Camden Property Trust (CPT) Q2 2022 Earnings Call Transcript

Camden Property Trust (CPT -0.03%)
Q2 2022 Earnings Call
Jul 29, 2022, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning and welcome to Camden Property Trust second quarter 2022 earnings conference call. I'm Kim Callahan, senior vice president of investor relations. Joining me today are Ric Campo, Camden's chairman and chief executive officer; Keith Oden, executive vice chairman and president; Alex Jessett, chief financial officer. Today's event is being webcast through the investors section of our website at camdenliving.com and a replay will be available this afternoon.

We will have a slide presentation in conjunction with our prepared remarks, and those slides will also be available on our website later today or by email upon request. [Operator instructions] All participants will be in listen-only mode during the presentation with an opportunity to ask questions afterward. And please note, this event is being recorded. 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 2022 earnings release is available in the investor section of our website at camdenliving.com, and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call.

[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 Ric Campo.

Ric Campo -- Chairman and Chief Executive Officer

The theme for today's on-hold music was Together, which will resonate with team Camden. After two years of virtual meetings, this year Camden was able to be together for most of our important cultural events. In May, we held our annual leadership conference, which brings together 400-plus Camden leaders for three days of learning, reconnecting, and fun. A lot has changed in the world since May, which serves as a good reminder that real estate and financial markets will rise and fall but companies with a great culture will thrive in all conditions.

The file -- following highlight reel from our leadership conference is an inside baseball view of a culture that has earned a place on Fortune's 100 Best Companies list for 15 consecutive years. [Video presentation] Thanks to team Camden and the great culture that you've created and continue to build. Camden will always thrive. The last year and a half has been the best NOI growth and AFFO growth that we have had in our almost 30-year history with NOI growing 19.6% and AFFO growing a whopping 47%.

These gains are built into our run rate and are likely to remain in place, driven by strong consumer demand for housing in our markets. Consumer strength is driven by strong employment growth, large wage increases, and high savings levels. Our apartments are affordable despite the double-digit rental increases. Our residents spend roughly 20% of their incomes for their rent.

Domestic migration has led to more than 700,000 Americans moving to our markets in the last year. They are not moving back. Apartment supply is not caught up with demand. We expect growth to moderate over the next couple of years, but believe it will exceed our long-term growth rate.

With a strong balance sheet, a great team with an amazing culture, we are ready for more successes. Up next is Keith Oden.

Keith Oden -- Executive Vice Chairman and President

Thanks, Ric. Now for a few details on our second quarter 2022 operating results and July 2022 trends. Same-property revenue growth was 12.1% for the quarter, once again exceeding our expectations with 12 of our 14 markets posting double-digit revenue growth. Given this outperformance and an improved outlook for the remainder of the year, we have increased our 2022 full year revenue growth projection of 10.25% to 11.25% at the midpoint of our guidance range.

Rental rates with the second quarter had signed new leases up 16.3%, renewals up 14.4% for a blended rate of 15.3%. Our preliminary July results are trending at 13.1% for blended growth with new leases at 13.5% and renewals at 12.7%. Occupancy averaged 96.9% during the second quarter, which matched our performance during the second quarter 2021 and compared to 97.1% last quarter. July 2022 occupancy is currently trying to get 96.7%.

Net turnover for the second quarter 2022 was 46% versus 45% last year. And moveouts to purchase homes were 15.1% for the quarter versus 17.7% during the second quarter of 2021. The year over year decline in moveouts to purchase homes is not surprising. Since last year, home mortgage rates have nearly doubled and the median existing home sales price is now above $400,000.

So despite the recent increases in rental rates, many would-be homebuyers will likely remain renters. Next up is Alex Jessett, Camden's chief financial officer.

Alex Jessett -- Chief Financial Officer

Thanks, Keith. Before I move on to our financial results and guidance, a brief update on our recent real estate and finance activities. During the second quarter of 2022, we completed construction on Camden Buckhead, a 366-unit, $162 million new development in Atlanta. We began leasing at Camden Tempe II, a 397-unit, $115 million new development in Tempe, Arizona.

We began construction on Camden Village District, a 369-unit, $138 million new development in Raleigh. And we acquired for future development 43 acres of land comprised of two undeveloped parcels in Charlotte and four acres of undeveloped land in Nashville. As previously reported, at the beginning of the second quarter, we purchased the remaining 68.7% ownership interest in our two joint venture funds for approximately $1.5 billion, inclusive of the assumption of debt. The assets involved in this fund transaction included 22 multifamily communities with 7,247 apartment homes with an average age of 12 years, primarily located in the Sunbelt markets across Camden's portfolio.

In conjunction with this acquisition, we recognized a non-cash non-FFO gain of $474 million, which represented a step-up to fair value on our previously held 31.3% equity interest in the funds. Also, as previously reported, early in the quarter, we issued 2.9 million common shares and received $490.3 million of net proceeds. As of today, we have approximately $80 million outstanding under our $900 million line of credit. At quarter end, we had 248 million left to spend over the next three years under our existing development pipeline.

Our balance sheet remains strong with net debt to EBITDA for the second quarter at 4.4 times. Last night we reported funds from operations for the second quarter of $179.9 million or $1.64 per share, $0.02 above the midpoint of our prior guidance range of $1.60 to $1.64. This $0.02 per share variance resulted primarily from approximately $0.03 in lower bad debt and higher rental rates and occupancy for our same-store and non-same store portfolio, partially offset by $0.01 in higher property tax expense resulting from higher initial valuations in Atlanta and higher than expected final valuations after appeals in Austin and Houston. Last night, based upon our year-to-date operating performance, our July 2022 new lease and renewal rates and our expectations for the remainder of the year, we have increased the midpoint of our full year revenue growth from 10.25% to 11.25%.

Our revised revenue growth midpoint of 11.25% is based upon an anticipated 12.5% average increase in new leases and an 8.5% average increase in renewals for the remainder of the year. We are anticipating that our occupancy for the remainder of the year will average 96.6%. Additionally, we have increased the midpoint of our same-store expense growth from 4.2% to 5%. This increase results from inflationary pressures on repair and maintenance costs, and the previously mentioned higher than anticipated tax valuations in Houston, Austin, and Atlanta, partially offset by lower than anticipated insurance expense tied to our successful May policy renewal.

Property taxes make up approximately 35% of our total expenses and are now anticipated to increase by 5.6% year over year, an approximate 200-basis-point increase from our prior estimates. Repair maintenance makes up approximately 13% of our total expenses and is now anticipated to increase by 7% year over year. And insurance makes up approximately 5% of our total expenses and is now anticipated to increase 13% year over year. As a result of our revenue and expense adjustments, the midpoint of our 2022 same-store NOI guidance has been increased from 13.75% to 14.75%.

Last night, we also increased the midpoint of our full year 2022 FFO guidance by $0.07 per share for a new midpoint of $6.58 per share. This $0.07 per share increase resulted primarily from an approximate $0.06 increase from our revised same-store NOI guidance and a $0.01 increase from additional NOI from our non-same store and development portfolio. We also provided earnings guidance for the third quarter of 2022. We expect FFO per share for the third quarter to be within the range of $1.68 to $1.72.

The midpoint of $1.70 represents a $0.06 per share increase from the $1.64 recorded in the second quarter. This increase is primarily the result of an approximate $0.06 sequential increase in same-store NOI resulting from higher expected revenues during our peak leasing periods, partially offset by the seasonality of utility expenses and leasing incentives, and a $0.01 sequential increase related to additional NOI from our non-same store and development portfolio. These increases are partially offset by a combined $0.01 decrease in FFO related to higher variable rate interest expense and the incremental impact of the additional shares outstanding from our early second quarter equity offering. At this time, we'll open the call to questions.

Questions & Answers:

Operator

[Operator instructions] And the first question will come from Austin Wurschmidt with KeyBanc. Please go ahead.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Hey. Good morning, everybody. I was curious if you could give us an update on the disposition that you had previously planned half the year. And just some general color on what you're seeing in the transaction market?

Ric Campo -- Chairman and Chief Executive Officer

Well, the transaction market has slowed down substantially. Obviously, with the increase in the tenure and just the sort of dislocation that the markets have experienced, given everything that's going on with the Fed. And so what we've decided to do with our dispositions, rather than being the early price discovery folks, we've basically taken them off the table and are just sort of waiting for more market clarity. When you when you think about what's happened here, the cost of capital has gone up for pretty much everyone.

And the the leverage buyers have -- that were using 60% to 80% leverage of have -- the game has changed and their return on equities have gone down. And so we think that value should probably gone down anywhere from 10% to 15%. It really depends on the market and also the product type. Probably the most impacted properties are the value-add space, that 10 to 20 year old that really needs a lot of work kind of thing.

And so with that said, we will continue to monitor the market and we, for a long time, have been selling -- buying and selling at the margins to be able to improve the quality of our portfolio and improve the geographic diversity of that portfolio and we'll continue to do that. But right now, we're sort of on a pause to see -- to kind of figure out where the market is. We think that that after Labor Day, there'll be a lot more clarity when you think about the the wall of capital that still exists is there. And ultimately, I think buyers and sellers will come together probably starting after Labor Day and through the end of the year.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

And second question, you mentioned in your prepared remarks that you expect growth to slow and supply to catch up and sort of the years ahead. But growth should still exceed sort of that long-term historical average. So I guess first, could you kind of give us a sense of what that average is? Presumably 3% or 4%, but if you can put a point on that? And then I guess just what gives you the confidence that you can continue to exceed that long-term average, given the level of projects that are on production today? Keith, do you want to take that?

Keith Oden -- Executive Vice Chairman and President

Yeah, so if you look at the deliveries that are planned for 2023 relative to this year, Ron Wheaton's got completions going up about 130,000 across Camden's markets to about 190,000. So it's meaningful, but if you look at it as a percentage of the stock, it's not really out of line with where we've been for the last couple of years. And then in years beyond that, the starts stay fairly flat. So if you roll forward, I mean, the easy part at this point is kind of thinking about 2023 and where we start out as we come out of this really, really strong 2022, where we continue to get really strong renewals as well as new leases.

I mean, we're we'll start somewhere in the 5% range on embedded growth in 2023 and long-term average on on NOI growth across Camden's portfolio over the last 30 years is in the 3.1% range. So you kind of sort of a lay up to think about 2023 being higher than normal. And I think as long as we continue to have the the affordability issues that consumers are dealing with right now in terms of their alternative to renting, which is buying a home, I think you're going to see -- I think we're likely to see a pretty dramatic decline in the number of single family home starts. So you're just going to continue to have a shortage in housing of virtually all types.

And I think that will continue to benefit the multifamily space.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Thanks for that.

Operator

The next question will come from Nicholas Joseph with Citi. Please go ahead.

Nicholas Joseph -- Citi -- Analyst

Thanks. Maybe following up on that, but more focused on the demand side. Obviously, the July numbers remain strong, but a more challenging comp there. Are you seeing any signs of consumer demand changing as you look out 30 or 60 days or any kind of pushback on pricing?

Keith Oden -- Executive Vice Chairman and President

No, we're we're really not. I mean, we continue to be almost 97%, nearly 97% occupied. I think we're 96%, 97% currently. And as you look out on our pre-lease numbers, we're still in really good shape 60 and 90 days out.

So turnover continues to be low. Renewal and rates and new lease rates are definitely going to come down. And we've been, obviously, trying to -- been talking about that for the last couple of quarters. But in our case, it's just because we're running into a period in -- a period of time where last year we were rolling out 18%, 20% renewal and new lease increases across our -- most of our portfolio.

And so as you run into those comps, you're just not -- it's just not sustainable to stay at the levels that we've been at for the last couple of quarters. So we know it's going to come down, but it's still going to be -- if we maintain the kind of occupancy that we have, the model will continue to push rents up to the level of kind of the market clearing price. Everybody's -- in our markets and in our submarkets, people are continuing to see great strength and continuing to increase rents. As long as that happens, I think we'll be fine.

But the reality is that those numbers are going to come down in the fourth quarter for sure.

Ric Campo -- Chairman and Chief Executive Officer

One of the things I think we think about our consumer and that is that our consumers are doing really well. They all have jobs. When you look at that year over year increase in income for Camden residents, it's gone up almost 10%. So we worry, I guess, on Wall Street and the financial folks worry about interest rates and inflation and all this stuff but -- and that's important and I think the consumers are worried about that, too.

But they also are doing pretty darn good when it comes down to income growth and savings rates. And I think that folks that are probably going to be the most impacted are at the lower end. And our customers on average make six figures, and so they're not the low end of six figures. And those are ones that are not as pressured on the inflation side.

And especially when you think about 20% of their income going to rent, it's the folks that are paying 30% to 50% of their income for rent that are getting sort of really pressured. So our residents are doing well. They're stressed, but -- and we can feel that in the marketplace, but they're not financially stressed. They're more worried about what's going to happen in the future than they are about making ends meet with their incomes.

Nicholas Joseph -- Citi -- Analyst

Thanks. That's helpful. And then you touch on the broad strength really across all the markets. But the two that lag on a relative basis, I guess are D.C.

and Houston. How are you thinking about those markets back after this year and probably more importantly into 2023?

Keith Oden -- Executive Vice Chairman and President

So I think that -- and just to put into perspective on a -- you said on a relative basis, and that's I think it's important to think about that. Houston and Washington, D.C. in the second quarter, we're roughly 7% up on revenues. And if it weren't for the fact that the rest of our portfolio was up 13, 14%, that you'd be turning back flips about those numbers in Houston and D.C.

But obviously, on a relative basis, that has lagged the other 13 markets in our portfolio. I think one of the things that -- one of the implications for that is that as we roll into these periods and into the renewal stack for the previous year, where we had -- in these markets where we had 20% increases last year, obviously that gets much, much more difficult to push rents to anything close to those levels on this renewal. And yet the comparable numbers for D.C. and Houston would probably be in the 2% to 3% year-over-year comp.

So I think we have probably going to have more opportunity to raise -- be a little bit more aggressive and rising rents in D.C. and Houston just because of what the -- what we -- what happened to our consumers in those two markets last year. And they didn't get outsized rental increases and there's probably one coming in 2023 in the renewal period. So I think those two markets have pretty, pretty decent upside on a relative basis in 2023.

And obviously, we'll be able to give you a lot clearer picture of that, hopefully by this -- the end of the next call. But I think there's really pretty good upside in those two markets just because of the comp set.

Ric Campo -- Chairman and Chief Executive Officer

Also when you think about the economy, so D.C. and D.C. proper was probably more like California in terms of COVID opening and being able to evict people who were just sort of not paying because they didn't want to. And then in Houston, you have a whole different animal.

You had Houston didn't had the jobs back as fast as Dallas and Austin. But when Exxon and and Chevron make combined $30 billion like they just reported the last week, the job picture looks better in Houston because of that. And it's interesting because the energy complex people are complaining about high gas prices and yet the companies are not expanding big time because of the -- just the nature, ESG issues, and investors are wanting dividends from them rather than putting that -- those dollars back into exploration. And if -- ultimately, if energy continues to do what it's doing now, they need to add jobs.

They're running very thin. And last month they added, I think, 2,000 jobs in the Houston region and -- for energy-related folks. And so there is a tailwind, I think, on the Houston market because of that. So they're very different markets in D.C.

and Houston, but I kind of look at them as, no pun intended, maybe or maybe intended, with gas in the tank for 2023.

Nicholas Joseph -- Citi -- Analyst

Thank you.

Operator

The next question will come from Derek Johnston with Deutsche Bank. Please go ahead.

Derek Johnston -- Deutsche Bank -- Analyst

Hi, everyone. Can you provide an update on your portfolio loss to lease and thus the opportunities for further rent growth next year?

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. So loss to lease for us right now is about 8.5%

Derek Johnston -- Deutsche Bank -- Analyst

Excellent. Thank you. And then on new development, supply seems benign in some of your markets. And where rent growth is has actually really been strong, seemingly outpacing cost increases.

So how would you view development starts, given this backdrop, you own a construction company and what really do you need to see to ramp new projects? Thanks.

Ric Campo -- Chairman and Chief Executive Officer

Well, if you you saw in our earnings release that we added land positions and we are continuing this quarter and we're continuing to work on development. So you have good news, bad news, right. The good news is that development revenues are up and the bad news is costs are up, but we think costs are starting to moderate. We think that -- I don't think costs are going to go down, but I think that the increase in costs is starting to slow.

So ultimately, development is has been a great business for us and we'll continue to do that, continue to build. I think right now we're focusing on sort of the existing portfolio that has legacy land costs and we'll be ramping that up next year. And I think that you -- once the market settles down in terms of so what is the cost of capital long term and not just sort of up and down scenario that we've had for the last couple of months, I think that we'll still be able to make reasonable spreads on our weighted average, long-term cost of capital in the development business. And we will probably sort of wait and see between now and sort of the middle of the fourth quarter to kind of where things settle out.

But I think it's still a really good business. If you look at our pipeline, I mean, we have average yields with big cost contingencies in those construction numbers that are anywhere from low 5s to sort of low 6s. And that's still pretty good business even in this environment.

Derek Johnston -- Deutsche Bank -- Analyst

Thank you.

Operator

The next question will come from Neil Malkin with Capital One. Please go ahead.

Neil Malkin -- Capital One Securities -- Analyst

Hey, everyone. Good morning. I guess maybe just probably on the development side, you talked about maybe -- well, I wanted to see if you're seeing delays. It seems like you guys probably won't make the development start numbers you initially forecasted.

We were hoping you could talk about that. And if it's a function of cost or is it a function of regulatory delays, etc. Can you maybe just talk about like where do you see the starts kind of shaping up over the next several quarters? That'd be great.

Sure. I would say that definitely regulatory issues are a big issue. I mean the challenge you have is it's sort of interesting you think about this. People are worried about recession and job losses yet cities and municipalities that issue permits and issue and inspect buildings and things like that are absolutely understaffed beyond belief.

And even markets that used to be very friendly to permits and building like Houston, I mean, everyone is talking about how it just takes forever to get this stuff done. And so we're experiencing that just like everybody else is. So a lot of the starts that we had -- several of the starts this year are going to fold into next year. Next year should be a pretty buoyant start year.

Alex, you might want to go through those numbers.

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. So, Neal, what I'll tell you is that we still think that we're going to make the low end of our of our total start number. We're anticipating --

Neil Malkin -- Capital One Securities -- Analyst

Between what?

So $400 million to $600 million was our range. And we're anticipating starting Woodmill Creek, Long Meadow Farms, and Camden Nations, which is on Page 18. We always put that in order of our starts, so we'll anticipate starting those three this year. And keep in mind that we just started Village District last quarter, so we should make the low end of our range.

OK. Great. Other question is on Houston. I know that several quarters where you talked about Houston and D.C.

Metro being the two markets that you would focus on trimming your exposure just given the elevated contribution to your portfolio. It's actually gone up, obviously, with the JV takedown and the two SFRs that you're doing right now. Question is there's been speculation that the Biden administration is getting sort of climate executive order and his administration's endless assault on energy, fossil fuels. What is the likelihood of these sorts of things having an impact or is it already having an impact on Houston? Because the idea that somehow like these unknown green jobs are going to replace even close to the number of jobs that will be lost, I mean, or could be lost, it's laughable.

So maybe you can -- you guys are like the kings of Houston, so you could kind of give your 30-foot view on that, that'd be helpful.

Ric Campo -- Chairman and Chief Executive Officer

Sure. So I think I think you hit the nail on the head, which is that people talk about green and replacing fossil fuels, but there's just no way that that happens any time soon, right. I mean, that, sure, we need to move in that direction and ESG is important and climate change, I think, is critical for us to focus on and think about it. But the challenge is it's not so much the energy companies that are being forced to do things.

It's really the federal government and their issues because if you think about what has to happen in an energy transition from fossil fuels to clean energy, you have to have major infrastructure investments made in the grid and in the system of how we provide energy to the world. Just take electric cars as an example. So in our ESG committee, we had a robust debate a couple of weeks ago about how many charging stations do we have in our car -- in our apartments. And then in our new developments, we're wiring and making sure that we're positioned to have EVs in our in our garages and what have you.

But the challenge is, is that if I wanted to -- I'll give you just a small example. If we wanted to have an EV station for every one of our -- every car that we think might be in our garages in the future, we can't put that infrastructure in today. We can't get the power companies to agree to give us more power to utilize those. So there's so many issues that have to be developed and to -- to really get us to climate change and get us to transition.

So, Houston, the interesting part of Houston, you've seen -- I think you have seen a negative effect in Houston. And it's really the job growth that we didn't have that we should have had. And that was -- and that's been driven by really investors, the ESG push on energy companies, but also investors that say we're not giving the industry capital unless you give us cash flow back. Over the last 10 or 15 years there had been a lot of investments in energy and the energy industry hasn't given back capital.

And so the market is pushing energy companies to be more -- to be less -- to invest in infrastructure and less in exploration, which has driven up the cost of oil and limited supply. So I think long term, Houston is going to be the clean energy capital of the world. Ultimately, you have a bunch of big projects. There's a $100 billion project, for example, that Exxon is doing in Houston.

And it is going to be subsidized by the federal government and it is a carbon capture in Houston Ship Channel. And so I think the energy companies know ultimately they have to transition. I don't think it's going to happen in one year or two year or five years. It can be more like 10 to 20.

And I think they're smart enough to know that they have to be in a position where they're not dinosaurs and they don't become -- and Houston doesn't become a Detroit. And I don't think that -- I think that there's a long enough transition period where that pivot is being made and will be made. So Houston will do long term but it's definitely a complicated issue for sure.

Neil Malkin -- Capital One Securities -- Analyst

Thank you.

Operator

The next question will come from John Kim with BMO. Please go ahead.

John Kim -- BMO Capital Markets -- Analyst

Thank you. I was wondering if you could provide an update on your yields on the development pipeline overall and on the project you started this quarter in Raleigh?

Ric Campo -- Chairman and Chief Executive Officer

Sure. So the pipeline that is under construction or in lease-up is 5s to -- we have some in Phoenix that are actually up almost a 7.5 cash on cash. And those are those are classic development deals underwritten at very low at a lot lower rates, and we've had 30% increase in rents so our yields are better. And by and large, our existing and under construction and lease-up yields are better than we originally underwrote because of the rental increases.

And then in the pipeline behind that hasn't started, is anywhere from low 5 to 6 to low 6.

John Kim -- BMO Capital Markets -- Analyst

OK. Great. And then you talked about on your answers a 5% earn in for next year, 8.5% loss to lease. I just wanted to confirm that these are separate items.

They are starting out for the 5% same-store revenue for next year and then 8.5%, which can move based on market rents but that's all additive to the 5%.

Alex Jessett -- Chief Financial Officer

Yeah. So the way to think about it and the way we calculate earn-in is we look at what we anticipate the rent role is going to look like at the end of 2022 and if you just froze everything right then. And so we froze everything right then for 2023, and that's how you get to the 5% number. Obviously, there is a component of that that is associated with loss lease, right.

Because you have some of those leases that are in place that you're freezing that are below market.

John Kim -- BMO Capital Markets -- Analyst

And so the loss to lease is what the effect of rent growth you could achieve with next year assuming the market rents don't move.

Alex Jessett -- Chief Financial Officer

Yeah, assuming you could take everybody up to market. And as you know, we don't necessarily take our renewals up to market. But if you took everybody up to market, you would have an 8% increase right there, 8.5%.

John Kim -- BMO Capital Markets -- Analyst

Thank you.

Operator

The next question will come from Rich Anderson with SMBC. Please go ahead.

Rich Anderson -- SMBC Nikko Securities -- Analyst

Oh, let me turn off my on-hold music here.

Keith Oden -- Executive Vice Chairman and President

By all means, leave it on.

Rich Anderson -- SMBC Nikko Securities -- Analyst

OK.

Ric Campo -- Chairman and Chief Executive Officer

Go ahead.

Rich Anderson -- SMBC Nikko Securities -- Analyst

No, I can't do that. So when you talk about the earn-in, and looking at the July sign versus July effective, which is a difference of about 200 basis points, is it fair to assume that when you think of this roll forward situation and, to your point, Alex, freezing at the end of 2022, that the inflection point is assumed to be now start of August, July, end of July? Or is it possible that your leasing season can still extend, and hence, the earn-in would get bigger as we go?

Alex Jessett -- Chief Financial Officer

Well, so the earn-in will get bigger -- well, no. So what we're assuming is that the earn-in of 5%-plus is based upon at the end of 2022. So that takes into consideration everything that we expect from now till then. If you're looking at inflection points, I mean, I think the real important thing to look at is if you go back to last year in Q2, our blended lease growth was 4.7%.

In Q3, it was 12.3%, and in Q4 it was 15.7%. So we really are starting to have some really tough comps in the third and fourth quarter of this year as compared to what we saw last year.

Rich Anderson -- SMBC Nikko Securities -- Analyst

Fair enough. And so then the second related question is how much of those tough comps -- this is a weird year because you have these strange year over year comps that -- because of how things moved last year, normally not the case. But when you think about absolute rents, so I get it that you're going to have lower percentage increases in the back half of the year. But what happens to the actual rent from, let's say, today and I asked this question on someone else's call, say, to today's rent, to make it easy, $1,000.

Is the rent something below $1,000 in the end of the year or is the rent just growing at a slower pace, but maybe at or above $1,000 by the end of the year?

Alex Jessett -- Chief Financial Officer

No, it's going to be above $1,000. I mean, so when we look at our math, we continue to have asking rents that are going to be increasing throughout the rest of the year. It's just the comp that you're looking at. You're looking at a much tougher comp period in the fourth quarter of this year because rents escalated so quickly in the latter part of 2021.

Ric Campo -- Chairman and Chief Executive Officer

You still have a positive rent growth, but a negative second derivative, right?

Rich Anderson -- SMBC Nikko Securities -- Analyst

Got it. Yeah. So that's interesting because you're saying positive rent growth, but your peers in gateway markets are saying the opposite, that rent growth is actually, in absolute terms, negative. Would you hazard a guess why that would be the case? Why it would be different?

Ric Campo -- Chairman and Chief Executive Officer

Why? We're not in gateway markets.

Alex Jessett -- Chief Financial Officer

That's right.

Rich Anderson -- SMBC Nikko Securities -- Analyst

All right.

Ric Campo -- Chairman and Chief Executive Officer

I don't understand that, given the strength of this market right now, though, I don't understand how anywhere in America you could have absolute rents be less at the end of the year than they are today.

Rich Anderson -- SMBC Nikko Securities -- Analyst

That's what I understood, but maybe I'll have to revisit that.

Ric Campo -- Chairman and Chief Executive Officer

I can't -- I don't -- that math doesn't work in my head, even in New York or San Francisco.

Keith Oden -- Executive Vice Chairman and President

That's -- I'd be shocked if that were true, but that's hard to imagine with the set of conditions right now that would have absolute rents falling. But those markets have a different cadence to them as well.

Rich Anderson -- SMBC Nikko Securities -- Analyst

OK. All right. I'll check my notes on that. Thank you very much.

Ric Campo -- Chairman and Chief Executive Officer

You bet.

Operator

The next question will come from Alexander Goldfarb with Piper Sandler. Please go ahead.

Alexander Goldfarb -- Piper Sandler -- Analyst

Hey. Morning down there. Two questions for me. The first is you guys obviously talked about the slowdown in the mortgage market, transaction market.

You're -- it sounds like your developments, you're going to start fewer, you're not spending as many acquisitions dispositions for -- based on what's happening. Is there anything that's on the merchant development side? Like are you guys seeing any merchant deals that got started that suddenly are in a pickle, and maybe that's an opportunity for you guys to acquire on that front? Just curious.

Ric Campo -- Chairman and Chief Executive Officer

I would say that there's not a lot of -- there definitely not a lot of stress in the market today. I mean, merchant builders we're making 3x on their equity. And now with price adjustments today, maybe it's 2x or 1.5x, which is still really good but there really is no distress now. I will say there are -- we have seen opportunities and I think the example would be would be our Nashville Nations project.

It was a property that was zoned and ready to go, but the developer couldn't figure the cost out and they had a little bit more complicated building design. And what happened was their -- the land value was almost equal to -- or their profit in the land was enough to incent them to not to build it and to sell it to us. And so I think there are definitely opportunities like that where the merchant builder, their cost of capital has gone up or their equity partners a little nervous or and they have profits in their land. So they're willing to sell the -- a shovel-ready deal at a profit to them at a sort of market value to us.

I think that's the kind of transaction that's out there for sure. I do think that there's probably a fair amount of mezzanine type of business that's out there that's probably -- that people are working on that's not a space that we trade in. But I've had a number of calls from people who want us to kind of help recap them and stuff like that. But that's not what we're -- we're leaving that to some of our competitors.

Alexander Goldfarb -- Piper Sandler -- Analyst

OK. Then the second question is on -- obviously, the Sunbelt has been garnering headlines the past few years for the influx of folks coming from coast or other areas moving down south. As you guys look in your portfolio, how much of a benefit have -- I'll say out of region, if you will, into Camden versus to the market overall? And ask the same question on Mid-America's call. They said they went from 9% outside of Sunbelt to now 15% out of Sunbelt.

But they opined that it was more people coming into the market, buying homes, etc. Given you're a bit higher income, a little bit more upscale, curious if you're seeing similar dynamics or if you see a much bigger impact from ad-away people coming down south?

Ric Campo -- Chairman and Chief Executive Officer

Well, it's interesting, Alex, because when you think about it, the migration from sort of north or coast to south or whatever, however you want to call it, has been going on for a long time. I mean, it's not new. What happened during the pandemic was -- the nuance of being able to work from anywhere and the difficulty that people have living in the -- on the coast, given COVID and the restrictions you had -- you accelerated what's been going on for a long time. And that acceleration has definitely helped us.

Alex has some numbers on that. Go ahead, Alex.

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. So if you look at the second quarter, 20.3% of all of our move-ins to our Sunbelt markets came from non-Sunbelt markets. That's a 100-basis-point sequential increase. And if you compare this to the second quarter of 2020, it's up 440 basis points.

So we are absolutely the net beneficiary of folks moving out of New York, Illinois, Pennsylvania, New Jersey, etc., down to our markets.

Keith Oden -- Executive Vice Chairman and President

And Alex just take down some aggregate numbers on that, Wheaton's data had -- has total domestic in-migration net to Camden's markets. So about 140,000 this year. And that number goes to 130,000 in 2023. So it's -- to Ric's point, we got this turbo-charged effect as a result of all the complications from COVID.

But this trend has been in place for a long time, and it looks like it's going to continue at a very elevated level in 2023 as well.

Alexander Goldfarb -- Piper Sandler -- Analyst

Which then sounds like it plays into Richard Anderson's point on why you guys are looking at positive rent growth in the back half of this year versus perhaps slowdown elsewhere. You're getting this continued inward migration.

Keith Oden -- Executive Vice Chairman and President

Yeah, I think it's clearly part of the story.

Alexander Goldfarb -- Piper Sandler -- Analyst

OK. Thank you.

Operator

The next question will come from Joshua Dennerlein with Bank of America. Please go ahead.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Yeah. Hi, everyone. Can you maybe talk about the differences across markets in the July rate growth front, kind of where are you seeing the strongest and weakest lease growth? I think you kind of alluded to D.C. and Houston already, so maybe other markets would be pretty interesting for growth.

Keith Oden -- Executive Vice Chairman and President

So just looking at our same-property, second quarter comparisons over the prior year, you had -- we've already discussed D.C. Metro and Houston. Those are basically in the 7% range. And then beyond that, you've got Phoenix that's still at almost 18%.

You've got Southeast Florida at 60.5%, you've got Orlando at 16%, Tampa at 18%. I mean, these are -- 12 of our 14 markets are in double digits. So those are pretty -- for this for this business, those are pretty crazy numbers.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

And one more for me. On the tax side, you bumped up the expenses. Part of that was, I think, the same sort of property taxes going up. Are there any specific markets where you're seeing kind of higher than expected tax assessments or is it across the board? And then is it driven by just valuations or municipalities increasing rate?

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. And so the three markets that I called out, the first one is Atlanta. Atlanta in the aggregate is actually not that much of an increase. But we originally had actually expected for Atlanta taxes to be down in 2022 based upon some excess -- some successful protests that we had in 2021.

And so we got some initial values there that were different than we had expected and we'll go and contest those. The other two markets I pointed out were Houston and Austin, and we're looking at Austin having close to a 20% increase in property taxes. We got initial valuations in that were in that vicinity. We challenge almost every valuation.

We're usually incredibly successful and we had absolutely no success in Austin this year on valuation. So that sort of got us to this 20% number. And then we had sort of in Houston was a similar story not quite to the same level, but we had expected Houston to be sort of in the 2% to 3% range and ended up being in the 5% range once we got through once we got through all of our final -- all of our final protests. So that's sort of where we're seeing.

I will tell you also, add to that, that southeast Florida, Orlando, and Tampa just in general, continue to give us some pressure sort of in the 8% to 9% ranges.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you.

Operator

The next question will come from Boris Wu with Mizuho. Please go ahead.

Boris Wu -- Mizuho Securities -- Analyst

Thanks. I'm Boris. I'm on the line for Haendel St. Juste.

I'm going to have you discuss the expense pressure you're facing in more detail. Maybe first off, if you could discuss the drivers and key pieces on the 80% -- 80 bps upward revision in your expense guidance? Thanks.

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. And so the major driver that you're really seeing there once again is property taxes. So if you think about it, we're up to 5.6% of what we're anticipating for property taxes, and that's about a 200-basis-point movement. And property taxes represent 35% of our total expenses.

So 200 basis points on 35% gets you 70 basis points, which is almost the entire delta between the 4.2 that we originally had for total expenses and the 5% we have now. So it's almost entirely driven by property taxes. Now we do have a couple of other ins and outs. We are seeing some inflationary pressures on R&M, and that's causing us to have some increases on the [Inaudible] over what we originally had anticipated to the tune of about 300 basis points.

But the offset to that is we actually had a really good insurance renewal and we originally thought that our total insurance for the year was going to be up about 22% and now it looks like it's up 13%. So we've got a 900 basis point positive there that sort of offsets the R&M inflationary issues. And so that leads you really to the property taxes to being the main driver.

Boris Wu -- Mizuho Securities -- Analyst

OK. Thanks. So it sounds like it's mostly noncontrollable. So what about on the -- looking at your supplemental, the 33% G&A increase? Can you talk a little bit about that?

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. So as I talked about last year -- last quarter, we rolled out our work reimagined initiative. And if you recall, this is where we took a look at all of our onsite positions and we effectively came up with nests where up to three communities are managed together. As part of that, we took our existing assistant manager position and we centralized that into a shared service.

So the shared service is now part of property G&A. And then you have the offset, in fact, more than an offset in lower salaries as we remove the assistant manager position.

Boris Wu -- Mizuho Securities -- Analyst

Thank you.

Operator

The next question will come from Robin Lu with Green Street. Please go ahead.

Unknown speaker

Morning all. I just got off with a question on with Keith. So has your team seen a notable pickup in concession from developers in heavier supply market?

Keith Oden -- Executive Vice Chairman and President

So yeah, absolutely. In markets where we've seen the kind of strength that we've had for the last year, concessions have been less. And we always include roughly one month of free rent or concession for lease-ups. We don't do concessions in any of our stabilized portfolio, but that's the game that's played among developers is -- has always included some provision for concessions.

But in our world they've been, for the most part, less than what we would have expected them to be. They're just the same strength for demand and new construction across our markets is typical that just like we have in our stabilized portfolio. So probably less overall in the last year in terms of concessions, but it's still a part of the overall pricing structure for all new developments.

Unknown speaker

So this is -- I guess the question was around what you're seeing your peers or competitors doing not just your own book.

Keith Oden -- Executive Vice Chairman and President

Yeah. They're -- they have less concessions as well. So in an environment where market rents are going up 16%, 17% from whatever their pro forma was, they're all far exceeding what they scheduled rents were. So there would be no real incentive to push rents, continue to push top-line rents and then concess back down to where they -- to the point where they're pro forma was.

So, yeah, they're all -- my guess is they're all doing better on a total rent or total schedule rents and they would -- but that doesn't mean that they would have eliminated concessions. It just means they probably are sticking to the one month free rent that was in their pro forma. And then adjusting mortgage market rents to whatever the clearing price is for non-concessional rent structure.

Unknown speaker

Got it. And so my second question, so in looking at the D.C. market, obviously, you don't really want second quarter and July still holding pretty, stay at 7%. Can you expect any supply pressure impacting your pricing power for the second half of the year?

Keith Oden -- Executive Vice Chairman and President

The supply pressure in D.C. have really not been a huge issue for us. We have -- most of our assets are in the D.C. metro area and in total delivered units this year in the 13,000 range, which is not a huge number for that entire metropolitan area.

If you roll forward to 2023, Wheaton has total scheduled deliveries in the D.C. metro area of about 12,000 apartments, so I don't expect it to change much next year. The difference is, as Ric pointed out, a lot of our challenges have been were in markets where there were governmental restrictions on what you could do with either just flat out rent control or the inability to collect or to to maintain to get your real estate back to the eviction process. And those were -- it's still not completely over in the district, but in D.C.

Metro, almost all of those restrictions have been lifted. So I think 2023 is probably going to be -- look more normal and just with regard to how we manage and the ability to push through market clearing rents, which we really couldn't in a lot of D.C. last year.

Unknown speaker

Thank you.

Keith Oden -- Executive Vice Chairman and President

You bet.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Ric Campo for any closing remarks. Please go ahead.

Ric Campo -- Chairman and Chief Executive Officer

Great. Thanks. Thanks for being with us today. And we will see you at the beginning of the conference season after Labor Day.

So take care and have a great summer. Thanks a lot.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Ric Campo -- Chairman and Chief Executive Officer

Keith Oden -- Executive Vice Chairman and President

Alex Jessett -- Chief Financial Officer

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Nicholas Joseph -- Citi -- Analyst

Derek Johnston -- Deutsche Bank -- Analyst

Neil Malkin -- Capital One Securities -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Rich Anderson -- SMBC Nikko Securities -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Boris Wu -- Mizuho Securities -- Analyst

Unknown speaker

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