we've got to really make sure that that's the right opportunity for our shareholders. And as I said, it's not something that we're just running out and saying, we will always develop. That's just not our mentality.

Great. Maybe on the balance sheet, obviously in excellent shape with the A-minus credit rating from S&P and a positive of refi. That's very unique coming up. Should you be leveraging the balance sheet more and should you be buying back more stuff?

So I've publicly said on the last earnings call that we are open to levering up a little bit to buy more shares. We bought over $700 million already. Obviously, that was funded from dispositions. But I will tell you, I believe Camden is a screaming buy. And when I sit here and I look at Camden Trading at a 6.465, and I realize that our debt to EBITDA, Ben, what's our debt to EBITDA right now? 4.5 times. 4.5 times. That tells me that we've got some capacity to do accretive transactions, whatever that might be.

Thank you. Maybe we could dive a little bit into some of your markets and, you know, curious kind of your outlook on the greater D.C. portfolio.

Yeah, so the DMV for us, if you go to 2025, was our best performing market. It was also the market that I talked about the most because everybody wanted to talk about Doge. And by the way, for our particular portfolio, Doge ended up being pretty much a non-event. If you look at where we are in the DMV, our largest concentration is Northern Virginia, and Northern Virginia has outperformed Maryland and the district almost consistently since we first moved into the market 20-some-odd years ago. So, Northern Virginia has absolutely always been strong for us. It also has lower levels of supply. Then it goes to Maryland, and then it goes to the district. The district for us has been an underperformer, and I do think a component of that. although a smaller component, is DOGE. I always told everybody last year that I was one of those folks that had no idea that federal workers weren't actually going into the office. I just assumed federal workers went into the office. And then all of a sudden they were called back and I realized that they were all like fly fishing in Boise. And so they all came back. And I think the offset of the incremental demand from them moving into the district, that offset the job losses that were associated with DOGE, and that's why the district ended up doing pretty well for us last year. But as I look at it on an ongoing basis, we will narrow or sort of shrink our exposure to the DMV over time, and that's just because it's over 10% of our NOI, and I don't want any one market to be over 10% of our NOI. And as we bring back our exposure to the DMV, likely that will happen in the district.

And then also curious on Houston, one of your larger markets that, you know, are you seeing any of the benefits of the higher gas prices?

Isn't that crazy to ask? Are you seeing benefits from higher gas prices? So in July, right around 50% of our communities in Houston had positive signed new leases. Obviously, that's a good trend right and and so that is indicative that houston is on the right track but we we talked to a lot of the energy company ceos uh if you think about drilling drilling is a really capital intensive thing and there's not a lot of people energy companies are not going to be reactive to what may be just a temporary strike excuse me a temporary spike in in oil prices to start drilling, right? Because this thing can go away really fast. If the Strait of Hormuz opens up, all of a sudden you're going to see oil prices drop. And so what I'm being told by the oil and gas executives is this is not a catalyst for them to start making major capital expenditures. If they made major capital expenditures, that's what would cause the job creation. So at this point in time, it's really not an event for Houston.

But a good July.

But a good July. Yeah.

And then maybe, you know, some of the larger sunbelt markets, Atlanta and Dallas and how they're trending.

Yeah. So I called out certain markets that actually had the majority of their communities have positive sign new leases in July. And the markets that I called out that fell into that category would be Atlanta, Dallas, Raleigh, Charlotte and South Florida. And so those are the markets that I would expect to sort of lead us into the recovery as we go forward.

Great. And, you know, maybe a little bit on the renewal side, it's been amazing how the retention keeps getting better. I guess, where do you kind of see it going from here? And obviously mortgage rates are going higher, lower.

So we continue to have for Camden record level retention. A lot of people try to tie it to mortgage rates. I don't actually think that that's that much of a driver. So in our markets, you have to remember that the reason why somebody leaves multifamily and they go to single family is usually lifestyle driven. And it's typically they got married, they had their first child, and they start to think about school districts. And at that point in time, they move out to single family. If you look at the percentage of our move outs that's typical to buy a single family home, it's typically 14% of our move outs. We turn half of our units every year. So what that means is that 7% of our residents typically every year move out to buy a single family home. We are now at the point where 5% of our residents are moving out to buy a single family home. That is not that significant of a swing going from 7% to 5%. I think the real reason why we are all seeing turnover be as low as it is, is it comes down to demographic factors that are happening in this country. And the demographic factors that are happening in this country, as I said, is that folks are getting married later. People are having children later, or people are having no children at all. And if they are in that situation, there is no real pressing desire in our markets for them to go out and buy a single-family home. They enjoy all of the amenities, the freedom, the sort of low-maintenance lifestyle that you get from living in a multifamily rental, and that is continuing. And what's happening is that our residents are becoming older, right? And as our residents become older, they become more established, and they become less likely to move. And one of the interesting things is that we have a tendency for the past 30 years to talk about 25 to 34-year-olds and talk about their propensity to rent, and I would argue that perhaps we should be expanding that, and it should be 25 to 40-year-olds or 25 to 42-year-olds because we just know that people are staying renters for longer periods of time. And unless anybody thinks that that demographic is going to all of a sudden shift and that all of a sudden people are going to start getting married earlier or having more children, I think this is something that's going to be a tailwind for the multifamily market for quite some time.

What's the actual number that you've seen that shift in terms of the age demographic?

Yeah, so our average age – or excuse me, our median age is 32 right now, and it's gone up a couple years in the last like 10 years. Like two years, you think? Yeah.

Maybe going back to kind of the demand drivers, you highlighted it's always kind of been job growth and population growth. Do you think that there could be maybe further upside with, you know, any change to immigration policy? Or maybe, you know, we keep seeing articles about, you know, the percent of, you know, college and high school grads still living at home with their parents, maybe unlocking that?

Yeah. So, if you look at the past couple of years, we've had about 1.15 million additional 25 to 34-year-olds move home with mom and dad. I consider that gas in the tank. Now, by the way, I have a 22-year-old and a 20-year-old, and I sincerely hope at 25. They're not living with me, but if they were to live with me, it wouldn't be for very long. And I have a belief that this excess million folks living at home with mom and dad are going to get kicked out sooner or later, and they will clearly become renters. I doubt somebody gets kicked out and all of a sudden becomes a home buyer. That's not just sort of how the math works. And then when you look at migration, and let's sort of talk about domestic and international migration combined, if you look at the markets that are anticipated to have the highest immigration in 2026 through 2028, basically, we are in all those markets, right? And by the way, nowhere on the list do I see New York City, nowhere on the list do I see any markets in California, with the exception of Sacramento and Riverside. So people continue to move out of the Northeast, out of the Pacific Northwest, and down to our markets. That is absolutely a trend that's continuing. Now, the broader sort of global discussion around immigration, here's what I know. I know that for any economy, it is incredibly important that population grows. And so obviously, if we don't have the immigration that we all need, that will be a damper on the overall economy. What I will tell you, though, because the domestic in-migration continues to favor our markets, and if you compare us to a New York or a California that without international immigration net loses people every single year, I think we are suited and well-positioned to outperform the rest of the multifamily sectors, those of us in the Sun Belt.

Maybe just to follow up on the Austin example that you gave where the concessions really plummeted, I guess, you know, was there, you know, a specific occupancy that you saw hit in the competition where they pulled back where then you could look at other assets that have seen this, you know, heavy supply and say, you know, if these other, you know, markets mirror what happened here by, you know, x month year we think this is going to be like a big impact yeah so it's typically the absorption of the new supply so it is typically remember that every single time if you deliver 300 units

you have to go from zero percent occupied to 95 percent occupied and generally what we see is that once merchant builders sort of get to around the 80 percent type type occupancy they'll start to dial back, and then once they get to 95, it goes away. Now, I will tell you this particular community in Austin is a poster child of extremes because it had the worst amount of new supply directly competing with them. So it's hard to say, is there another scenario like that? But there clearly is, across all of our portfolio, there clearly is a 50-year high of new supply that was delivered, that is being absorbed, and as it's being absorbed, we should see those concessions be turned off, right? And if you look at where we are right now, a lot of the data that we're seeing says that concessions have been sort of a little bit sticky the last couple of quarters, and I think that's probably having a lot of merchant builders because they're now getting to the final points where they're just trying to get this thing done, where they're trying to get the stabilization. And then we should see the concessions go away.

And then when we saw you in June, I know you were emphasizing that as analysts, we typically model what we've been seeing, right, the low growth. And you were talking about, let's call it more green shoots of higher growth potential. Do you still think that's a possibility?

So the last time that we were in a situation where we had such a dramatic delta between previous new supply and current new supply was coming out of the GFC. And when we came out of the GFC, we had five years where we averaged same-store NOI of over 6%. Now, this looks and feels fairly similar. Now, obviously, what we do know is the GFC had an even further decrease in new supply, but it is a good example to look at what can happen when you swing from excess supply to not enough supply.

My last, I know you've been good at telling us, you know, in your view, how far out that limited new supply will be. I feel like the last time I saw you, maybe you talked through 28, 29. I mean, where are you, I guess, right now in your thinking?

That's one of the beautiful things about real estate is we've got perfect clarity to exactly what new supply looks like in 27, 28, and really most of 29. It's either started or hasn't started. And we can look at that. And so we're going to be in a pretty good shape for the next two and a half years. Now, I will tell you, will supply pick up again? Absolutely. Of course, supply will pick up again. But we all have a tendency to suffer from what I call the recency effect, which is every single time I say, well, supply will pick up again, people go, oh, my gosh, it's going to look like 2024. And I have to remind everybody that was a 50-year high in terms of new supply, really created almost entirely because we had free money. So unless anybody thinks that interest rates are going back to zero, I would not expect to see the level of supply that we saw delivered or peaking in 2024 for the rest of at least my career. Maybe some younger folks in this room, maybe they'll see it, but definitely won't see it for the rest of my career.

Unfortunately, we're out of time, but I have three quick rapid-fire questions we're asking all our REITs. Number one, if long-term rates stay higher for longer, which has the biggest impact on your sector's earnings? Higher refinancing costs, lower transaction activity, or less new supply?

I'm going to go with less new supply.

Over the next three years, will third-party capital become a more important source of growth for public REITs than balance sheet capital? For your sector, will 2027 same-store NOI growth be higher, the same, or lower than 2026? Great. Thank you so much.

Thank you, everybody.