Multifamily real estate investment trust (REIT) Camden Property Trust (CPT 1.31%) is a top operator in its segment. But is it a potentially lucrative one for investors?
Even when accounting for its habitual dividend payouts, Camden's total return has trailed that of the S&P 500 index. That, of course, could mean it's undervalued and underappreciated rather than justifiably cheap. Read on for my take on which of those directions it leans.
Lagging a benchmark indicator
The total return for Camden would amount to $1,405 today had you plonked down $1,000 on the stock at this point in 2020. While a 40% gain over that stretch isn't bad at all, it's notably lower than the $1,907 that would have been in your hands with an investment in the S&P 500.
Image source: Getty Images.
Camden controls a portfolio of 173 properties containing more than 59,000 apartment homes in total. At such a size it can be difficult to grow meaningfully. This, combined with high property prices (and, thus, expensive rents), has resulted in uninspiring growth for the REIT recently.
In its most recently reported quarter, Camden's property revenue totaled $396.5 million, which was up by a bit over 2% year over year. Its funds from operations (FFO), the top profitability metric for REITs, fell. Camden's "core adjusted" FFO, which strips out items like legal costs, was $187.6 million, a slight drop from the year-ago tally.
More growth needed
Camden's occupancy rate of just under 96% is already quite high, so there's not much room for growth in the existing portfolio. Last quarter, it had two new properties come onstream, and a further four in development, which combined will be only a drop in the bucket of that 173-strong portfolio.
The REIT's quarterly dividend (currently $1.55 per share) also hasn't grown all that much recently; further, its yield of 3.9% is a tad low for the REIT sector.
So ultimately, I feel there are better and higher-yielding investments than Camden. I'd give its stock a pass.
