Camden Property Trust (CPT) Q4 2022 Earnings Call Transcript

Camden Property Trust (CPT 0.33%)
Q4 2022 Earnings Call
Feb 03, 2023, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Kim Callahan

Good morning and welcome to Camden Property Trust's fourth 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; and 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] 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 fourth 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. We hope to complete our call within one hour, and we ask that you limit your questions to two, then rejoin the queue if you have additional items to discuss.

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

Our theme for today's on-hold music was waiting patiently, which is what we find ourselves doing these days. The bid-ask spread for multifamily assets is as wide as I can ever recall. Sellers seem to be hoping for valuations to return to last year's peak. Some sellers acknowledged a decline in valuations of 10% to 15%, but buyers point to a dramatically different macro backdrop now versus last year, and reckoned value should be lower.

The result is the current standoff that won't be resolved until buyers and sellers adjust their views on valuation and meet somewhere in the middle. Until then, we wait patiently, which is a lot easier for Keith to do than me. This brief video sums up the hours that Keith and I have spent in recent months debating the merits of waiting patiently versus making something happen now. [Commercial break] By any measure, 2022 was the best operating environment Camden has had in our 30-year history.

We exceeded the top end of our guidance and raised guidance every quarter. Operating conditions over the last two years have never been better, driven by being in the right markets with the best product and having the best teams. Apartment demand was driven by an acceleration of in-migration to our markets that opened sooner after the pandemic and continue to be more business-friendly, driving outsized job opportunities. And a massive release of rental demand from people who were previously at home with their parents are doubled up as government stimulus added to their savings and subsequent buying power.

As a result, apartment supply could not keep up with increased demand. 2023 will be a return to a more normal housing demand market. Consumers still have excess savings, and the job market remains strong. Despite rising rents, apartments remain more affordable than purchasing homes for many consumers in our markets given the rise in home prices and interest rates.

Most of us don't like slowing revenue or negative second derivatives, but I think we need to put things into perspective. Apartments are and will continue to be a great business. Consumers will always need a place to live and will choose high-quality, well-managed properties to live in. We are projecting 5.1% revenue growth for 2023.

Absent coming off last year's 11.2% record-breaking growth, our 2023 projected revenue growth would be the sixth highest growth rate achieved over the last 20 years for Camden. At this point, I'd like to give a big shoutout to our Camden teams across America for a job well done in 2022, and I want to thank them for improving their teammates' lives, customers' lives, and stakeholders' lives one experience at a time, and I'll let Keith take over the call now. Thank you.

Keith Oden -- Executive Chairman and President

Thanks, Ric. As many of you know, we have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of each year and ranking our markets in order of their expected performance during 2023. We currently grade our overall portfolio as an A-minus with a moderating outlook as compared to an A with a stable outlook last year. Our full report card is included as part of our earnings slide -- call slide deck, which is now showing on the screen and will be posted on our website after today's call.

At this time last year, we anticipated 2022 same-property revenue growth of 8.75% at the midpoint of our guidance range. As we announced last night, Camden's overall portfolio achieved same-property revenue growth of 11.2% for 2022, well ahead of our original expectations and marking a record level of same-property revenue growth for our company. While conditions are expected to moderate during 2023, our outlook calls for same-property revenue growth of 5.1% at the midpoint of our guidance range, which would mark another year of above-long-term average growth for our portfolio. We anticipate same-property revenue growth to be within the range of 4.1% to 6.1% this year for our portfolio, with most markets falling within that range.

The outliers on the positive side should once again include our three Florida markets, Orlando, southeast Florida, and Tampa, with Houston and L.A.-Orange County falling likely below 4%. The macroeconomic environment today is uncertain, and the magnitude of 2023 job growth or even job losses remains a wildcard. But we expect our Sunbelt-focused market footprint will allow us to outperform the U.S. outlook.

We expect to see continued demand for apartment homes in 2023 given high mortgage rates for single-family homes and a reluctance from would-be buyers to make the transition to homeownership amid this uncertain economic environment. We reviewed several third-party forecasts for both supply and demand in our markets for 2023, and the outlook for recession scenarios and job growth or job losses varies dramatically. As such, I'll spend my time today focusing more on the supply aspect and expected completions and deliveries in our 15 major markets this year. Those estimates also vary quite a bit, but our baseline projection assumes approximately 200,000 new completions across our markets during the course of 2023.

Our three Florida markets, Orlando, southeast Florida, and Tampa once again earned A-plus ratings, but with moderating outlooks. These three markets had a weighted average revenue growth of 16.4% in 2022 and are budgeted to achieve between 6% to 8% this year. Overall, supply will likely increase in these markets, and we expect completions of 12,000, 11,000, and 6,000 units, respectively. Charlotte, Raleigh, and Nashville would rank next with an A rating in moderating outlooks for 2023 versus 2022.

This will be our first year of reporting same-property statistics for Nashville, but we anticipate same-property revenue growth of 5% to 6% for each of these three markets. New supply will continue to be a headwind this year, particularly in Nashville. But in-migration trends and overall levels of demand remain strong. Our estimates for new deliveries in these markets are 11,000, 9,000, and 10,000 units, respectively.

Up next are Dallas and Phoenix, which received A-minus ratings with stable outlooks. Dallas should deliver around 20,000 units this year. But so far, demand drivers remain strong and should allow for absorption of many new apartment homes. Phoenix is likely to see another 15,000 units completed this year, which will further temper revenue growth from double-digit levels to a more moderate rate of 5% or so.

We expect Denver and Austin to fall around the middle of the pack for our portfolio with approximately 5% revenue growth and would write them as an A-minus with moderating outlook. Completions in Denver are projected to be around 15,000 apartments, and Austin is expected to see over 20,000 new apartments come online this year. Both of these markets have seen their fair share of supply in the past few years, but demand has been remarkably strong. Given recent announcements regarding layoffs in the technology sector, we will keep an eye on both of these markets for any future signs of slowing demand.

Our next three markets, San Diego-Inland Empire, Washington, D.C. Metro, and Atlanta earned a rating of B-plus with a stable outlook. We expect completions of 10,000, 13,000, and 13,000 units, respectively, and revenue growth in the 4% to 5% -- 4% to 4.5% range. San Diego-Inland Empire should set to -- face less supply pressure than some of our other markets this year.

But the overall regulatory environment in Southern California puts us in a wait-and-see mode for now. Operations in Washington, D.C. Metro and Atlanta seem to be more of the same and should continue at a steady, stable pace throughout 2023. Houston and L.A.-Orange County are two last markets with grades of B and B-minus, respectively, and revenue growth projections of 3% to 4% this year.

Our outlooks for these two markets are a bit different as we see an improving outlook in Houston versus a stable outlook in L.A.-Orange County. Both markets should see manageable new deliveries with 15,000 and 20,000 units, respectively, but economic conditions in Houston may be a bit more resilient, with energy companies making profits and performing well. L.A. County was clearly -- has clearly had higher delinquencies and bad debt compared to our other markets, and we remain a bit cautious on win restrictions, and regulatory issues around evictions and nonpayment of rents will actually begin to improve.

Now, a few details of our fourth quarter '22 operating results and January 2023 trends. Same-property revenue growth was 9.9% for the fourth quarter and 11.2% for full year 2022. Nine of our markets had revenue growth exceeding 10% for the quarter, and our top three performers were our Florida markets of Tampa, southeast Florida, and Orlando. Rental rates for the fourth quarter had signed new leases up 4% and renewals up 8.4% for a blended rate of 6.1%.

Our preliminary January results indicate a return to more normal seasonal trends, with a blended growth of 4.2% on our signed leases to date. February and March renewal offers were sent out with an average increase of 8%. Occupancy averaged 95.8% during the fourth quarter of '22, compared to 96.6% last quarter and 97.1% in the fourth quarter of '21. January 2023 occupancy has averaged 95.4%, compared to 97.1% in January 2022.

Annual net turnover for 2022 was up slightly compared to 2021 at 43% versus 41%. And move-outs to purchase homes were 13% for the quarter and 13.8% for the full year of 2022, down from 16.4% for the full year of 2021. I'll now turn the call over to 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 activity. During the fourth quarter of 2022, we completed construction on Camden Atlantic, a 269-unit, $100 million community in Plantation, Florida, which is now almost 90% leased, averaging over 50 leases per month, well ahead of expectations.

Turning to financial results, last night, we reported funds from operations for the fourth quarter of 2022 of $191.6 million, or $1.74 per share, in line with the midpoint of our prior quarterly guidance. These results represent a 15%-per-share increase in FFO from the fourth quarter of 2021. Included within our fourth quarter 2022 results is approximately $0.01 per share of additional insurance expense associated with the recent winter freeze. Excluding these nonrecurring insurance charges, our results would have exceeded the midpoint of our prior guidance range by $0.01 per share, resulting from the faster-than-expected leasing velocity at Camden Atlantic, combined with lower employee health insurance claims and lower property tax rates in Texas.

For 2022, we delivered record same-store revenue growth of 11.2%; expense growth of 5.1%, which included the additional insurance expense from the winter freeze; and record NOI growth of 14.6%. You can refer to Page 24 of our fourth quarter supplemental package for details on the key assumptions driving our 2023 financial outlook. We expect our 2023 FFO per share to be in the range of $6.70 to $7, with the midpoint of $6.85, representing a $0.26-per-share increase from our 2022 results. This increase is anticipated to result primarily from an approximate $0.36-per-share increase in FFO related to the performance of our same-store portfolio.

At the midpoint, we are expecting same-store net operating income growth of 5%, driven by revenue growth of 5.1% and expense growth of 5.5%. Each 1% increase in same-store NOI is approximately $0.07 per share in FFO. An approximate $0.26-per-share increase in FFO related to the additional NOI from our fund acquisition we completed on April the 1st of 2022. This includes the additional three months of ownership in 2023 and an approximate 6% increase in NOI from the portfolio; and an approximate $0.16-per-share increase in FFO related to the growth in operating income from our development, nonsame store, and retail communities, resulting primarily from the incremental contribution from our nine development communities and lease-up during either 2022 and/or 2023.

This $0.78 cumulative increase in anticipated FFO per share is partially offset by a $0.21-per-share increase in interest expense, of which $0.08 per share is from the utilization of our unsecured credit facility to retire our $350 million, 3.2% unsecured bond that matured on December 15, 2022. We are anticipating an average 2023 interest rate on our credit facility of approximately 5.5%. And $0.10 per share is from the full year impact of the $515 million of secured debt we assumed as part of the fund transaction, inclusive of the impact of higher interest rates on the $185 million of assumed variable rate debt. The remaining $0.03 per share in additional interest expense comes from additional borrowings in 2023 under our line of credit, primarily to fund our anticipated development activities.

Our forecast also assumes we will use our credit facility to repay our $250 million, 5.1% unsecured bond, which matures in June of 2023.An approximate $0.07-per-share decrease in FFO related to our 2022 amortization of net below-market leases related to our acquisition of the fund assets. As we discussed on prior earnings calls, purchase price accounting required us to identify either below- or above-market leases in place at the time of the acquisition and amortize the differential over the average remaining lease term, which was approximately seven months. Therefore, in 2022, we recognized $0.07 of FFO from the noncash amortization of net below-market leases assumed in the acquisition. An approximate $0.07-per-share decrease in FFO related to equity and income of joint ventures and management fees as we now own 100% of the fund assets.

An approximate $0.06-per-share decrease in FFO, resulting primarily from the combination of higher general and administrative and property management expenses caused by continued wage pressure and inflation, higher franchise and margin taxes, and higher corporate depreciation and amortization. An approximate $0.06-per-share decrease in FFO due to the additional shares outstanding for full year 2023, resulting primarily from our 2022 equity activity. An approximate $0.04-per-share decrease in fee and asset management and interest and other income primarily related to the earnout received in 2022 from the sale of our Chirp investment and lower cash balances expected in 2023. And an approximate $0.01-per-share decrease in FFO from the disposition we completed in 2022.

Our 2023 same-store revenue growth midpoint of 5.1% is based upon an approximate 4.5% earning at the end of 2022 and a current 1.5% loss to lease. We are assuming we capture a third of this loss of lease in 2023 due to the timing of lease expirations and leasing strategies. We also expect a 3% increase in market rental rates from December 31, 2022 to December 31, 2023. Recognizing half of this annual market rental rate increase, combined with our embedded growth and loss of lease capture, results in a budget at 6.5% increase in 2023 net market rents.

As a result of increased supply, we are anticipating an 85-basis-point decline in physical occupancy, which results in a 100-basis-point decline in economic occupancy after accounting for lower levels of rental assistance proceeds anticipated in 2023. When combining our 6.5% increase in net market rents with a 100-basis-point decline in economic occupancy, we are budgeting 2023 rental income growth of 5.5%. Rental income encompasses 89% of our total rental revenues. The remaining 11% of our property revenues is primarily comprised of utility rebuilding and other fees closely correlated to occupancy.

And these items are expected to grow at approximately 1.5%. Our 2023 same-store expense growth midpoint of 5.5% is primarily driven by above-average increases in property taxes and insurance. Property taxes represent approximately 37% of our total operating expenses and are projected to increase approximately 6.5% in 2023, primarily driven by larger valuation increases anticipated in Florida, Georgia, and Colorado. Insurance represents 6% of our total operating expenses and is anticipated to increase by 12.5% as insurance providers continue to face large global losses.

The remaining 57% of our operating expenses are anticipated to grow at approximately 4% as inflation and wage pressures, combined with anticipated increases in marketing expenses as we face increased supply, are partially offset by the positive impact of our 2022 on-site staff restructuring. We are expecting total salaries and benefits to increase at less than 2% in 2023. At the midpoint of our guidance range, we assumed $250 million of acquisitions, offset by $250 million of dispositions, with no net accretion or dilution. Page 24 of our supplemental package also details other assumptions for 2023, including the plan for $250 million to $600 million of development starts spread throughout the year, with approximately $290 million of annual development spend.

We expect FFO per share for the first quarter of 2023 to be within the range of $1.63 to $1.67. The midpoint of $1.65 represents a $0.09-per-share decrease from the fourth quarter of 2022, which is primarily the result of an approximate half-cent-per-share sequential increase in NOI from our development and stabilize nonsame-store communities, entirely offset by an approximate 3.5 cents-per-share increase in sequential same-store expenses, resulting from the reset of our annual property tax accrual on January the 1st of each year, and other expense increases primarily attributable to typical seasonal trends, including the timing of on-site salary increases and the lower levels of employee health insurance claims in the fourth quarter of 2022, which are not expected to reoccur in the first quarter of 2023. An approximate 1.5 cents-per-share decrease in sequential same-store revenue, primarily driven by lower levels of anticipated rental assistance proceeds and sequential declines in occupancy. An approximate $0.02-per-share increase in interest expense, resulting from the utilization of our unsecured credit facility to repay the December 15, 2022 maturity of our 3.2%, $350 million unsecured bond.

An approximate $0.01-per-share decrease in FFO, resulting primarily from the timing of our annual corporate salary increases and various other corporate accruals. An approximate $0.01-per-share decrease in FFO related to our fourth quarter 2022 amortization of net below-market leases related to our acquisition of the fund assets. And an approximate half-cent decline in fee income related to the timing of our third-party construction activity. Our balance sheet remains strong with net debt to EBITDA for the fourth quarter at 4.1 times.

And at quarter-end, we had $304 million left to spend over the next three years under our existing development pipeline. At this time, we'll open the call up to questions.

Questions & Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator instructions] Our first question comes from Steve Sakwa with Evercore ISI. Please go ahead.

Steve Sakwa -- Evercore ISI -- Analyst

Yeah. Thanks. Good morning. I don't know if this is for Keith, Ric, or Alex, but just as you think about kind of your blended spreads and kind of looking at the new versus renewal, could you just provide a little bit more color on the 8% number that you talked about and, you know, what sort of, I guess, concessions or discounts are you having to offer? You know, when you're sending them out at 8, are people signing that? And then also, the new at 1%, you know, looks kind of low.

Do you expect that to turn negative at all in the next, say, six to nine months?

Keith Oden -- Executive Chairman and President

You know, Steve, on the renewals that are being sent out, we really don't do concessions in our portfolio. The only time we ever use concessions is on new lease-up properties where kind of it's expected in the -- it's sort of written into the proforma and underwritten that way. But we don't really do concessions. We sign our leases within -- typically sign them within 50 basis points to 75 basis points of what the renewals are sent out at.

So, there is some give, but it's not a whole lot. Regarding new leases at 1% up, you know, we do expect that to increase slightly over the course of 2023. You know, seasonally, it looks like we do have a return to actual seasonality and did certainly at the end of the fourth quarter. And that will likely continue until we get closer to our peak leasing season.

But, you know, overall, we're looking for another strong year of 5.5% plus or minus rent growth, which, as Ric pointed out, stand-alone and without, you know, kind of juxtaposition to what we did in 2022, over 11%, that would be a really strong year for our portfolio historically. So, we're looking forward to that.

Steve Sakwa -- Evercore ISI -- Analyst

Great. Thanks.

Ric Campo -- Chairman and Chief Executive Officer

To your second question, Steve -- to your second question, we don't expect our new leases to go negative at all over the next six to nine months. Now, if we have -- depending upon what happens, what unfolds throughout the year, whether we -- our feel and the way we built our guidance was that we would have either a very -- you know, reasonable soft landing or a mild recession. And so, we combined that, and that's why we took our occupancy numbers down and our vacancy numbers up. But as far as new leases going negative, they -- generally, if you look at historical sort of timing of seasonality, they tended to go negative in the -- in sort of November, December, January and then start a positive rise after that.

This year, we didn't have them go negative during that period. Now, we clearly had a significant negative second derivative on the growth, but we never went negative. So, assuming, if you have a recession next year and we have more reasonable or more normal market seasonality, then they may go negative in December. That's just new lease growth.

Steve Sakwa -- Evercore ISI -- Analyst

Great. Thanks, guys.

Operator

Our next question comes from Nick Joseph with Citi. Please go ahead.

Nick Joseph -- Citi -- Analyst

Thanks. Appreciate you walking through all the different market outlooks. But if we kind of drill into Houston, L.A., and Orange County, three of the ones, I think, you're expecting to underperform a bit. In the same markets that have underperformed, at least for the past few years, so what do you need to see from those markets, you know, maybe structurally kind of going forward that would change the outlook and get them more toward the top end of the grade?

Ric Campo -- Chairman and Chief Executive Officer

Well, the challenge you have with -- in California is that if you look at projected popular -- projected migration from either immigration, legal immigration, or domestic migration, Southern California over the next three years has almost 0.5 million people leaving. And on the other hand, if you look at Texas, including Houston, we have about -- the projections show around 350,000 of new migrations. So, that's one of the big things, is you just have this drag with people moving out of the -- out of those markets and moving into our markets. What could help Houston fundamentally is continued energy transition jobs that are happening here and continued strength in the oil and gas market.

You know, the oil and gas folks, just to give you some numbers, laid off about 80,000 people in the pandemic period and have only added back about 50. So, what's happened is as they become more efficient, even though they're printing money right now if you look at their earnings, they -- but they haven't really stepped up to hire people, and they've become a whole lot more efficient. You know, I think Southern California has some upside because, ultimately, when you get past the COVID measures -- I mean, that's been the biggest challenge there is you have a huge gap between economic occupancy and physical occupancy, almost at 1,300 basis points. And part of that -- and I think it's all driven by the fact that in California, you don't have to pay your rent.

And so, ultimately, when that clears, then -- which hopefully they'll be extended at the end of May or end of March in terms of restrictions. But hopefully, once that ends, you'll have a positive situation where you'll be able to kind of run your business like a business. Today, you know, we can't get our real estate back, and people smile as they live free and drive their BMWs and Teslas and feel pretty good about the world. 

Nick Joseph -- Citi -- Analyst

Thanks. I appreciate that. And then just on your opening comments on the transaction mark, you mentioned the wide bid-ask spread and kind of having some patience. Where would you buy today -- I guess from a cap rate or an unlevered IRR basis, what would you be comfortable underwriting and transacting if the seller was willing to do it there?

Ric Campo -- Chairman and Chief Executive Officer

You know, the cap rate side is kind of hard, you know, to peg because the question will be whether, you know, what we think the upside of the property is. A lot of times, when we buy properties, you know, they're pretty poorly managed, using revenue management wrong, in a wrong-headed way, and we can create a lot of value from that. So, we find properties that are stressed. You know, you may be buying by the pound, not the cap rate, and then we'll be able to drive the cap rate up.

In terms of unlevered IRRs, we've increased our unlevered IRR hurdles by at least 100 basis points. So -- given our cost to capitalize. So, we'd be looking at, for acquisitions, in the seven kind of plus range on an unlevered IRR basis.

Nick Joseph -- Citi -- Analyst

Thank you very much.

Operator

Our next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Hey, good morning, everybody. Alex, I believe you referenced a 1.5-cent negative impact to fourth quarter FFO from lower rental assistance. And I was wondering if you expect any additional impact going forward and just what you're assuming for, you know, net bad debt for this year in your guidance.

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. So, net bad debt for us for 2023 should be right around 1.4%. When you think about rental assistance, so in 2022, on a same-store basis, we got about $11.5 million of rental assistance. And in 2023, we're assuming some but really negligible amounts.

So, the best way to sort of think about it is that on a net basis, there's not much of a change in terms of bad debt from 2022 to 2023. But if you sort of back out the positive benefits of rental assistance that we got in 2023, then we are showing -- excuse me, in 2022, then we are showing some improvement in 2023.

Ric Campo -- Chairman and Chief Executive Officer

And ultimately, our bad debts are probably 0.5%. And that's the challenge we have today. It's very elevated. And given the outlook for a potential recession, we're hoping that that 1.4% will start going down throughout the year and then ultimately go back to 50 basis points in number in 2024.

So, there's some positive growth that can come from people actually starting to pay their rent.

Alex Jessett -- Chief Financial Officer

Yep.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Got it. Understood. And then it seemed like Houston had started to see some momentum last year, sort of bucking maybe the trend of some of your other markets given it didn't have as difficult comps, but it is remaining at the lower end of your revenue growth expectations and market outlook. And I guess I'm just curious, you know, what's really holding back Houston from stacking up better versus other markets? And is there potential for, you know, a surprise to the upside as you move through the year?

Keith Oden -- Executive Chairman and President

Yeah. So, we have -- in our forecast, we've used 15,000 completions in Houston, which, you know, in a normal year in Houston, that would be seen as a positive to the overall market conditions given the size of the Houston market. Interestingly enough, and Ron with these numbers, he actually has Houston job growth as basically flat -- or I mean, zero and flat total employment over the year. And after -- you know, it's one of those things where we don't necessarily agree with Ron on everything.

And I think it's very possible that he's got the -- that he has the job growth outlook -- he's understated it in Houston. The Greater Houston Partnership came out with numbers after Ron's latest update that indicated Houston could be as high as 60,000 or 70,000 new jobs in 2023. That's quite a range between zero and 70,000. So, you know, I think when we look at our modeling and he carries that over into his rental forecasts, we probably tweaked Ron's rental forecast in Houston to reflect a little bit more dynamic situation on job growth in Houston.

So, I think there is a chance if the energy business continues as it is right now, which is basically almost every energy company in the country in the fourth quarter reported record earnings, if that trend continues, I just can't imagine that we're not going to see a more robust job growth situation in Houston.

Ric Campo -- Chairman and Chief Executive Officer

Yeah, and I think the other thing that could help Houston a lot is the -- you know, we think about the federal government spending, even though we have lots of supply coming on, the supply is going to be shut off. We know that's happening right now given the current financial environment, and we have a tremendous amount of, in Houston, of federal money that's coming here, be it via hydrogen carbon capture, you know, expansion of the port, and just a lot of big government projects that are going to create a lot of employment over the next 12 to 36 months with massive amounts of spending from the infrastructure bill and the, you know, the Inflation Reduction Act, and that Houston should benefit big time from both those.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

That's helpful. Thanks for all the detail.

Operator

Our next question comes from Michael Goldsmith with UBS. Please go ahead.

Michael Goldsmith -- UBS -- Analyst

Good morning. Thanks a lot for taking my question. Turnover was down 100 basis points in January and blended signed lease growth increased to 2%. Is that indicative of an upturn in trend? Maybe asked another way, is there any indication that the men have bottomed and how did top-of-funnel demand and conversion in January compared to December or prior months?

Keith Oden -- Executive Chairman and President

So, the question of kind of where we see demand, you know, I think that the decline that we saw between November and December was far -- you know, was outsized compared to the normal history. We normally see a decline in occupancy and rental rates from November to December and somewhere around the 20 basis points or 30 basis points. And in this year, it was wider than that by 40 basis points or 50 basis points on both metrics. So, clearly, you know, there's something changed in the total amount of people seeking to lease apartments between November and December.

That was a little bit higher than what we would normally expected. There's no doubt about that. I mean, we sort of made the comment internally that it felt like people -- a lot of our renters went home for Christmas holidays and a fair number of them stayed home. So -- but our trends have gotten better in January.

Our traffic is sufficient to backfill and to maintain the occupancy and over time increase it a little bit. You know, we didn't decrease our overall occupancy for the year of 2023 from where it was last year. But last year, we were at historically elevated levels, and we model 95.7 in occupancy for 2023, which, again, by historical standards is really still quite strong for us.

Ric Campo -- Chairman and Chief Executive Officer

You know, one of the things that was -- I'll just kind of hit it in in a really broad way because -- and these data points that I'm going to give you right now are just really hot off the press over the last week or two. As Keith pointed out, we felt definitely a more -- a seasonal situation during the fourth quarter. But it was also, as he said, you know, it's sort of like people just went away in December. And when you look at the stimulus and post-pandemic demand, right, and think about this, these numbers are pretty amazing.

In 2021, the industry absorbed 600,000 net new units in 2021 in multifamily. And that's when we had the massive stimulus. Lots of people had money, and they moved out. If you look at the average between 2014 and 2023 -- or 2021, the average -- there were about 150,000 people, on average, that made between $25,000 and $75,000 a year.

In 2021, that number grew to 450,000. And so, the same thing could be said for the $75,000 to $100,000 cohort. It went from 100,000 people to 150,000 people. And then over 75 went from -- those were fewer.

But you went for 150,000 people, on average, to 225,000. And what happened was the whole market moved up in terms of people that had money because of the stimulus and because if you think about even if you lost your job during this pandemic, if you lost your job in '08, '09, you got a fraction of your pay in unemployment -- maybe 60% of your pay through unemployment insurance. The way that stimulus worked and the way unemployment insurance was tweaked during the pandemic is you got 110% or 115% of your pay when you lost your job. So, you had this massive saving.

It moved up a lot of people into the world that wouldn't otherwise have been able to have to afford an apartment. And they all moved out to apartments. If you look at 2022, we got a net absorption of 50,000 units, right? So, you had -- we had really anemic absorption. A couple of other numbers that I think are really fascinating would be in the fourth quarter of 2008, which was a really bad time in the world, we had a negative -- this is national, negative absorption of multifamily of 115,000 units.

In the fourth quarter of '22, which obviously is a lot better than the fourth quarter of 2008, we had 181,000 net loss of apartments. So, 115 to 181. The 181 was so big relative to the history. I couldn't find a time at least that Keith and I have been in this business where the number was that big.

And what happened, obviously, is that those people that moved up income-wise have spent their money and moved back, and they stayed home after Christmas instead of coming back and renewing their leases. And that's why when you start thinking about next year, I think next year is going to be a good year ex some real bad recession side of the equation. But that's why you can't continue to have, you know, 14%, 15% NOI growth with double-digit revenue growth when the market is going back to a more normal market. We're just getting off the sugar high of everybody has money and can go out and do whatever they want, including lease apartments.

Michael Goldsmith -- UBS -- Analyst

They've been very helpful commentary. And then in your guidance, there's a wide range for development starts. So, maybe what macro conditions would you look for that would drive you to the top end of the range versus maybe the bottom end of the range? Thanks.

Ric Campo -- Chairman and Chief Executive Officer

There are a couple of key points. One is that if you look at what's going on, the biggest sort of change in the market from a product perspective has been banks have really shut down construction lending. And with the uncertainty with interest rates, rents now are not going up fast enough to be able to offset the construction cost increases that we've had in the past. So, you have a lot of models that show merchant builders dropping construction somewhere in the 40% to 50% range.

If you look at starts today, they're around 0.5 million. And so, the folks we look at show that those starts going to like 250,000 by the end of this year, almost a 50% cut. So, if that trend continues, then the way we think about the world is, you know, it takes 24 to 36 months to build a property, you have great legacy land that makes sense for us to build on, and we could deliver at a time where you have very low supply in 2026 and 2027 given the outlook for the supply to be reduced. The other thing we're starting to see is because most folks do believe that starts will come down dramatically this year, then you're starting to see price pressure moderate.

We -- last year, there was probably -- in the last three years, construction costs have gone up over 30% to almost 40% in terms of cost. Now, we're seeing it flatten and actually go down. So, there could be an opportunity over the next six months where you do see some significant cost reductions. And if we can get our costs down, then we believe fundamentally that supply is going to be down and the market will be pretty good in 2025 and 2026, then we're going to lean into that and that's where we would be hitting the top end of our development range.

And sort of the interesting part is if you think about if you have a recession, then those starts will really go down this year and costs should come down even more. So, that could allow well-capitalized companies like Camden to buck the trend and develop when merchant builders can't and be able to position higher returns on developments than you would expect today in 2025 and 2026. So, that's how we think about it.

Michael Goldsmith -- UBS -- Analyst

Thank you very much. Good luck this year.

Ric Campo -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from Haendel St. Juste with Mizuho. Please go ahead.

Haendel St. Juste -- Mizuho Securities -- Analyst

Hey, good morning out there. My first question is going back to the same-store revenue guide, can you clarify for us the building blocks and how the math works? I'm looking at your current midpoint of 5, 5.1, but also considering the earn-in, which I think was around 5%, and the market rent growth assumption that you have in your supplemental, the 3%. So, assuming half of that gets us in, call it, mid-6 or so. So, can you spend a moment or two kind of clarifying the buildup for same-store revenue and what are the swing factors to get to the upper and lower? Thanks.

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. So, first of all, you're right. The earn-in -- and we'll call it the earn-in plus sort of the loss of lease that we think we can capture is about 5%. And then we have market rent growth from December 31st of '22 to December 31st of '23 of about 3%.

So, obviously, you can only get half of that. So, to the 5%, you add the 1.5%, and that gets you to 6.5%. And that's what we call net market rent. Then the driver sort of the dilutive impact of that is economic occupancy.

So, we are making the assumption that occupancy comes down about 100 basis points. So, you take the 6.5% and you back off the 100 basis points, and that gets you to a 5.5% rental income growth. Now, remember that rental income is only about 89% of our total property revenues. So, if you take that 5.5% rental income growth and you multiply it by 89%, you get to about 4.9%.

And then the other 11% of our rental revenues comes from other income. And think about water rebuilding, trash rebuilding, admin fees, application fees, those types of items. And they're so closely correlated to occupancy, and they're also -- some of them are statutorily mandated to the amount that you can actually charge. And so, we're expecting that 11% to grow at about 1.5%.

So, if you multiply those two out, you get 0.2. You add the 0.2 to your 4.9, and you get exactly to 5.1.

Haendel St. Juste -- Mizuho Securities -- Analyst

Got it. Got it. That's helpful. Second question is on the 250 million of acquisitions and dispositions you outlined in your guide.

I guess I'm curious on how we should broadly be thinking about the timing in light of the small transaction market you outlined. Are you willing to wait for better cap rates or are you expecting better cap rates by getting calls from many -- and getting more calls from merchant builders and sensing an opportunity there? And then any market that you are outlining that you're adding more to or calling from? Thanks.

Alex Jessett -- Chief Financial Officer

So, I'll answer the timing and then let Ric and Keith answer the second part of it. But the timing of what we have in our model is we've got it toward the end of the year, and we've got them offsetting one another. So, there's no net accretion or dilution from acquisitions or dispositions in our '23 guidance.

Ric Campo -- Chairman and Chief Executive Officer

We just got back from NMHC, and it was interesting. There were 88,500 registered people there, a record for NMHC, and that didn't include the couple thousand that don't want to pay the fee. They just hang around the hoop trying to have meetings with people trying to understand the market. And we sort of -- it was interesting because you had sort of three camps.

You had the camp where the capital like -- people with capital like us and other portfolio managers and others, and we were all kind of -- we're kind of waiting to see what's going to happen. Then you had merchant builders who still are kidding themselves that they're going to start as many properties that they thought they were going to start this year. And there are some that are realistic, that are actually betting on a lower start number than is projected. And then you have the brokers who are all very excited about getting back to work.

You know, when you look at some of the numbers that we heard, a January numbers, I heard one of the national brokerage groups said they did about $1 billion of sales in January of 2022. And this year, they've done 80 million. And so, there is definitely a -- the market is frozen to a certain extent because you have this bid-ask spread. And I think as the market develops, capital will look to try to get reasonable rates of return.

Like I said earlier, I think it might be where you're buying by the pound and knowing that, ultimately, you'll be able to make a reasonable rate of return, but maybe not initially in terms of you might buy lease-ups and things like that that don't really have great returns yet, but you might buy that, you know, substantially below what we could replace for today. So, I do think that there is definitely a wait-and-see attitude and that will continue, you know, probably until there's just more clarity. I mean, you know, when you think about the Fed's meeting this week, they -- you know, I think most people believe 5 basis points to 25 basis points, the market liked it. You know, interest rates came down, and then all of a sudden you have 500,000 jobs today, and the 10 years back to 350.

And now, we're back to talking about, well, you know, what's the Fed going to do now, right? A 50-year low on unemployment rate. And so, there's just so much uncertainty that it's hard to get conviction. And when I think the market gets conviction, then you'll start seeing there's plenty of dry powder out there. And the question is, will -- who will blink first? And I think it's going to be the sellers that have to blink first.

I'm hoping that anyway.

Haendel St. Juste -- Mizuho Securities -- Analyst

I hear you out. I would get nothing. I agree with your comment. That's what [Inaudible] And I did speak to a handful of people in the minority who thought that, well, maybe a better spring selling season and lower interest rates in the backup here could result in lower cap rates.

Is that a scenario that you can envision? I mean, how do you think about potentially that outcome?

Ric Campo -- Chairman and Chief Executive Officer

Well, I guess, on the one hand, there's a mountain of capital, right? And multifamily is a great business, and people understand that. And so, I guess if you have -- if we -- if the Fed can sort of thread the needle and doesn't crash the economy and rates -- you know, forward rates look like they're going to be in the, you know, the 3% to 3.5% range, I think you could argue that cap rates might either firm dramatically or come down some. You know, I think that when you look at the negative leverage that people have to put on their properties today, if you look at Freddie and Fannie spreads relative to the 10-year, you're at about 5%, 5.25%. And if you're going to buy, you know, a 4% cap rate, you got 150 -- 100 -- 150-basis-point negative spread there and you've got to figure out how do you get that negative leverage dealt with.

And if you want a 6.5 to 7.5 unlevered IRR, you got to bet on some pretty strong growth or falling cap rates in the future to ever make those numbers work. So, there's a scenario, for sure. But it's -- right now, I wouldn't bet on that scenario.

Haendel St. Juste -- Mizuho Securities -- Analyst

Thanks for the time and your thoughts.

Operator

Our next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Alexander Goldfarb -- Piper Sandler -- Analyst

Hey. Good morning down there. So, two questions. Good morning.

Two questions. First off, on California, just especially in light of what L.A. recently did, do you -- has your view of that market changed? I mean, I've asked you the question over the years about California, and there are a lot of good qualities about Southern California lifestyle, etc. But it seems like the conditions there for landlords get tougher and tougher every year.

Now, uncertainty, you know, with the good cause and, you know, whether or not further rent and directions, whatever. Is that a market that you still believe in long term or your view is changed in the past year where you're like, you know what, it's not the market that we thought it would return to? You mentioned 500,000 people returning. I mean, sorry, leaving that, you know, eventually, that's something that we have to strategically assess.

Ric Campo -- Chairman and Chief Executive Officer

Go ahead, Keith.

Keith Oden -- Executive Chairman and President

Yeah. So, Alex, we -- you know, the last two years as in all the trials and tribulations that have come with the restrictions and the eviction moratorium, etc., those have been -- to me, those have been a distraction from the bigger picture. You know, California has had a challenge, and it has been a challenge to operate in for not just the last two years, but for the last three decades or two and a half decades anyway. And so, there's a -- you have to kind of get your mind around the fact that it's a different regulatory regime.

Everything is going to be trickier, everything is going to be a little bit stickier in terms of moving forward on new initiatives, etc. But that's something that we've lived with for 20 years, and we know how to do it. We're good at it. We have a very seasoned team in California that knows how to navigate their way through normal conditions, you know, the normal regulatory morass in California that the last two years have been an exception to that, for sure.

But I do believe and we believe as a team that the end of at least the eviction moratorium and the ability to get control of our real estate is coming to an end. And, you know, I know that they've said, I swear to God, this is the last time we're going to extend it. But I do believe that the L.A. County extension for the -- for this last two months came with a very public announcement supported by virtually the entire council that said, we're going to do this, and then really and truly, no kidding, this is the last one.

So, whether it is or it isn't and whether it goes on for another two months beyond that, and the big picture of having operated out there for almost 20 -- over 20 years, I don't think you can -- in a business like ours, given the nature of our assets and the long-term commitments that we make, I don't think you can kind of just get emotionally wound up about what craziness the last two years have been. I think if you look beyond that, California is actually a really good story in terms of being a landlord because, you know, just as difficult as it is to run properties, it's 3x difficult to build properties in California. So, it's kind of like you -- the new supply challenge is not going to be what it is that we have to deal with our other market. So, California will -- you know, I guess I'm a little more optimistic than most people that there -- we'll reach a tipping point in some of these places where, you know, sanity has to prevail and maybe we don't end up with the continued hemorrhage of out-migration from California and things get more on a normal track.

If that were to happen, you'd get a great return in demand. You haven't had any meaningful amount of replacement or new product built in the last four years in terms of new starts. I think it could end up being a really good operating environment once we get past these two and a half years of crisis.

Alexander Goldfarb -- Piper Sandler -- Analyst

OK. Second question. And, Ric, you guys are always sort of the speaker on regulatory policy. Obviously, we all know what the White House put out.

In your view, does this make Fannie, Freddie debt less attractive if borrowers think that the government is going to use them to effect change? And second, the CFPB and FTC obviously have broader, you know, regulatory power to go after all apartments. Do you fear that this is going to be some sort of overreach or your view is there are local regulations that already regulate apartments already so tough that it's really hard to, you know, to really sort of up the ante, if you will?

Ric Campo -- Chairman and Chief Executive Officer

So, on the first question with Freddie and Fannie, I don't think it's going to affect that much because when you look at those guidelines, it's -- they're really targeting lower income and trying to help there. I mean, one of the things that people don't realize is when you think about the attacks that the multifamily business are getting, you have to think about who the largest entities that evict people are public housing agencies, right? The federal government. And so, not market rate companies like Camden. Just to give people a sense, too, by the way, in a normal time -- normal times where we want -- we try to keep our residents as long as we can.

We work with them to create value for them, and we work on payment plans. You know, in a normal time, out of 60,000 apartments, we maybe evict 600 people a year. And a lot of those evictions are people, not monetary defaults. But the person's like, you know, has a dog that bit somebody or has -- is disruptive to their neighbors.

So, I feel pretty good about long term that we're not going to be under siege. You know, clearly, for a politician, when rents go up 30%, they scream for rent control and they scream for, oh my God, there's bad people doing things. It's almost like the -- when energy prices go up and gasoline is 4.50 a gallon, they think the energy companies are the villains, right? But it's really supply and demand driving that. I think the -- we do have to be vigilant, though, because it is politically expedient oftentimes to just say, well, we'll put a cap on and we'll do rent control because that'll help the constituents.

But ultimately, we all know that -- and there's lots of economic analysis on this, both left and right, think tanks, all think that rent control stifles supply, which ultimately creates the problem for folks. The good news for Camden is we're -- in the markets we're in, we don't have a lot of major regulatory targets on us. And I think that a lot of the -- even like if you look at Florida, for example, where a couple of the markets have tried to put in rent control, and they're just getting massive pushbacks from both legally and from the state houses. So, we do need to be vigilant, but I don't think we're at risk of having some massive government making us do stuff.

Alexander Goldfarb -- Piper Sandler -- Analyst

Thank you.

Operator

Our next question comes from Chandni Luthra with Goldman Sachs. Please go ahead.

Chandni Luthra -- Goldman Sachs -- Analyst

Hi. Thank you for taking my question. The first one is on TRS acquisition. So, with the benefit of hindsight, as you think about the different moving pieces, especially around higher interest expense now versus, you know, at the time of the transaction, how would you qualitatively think about this deal now and the net accretion from it, especially when you consider the dynamic that has also increased your exposure to markets like Houston and D.C.

that, you know, as you mentioned, are your B, B-ish, B-minus kind of ratings in sort of, you know, the whole deck?

Ric Campo -- Chairman and Chief Executive Officer

Well, I think the acquisition is still a great acquisition. At the time, we financed it with equity -- mostly equity. We had 600 million of cash, and we completed a large equity transaction to pay for it. And so, ultimately, when you -- when I think about that portfolio, it was a very low-risk acquisition for us, primarily because we either built them or bought them.

We operated them. So, there was really no transition risk or no oh gee, got-you risk because you didn't know what was going on with those properties since we clearly knew everything that was going on with those properties. And so, you know, from an accretion dilution perspective, it was accretive in 2022 and it's accretive in 2023. You know, when you look at our -- the walk that Alex showed in our -- and went through in our press release, the broader interest rates going up were a drag on our FFO not as a result of that transaction per se.

It was bonds coming through that were at three and some change that we're having to finance at five and some change now. So, I think it was a very good transaction for us. Ultimately, we would have had to unwind that portfolio because we had a 2026 kind of time frame where we would have to sell the assets. And so, to be able to acquire really high-quality properties with very little transaction risk was really attractive to us.

To the issue of longer term, we're going to -- we want to lower our exposure in D.C. and Houston, and the fund transaction actually increased our exposure to Houston is -- we were willing to sort of delay that a bit to be able to acquire those quality properties. But ultimately, we are going to grow our way -- either grow our way out or do dispositions and acquisitions in other markets to be able to lower those exposures. And really, it's all about trying to become more geographically diverse so that we can have less volatility in our cash flow.

And that's sort of the where the -- one of the reasons why we wouldn't exit California right now because it's a good balance and also could be great upside over the next couple of years once we get out of the pandemic issue. So, yeah, we will continue to focus on being more diverse around the country and move assets around. If you think about from 2014 to through, you know, through 2020 -- roughly 2020, we sold over $3 billion of properties and moved the portfolio around pretty dramatically during that time and changed our geographic footprint. And we will continue to do that.

So, hopefully, in this environment when buyers and sellers get closer together, we'll be able to execute some of those sales and acquisitions to move to continue to diversify our portfolio.

Chandni Luthra -- Goldman Sachs -- Analyst

Very helpful. Thank you for that. And as a follow-up, you know, as we think about occupancy in 2023 and the dip that you guys talked about, how much of that is emanating from higher supply versus you guys perhaps prioritizing pricing over occupancy? And then, you know, as we think about California in this mix down the line, as you said, a couple of mix -- months down the line, you would be perhaps thinking about looking to get back your real estate from tenants who are not paying currently. How would you put that in this mix of, you know, how occupancy might develop?

Keith Oden -- Executive Chairman and President

Yeah. So, we were modeling, you know, occupancy that's 95.4 plus or minus for 2023, which, you know, compared to our long-term average is about what we would like to operate the portfolio. In any case, we've certainly been higher than that for the last couple of years. But, you know, as Ric described, the drivers of demand that sort of made that happen were very unusual and probably not likely to -- I hope we don't see that kind of demand-driven for that reason anytime in the near future.

So, I think we'll -- we use a pretty strict revenue management shop and the levers that you can pull are -- the primary lever is pricing to try to adjust your occupancy to maintain in the mid-95% -- mid to upper-95%, right? So, we'll -- we will continue to take those recommendations from YieldStar. We think the inputs to the model both on the -- you know, looking at the new supply, which we know is going to be a headwind, we think we've properly accounted for that in our forecast. But the -- ultimately, it's -- it will come down to the conditions on the ground in each individual market, you know, as viewed by the YieldStar model in terms of where the pricing actually falls. So, in California, the -- if we -- if they do let the eviction moratorium finally lapse at the end of March, which again, we think that is likely to happen, that doesn't -- you know, that in itself doesn't solve the issue of getting your real estate back.

You still have to go through a legal process to effect an eviction. And unfortunately, in California and in several of our other markets, even those where they have long since given up on the eviction moratoriums, they're still struggling to catch up with the process of going through a legal eviction. So, we're prepared to do that. We are -- you know, expect to be first in line to pursue evictions, but we just know that it's going to be some lag between, OK, that we've lifted the moratorium, now you can begin the process, which, in some cases, can take 30 to 90 days, depending on the jurisdiction.

So, it'll be a -- you know, I think even after March 31, it will be a little bit of a drag in terms of time to get our real estate back. The flip side of that is, is that we think that once the gig is up for the non -- for the rent strikers, that they might choose to just move out voluntarily before we evict them because they know there's -- you know, the end is in sight. And that's something that they haven't had to contemplate for the last two years.

Chandni Luthra -- Goldman Sachs -- Analyst

Thank you for all that detail.

Operator

Our next question comes from Rich Anderson with SMBC. Please go ahead.

Rich Anderson -- SMBC Nikko Securities -- Analyst

Hey, thanks. Good morning out there. Thanks for hanging with us. So, when driving around the country, and, you know, I'm curious to know how is the market clearing to get you to where you're at with revenue growth at 5.1% versus last year? Obviously, we're all expecting deceleration, but is this landlords like yourself and others kind of sort of slow playing it because of the uncertainty that lies ahead, or are you seeing some sort of behavioral shifts with residents that's causing, you know, the market to clear -- the word is clearing? And then it'll kind of all comes down to market rental rate growth, what you're assuming, you know, for this year at 3%.

Is there a chance that we do have this soft landing or no recession at all or whatever you want to call it? Does that market rent growth number could be something much higher than 3%?

Ric Campo -- Chairman and Chief Executive Officer

Sure. That's why we have a range, right? You know, I think -- and what, the upside in our guidance could clearly be occupancy. I mean, if you have a very positive -- and, you know, the job number today was, you know, eye-popping, obviously. And if you -- if the Fed can thread the needle and keep job growth going and have a, you know, a soft landing, whether it's a landing, and you keep the consumer going, then yeah, I think our -- you have two parts of upside in that guidance.

One would be the rate, right, the 3%. The other would be we probably beat our occupancy numbers. And the occupancy number is probably the one that is the -- you know, when you think about -- when I think about those numbers, the earn-in is the earn-in. The 3%, that's what most market pundits are putting out there.

And then the occupancy is where we could be more -- could be too conservative given an outcome that you just -- that I just described. And so, there are two places where you could beat, and those are the really the two.

Rich Anderson -- SMBC Nikko Securities -- Analyst

So, I guess the question is where -- is this proactive from you or are you seeing behavioral shifts from your residents that are, you know, landing you where you're at now? MAA said they're not seeing any behavioral shifts with their residents, that they're really more focused on the macro and that's what's driving where they're landing right now. Is that a consistent theme for you guys?

Ric Campo -- Chairman and Chief Executive Officer

I would say that, you know, based on the numbers I said earlier, you know, where you had a negative absorption in the fourth quarter of 181,000 units in America, that's consumer behavior. Those are people staying home for Christmas. Those are people who got paid all kinds of big stimulus money, had cash coming out of because of forced savings, and decided to go out and rent apartment, and then they spent that cash, and now they're going what am I going to do? Maybe the economy's uncertain, and I'm going to go back and live with mom and dad and -- or double up and try to save money again. And I think that consumer behavior is clear that has happened.

And, you know, we went from, like I said, 600,000 positive net absorption in 2021. It was 50,000 in 2022. The 50,000, when you think about it, was all in the first half of the year. And if you look at -- the positive absorption was all in the first half.

In the second quarter, you start having kind of flat. Third quarter, you have negative some. And then the fourth quarter, you had a big negative. And so, I would say that is a definite consumer behavior issue that's out there, and I don't think you can ignore it.

Our view -- and that's why we came out with occupancy falling and rent being moderated. And it's just -- and it is based on also a less robust economy in 2023. 

Keith Oden -- Executive Chairman and President

And, Rich, on the consumer behavior side, you know, we -- one of the stats that we gave in our prepared remarks was people move out to purchase homes, which was about 13.8% for all of last year. Just to give you a refresh on that number, in the month of January, that number dropped to 10 -- just over 10% move-outs to purchase homes. And my guess is it falls below -- falls into single digits by next quarter, and we've only seen single digits on that stat for maybe two consecutive quarters during the middle of the great financial crisis. And so, I mean, we're getting to some pretty uncharted territory in terms of housing affordability and the willingness and ability of people to move out of apartments to buy homes.

And I don't think that's -- you know, I think we're at the beginning of that cycle.

Ric Campo -- Chairman and Chief Executive Officer

It's clearly a positive on that side, obviously. But go ahead, Rich.

Rich Anderson -- SMBC Nikko Securities -- Analyst

Yeah, I'm sorry.

Ric Campo -- Chairman and Chief Executive Officer

It's OK.

Rich Anderson -- SMBC Nikko Securities -- Analyst

I'm anxious to get to the call here one real quick question for Alex. If I'm doing the numbers right, your variable rate debt exposure went from 6% last quarter to 15%. I know that, you know, you had to deal the 550 million of secured debt. Is that a number, 15%, that we should be expecting for the full year or do you expect something to, you know, maybe right-size your algo of debt exposure in the coming months and quarters? Thanks.

Alex Jessett -- Chief Financial Officer

Yes. Yeah, absolutely. So, in our guidance, we are not assuming any capital transactions. Obviously, we're watching the market closely.

You know, rates have been coming down until this morning and spreads have been tightening. So, we're watching that closely. If we have the opportunity, we will take out some of this floating rate debt with fixed rate debt. But at this point in time, we're sort of operating under the thesis that interest rates are going to come down as we go through the year.

And based upon that, it probably makes sense to push out fixing rates really as long as we can. So, that's what's baked into our model. As I said, we're going to be opportunistic, though. And if we see an option, we'll take it.

Rich Anderson -- SMBC Nikko Securities -- Analyst

OK. Fair enough. Thanks. Thanks, everyone.

Operator

Our next question comes from Wes Golladay with Baird. Please go ahead.

Wes Golladay -- Robert W. Baird and Company -- Analyst

Hey, everyone, and thanks for taking the time. I just want to follow up on that last question, if I understand it correctly. So, it looks like you can borrow today around 4.5% and have the 1% interest savings on that floating rate debt. Would you have a penalty to pay that off? And I guess that would just be upside to guidance if you were to take it out today.

But it sounds like you just want to be a little bit more I guess aggressive at this point and think you get a little bit lower than the 4.5 I just cited.

Alex Jessett -- Chief Financial Officer

Yeah, and I'll tell you, I mean, spreads came in this week alone about 30 basis points. And so, if you would have asked me on Monday, I would have told you the number was 4.8. It was 4.5 this morning. And so, obviously, that's heading in the right direction.

But we want to see if we -- we want to see where rates continue and whether or not we can get any better on that. On the floating rate debt disassociated with the fund transaction, the debt we assumed, there is a 1% penalty. Obviously, 1% is really not that much. And certainly, that can go with the math pretty easily.

When we look at what's on our line and what's on our term loan, there is no penalty. So, that really does give us tremendous flexibility. And if this -- if the unsecured market continues to improve, you know, there are some potential upside there.

Wes Golladay -- Robert W. Baird and Company -- Analyst

OK. And then going back to Houston, I think you cited a supply of 15,000. Is that -- a lot of that supply directly impacting your portfolio? And then if you were to look out to next year, would you expect supply to be comparable up or down?

Keith Oden -- Executive Chairman and President

So, actually, most of the stuff that is being built in Houston right now is not directly comparable with our portfolio. Some of it is. Obviously, the downtown assets and midtown assets, there's been a reasonable amount of construction in both of those submarkets. But our portfolio in Houston tends suburban and there really just hasn't been that much new supply of buildings in the suburban markets in Houston.

It just gotten started maybe a year and a half ago. And now, it slowed considerably in terms of new starts. So, I think we're -- as with most of these markets, you know, when you see a scary headline number on completions, a good example would be Austin. There's 20,000 apartments that are set to be completed in Austin this year.

And the kind of headline number, it just -- it sort of -- you know, you got to take a double take because when you see a 20,000 starts in a market like Austin, but when you really go through the geography of where our portfolio is, such a big amount of that is in or around the downtown area, and we literally have one community that is impacted by all of that. So, if -- you know, if our portfolio were heavily oriented to downtown, either in Houston or Austin, it'd be a much greater concern than what it -- than what I think it's actually going to be. Obviously, all supply in a market matters, but it's like throwing rocks in a pond, you know, at the margins. If it's not near you, it raises the water level a little bit, but it's not a huge issue unless it happens to be in the particular submarket where your assets are located.

Wes Golladay -- Robert W. Baird and Company -- Analyst

Got it. And just to follow up on that, was it going to be -- do you think it accelerates next year or does it comparable or down in the early view on that?

Keith Oden -- Executive Chairman and President

Yeah. On -- for Houston starts -- or excuse me, completions, next year, we have it at 19,000 apartments completions. And that sounds about right.

Wes Golladay -- Robert W. Baird and Company -- Analyst

OK. Great. OK. Thanks for the time, everyone.

Ric Campo -- Chairman and Chief Executive Officer

Sure.

Operator

Our next question comes from Joshua Dennerlein with Bank of America. Please go ahead.

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

Yeah. Thanks, everyone. I just wanted to touch base on -- I appreciate the build from 2022 to 2023 FFO guidance at the midpoint. I just wanted to touch on the amortization of net below-market leases from the fund acquisition.

Is that something we have to factor into 2023 or is it fully out now that we've kind of lapped 2022? Just trying to get a sense of how we should be modeling this going forward.

Alex Jessett -- Chief Financial Officer

Yeah, it is fully out. There is absolutely nothing in 2023. So, the variance that you're looking at is the $0.07 that we recognized in 2022 as compared to zero in 2023.

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

OK. Appreciate that, Alex. And then maybe a touching base on the markets. Phoenix seems like it's kind of -- from some of my screens, it looks like maybe it's a market that's weakening.

It's interesting to see your occupancy went up sequentially. If you kind of just provide more color on what you're seeing on the ground and how maybe your portfolio is positioned versus maybe some new supply and that kind of you --

Keith Oden -- Executive Chairman and President

Yeah, we've got -- we have completions in Phoenix for 2023 of 15,000 apartments. Employment growth in Phoenix next year is about 26,000 jobs. So, that's a little bit out of equilibrium in terms of job growth to new deliveries, although the new deliveries are actually -- have actually come down pretty substantially from where they were in the previous year. So, I think Phoenix is -- we have it listed as an A-minus market in moderating.

So, I think that's our -- excuse me, A-minus and stable. So, that seems about right for the overall operating environment in Phoenix.

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

OK. Appreciate it.

Operator

Our next question comes from John Kim with BMO Capital Markets. Please go ahead.

John Kim -- BMO Capital Markets -- Analyst

Thank you. On your same-store revenue guidance this year, I appreciate the breakdown. But one component that seems to be missing is the renewal rate growth, especially since that renewal versus new lease rate spread widened in the fourth quarter, and again, even more so in January. So, I guess my question is, what's a good run rate for that renewal versus new lease spread, and how is that factored into your guidance this year?

Alex Jessett -- Chief Financial Officer

Yeah, absolutely. So, for the full year, we've got renewals up about 4.9% and new leases up 2%. When you blend that out, that gets you to about 3.5%. And that 3.5% picks up the market rent plus the about one-third of the loss to lease that we said we'd capture.

So, if you think about the sort of renewal component that you are addressing, that renewal component is what you're going to find and it's captured in that loss to lease. So, that's what we're saying, is that we're going to get -- we'll get about a third of that based upon timing and then based upon leasing strategies.

John Kim -- BMO Capital Markets -- Analyst

So, when you say market rental growth of 3%, that's not reflective of the 2% new lease growth rate, or do those two tie in together?

Alex Jessett -- Chief Financial Officer

Yeah, so market rental rate is going to be the rental rate that we expect December 31st of '23 as compared to December 31st of '22, right? So, you're going to pick up that component. And then the renewals, if renewals are coming up to market, that is effectively what you're picking up in the loss to lease. And then the new leases, if people leave and you're backfilling them, that's also getting picked up in the loss to lease.

John Kim -- BMO Capital Markets -- Analyst

OK. I appreciate it. Thank you.

Alex Jessett -- Chief Financial Officer

Absolutely.

Operator

Our next question comes from Robyn Luu with Green Street. Please go ahead.

Robyn Luu -- Green Street Advisors -- Analyst

Good morning. Alex, I noticed that the Texas and Florida markets printed double-digit expense growth this quarter. Are you taking in similar expense growth throughout 2023 for these markets?

Alex Jessett -- Chief Financial Officer

Yeah. So, when you see that, a lot of that is due to the timing of property tax refunds and sort of how that flows through the system. And so, no, I would not expect that to be a sort of run rate type item.

Robyn Luu -- Green Street Advisors -- Analyst

I mean, property taxes are expected to be fairly high. I know you pointed to about [Inaudible] for the portfolio this year. But Texas and Florida probably seem a little bit higher. So, if not double digits, do you see the state to print, you know, in the high single-digit range?

Alex Jessett -- Chief Financial Officer

No. You know, if you think about the states that I specifically called out for having higher property taxes, you do have Florida. But Texas was not one of them. So, you've got Florida, you've got Georgia, and you've got Colorado.

And those are the markets that we're anticipating having higher property tax expense. And so, that's where -- you know, if we're averaging 5.5% and property taxes make up a third of our total expenses, those markets that are going to have the higher growth in property taxes are going to have the higher expense growth. So, yeah, I would expect that once again in, I said, Florida and then Georgia and Colorado.

Robyn Luu -- Green Street Advisors -- Analyst

That's clear. And then I want to talk about the D.C. market. How is its front-door traffic and trending in D.C.

relative to the portfolio average? And are you seeing any signs of people trying to migrate to the suburbs or even out of state?

Keith Oden -- Executive Chairman and President

So, we certainly have seen some out-migration from D.C., particularly the D.C. proper as opposed to D.C. Metro. It's not anything like what we've seen from New York or California.

But I would say at the margins, yeah, we do get, you know, in terms of folks that show up in Atlanta for relocation purposes, you know, it's certainly in the top three or four, you know, from destinations. So, I think, again, more D.C. proper than the suburban areas. And a lot of that's just driven by the employers and the work where you happen to be.

Your office is located in D.C. proper. People have been very reluctant to return to their offices because they've been allowed to basically work from anywhere. And if you can work from anywhere, D.C.

proper is probably not in your top 10 places to work from if you have complete flexibility. So, yeah, I think it's -- we have three assets in D.C. proper, and we certainly have seen more of that from those three assets than what we had seen prior to COVID, for sure.

Ric Campo -- Chairman and Chief Executive Officer

But compared to L.A., for example, Washington, D.C. has positive net in-migration over the next three years compared to 350,000 out-migration. So, it's not as -- you don't have the back door open as big as you do in D.C. versus any of the other California markets.

Operator

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

Ric Campo -- Chairman and Chief Executive Officer

Thanks. We appreciate you all being on the call today. And if you have any other questions, we'll be around. So, just give us a call, and we'd be happy to give you more detail.

Thanks.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Kim Callahan

Ric Campo -- Chairman and Chief Executive Officer

Keith Oden -- Executive Chairman and President

Alex Jessett -- Chief Financial Officer

Steve Sakwa -- Evercore ISI -- Analyst

Nick Joseph -- Citi -- Analyst

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Michael Goldsmith -- UBS -- Analyst

Haendel St. Juste -- Mizuho Securities -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

Chandni Luthra -- Goldman Sachs -- Analyst

Rich Anderson -- SMBC Nikko Securities -- Analyst

Wes Golladay -- Robert W. Baird and Company -- Analyst

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

John Kim -- BMO Capital Markets -- Analyst

Robyn Luu -- Green Street Advisors -- Analyst

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