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Camden Property Trust (CPT -0.66%)
Q2Â 2020 Earnings Call
Jul 31, 2020, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning. Welcome to Camden Property's Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to Kim Callahan, Senior VP of Investor Relations. Go ahead.
Kim Callahan -- Senior Vice President of Investor Relations
Good morning, and thank you for joining Camden's Second Quarter 2020 Earnings Conference Call. Before we begin our prepared remarks, I would like to advise everyone that we will be making forward-looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from expectations. Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to update or supplement these statements because of subsequent events. As a reminder, Camden's complete second quarter 2020 earnings release is available in the Investors section of our website at camdenliving.com, and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call. Joining me today are Rick Campo, Camden's Chairman and Chief Executive Officer; Keith Oden, Executive Vice Chairman; and Alex Jessett, Chief Financial Officer. [Operator Instructions] If we are unable to speak with everyone in the queue today, we'd be happy to respond to additional questions by phone or email after the call concludes.
At this time, I'll turn the call over to Rick Campo.
Ric Campo -- Chairman of the Board and Chief Executive Officer
Thanks, Kim. The theme for our on-hold music today was Strange Days. It's one of the most common ways I've heard people describe life during this pandemic, strange days indeed. It's common for some to refer to the current state of affairs as unprecedented. I've concluded that while almost all agree that these are strange days, whether or not people believe these strange days are unprecedented is definitely age related. Younger people are more likely to view our current situation as unprecedented. People my age or older are far less likely to see these current strange days as unprecedented. In 1967, when I was 13 years old and a rock band name The Doors released the song titled Strange days. Clearly, I have a background from that. This is the first versus of the song, "Strange days have found us. Strange days have tracked us down. They're going to destroy our casual joy. We shall go on playing or find a new town." The Doors were way ahead of their time, both musically and culturally. And indeed, the next few years after 1967 would bring an extended period of strange days and civil unrest that were orders of magnitude stranger than we've seen thus far during the COVID storm. I'm naturally optimistic, and I promise you this too shall pass. Since we're all in this together, we will continue to encourage our Camden team to stay true to Camden's why, our purpose for being, that is to improve lives of our team members, residents and shareholders, one experience at a time.
Apartment demand is stronger in the market than we expected given the nearly 40 million Americans that have filed for unemployment benefits with an official employment unemployment rate of 11.1%. Camden's geographic and product diversification has continued to lower the volatility of our rents and occupancy. Camden's Sunbelt markets have fewer job losses than coastal markets in the U.S. overall. Our product mix that offers varying price points in urban and suburban locations continues to work for us. Camden was prepared for the pandemic. We have a great culture and a flexible workplace and amazing employees that have adapted very, very well to the current work environment. Our investments in technology, moving to the cloud-based operating systems and our Chirp Access systems have allowed us to not miss a beat when it comes to leasing or operating our portfolio or making payroll and basic things like that. We have the best balance sheet in the sector and one of the best in REIT land overall. We were prepared and continue to be prepared to do as well as we can in this environment, and I think we'll do well long term. I want to give a shout out to our amazing Camden teammates for all that they do for our residents and taking care of each other every single day.
I'll turn the call over to Keith Oden now for a couple of comments from him. Thanks.
D. Keith Oden -- Executive Vice Chairman of the Board
Thanks, Rick. Strange days indeed. My prepared remarks today will be brief as we want to allow as much time as possible for Q&A. We want to make sure that we're providing you with the information that you find most useful to your ability to understand the current state of affairs in Camden's markets. At the outset of the COVID storm, we held an all-Camden conference call during which we told our Camden team that our highest priorities were: number one, taking care of our Camden family; and two, taking care of our residents. During the second quarter, we made good on that promise. We undertook various initiatives, including a frontline bonus paid to our 1,400 on-site team members, and we provided grants to almost 400 Camden associates from our long-established Camden employee emergency relief fund. We also established a Camden resident relief fund from which we were able to provide grants to 8,200 residents at a time of maximum financial uncertainty in their lives. We were pleased to be able to provide this level of assistance to the people who were financially impacted during the early stages of the COVID crisis. On our first quarter conference call, we were asked when we thought we could reintroduce guidance. And we said that when we felt like we had reasonable visibility into the next quarter, we would do so. At that time, based on the confidence level that we had from our operations and finance teams regarding our projected May and June results, on a scale of one to 10, it was probably a two, not good. As we sit here today, while our confidence level is less than it would be in normal times, we do feel it is sufficiently high to provide guidance for the third quarter, and we've done so. I want to acknowledge the amazing job that team Camden has done in continuing to provide living excellence to our residents despite the radical changes we have made to our policies, procedures and protocols. It's been incredible to behold. Keep up the great work, and with a little good fortune, for which we are long overdue, we'll see you soon.
I'll now turn the call over to Alex Jessett, Camden's CFO.
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
Thanks, Keith. For the second quarter of 2020, effective new leases were down 2.1% and effective renewals were up 2.3% for a blended growth rate of 0.3%. Our July effective lease results indicate a 2% decline for new leases and a 0.2% growth for renewals for a blended decrease of 0.9%. Occupancy averaged 95.2% during the second quarter of 2020 compared to 96.1% in the second quarter of 2019. Today, our occupancy has improved to 95.5%. We continue to have great success in conducting alternative method property tours for prospective residents and retaining many of our existing residents, with only a slight deceleration in total leasing activity year-over-year. In the second quarter, we averaged 3,855 signed leases monthly in our same property portfolio as compared to the second quarter of 2019 when we averaged 4,016 signed leases. July 2020 total signed leasing activity is in line with July of 2019. For the second quarter of 2020, we collected 97.7% of our scheduled rents, with 1.1% of our rents in a current deferred rent arrangement and 1.2% delinquent. This compares to the second quarter of 2019 when we collected 98.6% of our scheduled rents, but with a slightly higher 1.4% delinquency. The third quarter is off to a strong start with 98.7% of our July 2020 scheduled rents collected, ahead of our collections of 98.4% in July of 2019. Last night, we reported funds from operations for the second quarter of 2020 of $110.4 million or $1.09 per share, representing a $0.26 per share sequential decrease in FFO from the first quarter of 2020.
As outlined in last night's release, included in this $0.26 sequential quarterly decrease is $0.142 of direct COVID-19-related charges included incurred during the quarter. After excluding the impact of this aggregate $0.142 per share, sequential FFO decreased $0.12 in the second quarter, resulting primarily from: approximately $0.05 per share in lower same-store net operating income, resulting from a $0.02 per share decrease in revenue from our 90 basis point sequential occupancy decline; a $0.025 per share decrease in revenue, resulting from an increase in bad debt reserves from approximately 45 basis points in the first quarter to approximately 180 basis points in the second quarter; and an approximate $0.005 per share sequential increase in expenses; approximately $0.025 in lower non-same-store development and retail NOI, also resulting from a combination of lower occupancy and higher bad debt reserves; and approximately $0.04 per share in higher interest expense resulting from our April 20 $750 million bond issuance. Turning to bad debt. In accordance with GAAP, certain uncollected rent is recognized by us as income in the current month. We then evaluate this uncollected rent and establish what we believe to be an appropriate bad debt reserve, which serves as a corresponding offset to property revenues in the same period. As previously mentioned, for same-store, our bad debt as a percentage of rental income increased from approximately 45 basis points in the first quarter to approximately 180 basis points in the second quarter. During the second quarter, we reserved effectively all of the 1.2% of delinquent rents as bad debt. Also in the second quarter, we reserved effectively half of the 1.1% of deferred rent arrangements as bad debt.
When a resident moves out owing us money, we have already reserved 100% of the amounts owned as bad debt and there will be no future impact to the income statement. We reevaluate our bad debt reserves monthly for collectibility. In the second quarter, for retail, which is not part of same-store, we reserved 100% of all amounts uncollected and not deferred, which totaled approximately $800,000. Last night, based upon our recent trends, we issued FFO and same-store guidance for the third quarter. However, given the continued uncertainty surrounding the social and economic impacts from COVID-19, at this time, we will not provide an update to our financial outlook for the full year. For the third quarter of 2020 as compared to the third quarter of 2019, at the midpoint, we expect same-store revenues to decline by 1.6%, driven primarily by lower occupancy, higher bad debt and lower miscellaneous fee income. We expect expenses to increase by 4.5%, driven primarily by higher property insurance, higher property tax assessments and large property tax refunds received in Atlanta and Houston in the third quarter of 2019. As a result, we expect NOI at the midpoint to decline by 5%. We expect FFO per share for the third quarter to be within the range of $1.14 to $1.20. The midpoint of $1.17 is $0.08 per share better than the $1.09 we reported in the second quarter. However, after adjusting our second quarter results for the previously discussed $0.14 of COVID-related charges, our $1.17 midpoint for the third quarter is a $0.06 per share sequential decrease, resulting primarily from: a $0.045 per share sequential decline in same-store NOI as a result of a $0.005 per share decrease in revenue, resulting primarily from lower net market rents; and a $0.04 per share increase in sequential expenses, resulting primarily from the typical seasonality of our operating expenses, the timing of certain R&M costs and the timing of certain property tax refunds and assessments; an approximate $0.005 per share decline in non same-store NOI, resulting primarily from the same reasons; and an approximate $0.005 per share increase in sequential interest expense, resulting from our April 20 bond issuance.
As of today, we have approximately $1.4 billion of liquidity comprised of just over $500 million in cash and cash equivalents and no amounts outstanding on our $900 million unsecured credit facility. At quarter end, we had $185 million left to spend over the next two and half years under our existing development pipeline, and we have no scheduled debt maturities until 2022. Our current excess cash is invested with various banks, earning approximately 30 basis points. And finally, a quick update on technology. As I discussed, our on-site teams are having great success with virtual leasing, and we just completed our second virtual quarterly close, a task that would have been so much harder, if not nearly impossible, without our investment in a cloud-based financial system. As mentioned yesterday in the Wall Street Journal, we are continuing our pilot of Chirp, our smart access solution, with great success. And we are finding even more ways to utilize the Chirp technology. At our pilot communities for self-guided tours, our leasing teams can use the Chirp Access application to grant a prospect limited access to tour both the community and specific available apartment homes in a completely touchless exchange. There is no need for the prospect to pick up physical keys or FOBs or ever even enter the leasing office. Our leasing teams create the prospect a Chirp account, grant them access to the best apartments chosen per their unique wants and needs and then determine when the prospects access will expire. Additionally, we can utilize Chirp to quickly and automatically control the number of residents to have access to an amenity space, such as a fitness center, at any given time. Amenity spaces deemed as reservation only will require residents to use the chirp access application to reserve a specific time slot. Only those residents with confirmed reservations will have access to open the door of the amenity space for the allotted time. When the reservation expires, so does access to the amenity. Clearly, in this COVID-19 environment, our Chirp initiative takes on even more importance.
At this time, we will open the call up to questions.
Operator
[Operator Instructions] Our first question comes from Jeff Spector from Bank of America. Go ahead.
Jeff Spector -- Analyst
Go ahead. Hey, good morning. Thank you. Thanks for the initial comments. I thought it might be most helpful to talk about the markets, in particular, your 3Q guidance. Alex, I think you've talked about lower occupancy, higher bad debt. I guess, can you talk a little bit more, specifically on Houston and maybe even Phoenix? We were surprised to see the a 2% occupancy drop in Phoenix.
D. Keith Oden -- Executive Vice Chairman of the Board
Yes, Jeff, the Houston continues to be one of our weaker markets. We have so you have two challenges, headwinds and separate from the COVID in Houston. The energy business is obviously still and continues to be under pressure. But also we were scheduled and continue to be scheduled to deliver roughly 19,000 apartments in 2020 according to Witten's numbers. So those are in the process of being brought online. The place where we see that most the most impact of that is in the Downtown, Midtown area, where the a lot of the new deliveries are coming online. So it's that would have been an issue irrespective of trying to absorb 20,000 or 19,000 apartments in an environment where the job growth was already going to be a little bit under pressure from the energy business, and you add on top of that the just the job losses that are not related to the energy business at all. Yes I mean, it's more of a challenging environment. We think that in terms of renewal leases or renewals that are going out in Houston that went out in July, those are going out at basically flat. It's one of the so on our renewal overall across our markets for the July renewals that went out is about 1.8% across the platform. It's as high as 4% renewals in Austin. And then at the low end of that would be Houston at basically flat. So it certainly feels like, from a renewal standpoint, more back to getting back closer to regular order in terms of in every market that we're operating in, we are sending out renewals with increases. Specifically in Phoenix, that's we just that's a seasonal weakness that we always have in the middle of the summer. The 2% occupancy drop is a little bit more than what we would normally see, but it's not unusual to have that kind of weakness. And we still have pretty decent rental growth in Phoenix, and it continues to be on a projection going forward, it continues to be one of our bright spot markets for us. It's been incredibly strong for the last two years, and we think that, that market is going to continue to perform well for us.
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
And Jeff, when we talk about lower occupancy and higher bad debt, we're comparing the third quarter of 2019 to the third quarter of 2020. We actually expect third quarter 2020 occupancy to be relatively flat to the second quarter of 2020 in the aggregate.
Jeff Spector -- Analyst
Okay. That's good to know. My second question, if I can ask, your peers talked about an exodus to single-family rentals this past quarter. Are you seeing the same thing in your markets?
Ric Campo -- Chairman of the Board and Chief Executive Officer
No, we aren't. The single-family market or move out to buy single-family homes went up slightly at the beginning of the quarter, but it flattened out, and it's still in the 14%, 15% range. Obviously, with low interest rates and the marginal folks that were going to go buy houses are buying houses right now. But generally speaking, when you look at our demographic profile with a lot of single folks that are living in our apartments, even with low interest rates, they're just not buying houses. And so with that said, we haven't really seen any increase in moving out to rent houses or buy houses.
Jeff Spector -- Analyst
Thank you. I wish everyone well
Operator
Our next question is from Nick Yulico from Scotiabank. Go ahead.
Nick Yulico -- Analyst
Thank you. First question is just on your new lease and renewal pricing. It did actually get a little bit better, it looks like, in July versus the second quarter. And I just want to be clear here on the renewals because it sounds like some of the renewals that you're doing now are also improving versus the second quarter. So just trying to understand how we should think about rental pricing dynamics in the third quarter and the rest of the year. I mean, are things getting better or worse, you think?
D. Keith Oden -- Executive Vice Chairman of the Board
Well, on the renewal side, there's no question they're getting better. And part of that, though, was, if you'll recall, for the first 90 days after the COVID storm hit and we went into shutdown mode, we actually, from a policy perspective, just said we're not going to take any renewal increases for the next 60 to 90 days. And then we as it turned out, it was a little right at 90 days that we just did not process we renewed offered everybody a renewal at flat. Now could we have as it turns out in 20/20 hindsight, could you have gotten 1% or 2% increases? Probably. But from the standpoint of two thoughts on that. One was we just had no idea how to measure the collapse in demand from 30 million or 40 million jobs evaporating. So there was a great concern on our part that you need to keep every resident that you have in place that it's possible. So that was one part of it. The second part was really more of a it was just more in terms of residents who had been kind of shut-in to their apartments, most of them working from home. And at the time, we had been mandated in almost every case to close all amenity spaces. So you have people who are in the midst of a pandemic, 40 million job losses, and then they can't even use the amenities. It just seemed like a terrible idea to be pushing through rental increases to our residents at a time where you could where they were they couldn't even get full value of the proposition that they felt they bargained for.
So part of it was to protect just to protect the relationship that we have with our residents and not create the kind of tension that would come from leasing consultants trying to get what would amount to a $20 or $30 rental increase from residents in that time frame. So the net of all that is that our renewals were probably under what could have been achieved in the first half of the year. And obviously, that's it's back to regular order now, and we're just in a really different place. We're in a different place. Our residents are in a different place. For the most part, our amenity spaces are all open. Some with restrictions, but they're open again. So yes, we expect much better results on renewals. The new leases in July were just a tiny bit better than a tick up from where we were in the first half of the year. I think more importantly for us is that we were able to maintain an above 95% occupancy rate between the new lease activity and the renewal. So to me, that was more important to see the stability there, and it gives us something to grow on going forward.
Ric Campo -- Chairman of the Board and Chief Executive Officer
Let me just add that early on in the pandemic, we, along with the leadership of the national the NMHC Group, Doug Bibby and his team, we hosted an industry conference call. And then we came up with, as a team, best practices for the way the industry ought to face the pandemic. And the industry was all about even before late fees were banned by governments or evictions and things like that, we came out with a set of principles that were designed to help residents in a very uncertain time. And one of the principles was flat renewals, no late fees, work with people in terms of payment plans, things like that. And I think the industry did a great job of showing that they really care about their customers. And so to Keith's point, sure, we could have renewed leases during the first part of the pandemic at decent rates, but we just chose not to. Now there are some folks in our industry that just didn't do that, and they did raise rents. And I just that's just not our culture. And I think most of the industry who followed those principles of trying to help their customers in a very, very uncertain and complicated time. And it's the thing that's really interesting about this is that we're four months into it, right, which is like nothing compared to the financial crisis and all that. And so still uncertain. And I think that people when you think about how you treat your customers, it's all about building your brand long term and making sure that customers understand that you actually care about them.
Nick Yulico -- Analyst
Okay. That's helpful. Just second question would be, if you have any stats you can provide on the nature of your total portfolio in terms of which buildings you think are high-rise product versus not? I mean I think you definitely have some in Hollywood; Washington, D.C.; I think you have at least one in Houston. But and whether you're seeing as well any difference in leasing demand for what would be more high-rise concrete, steel-type product versus low-rise stick-and-brick product?
Ric Campo -- Chairman of the Board and Chief Executive Officer
Well, for us, the good news I don't know if it's good news or bad news, but we tend to have so we don't have as many high rises as we have mid and low rises. We've balanced the portfolio pretty well to if you like let's just take Houston as an example. We have two high rises in Houston that are actually high rises, 22 story, 30 story. We have seen really no change in demand for high rises in the in those markets. And same in D.C. because D.C. is actually a standout market for us right now, which is great. But when you think about our portfolio in Houston, we then go to a mid rise, we might have a 8-story building or a 6- to 8-story building. And then we go down as low as 2-story or 3-story walk ups. Actually, we have some older property we built older properties we've built in the 20 years ago that are two story. So we tend to be more suburban, more low density, but we really haven't seen a lot of differentiation between high rise or low rise given that we don't have many high rises. And then I think the other part of that equation is sort of the geographic mix and product mix that we have. And generally speaking, our we're sort of skewed toward suburban and more B than A. But and right now, we don't really see a lot of variation in collections or in demand for any of that product. All about the same.
Nick Yulico -- Analyst
Thanks. Appreciate it.
Operator
Our next question is from Austin Wurschmidt from KeyBanc. Go ahead.
Austin Wurschmidt -- Analyst
Hi, good morning everybody. Just as it relates to the bad debt, I was curious how much of an impact that had on your same-store revenue growth in the second quarter. And then what do you assume for bad debt in your 3Q same-store revenue guidance? Because in the July collections data, it looks like they were actually better than the first quarter and 2Q of last year.
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
Yes. Absolutely. So as I said, our bad debt went from approximately 45 basis points in the first quarter to approximately 180 basis points in the second quarter. So you can look at that 140 basis points and that's a direct reduction in revenue on a sequential same-store basis. So you can do the math on that. When we look at what we've got in our model on a go-forward basis, we are anticipating that the third quarter bad debt drops down to somewhere right around 125 basis points, so it goes from 180 to 125. And so hopefully, we'll get some pickup on that. Now that pickup is going to be offset by slightly lower net market rents and will also be offset by slightly lower reletting income. We did get a fair amount of reletting income in the second quarter as we did have folks break their releases.
Austin Wurschmidt -- Analyst
Understood. And then as it relates to Chirp, just curious, what's kind of the time line for rolling that out across the portfolio? And then can you remind us how we should think about the returns there and how you guys are measuring that?
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
Yes. Absolutely. So you have to think about Chirp in two components. The first one is the gateway, and that's the Chirp that controls the access gates, also controls the amenity space, etc. We've rolled out right around 12,000 units, and we expect to have gateway rolled out across our entire portfolio really by the end of the year. The second component is what we call the true curb-to-couch solution, which includes gateway, but also goes to the individual locks of the units. And we've rolled out about 1,500 doors with that solution. And we expect that probably by about this point next year, we will have total access, so think gateway plus locks, rolled out across our entire portfolio. It's really interesting because when we originally looked at what the value proposition was for this, we looked at a lot of things around not having to rekey locks, time that are on folks people spend laying vendors, etc. And then we also knew that there was some embedded value proposition to a resident to be able to push a button and let the pizza delivery guy in the gate and go straight to their front door rather than having to get out of their jammies and walk down to the front gate and open it up. We never would have thought of COVID-19 and all of the additional benefits that we've now gotten from this. And so we're still at the point of trying to quantify all of the benefits. But I will tell you, when we look at ordinances that we see that say gyms must be at 25% capacity or 50% capacity, this is nearly impossible for a typical apartment operator to enforce. However, with our Chirp Access application, we can do that, and we can do it very easily. When we think about virtual leasing, which is undoubtedly the future of our industry, you can't have virtual leasing unless you have an access application that opens gates plus doors. So there are a lot of additional benefits that we're still in the process of quantifying. But ultimately, we think this is a huge differentiator for Camden and ultimately will be a huge differentiator for the industry.
Austin Wurschmidt -- Analyst
So are you attempting to measure at all what you think the returns are? Or is it just an additional offering across the entire portfolio that you think will generate value just over time from a demand perspective and just resident satisfaction perspective?
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
That's exactly right. I think, ultimately, a resident of Camden who has Chirp, when they go look at an additional or at a other community and they realize that they will have to take time off of work to let their dog walker into their apartment, when they realize that they will have to meet all of their guests at the front gate, I think they will ultimately pay us to have the flexibility and to have the convenience of the Chirp application that we'll provide.
Ric Campo -- Chairman of the Board and Chief Executive Officer
I think the other issue is cost savings because when you think about the number of keys we have and lost keys and motion that goes on with having to help people open their doors and things like that, it's it ought to be a relieve us of cost and allow our on-site people to, in fact, serve the customer better.
Austin Wurschmidt -- Analyst
Got it. Thank you.
Operator
Our next question is from Alexander Goldfarb from Piper Sandler. Go ahead.
Alexander Goldfarb -- Analyst
Hey, good morning. Thank you. The Chirp feature sounds pretty interesting, just given I'm guessing all the different uses that, that can be. So just two questions here. The first is, in California, maybe I missed it, what percent of your residents are basically preloading, are in there not paying rent? And of those that aren't paying rent, how many do you think will not pay rent versus are just saving the money and once the eviction moratoriums go over, they'll pay you the back rent, along with the hopefully, there's interest that accrues, but I'm not sure?
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
So when you look at July delinquency, California has improved tremendously. It's still our highest delinquent market, but it's at about 3.6% today. Obviously, time will tell, as we are able to start enforcing contracts, what percentage of those folks actually pay. But as I said, it is a significant improvement from where it was four months ago.
Alexander Goldfarb -- Analyst
And where was it [Indecipherable]
Ric Campo -- Chairman of the Board and Chief Executive Officer
[Indecipherable] interest on, that kind of stopped because there's no late fees, they're banned by the government. I think it's really instructive, though, when you look at Houston, for example, our Houston numbers are not even single digits. They're in the 0.3% or 0.4% range. And California is 3.3% and some 3% change. It shows you sort of the mentality and that's and it gets to the whole sort of government issue. I mean, if you're a resident in California and you listen to the Mayor of L.A. and the Governor, their messaging is don't worry, you don't have to pay. And the limitation of late fees and limitation of being able to fix somebody creates what we are what we call ghosting, which is they just don't show up and they don't have the ability they know they don't have any negative recourse. You're not charging them interest or late fees, and they know they can't be evicted. And so you just have you have this ghosting scenario that happens out there. And it is a I think, a serious moral hazard issue. And it's just in most of our Sunbelt markets, people just think they should pay their rent on time because they have the money. And in California, it's just a little different animal.
Alexander Goldfarb -- Analyst
So Rick, your view is that both of these will pay when they have to? Or are these all the people, Alex, that you said you wrote-off as delinquents and you wrote them all off and you're not expecting any of them to pay?
Ric Campo -- Chairman of the Board and Chief Executive Officer
We're writing them off based on our policy. But I think that folks that care about their credit and care about and if you care about your credit, you're going to pay. And a lot of the people that aren't paying today actually have the ability to pay, you're just not paying. So we're we have clearly modified our bad debt policy and increased the bad the accrual for bad debts, but we might be surprised that people actually do pay when the government tells them they should pay. I think one of the things that is really interesting, and this is, I think, sort of systemwide, but it's probably more important in California, is that the apartment associations are trying to educate people because when the governors and mayors say that there will be no evictions, a lot of folks think that means that they get free rent, right? And like, OK, we're not going to evict or foreclose on anybody, and they think that during that period, it's free. And we're educating people saying, well, number one, it's not free. Number two, if you do run-up a debt and you don't pay the debt, then you're going to ruin your credit and the next department you're going to try to lease is going to have a real problem with you, and you're not going to be able to lease an apartment or get credit. And so I think that education process is really important for the industry because people don't get it that actually, it is a debt and you do have to pay it.
Alexander Goldfarb -- Analyst
Okay. And then the second question is, you guys I mean, to your comment, it sounds like everything has stabilized. And while you're expecting lower occupancy, that's a year-over-year. So basically, you're flat from the second quarter, and the impact in third quarter is really from just continued bad debt and some lower fees. So I guess, why do you guys think that your markets, your portfolio is holding up better than the coastal urban guys who are continuing to unfortunately experience accelerating weakness? I mean you guys have had increased COVID recently, but that doesn't seem to have played a factor. So what do you think is it? Is It just less social unrest or less of the protests? Or what is going on in your markets that you guys seem to have stabilized, whereas in the coastal areas, it seems to be accelerating?
Ric Campo -- Chairman of the Board and Chief Executive Officer
Yes. I think it's exactly that. I think number one, as I said in my earlier comments, there have been fewer job losses. When you look at job losses, I mean, they're significantly higher on the coast, and the Sunbelt markets have not lost as many jobs. And when you look at the that social unrest is an issue, too. There are some markets where you can't even get to your properties because of the urban nature and the sort of takeover blocks in certain cities. So I think it's all about the things that were driving our markets before. When you think about recoveries, the Sunbelt recovers quicker and has more jobs generally. And so I think it's really a jobs issue more than anything.
Alexander Goldfarb -- Analyst
Okay, thanks.
Operator
Our next question is from Nick Joseph from Citi. Go ahead.
Nick Joseph -- Analyst
Thanks. You mentioned we're only four months into this. And given the continued macroeconomic uncertainty and elevated unemployment, do you currently expect any more tenant or employee relief for frontline bonuses to occur?
D. Keith Oden -- Executive Vice Chairman of the Board
Yes. We don't have any plans currently, Nick, to do anything along the lines of what we did in the second quarter. The impetus for that was I've laid out some of the rationale earlier in my comments. But in addition to that, it was just the timeliness of it. It was such a jolt to so many people in the way it happened. Unlike in previous downturns, where there was sort of this rolling layoff scenario, people had time to adjust and make preparations, this was you think you were good on a Friday and on Monday, your job was gone. And so people were there was an urgency to getting some financial relief to both residents and our Camden employees who got affected. The impact of that was really always to get to bridge a gap in time to get to a scenario where there was a more permanent relief available to both residents and Camden employees. And that's happened, and it happened through the stimulus, it happened through the plus up unemployment benefits. Now there's a lot of wrangling now about are they going to extend that and to what extent. But and even in the scenarios where they talk about not including the plus up, the provision, the most conservative provision that I've seen is 70% of your previous income and unemployment payments. And for honestly, for most Camden residents, where we have a an average household income of about $105,000, our average rental payment is about 18% of that. So if you're paying 18% of your rent, you're getting 70% in unemployment, most people can figure out a way to make that work. So no, it's a long answer to saying we don't anticipate it.
Nick Joseph -- Analyst
That's helpful. And then I recognize it's only been probably two or three months max, but have you seen any differences in terms of delinquency or turnover for those residents who received any of the relief?
D. Keith Oden -- Executive Vice Chairman of the Board
No, we haven't. Although I think the thing that's very encouraging for us is the collections number that we've seen year-to-date or month-to-date in July, 98-plus percent. And we actually collected have collections higher in the month of July at this point in the month than we had in 2019, which is fairly remarkable. And my guess is that there's some component of that, that people have there's some associated goodwill, but it's hard to know what people's motivations are.
Nick Joseph -- Analyst
Thanks.
D. Keith Oden -- Executive Vice Chairman of the Board
You bet.
Operator
Our next question is from Neil Malkin from Capital One. Go ahead.
Neil Malkin -- Analyst
Hi, everyone. Good morning. First question is, are you seeing an increase in migration into your beautiful Sunbelt markets from the coast, which, like Alex was alluding to, are getting pretty dicey and more dangerous? So just curious if that trend has exacerbated or any comments you're hearing anecdotally on the ground from your managers?
Ric Campo -- Chairman of the Board and Chief Executive Officer
Sure. So clearly, the in-migration out of coastal markets has continued. It's been going on for a long time. And I think and we start looking at U-Haul rates, it's cheap to lease it's cheap to go to California and to Seattle, but it's very expensive from a to move out of it. It's like I think it's like four or five times more expensive to lease one of those you haul to go out of California to Texas or Arizona than it is to go into California because there's too many of them coming out and not going in. The other thing that we've been watching is postal forwarding, where you forward your mail, and there's been a tick up in mail being forward. It's hard to tell whether the people are just sheltering in place out of of their markets. But I think it's just a continuation of really a long-term trend. If you look at you take immigration out of the equation, there's been out-migration of California and New York and for the last 10 years. And the only thing that has increased it gets to positive is immigration. So I think that's going to continue. I don't think that I guess, if you if the issue is do all the coastal markets, do they rebound as New York City rebounded, I think we have to think about it like after 9/11. After 9/11, Downtown New York was like people talked about how it would never come back, right? Well, it did. I think that Americans have short memories and when it comes back when it comes down to how do I feel about where I am. I think the fundamental challenges in highly regulated, very expensive markets, where people are paying 40% to 50% of their income for rent or housing, that just is unsustainable, and that's why I think the out-migration has happened for the last for a long time. And I don't think that's going to change. Will people put up with it and deal with it in the future? Yes. I don't think big cities are going to empty out. But I just think it's just the pressure on people to want to have a decent place to live without having to pay half their income is going to continue to drive out migration into these more affordable markets, and I think that's going to continue.
Neil Malkin -- Analyst
Okay. Great. I appreciate that. I agree. Second one is in terms of the development. It seems like on the acquisition side, it's going to be less fruitful just given the available and low-cost debt right now. So it seems that development deals, land leads are probably going to be your best bet, particularly with your balance sheet. So I'm just wondering if you can talk about how you see that. What are the opportunities in front of you? Are you seeing like land deals coming falling through or coming to market? And also if you'd take a look at ever doing preferred or mezz lending with some sort of equity at the end participation.
Ric Campo -- Chairman of the Board and Chief Executive Officer
So we have started to see some shovel-ready development deals that have that where the merchant builder couldn't get their financing or the equity pulled out or they're underwrite it's hard to underwrite anything today, right, given the uncertainty about where the market is going to be in like two years. And so even though longer term, I think people feel like development is definitely going to be a good option, we've already started to see some price softness in the construction market, which is good. So we were seeing 3% to 5% increases, now we're seeing flat to 2% to 3% down, which is really good. So we are starting to see some of those opportunities. I think it's a little early still because the market just hasn't we haven't had a shakeout yet, and I think we're going to that will take maybe through the end of the year to have that happen. In terms of getting involved in mezz or presales and things like that, we have stayed out of those kinds of products over the years, primarily if you think about it in the financial crisis, we had about $3 billion worth of joint ventures and other types of structures. And we thought it lowered our risk. And what it really did is increase our risk because our partners and having to work through the issues that the financial crisis created took a lot of time and effort. And so we decided after that, that we would not do things that wouldn't move the needle for Camden. Now I'm sure you could go do $0.5 billion worth of mezz and move the needle a little. But at the end of the day, what moves our business long term is our cash flow that we grow from our properties. And so we want to have the cleanest balance sheet and the simplest structure and not have any distractions, having to deal with small equity positions or mezz positions and then have to go deal with people in that. That's just not our in our forte. We might do a presale or something like that, but we're definitely not going to do mezz or anything like that. It just doesn't move the needle enough, and it's too much of a distraction for our teams to we want them focusing on the big picture where shareholders have 100% of the exposure in the property.
Neil Malkin -- Analyst
All right, thanks a lot of sense. Thank you guys for the time.
Operator
Our next question is from John Pawlowski from Green Street Advisors. Go ahead.
John Pawlowski -- Analyst
Hi, thanks very much. Curious as some of the Sunbelt economies have had to kind of walk back reopening plans in recent weeks months. Since you've noticed in July, any meaningful inflection point in terms of leasing velocity or notices of move out in any of your larger markets, maybe excluding Houston?
D. Keith Oden -- Executive Vice Chairman of the Board
Yes, you can I would even include Houston and say that we have not seen any meaningful pullback. I mean it's the if you think about what we went through in terms of converting our approach to be basically 100% virtual leasing for a period of time, so we got that trade craft down to an art. And so prior to the kind of most recent spiking in cases in Texas in particular, but also in Florida, we had gone back to a sort of a hybrid model where we would allow access to our leasing offices for someone that wanted to do an in-person tour as long as they both our folks and the prospect wore masks and socially distanced. So we did that. And then with the spiking, our the feedback we got from our folks is they just were not as comfortable with that approach. So we went back to basically an appointment-only virtual tour. And so most of what you see in July activity, which was really good for us, was activity of that variety. I think it was in the first week in July, we went back to a kind of a virtual-only model, and we're fine with that. And our folks are proficient at it. They're comfortable with it. The prospects interestingly enough, when we ask our prospects what their preference is, about 30% to 40% of our prospects tell us that they would prefer this permanently as a way to lease apartments. So I think it's going to be a part of the mix for the future, and we're really good at it. So I think we're good.
John Pawlowski -- Analyst
Okay. But on the move-out side, any interesting shifts across markets and or your 60-day exposure coming up here?
D. Keith Oden -- Executive Vice Chairman of the Board
No, we're in good shape. Our pre-lease numbers are really healthy, which is why we got the comfort level that we got to give guidance for the third quarter. We're July is basically over. So you're looking at August, September. We have pretty good visibility into the pre-lease numbers. Traffic is good. Our closing percentages are where they need to be. And like I said earlier, John, the key for us was being able to maintain a 95-plus percent occupancy while we reinitiated renewal increases, and we're getting back to something closer to flat on new leases.
John Pawlowski -- Analyst
Okay. Last one for me. In some of your harder hit economies, like in Orlando or Houston, if you were a buyer in those markets today on a stabilized deal, what kind of what kind of discount on an asset value basis would you be looking for versus kind of pre-COVID levels?
Ric Campo -- Chairman of the Board and Chief Executive Officer
That's a complicated question because there's just no trades going on. And the trades that are going on, I think people are buying by the pound and not by the cap rate or the discount. So oftentimes I think fundamentally, pricing hasn't changed in the private market and cap rates have declined and compressed in the market because people are if you look at cash flows, people thinking that underwriting them going down over the next, call it, six months or eight months or however long the pandemic lasts. And then they if you look at Witten's numbers, there's a pretty big snapback in 2022 or sort of end of 2021, 2022, 2023. So if you're underwriting a project in Houston or anywhere else today, there is no discount, and you have to take a lower cap rate. And then I think the belief that is that the cash flow will grow faster than before the pandemic, and you'll get back to a total return that is a rational total return with that increase in cash flow. So the real question is going to be to me is how fast will investors get to that level. And then because there's just a wall of capital out there. And with the treasury at 0.5-something percent, financing on existing assets is incredibly cheap. And when you look at leverage buyers, you're going to who are going to look at their equity returns with incredibly low cost of debt, I think they're going I think there's going to be a lot of activity and interest in multifamily. The question will be how long will it take to get that those investors to a point where they can feel like they can do some underwriting for in the next couple of years. The development side is a little more complicated because construction loans are really hard to get today and lenders have lots of other issues in real estate, be it retail and office and others. And so increasing exposure for them on the construction side in multifamily is hard for them to do today, and I think that's where the opportunity might be from an acquisition perspective. But we'll just have to see.
John Pawlowski -- Analyst
Okay, thanks so much for the answer.
Operator
Our next question is from Rich Anderson from SMBC. Go ahead.
Rich Anderson -- Analyst
Thanks and good morning everyone. So I guess you Chirp because tweet was taken.
Ric Campo -- Chairman of the Board and Chief Executive Officer
It's a homage to our Hummingbird.
Rich Anderson -- Analyst
Okay. Okay. To anybody in the field here, how would you characterize the amount of what you call ghosting or people taking advantage of regulation in states like California? How much did that surprise you in terms of the number of people? Was it less or more than you thought? And the reason why I ask is, do you think that there's a longer-term impact in your underwriting criteria in terms of looking at the individual credits of your tenants before signing a lease?
D. Keith Oden -- Executive Vice Chairman of the Board
Yes. So in terms of the impact in our California portfolio, so if you break it out between where we're total collections and L.A./Orange County, which is our lowest collection for the second quarter of 2020, we have collected 92.6% on of our scheduled rents. And that's the lowest in our portfolio, and it's not it's really not even close beyond that. Everything else in our portfolio is Southeast Florida is 94%, and then everything else is above 95% and most are in the 98% range. So it's clearly an outlier. But if you take the 92.6% collected, and you break it out between deferred payment plan and truly delinquent, 2.3% is deferred payment and 5.1% is delinquent. So the 2.3%, we have had conversations with. The people have said we have financial distress. We have we need a path forward. We have and that means we have a written agreement with them on how they're going to get whole on their rent from the standpoint of their delinquency. So the 5.1%, they it's if we don't for the most part, it's they don't communicate. Maybe they can't pay and just choose not to communicate. But our guess is that a pretty large percentage of those folks have just gone dark because they think they can not pay their rent for some period of time and get away with it. And the challenge with so the challenge is that the policy prescriptions of no evictions, no late fees and by the way, sort of a wink and a nod among political leaders that we can't give you direct rent relief, but we're creating conditions on the ground that prevent you from being evicted from your apartment. In some way, that's rent relief, which it's truly not from the liability standpoint, but from the standpoint of do I have to pay, it does create that. So I think this is a unique circumstance relative to this pandemic. And it's hard for me to imagine I mean, even in the great financial crisis, we didn't have policy prescriptions of that variety anywhere, including in California. Now maybe the politics have changed that much in the last 10 years. But I think it's probably ultimately ends up being pretty unique to this particular pandemic and not some greater incidence of policy prescriptions around you can't evict people who don't pay their rent. That's just my that's my personal view.
Rich Anderson -- Analyst
All right. And then second question is, Rick, you mentioned you think there might be some permanency to this sort of move to the suburbs and B versus A and so on. But I don't I'm not sure I agree with it being a permanent condition, and maybe I'm putting words in your mouth. But nonetheless, to what degree could this alter your strategy? I know you kind of already it fits into your wheelhouse a bit already. But if you believe in some systemic change to that conversation, do you see a systemic change in how you're going to pursue the business longer term?
Ric Campo -- Chairman of the Board and Chief Executive Officer
Well, I think that I didn't if you heard that I thought there was a permanent shift from urban to suburban or high rise or major cities to smaller cities, I don't believe that. I really don't. I think that, like I said earlier, we have people have short-term memories. And at the end of the day, once the pandemic is over and everybody gets back to work and they're focusing on their lives, they're going to do what they want to do. And I think people do love urban environments, they love restaurants, they love going to the ballpark. The and when that comes back, they will engage that again. I do think that there will be some but I do think that continued out-migration from coastal markets to Sunbelt markets is going to continue. And but I don't know that it's it's not going to those markets are still going to be fine markets long term. It's they're just going to have the issues that they have today that are pre pandemic. So from our perspective, when we start thinking about where we want to be, it continues to be the same drivers longer term, which is high job growth, low pro business governments, good weather, young people, great workforce, that kind of stuff.
I think from a sort of a product mix perspective, we definitely are going to continue to invest in urban and suburban properties. I think that from a development perspective, we are thinking really hard about our spaces and how we utilize the space inside the common areas. And are thinking a lot about, OK, maybe the work from home is going to be a bigger piece of the equation because I just think that the work from home is going to be massively more than it was pre pandemic. And primarily because if you think about Camden, we have 450 people, plus or minus, working from home, and they're doing really well. And so the people that had hour commutes one way are going, wow, I got two hours of my life back, plus I don't have wear and tear my car and all those expenses. So we can give people their time back and raises, in essence, by letting them work from home. So from our perspective, we're going to spend a lot more time looking at our properties and creating a more user-friendly work-from-home environment. Prior to once the pandemic hit, one of the things we did is amp up the bandwidth in all of our properties because if you had low bandwidth, I mean, we were just getting people going nuts because they couldn't do Zoom calls and things like that. So we amped our bandwidth up. And I think we're going to so when we think about modifying our existing buildings and then building new buildings, you have to think about that work-from-home component. And I think that's going to be a big, big shift.
Rich Anderson -- Analyst
All right, great, thanks for the color, I appreciate it.
Operator
Our next question is from Rich Hightower from Evercore. Go ahead.
Rich Hightower -- Analyst
Hi, good. Good afternoon, everybody. I'll be quick. I just want to make sure I understand something here. As far as the collections rate in 2Q, where did the resident relief funds fit into that? Was that part of that calculation or separate? Or how do we understand that relationship?
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
Yes, it was separated.
Rich Hightower -- Analyst
Okay. So it's not included in the 97-plus percent collected in 2Q?
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
That is correct.
Rich Hightower -- Analyst
Okay. And then just I guess, just to pile on to the sort of anti California sentiment, how do you think about the Southern California footprint longer term? I mean, do you it's a tough market to build, and it has it checks a lot of the boxes that, Rick, I think you described about the nature of the workforce and people want to be there and this and that. But how do you think about political risk and the impact to cap rates and values over the long term? How do you think about that?
Ric Campo -- Chairman of the Board and Chief Executive Officer
So I think that it I think California will always be a market that people want to be in. It's one of the biggest economies in the world if it was its own country. It's always going to have challenges that just like New York City has challenges, but people love to live in New York City. And I think they love California, and California will continue to struggle with its issues. But I think that long term, California is a good market. And I don't think that when we start talking about our portfolio and you think about our Sunbelt mix, California right now is dragging our performance down. And had we not had California, then we would definitely have better same-store numbers and better everything, better collections and all that. So but ultimately, when you think the way I think about our portfolio, it's a geographically diverse and product mix diverse portfolio. And over a long period of time, the volatility balances out and we lower our volatility. Prior to the pandemic, Southern California was one of our better markets. We were growing 3.5%, 4% in there, which is good, and that was offsetting our slower growth in Houston. So to me, I know that there's a lot of people piling on to California, New York and Seattle and some of these other markets. They're not going away. They will be good long-term markets. And hopefully, the maybe the hopefully, the pandemic moves through fast, and we'll get back to good growth. They will continue to have the pressure from government trying to cap rents through rent control and other issues. But generally speaking, even if you put a rent control law in, it generally is better for the incumbents, and harder to build means that you don't have competition. And so the offset to the maybe the tough government and out-migration is you're not going to overbuild those markets very often, and they'll still be good.
Rich Hightower -- Analyst
All right, thanks for the comments.
Operator
Our next question is from John Kim from BMO Capital Markets. Go ahead.
John Kim -- Analyst
Good morning. Had a couple of questions on guidance. You mentioned the lower occupancy, which is clear on a year-over-year basis. But I was wondering how you see it trending during the quarter? Because you already had a 30 basis point sequential increase in July. And the second part is on your same-store expense guidance of 4.5%, how much of that was already contemplated when you provided your original guidance of 3% for the year? I know that guidance has been pulled, but just wanted to see how much of that was new versus already now.
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
Yes. I mean, so if you think about it, our second quarter 2020 guidance excuse me, second quarter 2020 occupancy was 95.2%. And for July, it is 95.3%. I told you that it was 95.5% this morning, so obviously, we're getting some uptick. But effectively, in our guidance, we are assuming that occupancy is flat in the third quarter as compared to the second quarter. When you look at expenses, almost all of that was known. Really, the largest driver that we typically have in expenses is the timing of property tax refunds. And it's just the way the timing works that the third quarter was going to have a higher sequential property tax number. And in fact, if you looked at it on the third quarter 2020 to the third quarter 2019, as I mentioned in my prepared remarks, you also had the same impact where we got some very favorable refunds in Atlanta and in Houston in the third quarter of 2019. So that's really the driver. The drivers are, by and large, property tax driven.
John Kim -- Analyst
Okay. That's helpful. And you guys talked about some of your changes in potential long-term strategy, but I had a question on shorter-term strategy. And it seems like a lot of people up here in the Northeast are contemplating becoming snowbirds this winter. I was wondering if you anticipate that happening, if you see potentially higher demand. And if you are willing to potentially provide some shorter-term leases to meet that demand?
Ric Campo -- Chairman of the Board and Chief Executive Officer
Well, we definitely will provide short-term leases to meet that demand at a premium rate for sure. And that's we're open to all-comers when if that happens, and we're ready. Even though our occupancy levels are really high right now, we still have room to move those occupancy levels up.
John Kim -- Analyst
Thank you.
Operator
Our next question is from Zach Silverberg from Mizuho. Go ahead.
Zach Silverberg -- Analyst
Hi, thanks for taking my question. My first one is just some of your peers sort of spoke about migration of college students from city to city. Just curious, if you guys see any potential headwinds as universities are more reluctant to open, international student hesitant to travel? And are there any sort of markets that are disproportionately impacted by this trend?
D. Keith Oden -- Executive Vice Chairman of the Board
Yes. We haven't seen any impact of that nature. I think there's still so much conversation around who's going to open and how and when that until we probably get into actually the month of September to see what where all of that shook out at the college level, we're just not going to know. We don't really have Austin would be probably a market where it's always been a big university town. But within the context of how long how much Austin has grown over the years, that's become less and less important. But outside of that, I think it just remains to be seen on what how many of the students actually are going to get called back to the university to an in-person experience. And around the margins, obviously, it could matter. But not our portfolio doesn't tend to have a lot of student participation.
Ric Campo -- Chairman of the Board and Chief Executive Officer
Just anecdotally, our one of our Board members is the Chancellor and the President of University of Houston. Her name is Rene Cator. And Rene in our Board meeting on Wednesday told us that their enrollment is actually up at the University of Houston. And that the only part of the equation that they're having trouble with is international students because of travel issues. But she was surprised that their enrollment was actually up, and they're going to do a combination of in-person and virtual. But I was I think that people are continuing to enroll in college at pretty record numbers still.
Zach Silverberg -- Analyst
Got you. That's helpful. And just a final one here. I understand that a few transactions on the market have closed lately. Most were likely done or negotiated pre COVID. But curious if you're seeing anything in the shadow market and what buyers may be underwriting right now and what IRRs they're sort of targeting.
Ric Campo -- Chairman of the Board and Chief Executive Officer
So there have been some transactions done. Some were definitely under contract and hard, earnest money that closed a pre kind of COVID time frames. But there have been a few transactions that have happened in this environment. And as I said before, the cap rates have compressed, and we're hearing numbers like the cap rates are in the 3s in Dallas and Houston. And I think that underwrite that people are sort of most investors are kind of have a wait-and-see attitude in terms of what they think underwriting is going to be like. When you think about the 10-year treasury being where it is today and sort of interest rates lower for longer, even more now than before the pandemic, I would think that underwriting IRRs have to come down some, and I think that's probably going to happen.
Zach Silverberg -- Analyst
Got you. Appreciate all the color, guys.
Operator
Our next question is from Alex Kalmus from Zelman & Associates. Go ahead.
Alex Kalmus -- Analyst
Hi, thank you for taking my question. Looking into Southeast Florida's performance, outside of expected pressure in L.A., it seems to lag the rest of your portfolio on some key metrics. I was just curious if you could give us some more color on what caused the challenging leasing environment there.
D. Keith Oden -- Executive Vice Chairman of the Board
Yes. So there's two challenges in Southeast Florida right now, and one is just traffic in general. It's there's less of a propensity for people to want to engage in a virtual scenario in Southeast Florida. So we just have have a little bit less traffic there than what we would normally expect this time of year. The second part is on the operations side, just collections. I called Southeast Florida for the second quarter of 2020, our collections were 94%, and that would make it the second most challenged market behind L.A./Orange County. So those are those dual challenges are definitely something that we're dealing with in Southeast Florida.
Alex Kalmus -- Analyst
Got it. And curious about the non-Chirp-enabled properties, how are the leasing dynamics there? And how are you guys approaching those? Are those just typical in-person showings? Or are you still using virtual to your advantage?
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
Yes, we're still using virtual. But it's really if you think about it, it's a little bit old school, and it involves a lockbox with a key where you can pick up the key and you can pick up the FOB and then you have a map. It certainly is an effective way of doing it, but clearly, nowhere near as effective as using an application that has a definitive start and a definitive end that can also open not just the access gates but the door units. And I think that's the big benefit that we're getting from Chirp from the communities that have short rolled out.
Alex Kalmus -- Analyst
Thank you.
Operator
This concludes our question and answer. I would now like to turn the conference back over to Rick Campo for closing remarks.
Ric Campo -- Chairman of the Board and Chief Executive Officer
Thank you. We appreciate you participating in the conference today, and we will look forward to speaking to you in the future. So thanks a lot, and take care. Have a great rest of the summer.
Operator
[Operator Closing Remarks]
Questions and Answers:
Duration: 79 minutes
Call participants:
Kim Callahan -- Senior Vice President of Investor Relations
Ric Campo -- Chairman of the Board and Chief Executive Officer
D. Keith Oden -- Executive Vice Chairman of the Board
Alex Jessett -- Executive Vice President of Finance, Chief Financial Officer, and Treasurer
Jeff Spector -- Bank of America -- Analyst
Nick Yulico -- Scotiabank -- Analyst
Austin Wurschmidt -- KeyBanc -- Analyst
Alexander Goldfarb -- Piper Sandler -- Analyst
Nick Joseph -- Citi -- Analyst
Neil Malkin -- Capital One -- Analyst
John Pawlowski -- Green Street Advisors -- Analyst
Rich Anderson -- SMBC -- Analyst
Rich Hightower -- Evercore -- Analyst
John Kim -- BMO Capital Markets -- Analyst
Zach Silverberg -- Mizuho -- Analyst
Alex Kalmus -- Zelman & Associates -- Analyst
