Is it Wise to Retain Camden Property Stock in Your Portfolio for Now?

Camden Property Trust CPT is well-poised to gain from the healthy renter demand amid favorable demographic trends. The company’s diversification efforts, focus on technology enhancements and strong development pipeline, backed by a healthy balance sheet position, augur well for long-term growth.However, the elevated supply of rental units in certain markets is likely to fuel competition, impeding the rent growth momentum to some extent.The high debt burden adds to its woes.Last month, CPT reported first-quarter 2025 core funds from operations (FFO) per share of $1.72, beating the Zacks Consensus Estimate of $1.68. The quarterly results reflected higher same-property revenues and same-property net operating income (NOI) and improved occupancy.What’s Supporting CPT Stock?Camden targets high-growth markets with high-quality resident profiles that enable the company to generate steady rental revenues. The markets are characterized by growing employment in high-wage sectors of the economy, with in-migration trends. Moreover, demographic growth also continues to be strong in the young adult age cohort, which has a higher propensity to rent. Hence, with these factors in place, Camden remains well-poised for growth.Camden has a diverse portfolio with a superior product mix of A/B quality properties in urban and suburban markets. Maintaining a diversified portfolio across urban and suburban markets and price points limits volatility and helps generate steady rental revenues.Camden is leveraging technology, scale and organizational capabilities to drive margin expansion in its portfolio. The company is investing in innovative applications aimed at a better customer experience. Such efforts are likely to bring about operational efficiency and reduce costs, aiding NOI growth.In the next few years, the developments underway are expected to deliver meaningful incremental NOI upon completion and stabilization and are expected to fuel FFO and NAV growth. As of March 31, 2025, Camden has four communities under development with a total of 1,531 units at an estimated cost of $639 million. As of the same date, the company has a development pipeline of two communities with 932 units at a total estimated cost of $491 million.Camden has a healthy balance sheet with ample liquidity, placing it well to capitalize on long-term growth opportunities. As of March 31, 2025, the company had around $772.9 million in liquidity. Camden has a well-laddered debt maturity schedule with a weighted average year-to-maturity of 5.7 years. In addition, in the first quarter of 2025, its net debt to annualized adjusted EBITDAre was 4.1 times and unencumbered assets to NOI was 93.7%, providing scope for tapping the additional secured debt capital if required.Over the past three months, shares of this Zacks Rank #3 (Hold) company have declined 4.3%, narrower than the industry's downside of 6.7%. Analysts seem bullish on it, with the Zacks Consensus Estimate for 2025 FFO per share having been revised marginally northward over the past month to $6.80.Image Source: Zacks Investment ResearchWhat’s Hurting CPT Stock?The struggle to lure renters will persist as supply volume remains elevated in some markets where the company operates.Also, Camden faces competition from other housing alternatives, such as rental apartments, condominiums and single-family homes. Such a competitive landscape limits the company’s ability to increase rent and occupancy, restricting its growth momentum to some extent.Despite the Federal Reserve announcing rate cuts late in 2024, the interest rate is still high and is a concern for Camden. Elevated rates imply a higher borrowing cost for the company, which would affect its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of March 31, 2025 was approximately $3.74 billion.Stocks to ConsiderSome better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been raised marginally over the past month to $2.34.The consensus estimate for W.P. Carey’s current-year FFO per share has moved marginally northward in the past month to $4.88.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report W.P. Carey Inc. (WPC): Free Stock Analysis Report Camden Property Trust (CPT): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks