Camden Property Trust' (CPT) CEO Ric Campo on Q4 2015 Results - Earnings Call Transcript

| About: Camden Property (CPT)

Camden Property Trust (NYSE:CPT)

Q4 2015 Earnings Conference Call

January 28, 2016, 12:00 PM ET

Executives

Kimberly Callahan - Senior Vice President of Investor Relations

Richard J. Campo - Chairman and Chief Executive Officer

Keith Oden - President

Alexander Jessett - Chief Financial Officer

Analysts

Austin Wurschmidt - KeyBanc Capital Markets, Inc.

Jordan Sadler - KeyBanc Capital Markets, Inc.

Nicholas Joseph - Citigroup Global Markets Inc.

Robert Stevenson - Janney Montgomery Scott LLC.

Richard Anderson - Mizuho Securities USA Inc.

Alexander Goldfarb - Sandler O'Neill Partners, L.P.

Michael Lewis - SunTrust Robinson Humphrey

Thomas Lesnick - Capital One Securities, Inc.

John Pawlowski - Green Street Advisors LLC

Drew Babin - Robert W. Baird & Co.

Kris Trafton - Credit Suisse Group

John Kim - BMO Capital Markets

Karin Ford - Mitsubishi UFJ Securities (NYSE:USA), Inc.

Vincent Chao - Deutsche Bank Securities Inc.

Daniel Oppenheim - Zelman & Associates, LLC

Operator

Good day and welcome to the Camden Property Trust Fourth Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kim Callahan, Senior Vice President of Investor Relations. Please go ahead.

Kimberly Callahan

Good morning and thank you for joining Camden’s fourth quarter 2015 earnings conference call.

For those of you who listened to our whole music prior to the call, you heard songs from ZZ Top, Beyoncé, Kenny Rogers, Archie Bell & The Drells and Robert Earl Keen. These five artists have one trait in common. If you can identify the unifying trail of these musicians, please e-mail me now at kcallahan@camdenliving.com. The first person with the correct answer gets a shout out on today's call and the opportunity to help select music for our next call.

Now for the business at hand. 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 2015 earnings release is available in the Investors section of our website at camdenliving.com and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call.

Joining me today are Ric Campo, Camden's Chairman and Chief Executive Officer; Keith Oden, President; and Alex Jessett, Chief Financial Officer.

I would like to remind everyone that it is our company's policy not to comment on market speculation or rumors. An article was published earlier this week regarding a potential sale of several Camden communities. At this time, we have no comment on that article and as such we will not respond to questions related to the content of that article on today's call.

We will try to be brief in our prepared remarks and complete the call within one hour. We ask that you limit your questions to two then rejoin the queue if you have additional items to discuss. Just a heads up, we already has 14 people in the queue, so it might be a little bit longer. If we are unable to speak with everyone in the queue today would be happy to respond to additional questions by phone or e-mail after the call concludes.

At this time, I'll turn the call over to Ric Campo.

Richard J. Campo

Thanks, Kim and good morning. To most of you, good afternoon in New York. I want to first give a shot out to our Camden team members who work smart and with integrity to produce another solid year of growth and improved portfolio and strong balance sheet for the company.

In 2015, we guided at the beginning of the year to a 4% increase in same property net operating income and we finish the year with 5.2% growth in our net operating income. Our geographic and property diversification strategy continues to work for us, stabilizing our operating income as markets go through their business cycles. I know that the market is forward looking but it's important to understand the pasts have set the stage for the future. As Mark Dwayne, famously said “History doesn’t repeat itself, but it rhymes.”

In the last cycle that we began in 2010, I want to give you Camden's score card to the end of 2015. Our average rent increased from $937 a month to $1,322 a month a 41% increase producing a 7.1 compound average growth rate. Our average portfolio age began 2010 with at 12 years old and ended in 2015 at 12 years old. I wish I could do that with my age.

Camden's net operating income growth was the second highest in the sector from 2010 through 2015 at 37.1% growth, which produced the compound average growth rate of 6.5%. Our debt to EBITDA improved from 7.2 times to 5.2 times producing with the strongest balance sheets in the sector.

2016 will be another good year for our business with operating trends above long-term averages. Apartment demand from millennials and empty nesters should be sufficient to absorb new supply and be constrictive for rent increases in most markets. Houston is our second largest market with 12% net operating income contribution. Last year as Houston added 23,000 jobs.

The energy sector loss 31,000 but the healthcare, education, hospitality and government added 54,000 and its offsetting those energy losses. We expect another slow year for job growth in Houston coming up. Another 20,000 energy jobs look like they are going to be lost, but they will be offset by 42,000 jobs gained in the same sector that we are adding in 2015.

In the near-term Houston has too many apartments coming online given the slow job growth that we are experiencing now. Houston is no stranger to oil price volatility. In the last 20-years oil prices have ranged from $16 a barrel to a high of $145 a barrel with lots of peaks and valleys along the way. Over that same period, Camden has experienced only one year where our net operating income was down 10% and that was during the recession of 2003 with revenue sound 3.7%.

Our guidance doesn’t include such a drop at this point, but for those of you who have a much more bearish outlook for Houston, a 10% decline in our net operating income will reduce our 2016 same property net operating income guidance from 4.5% to 3.5% we will reduced our FFO by $0.06 per share. While we expect Houston to be our slowest market in the near-term the market will hold up better than most people expect.

Forbes magazine just published a list of the Top-10 cities for growth in the U.S. from a business perspective and Houston, Dallas, Fort Worth, Austin and San Antonio were in the Top-10. Low oil prices are good for America and especially for our residence. They have more income to pay rent and other necessities.

Over the last two years, we have been a net seller of properties. We will continue to be a net seller of properties in 2016. Apartments are fully valued in the private market. Private apartment companies enjoy a cost of capital advantage over public companies at this point in the cycle, we will continue to sell non-core assets during 2016 using proceeds to fund our development, paying down debt and return capital to shareholders when we can't find a suitable investment.

With that I will turn the call over to Keith Oden. Before I do that however, we do have a winner and the winner is Neil Malkin with RBC, who correctly guessed that all five of the new additions featured on our pre-call music started in the Houston, Texas. Just a reminder that there really are other things other than apartments to get started in the Houston, Texas. Over 30 other people have the correct answer so far, but Neil was the first one, so Neil good job and we are glad to your quick one on your feet and on your iPad as well.

So now we will turn it over to Keith as well. Thank you.

Keith Oden

Thanks Ric. Consistent with prior years I'm going to give my time on today's call to review the market conditions that we expect to encounter in Camden's markets during 2016. I'll address the markets in the order of best to worst by signing a letter grade to each one, as well as our view on whether we believe the market is likely to be improving stable or declining in the year ahead. Following the market overview, I'll provide additional details of our fourth quarter operations and our 2016 same property guidance.

Our number one ranking this year goes to Denver, which we rate as an A with a stable outlook. Denver was our top market in 2015 with 8.2% same property revenue growth and we expect it to be one of our top performers again in 2016. Supply should remain below the historical levels with 6,500 new apartments expected to open this year and nearly 30,000 new jobs should be created.

Orlando and Tampa are the next two spots both with A minus ratings and improving outlooks. These markets have been somewhat average performers for us over the past several years, but they began to accelerate in mid 2015 and by year end both markets ranked in our Top-5 for quarterly revenue growth.

Tampa should see 30,000 jobs created with around 6,000 new units being delivered. Job growth in Orlando is projected to be closer to 50,000 with 7,500 new apartments coming online providing the favorable ratio of supply and demand in both markets.

Rounding out our Top-5 ranking for this year our Dallas and Phoenix with an A minus rating and a stable outlook. Both markets posted over 7% revenue growth during 2015 and are poised for very good performance again this year. Job growth in Dallas has been very strong with over 80,000 jobs added in 2015, estimates remain pretty strong for 2016 with approximately 70,000 new jobs projected.

New developments have been coming online steadily for several quarters and another 20,000 plus new units are expected to open this year, while some of the DFW Dallas Fort Worth sub markets nicely increase competition this year, overall demand for apartment should be healthy given the contain strength on the Dallas economy. 55,000 new job were added in Phoenix last year and another 60,000 are anticipated during 2016. With 6,000 to 8,000 new units scheduled for delivery this year, we think the outlook for Phoenix is very good.

Las Vegas moves up a bit this year after ranking as one of our bottom markets for the past several years. Today we rate Vegas as a B plus with in improving outlook. Our revenue growth there has been less than 2% in both 2012 and 2013, but the market began showing a solid improvement in 2014. Last year we posted 6.7% revenue growth, we expect strong results again in 2016. Supply remains minimal with less than 3,000 new apartments to be delivered this year and 30,000 new jobs are forecast.

Atlanta and Southern California and Austin are next on the list earning B plus ratings and stable outlook. Atlanta has been a top market for the past three years averaging 7.9% annual revenue growth over that time frame and while we expect another good year in 2016 we all know trees don’t grow to the sky and another year of 8% growth seems too ambitious. Job growth remains solid and Atlanta with projections are ranging from 60,000 to 80,000 new jobs this year and supply remains very manageable as well with 10,000 to 12,000 new apartments scheduled for delivery.

Our Southern California market markets also we are having a healthy supply and demand outlook with an aggregate of a 190,000 jobs and 30,000 new apartments for our portfolio and LA, Orange County and San Diego. Our San Diego and Inland Empire markets achieved slightly better revenue growth for us in 2015 we think that trend will repeat again this year.

Austin has posted solid numbers for us over the last few years averaging 6.4% annual revenue growth despite the steady ways of new apartments that have come online. Completion should moderate this year to around 8,000 apartments and job creation will be similar to last year at 35,000.

We gave Raleigh and South Florida a B rating again this year both with stable outlooks, like Austin, Raleigh has faced high levels of new supply for several years, but our portfolio is held up well. We expect 2016 to look a lot like 2015 there with job growth in the 16,000 to 18,000 range and new deliveries of roughly 4,000 apartments.

South Florida should also continue on a steady path with around 9,000 new units being easily absorbed by the 47,000 new jobs expected to be created in 2016. Conditions in Charlotte are currently a B with a declining outlook. Charlotte added around 12,000 apartments over the last two years and with another 8,000 completions are expected to began this year. Job growth should remain healthy with 30,000 new jobs versus roughly 35,000 last year, but our occupancy and pricing power will began to moderate during 2016 as even more new communities come online.

Washington DC moves up one spot this year to a C plus rating, but improving outlook. Revenue growth was seven tenth of a percent just better than flat in 2015, which was the lowest in our portfolio. We expect the modest improvement to roughly 2% in 2016. Completion this year should begin to slow to the 10,000 range, but job growth remains a little bit of wildcard for DC with the estimate strengthening from 35,000 of the 60,000 new jobs this year.

It should be no surprises that Houston rank last year with the current rating of C and conditions are expected to decline during 2016. As Rick mentioned, over the past 20 years of operating in this market, our same-store revenue growth has ranged from minus 4%, which roughly 4%, which is happen twice during the recession years of 2003 and 2010, up to a high of 11% in 2012 with the average over that timeframe being 3.4%.

We finished 2015 with just under 2% same-store revenue growth in Houston and that number will likely be zero or completely flat this year for revenues in Houston. While Houston average a 100,000 new jobs annual from 2010 to 2014, 2015 it looks like we’ll get about 23,000 new jobs and most for 2015 and it looks like the estimate for 2016 will be in the 20,000 to 30,000 range as Rick gave a little bit of color around that number.

New supply has been significant for the past several quarters and another 20,000 new apartments are expected to open in 2014, which will continue to have pressure to the overall market. Overall, our portfolio would rank close to B plus again this year, which is roughly where it ranked last year, which puts us in a very good starting position for 2016.

For the markets we ranked B or higher, our same-store revenue growth should average 5% to 7% this year. Factoring in Washington DC at 2% and Houston is flat, our 2016 guidance range for same-store revenue is 4.1% to 5.1%.

Now few details of our 2015 operating results, same-store revenue growth was 5.4% for the fourth quarter and 5.2% for the full-year. We saw strong performance during the fourth quarter of 2015 was 12 of our 2015 markets exceeding 6% revenue growth and five of those recording over 8% growth.

Our top performance for the quarter were Phoenix at 10.6%, Tampa at 9.8%, San Diego/Inland Empire at 8.8%, Dallas at 8.7% and Orlando at 8.3%. Rental rate trends for the fourth quarter were as expected with new lease is up six tenth of a percent and renewals up roughly 6%, which was approximately 50 basis points below last year’s levels.

For January so far, new leases are flat with renewals up 6.2%, which is about 40 basis points under our average gain in January 2015. February and March renewals are being sent out at roughly 7.3% and those typically get signed within 100 basis points of the original offer. Occupancy averaged 95.5% during the fourth quarter, compared to 95.6% last year. January occupancy has been running at about 95.3%, which is where it stands right now and the same as it was in January 2014.

Net turnover for 2015, actually came in 200 basis points than 2014 that 51% versus 53%. Continuing the years long trend of well below trend move out to purchase homes were 14.8% in the fourth quarter of 2015, 14.3% for the entire year and that compares to 14.2% in 2014.

With that I will wrap up and turn the call over to Alex Jessett, Camden’s Chief Financial Officer.

Alexander Jessett

Thanks, Keith. Last night we reported funds from operations for the fourth quarter of 2015 of $109.6 million or $1.20 per share. Exceeding the mid-point of our guidance range by $0.01. This outperformance was due to slightly lower same-store operating expenses driven by expected cost controls and lower interest expense due to timing of capital market transaction.

Our prior guidance assuming would issue an unsecured bond midway through the fourth quarter of 2015. Due to continued strength of our balance sheet and volatility seen in the bond market in the fourth quarter, we felt comfortable delaying the timing of this transaction. As of December 31, 2015, we had $244 million outstanding under our $640 million revolving lines of credit.

These two positives were partially offset by higher overhead expenses relating to a change in the accounting for our trust management’s compensation and a slight acceleration of the plan retirement of our general counsel. All other line items for the quarter were in line with expectations.

Our new Camden technology package with bundled cable and internet service is rolling out as scheduled and for the fourth quarter contributed approximately 40 basis points to our NOI growth. For the year, this initiative has added 60 basis points to our same-store revenue growth, 120 basis points to our expense growth and 30 basis points to our NOI growth. We now have approximately 23,000 units signed up for our technology package and the program is performing in line with expectations.

Moving onto 2016 earnings guidance. You can refer to page 26 of our fourth quarter supplemental package for details on key assumptions driving our 2016 financial outlook. We expect 2016 FFO per diluted share to be in the range of $4.75 to $4.95 with a mid-point of $4.85 representing a $0.31 per share increase over our 2015 results. The major assumption in components of this $0.31 per share increase in FFO at the mid-point of our guidance range are as follows. A $0.26 per share or $23 million increase in FFO related to the performance of our 47,894 unit same-store portfolio.

We are expecting same-store in net operating income growth 3.5% to 5.5% driven by revenue growth of 4.5% to 5.1% and expense growth to 4.3% to 5.3% and a $0.20 cent per share or $18 million increase in FFO related to net operating income from our non same-store properties resulting primarily from the incremental contributions from our development communities in lease up during 2015 and 2016 and five developing communities which stabilized in 2015.

These positives are partially offset by a $0.02 per share or $2 million decrease in FFO related to loss NOI from $147 million at this position completed in 2015. A $0.03 per share or $2.5 million decrease in FFO related to forecast of lost NOI from planned 2016 dispositions. $0.05 per share or $4 million decrease in FFO related to increase interest expense is roughly primarily from a have planned mid-year $250 million bond transaction and lower levels of capitalize interest.

In 2015, we completed 1500 units of our development pipeline and at this stage completed approximately 1200 additional units in 2016. Once the units are completed and we receive a statement of occupancy we must begin expensing all interest and operating costs related to that unit.

A $0.02 per share or $2 million decrease in FFO due to increases in net overhead expenses and finally, a$0.02 per share decrease in FFO due to additional shares outstanding resulting from regularly scheduled vesting of prior and anticipated incentive share issuances.

Taking a closer look at our anticipated same-store expense growth of 4.3% to 5.3% for 2016. We are once again expecting a large increase in property taxes. Property taxes are approximately a third of our total operating expenses and are projected to be at 6% in 2016. 5.5% is core the resulted from anticipated increases in assessments from our properties in 2016 due to continued increase real estate values. 50 basis points is due year-over-year reduction and anticipated refunds from prior year tax purchase.

Additionally, we are anticipating a 10% increase in property utility expenses in 2016 as a result of our continued bulk internet initiative. Utilities are approximately 22% of our total operating expenses and this initiative is adding approximately 200 basis points to our total 2016 expense growth. Approximately 100 basis points to our 2016 estimated same-store revenue growth and approximately 50 basis points to our same-store NOI wide growth. Excluding taxes and utilities, the rest of our properties level expenses are projected to grow at less than 1.5% in the aggregate.

Page 26 of our supplemental package also details our expected ranges of acquisitions dispositions, dispositions and developing activities. The mid-point of our 2016 FFO per share guidance range assumes the following. $250 million in on balance sheet dispositions towards the later part of the year. No on balance sheet acquisitions, zero to 200 million of on balance sheet developments starts and a $250 million bond transaction midway through the year.

Currently, we estimate that all-in 10-year bond prices for Camden will be in a high 3% range. Our balance sheet remains strong with debt to EBITDA 5.2 times, a fixed charge expense coverage ratio of 5.4 times. Secured debt to gross real estate assets at 11%, 80% from our assets are encumbered and 83% of our debt at fixed rate.

Last night, we also provided earnings guidance for the first quarter 2016. We expect FFO per share for the first quarter to be in the range of $1.16 to $1.20. The mid-point of $1.18 represents a $0.02 per share decrease from the fourth quarter 2015 which is primarily is the result of $0.02 or approximately $1.5 million decline in sequential same-store net operating income, mainly due to higher property taxes and normal seasonal expense increases partially offset by the timing of certain insurance reimbursements and a slight increased in the same profit revenues due to continued improvement in rental rates.

At this time, we'll open the call up to questions.

Question-and-Answer Session

Operator

We will now begin the question and answer session [Operator Instructions] Our first question comes from Jordan Sadler of KeyBanc Capital. Please go ahead.

Austin Wurschmidt

Hi, good morning it's Austin Wurschmidt here with Jordan. I was just curious first from the same-store guidance. How conservative do you guys really feel you are being this year versus the position you were in a year ago entering the year?

Richard J. Campo

Well, I think the guidance that we give is always we try not to be overly conservative, but we also try to be realistic on what we can achieve. I think that one of the things that is interesting to know that wasn’t in our prepared remarks. It was just the interest thing as I was putting together my notes for the call is that if you go back to our original guidance for 2015. Our 2016 guidance is actually higher than our original guidance for 2015 which I think even though we outperformed our guidance, so we obviously some of our markets did substantially better than we thought they were going to do.

So particularly the range that we built around Houston we basically hit right on our number for Houston for 2015, so 3% revenue growth was kind of what our original plan was and that's about where we ended up. So if you think role forward this year obviously we've got the role forward of the rent role in Houston, which is still providing some benefit to us and we've got a forecast this year for basically flat on revenue growth, which we think is appropriate.

We think it appropriately addresses the conditions of a lot more supply coming online with some pretty new to job growth, but at the same time it also reflects the fact that a lot of our portfolio in Houston is not hit ground zero for the delivery of new supply. So we think we properly covered the risk that are out there, obviously the Houston being a little bit more volatility around that number, but we think we got captured appropriately.

Austin Wurschmidt

So how much of the higher same-store growth do you think is a function of what's already earned into the pipeline versus what was earned in last year?

Alexander Jessett

Well I think the numbers are roughly the same in terms of where the overall affect is going to be. We rolled down roughly 300 basis points from 2014 through 2015 and that's about what we've got again this year. So I think it's roughly the same. So from an occupancy standpoint we’re starting at about the same place we did last year, clearly over the course of the year you would expect that there is going to be a little bit more pressure on occupancy rates, just because the overall market is going to be little bit sloppier than it was in 2015. But gain I think we've properly captured the scenario that we think is going to play out in Houston this year, which is 20,000 to 30,000 new jobs and trying to absorb another 20,000 apartments.

Austin Wurschmidt

Thanks for the detail. One for me and then I think Jordon has a follow-up. I was just curious what you are seeing on the ground in Houston any increase and move outs for job losses or uptick in bad debt expense?

Alexander Jessett

None whatsoever in our portfolio on either account, no uptick in bad debts and certainly anecdotal evidence is very minor around job losses in the energy sector, but I mean you are talking in handfuls of people not anything meaningful on our portfolio. So far so good, as Ric mentioned in his comments that if you kind of take the 20,000 energy jobs that we lost it gets offset by employment in other areas and we ended up with the net gain for the year of roughly 23,000 to 25,000 jobs.

Richard J. Campo

And I think the key to that too you have to dig into the details of who really looses their jobs and if you think about what’s going on, it’s similar to what happened at financial services and you guys probably on the call know more about that than we do, but a lot of people are getting laid off in energy are older people, people 45-year and up and they are hiring younger people for obvious reasons. Younger people cost less, are more flexible, have new technology in their brains and 50-year old don’t.

And generally 50-year olds or 45-year old don’t live in apartments, they live in homes and those people are doing even though they are laid off, they generally have more capital and they are making a home mortgages and things like that so there is no stress in the market. So I think that part of the equation people miss and just think well if you have this print of a 31,000 job losses in energy, it's all bad for the market. But remember we have 6.5 million people that live in this region and 31,000 people losing their jobs is very, very tough for them personally, but it's a drop in the bucket in the scheme of 6.5 million people in the region.

Jordan Sadler

Thanks for that. Just a quick follow-up its Jordan. Just on assets sales I know the position you are vis-à-vis in your opening commentary, so I'm not asking specifically about that but how are you determining what's non-core? So is it a function of the market or is it purely an individual asset underwriting and from an IRR perspective.

Alexander Jessett

So what we do is we first rank our portfolio by property to start with and it's one to 172 and that model is sort of a econometric model that takes into account the markets, takes into the CapEx, the return on invested capital and then that's really a kind of analysis. Then we also analyze everyone of our markets and our sub markets within our markets and we look at that and say what do we think this market is doing, where is it going.

And we also look at pricing within the market and on a relative basis where it was in the past, where it is today on a cap rate basis to try to understand if that market is gaining a lot more love from investors, because the cap rates are substantially lower perhaps than they have been in recent history.

So with all that said, it gets it sort of rolled up and we look at it and decide we generally speaking would rather sell the bottom piece of our portfolio and then when you start looking at sub markets. If we see sub markets that are moving in a different direction then we might want to exit those sub-markets as well. So over the long-term that's how we evaluate our asset pricing model and our disposition strategy.

Jordan Sadler

I’ll hop back into queue. Thank you.

Operator

Our next question comes from Nick Joseph of Citigroup. Please go ahead.

Nicholas Joseph

Thanks. Can you hear me?

Richard J. Campo

Yes.

Alexander Jessett

Yes.

Nicholas Joseph

Perfect we've seen a handful of large portfolio sales and privatization in the apartment sector over the last 12 months. Wondering what your thoughts on selling a larger portfolio of the assets give the strong bid and then how you think about multifamily asset pricing at this point in the cycle overall?

Richard J. Campo

Well multifamily asset pricing as I said in my remarks priced very full right now, cap rates are the lowest. We've seen them in our business careers and in every single market that we operate in. and so when you think about it from that perspective, it really is hard for us to compete with the private people from acquisition perspective.

That's why last year we had zero acquisitions, even though we had $400 million of joint venture funds money to spend in addition to our own. With that said, we think development is a smarter alternative even though we are shrinking our development pipeline giving where we are on the cycle. As far as portfolio sales go, clearly there is a premium for portfolios today and to the extent that we can drive value from that premium and we will.

Nicholas Joseph

Thanks and what percentage of the portfolio today would you consider with non-core?

Richard J. Campo

Well you know when you first rank every property you look at the bottom sort of 10% or 15% of your portfolio and that sort of by definition is non-core, because it's growing slower than the rest of the portfolio. And when an asset is growing slower than the overall portfolio, it's obviously a drag on your cash flow and a drag on your NAV.

So redefine those as non-core and then what happens generally is that if a property is experiencing a slowdown in its return on invested capital there is a reason for it, it’s either old and it requires CapEx. It doesn't return cap that doesn't increase the ability to increase rents or maybe a sub market that’s going sideways and so that generally creates the situation that sub market situation or market situation that actually creates the non-core position. So will always have properties that are non-core.

Alexander Jessett

Disposition guidance for this year is 1.50 to 3.50 and I would say that's the range of what we consider with non-core

Nicholas Joseph

Okay. And then I guess just the exposure, if you were to hypothetically exit a market, your exposure to the other markets obviously would go up as we as a percentage. so I'm wondering what your thoughts are on a level of concentration that you would want to avoided in any one individual markets?

Richard J. Campo

Well when you look at the market, our largest market is Washington DC and we have properties from Washington DC that beyond on that list too, but the bottom line is that when we think about our geographic exposure we think about percentages, but we are not wed to a specific number. So when you think about DC for example, 16% of our portfolio is Washington DC plus or minus. Washington DC is a bit vast market, we have some in the district, we have some in Northern Virginia, we've some in [Lawton] County and so you can't really sort of say it's all one market in my opinion.

So with that said, we are wed to a specific percentage, but we do look at the percentages to try to balance the portfolio, because when you think about a geographic diversification just like a stock diversification, you are trying to lower the volatility of your cash flow this year. So our same-store NOI growth is going down 60 basis points at the mid-point from last year and that's because Houston is going down and other markets are going up to offset that. So we want to keep a balance, but we're really not wed to a specific number

Nicholas Joseph

Thanks.

Operator

Our next question comes from Rob Stevenson of Janney. Please go ahead.

Robert Stevenson

Good morning, guys. Keith of the eight or so stable market that you talked about when you ran through your list, any of those that wouldn't surprise you if they move to declining over the course of 2016?

Keith Oden

So, the stable markets that we have for 2016, just to run over more them real quickly, because we don’t have that in front of them. We have Denver is stable, Dallas, Phoenix, Atlanta, Sothern California, Austin, [indiscernible] and South Florida. So of that group, there is not really one on group that I think has much volatility associated with it around the stable rating. If you just look at the projected job growth versus the deliveries, all of those are at a range that should sustain kind of what we saw in 2015.

Obviously the ones where we have declining markets, we have Charlotte and Houston as declining market and I think those probably have a little more volatility associated with outcomes and that's primarily because they have got a lot of news supply that's being delivered into the marketplace. When you got merchant builders who are heading for the exits, it always creates the potential for more volatility, because they tend to discount now and ask questions later.

So if you got leased ups that are specifically in your competitive market set in markets that have a lot of new supply, then you know you are going to be more impacted by it. But we think we’ve captured those appropriately, but other stable markets it would surprise me if any of those that I just listed off that we ended up wishing that we had attached to declining range to them.

Robert Stevenson

Okay and then if you look at the expected deliveries in DC over the next couple of years, I mean borrowing some major increase and unexpected increase in job growth there, is that just a market that’s going to continue to stuck in a mud for a long period of time?

Richard J. Campo

Well, it is a market that is improving. So instead of just flat or down a little, it's now up 1% or 2%, but we don’t see it getting to the point where it's 4% or 5% like the rest of the country because of sort of supply pressure. Even though supply is coming down some. It will be interesting to see how the presidential election affects, because generally speaking when you think about DC, change of administration whether Republicans come in or Democrats retain, all those creates a lot of movement in activity. And given that we as a country are not doing stupid things like shutting the government down and things like that that’s obviously a positive for the DC market sort of long-term.

Alexander Jessett

And so if you look at - we’ve got forecast in our data that we keep out through 2017, so we’ve given you the numbers for 2016, but if you roll that forward to 2017 and again this really the average of the data providers. It looks like we’ll get another 8,000 apartments in DC Metro in 2017 and the average of the job forecast for the DC Metro area are about 42,000. So again those metrics would not add to any pressures that - or go along, get along scenario, which is what we’ve projected for 2016. We think we’re going to get some additional traction out into 2017 and certainly those job growth and supply numbers are supportive of that.

Robert Stevenson

Okay and then just lastly, is there any markets that you are finding it easier to backfill the land supply for future development relative to the others?

Richard J. Campo

No, not even in Houston.

Robert Stevenson

Okay, alright thanks guys.

Richard J. Campo

You bet.

Operator

Our next question comes from Rich Anderson of Mizuho Securities. Please go ahead.

Richard Anderson

Thanks, good morning. So Ric could you talk about how the buying public, those folks that are buying multifamily property, how that kind of is changing, what types of players are in that side of the table?

Richard J. Campo

I don’t think the players are changing much. You do have the big buyers that have emerged obviously the portfolio buyers, but you still have sort of a combination of depending on the markets you are talking about, a combination of what we call Country Club money buyers which are private individuals that are using 70% to 80% leverage, floating rate debt. So they are buying five cap rates or the low end of five cap rates, financing it with 2% to 2.5% money, generating 8% cash-on-cash returns, and just focusing on cash-on-cash returns more than anything.

And you have sort of the pension funds that are still big buyers out there in a lot of markets and they are buying core assets and they are paying sub five in most markets and sub fours in closable markets. So I think there is a very good combination of private pension and large capital players that everyone knows about. And in most markets you are getting multiple bids by all the above players depending on the property type you are trying to sell.

Richard Anderson

Okay if you are having a walk in park selling assets and I don’t suggest it’s that easy, but obviously as you mentioned pricing is full. Why not just sell more and not do a debt offering, explain to me that thought process from a capital source perspective.

Richard J. Campo

Sure. So when you build guidance you have to build sort of guidance around what you think is going to happen, but on the other hand, you also have to adapt to the market as it goes forward. And so to the extent that we see opportunity to sell, larger asset base at a really good price, then we would do that. And clearly if we exceed our 250 million mid-point net disposition guidance we would have to change our strategy and not do a bond deal and we do have some complicated tax issues that we obviously have to deal with.

We’ve told people in the past, we are probably right at the edge of - if we increase our dispositions from where they are today, we would have to do special dividends, most likely unless we did 10/31 exchanges and the 10/31 exchange markets really sort of you are selling you have the same challenge of buying and I don’t see a lot of opportunity to do that. So yes, if we sell more you we will do a bond deal and we’ll have to change guidance.

Alexander Jessett

And Rich just a follow-up on that I mean we have in fact then significant net sales and I think Ric gave you the numbers from 2010 forward, of our debt to EBITDA going from 7.2 to 5.2 and the primary source of the pay down in debt over that period of time from 7.2 to 5.2 is a net dispositions. So we've been doing that and if you look at our guidance in this year, the mid-point of the dispo range is 250 with no acquisition, so we have been big time net sellers.

Richard Anderson

Thanks and I realize I sound like I'm talking in a cave and it’s because I am so. Thanks.

Operator

Our next question comes from Alex Goldfarb of Sandler O'Neill. Please go ahead.

Alexander Goldfarb

Hey good morning down there.

Richard J. Campo

Good morning.

Alexander Jessett

Good morning.

Alexander Goldfarb

So just first going to Houston, I think if I heard correctly, you said you are expecting flat NOI, but also flat revenue and assuming that expense are up in Houston. So can you just walk us through sort of the dynamics and maybe you were just using an average so maybe there is a range which is why is revenue flat, NOI flat, but when you do the range, it makes more sense?

Alexander Jessett

No, its revenue flat Alex and NOI will be down probably 2% something like that, but our comments on Houston are flat revenues. So that's the difference as we didn’t give the expense number, but it's NOI down roughly 2%.

Alexander Goldfarb

Okay and then just based on your experience from last year where sort of Houston performed as you expected and you had jobs came in a lot lower. To what extent do jobs really matter versus it's really what's going on around the property and in that particular sub market that's the bigger driver? And therefore sort of curious why you guys were out of jobs metric versus if it's really lower a sub market by sub market decision.

Richard J. Campo

Well, obviously, if you got lease ups going on in your neighborhood then you are going to be more impacted, but jobs obviously do matter in the sense that people will congregate and aggregate where most of new construction has been closer to down town which is where the job growth has been and which is where also poor people want to live. So the difference the last year n 2015 Alex between kind of what we thought was going to happen. So you have a 3% revenue growth target.

We end up hitting 3%, but we did that with 20,000 plus or minus jobs instead of a 100,000 jobs, but the biggest difference in our forecast was that we also last year had new supply coming online of roughly 20,000 apartments and our guess is that roughly 6,000 to 7,000 of those apartments did not get delivered in 2016 that were originally forecasted to be delivered.

And the reason for that is delays in construction and just the lack of availability of subcontractor and skilled labor. So you start out the year, you think you are going to get 20,000 apartments and 80,000 jobs, you will look forward to get 25,000 jobs, but you only deliver 12,000 apartments to 13,000 apartments.

Now, it doesn’t mean they went away and they will be delivered and some of those are going to be delivered into 2016 and obviously some of the 2016's are going to roll over into 2017, but to me the explanation for how we still hit 3% revenue guidance in light of a dramatically different job picture was the supply got rolled forward.

Keith Oden

I think the other piece of that too is there are two other pieces and again what I said earlier which is the type of jobs that are being lost and where they are been lost and then second there is something going on too that's very interesting. I mentioned empty nesters, I mean we are having sort of a battle between millennials and empty nesters where empty nesters are moving in from the suburbs because the traffic conditions have the ability to do that. Have ability to sell their house and move in.

And a lot of the product that's being built today didn’t exist in the past, meaning that high rise product, very well located, walk able neighborhoods things like that and these empty nesters are giving up their homes and moving in to the urban and core and that's helped a lot and I think that that's why even with the low job growth we've had you haven’t had the apartment market fall off the edge.

Alexander Goldfarb

And then just final, given the strong demand that we are seeing from the private players, why do you think the volatility in the stock market hasn’t scared them or that volatility is causing more of them to seek directed investment?

Richard J. Campo

Well the disconnect in the stock prices versus the private sector, I think if you think about what drives prices first of all of any commodity or any assets it's liquidity number one. Number two is supply and demand, number three is inflation expectations and number four, interest rates. So right now the private sector has had interest rates are the least impactful. When you think about liquidity, the market is still awash with cash with massive amounts of cash.

People are looking for yield and where you can buy a multifamily property in a reasonably balanced supply and demand market, those folks aren’t worried about the volatility of the stock market. In addition, I think it's interesting because when the stock market is volatile everybody wants something that's not correlated to the stock market they want an assets that they can invest in.

They don’t have to worry about it going up and down every day and so often times there is a lot of the people that I know that are selling this country club equity that comes in. They lover apartments because they don’t know what they value is from day-to-day, it doesn’t go up and down. If they buy Camden stock, the volatility has been huge obviously.

So I think there is a huge disconnect between the public markets and the private market today and we've seen it over the years and what happens is whether it will be interesting and see whether the public market is right or the private market is right. Right now until liquidities rise up or supply and demand fundamentals changed dramatically the bid for multifamily is going to be strong and there is nothing going to change that unless you have a massive shift in those issues.

Alexander Goldfarb

Thank you.

Operator

Our next question comes from [Dana Gallen] (Ph) of Bank of America. Please go ahead.

Unidentified Analyst

Thank you. Ric you mentioned shrinking the size of the development pipeline and the guidance reflects that. What would cause you to come in at the low end and not have any starts this year, is it markets specific, are you looking at broader economic indicators?

Richard J. Campo

We are looking at both things. So clearly we want to make sure that we can deliver yields and returns that are reasonable for the risk you take in development and so that’s really important and then when you look at the cycle, so we have been in this recovery cycle for we are going on six years now. The longest recovery that I can remember was in the early 90s through 2001 and that was an eight year cycle and so most other cycles are three to five maybe six at longest cycles.

Now some folks believe that this cycle should be longer or could be longer because we had such a big decline in that million jobs, we've added back about 14 million jobs now and it's been sort of a slow swag obviously in terms of the economy trying that recover from that decline. But we start looking forward in the future with all the uncertainty with oil prices, with the Fed with sort of late the long [Indiscernible] the economic cycle. We are just getting more conservative when it comes to development spend to make sure we are not peaking in a development spend right at the same time when there some economic situation happens that none of us can foresee at this point.

Unidentified Analyst

Thank you. And then can you share the new year renewal lease trends for Houston specifically?

Richard J. Campo

For what period of time?

Unidentified Analyst

Fourth quarter and if you have January that would be great.

Richard J. Campo

So for the fourth quarter new leases were down roughly 2%, renewal was up 3.5% so call it up three tenth on a blended basis. So for the January numbers they are incredibly volatile on a one month basis, because we don’t even have full month in there, but I can tell you at the portfolio level, we are roughly most date we rolled up new leases basically flat, renewals about 6% for a total blended of about 3%.

Unidentified Analyst

Thank you.

Richard J. Campo

You bet.

Operator

Our next question comes from Michael Lewis of SunTrust. Please go ahead.

Michael Lewis

Thanks. Ric sounded that low oil prices are good for America, I'm guessing that might not make you really popular with your neighbors in Houston, but my question is if you know how many of your residents actually drive cars, because given kind of rise in the millennials and own US things. I'm wondering if the impact of lower gas prices might actually be less impactful than it's been in the past?

Alexander Jessett

Given on our market concentration that non- built with pretty limited public transportation, I would say that we have a substantial - there are some millennials that don’t drive for sure in some of our more urban projects in DC and elsewhere, but I would say by and large that lower oil prices are definitely helping our residents and they have more money in their pocket. and even Houstonians if they are not directly tied to the oil business our 6.5 million people that are living here are experiencing pretty good cash flow increases when they fill their cars up as well. So we operate in markets where people rely on their cars.

Michael Lewis

Fair enough the supplier side in Houston. You have talked in the past about projects getting pushed off because of shortage of labor and cost going up and things. I'm wondering what’s in your outlook, do you expect this to be kind of gradually delivered or do you think 2016 as a heavy supply year than maybe there can be - maybe it sets up for a little bit of a bounce when we get through all of that?

Alexander Jessett

When you look at the supplies. Supply is slowing, there is no question about that projects are getting pushed off as Keith mentioned earlier, projects are delayed because of construction workers. So the product is not coming in the market as fast as it would otherwise. When you look forward into 2017, actually the greater Houston partnership has 60,000 jobs projected in 2017 and a follow off in completion in 2017. If Houston gets set up to have a recovery in maybe middle of 2017 and through 2018 perhaps.

Richard J. Campo

Our numbers for 2017 deliveries, the average of our data providers is about 12,000 apartments, which will the substantially less on either 2014 and 2015. And a pretty big substantial part of that were originally, if you would ask when that would be deliver, there would have been 2016 deliveries that are rolled in 2017. So from a permitting standpoint they are falling off fairly dramatically, in 2016 we’ve got Houston permitting at roughly 8,000 apartments and a lot of those were things that were already underway in 2015 and have been push out.

Alexander Jessett

And the only thing really getting started here now in Houston, are pension fund build the core type deals, which are sort of 100% location irreplaceable where they already have huge investment in the land and they are willing to go have build, because it’s build to core kind of strategy. And by and large anything that’s a normal merchant builder sort of run at the mill site, it has to be financed is not getting done.

Michael Lewis

Okay, thanks and that’s helpful. And then finally, you just answer to question about the development starts and how you to be in the low-end. You guys were early to take advantage with the opportunity to develop. Are you getting the sense that it’s still more effective than acquisitions but maybe the opportunity there has run its course give it costs up and cap rates probably not compressing anymore?

Richard J. Campo

Well clearly the development pipeline is not as buoyant from return perspective as it was at the beginning of this cycle, but our pipeline, still looks really good. I mean we have a pipeline that has roughly 7% return and today in this environment we’re still very wide on the sort of acquisition to development spreads.

And so while they are harder to do and more complicated view today and maybe we have 200 and 250 spread on development premium and early in the cycle, it was like 300 or 400 basis points spread. But clearly the thing on development for us, it’s more about where we are in the cycle and when is an extra session coming. And if you say well, we are not going to have a recession in 2020 that will be 10 years of recovery, I haven’t been at least in my business career you are going to have 10 years are straight up.

Michael Lewis

Thanks.

Operator

Our next question comes from Tom Lesnick of Capital One Securities. Please go ahead.

Thomas Lesnick

Hey guys I'll keep it short since the call is running a little over an hour. But with respect to G&A and guidance, I know you guys give guidance. [indiscernible] year and for 2015, it was initially $41 million to $43 million and your policy is not really to update G&A guidance through the course of the year. But I guess given fourth quarter being a little out sized. Is that something you would contemplate update on a more frequent basis particularly if there was something material that change it?

Alexander Jessett

Absolutely, but one of the things Tom we do every quarter is I do a full walk from the current quarter to the next quarter. And so if there is anything that we assume would be unusual movement in G&A or any of our line items I call it out at that point in time. But absolutely, we would update it if they were something unusual that we were aware of.

Thomas Lesnick

Okay, thanks. And then Rick you made some comments about oil having a positive impact on the U.S. consumer. But I guess on the flip side of that, a lot of the sovereign wealth money and foreign capital that come to United States has really come in large part, because of oils impact over the last cycle. Are you concerned at all about the bid on U.S. assets from foreign capital going forward to 2016?

Richard J. Campo

I haven’t saying any indication that foreign capital was point back in a big way that was going to change that. And we did have a win with the FERC legislation sort of doubling the ability that was past year, recently in the tax code. So that all actually help with foreign investment on the one side. So I have not seeing any indication to that and any publication or any discussion with any one at this point and there is still a big bid for all kinds of different asset classes from foreign investors.

Thomas Lesnick

Alright, thanks. That’s all I have got.

Operator

Our next question comes from John Pawlowski of Green Street Advisors. Please go ahead.

John Pawlowski

Thanks. With regards to proceeds from plan disposition. Could you give us a rank order of the attractiveness of the uses of proceeds as you see today?

Alexander Jessett

Of rank order, okay. So rank order proceeds for dispositions would be funding development, because it’s required to the funded, paying down debt and then returning capital to shareholders either through special dividends or share buybacks.

John Pawlowski

Okay, great thanks. One last one. Could you quantify the revenue enhancing cash back spend in Houston this year in 2015 relative to 2014 and what are the plans for this year?

Richard J. Campo

Yes, it's fairly de minimus if you look at 2014 and 2015 there wasn’t really hardly any repositions done in Houston and the same for 2016.

John Pawlowski

Okay, great thanks.

Operator

Our next question comes from Drew Babin of Robert W. Baird & Company. Please go ahead.

Drew Babin

Hi thanks for taking my question and I'll make this quick. If you look at lot of your markets call it the ex-Houston Sunbelt. When you look at two of your competitors that have similar geographies, it would be easy to assume that most of the supplier that’s coming to just even spend more [CBB] (Ph) oriented and that out in the suburb the supply has been a little slow to come into the market and maybe just so to avoid from 2010 to 2012. That said, Camden’s portfolio is maybe a little bit between the other two in terms of urban versus suburban split and there are instances where the supply is within the realm or relatively close to some of your assets. So maybe if you could talk about the recipe behind the outperformance in those markets and anything specific you are doing to compete against the new supply and then maintain operations in that environment?

Richard J. Campo

Sure. I think there is some outperformance cause in two areas; one is we are just better operators; two, when we talk about geographic diversification, we are also talking about market diversification within product types. So we want to make sure that we aren’t 100% concentrated in urban core downtown or urban properties, because we know what happens in the cycle. The urban properties are very highly sought out by institutional investors, so they get overbuilt first and therefore you have more competitive pressure on the urban core.

So we keep our properties - We like urban for sure, we like to develop urban and we like own urban, but we want to have a balance between urban and suburban. We want to have various price points within our portfolio, because that price point is where you can outperform where if a high end project is getting pressure from new development.

The more moderate price development is not getting that pressure, so you will have better growth rates in the more moderate versus the high end price. So it's all about balancing your markets within your sub-markets and geographically balancing within the product mix as well.

Drew Babin

Great, thank you that’s all I got.

Operator

Our next question comes from Kris Trafton of Credit Suisse. Please go ahead.

Kris Trafton

Hi guys. Just going back to your Houston forecast. It sounds like your revenue forecast is flat with about 20,000 to 30,000 jobs out in 2016. Do you know what oil price that forecast implies and then what is your sense of how long oil can stay at these levels before where it can be little bit more substantial?

Alexander Jessett

Well if you look at oil price projects, all of them are from $20 barrel to $60 a barrel, so I have absolutely no clue and I don’t think anybody in the world has any clue what oil is going to do. So with that said, the 20,000 jobs plus or minus that are projected has oil fairly stable in the level it is today which is somewhere between high $20 and $40 a barrel, they are not assuming any recovery in oil through the end of the year to get those jobs.

Kris Trafton

And so even at those prices, you don’t think there is going to be widespread losses in the energy sector?

Alexander Jessett

No, I think we have to remember that energy sector is a broad thing right. And so there have been somewhere around 300,000 jobs lost in the energy sector and we lost 31,000 here in Houston. And so the energy sector is worldwide and when you think about the folks that are in Houston they tend to save their highest intellectual capital type of folks. And a lot of the deeper job cuts are going to be closer to wellhead and related to supply chains and things like that that are just not here.

Richard J. Campo

There is also a massive expansion in the petrochemical complex that’s going on between all the way from Houston down to ship channel to Galveston, and it's extraordinary that what the capacity that’s being built. And if you think from their perspective, the people on the petrochemical industry, low oil prices are a really good thing, it's their feedstock. So it's a mixed picture for sure and there is obviously winners and losers even within the Houston market.

Kris Trafton

Got it thanks okay and then on development, is that 7% yield with the 225 basis point spread applied just what you have under construction? Or does that also apply to some of the shadow pipeline? And if that apply to your land bank, is that enough of a margin to give you some leeway in case things turns out?

Alexander Jessett

It is both the existing portfolio and the shadow pipeline have similar characteristics in those numbers, okay so they are plus or minus within the same band. And then the question of whether the spread is wide enough to develop, I think you get down to the - if all things were equal and we are early in the cycle of 7% return when an asset market is trading at five or sub five for new development that’s a great spread and you could do that all day along.

The issue we have with that today is that we are long in the cycle not short in the cycle and how much development risk do you want to take given the uncertainty about when the next downturn in the market is going to be. And that’s what drives our development decisions when it come to whether we should start or not.

Kris Trafton

Great. Thanks a lot guys.

Operator

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

John Kim

Good morning. On your same-store expense guidance, first question how much pressure do you anticipate from wage growth. And secondly, with the 6% increase in property taxes are the reversals of some of the large increase from last year no longer on the table or just delayed.

Richard J. Campo

Yes absolutely. So we are assuming that there is really no incremental pressure on wage growth, we've got that about in our budgets. If you look at property taxes, so we're going up in 6% in 2016 and obviously that’s slightly lower than it was 2015, but it is still elevated. We will continue to protest every single tax assessment that we think we can. But we have certain markets that based on what we know today, we assume only high and although we don’t think that Houston is going to be quite as Dallas last year but we are anticipating additional pressure on markets such as Dallas and Raleigh.

Alexander Jessett

John the only place we have wage pressure in our portfolio over the last five years has been until recently in Houston. So I mean it was a major issue for us from a competitive stand point, but that changed about 18 months ago and since then it's not really a problem anymore. So that’s the one outlier that we did have wage pressure has certainly diminished greatly as a result of the overall employment situation in Houston.

John Kim

Even if it increased the supply coming into market you don’t see wage pressure has stuff potential move to competitors?

Alexander Jessett

No we don’t.

John Kim

Okay. And then I’m little surprised, you consider the top market for 2016 given the anticipate in supply commodity market can you just elaborate why you are more in thank your peers?

Alexander Jessett

Well no one is immune from new supply, but if you look at what is actually going to be delivered in Denver is about 6400 apartments, we are project 30,000 new jobs. Denver was our top performing, one of our top performing market last year. So you sort get a bleed over from your in place rents as they roll through your 2016 results.

We had revenue growth in Denver last year was 8.2% in 2015 and obviously some of that rolls forward into 2016. So if you think where a lot of new supply is being built we don’t have a lot of direct exposure to bulk of the new supply in Denver. So from our perspective Denver is going to be another great market in 2016.

John Kim

Okay. Thank you.

Operator

Our next question comes from Karin Ford of Mitsubishi UFJ. Please go ahead.

Karin Ford

Good afternoon. Ric you talked in the last call about your thoughts on share buyback since then leverage is down NAV is up. Can you just update us if you start from buyback had changed at all since then?

Richard J. Campo

They have not changed, I mean we have consistently said that share buybacks were always on the table as long as there was persistent disconnect between NAV and our stock price was persistent. The challenge that we've had has been in the volatility, and also a lot of folks sort of think well we should have buy the stock in December. Well you can't, because we have these blackout periods. So stock buybacks are on the table, I mean if we get an open window and it's look good to us we will buy it back.

Karin Ford

Thanks. And then my second question is related to same-store revenue guidance. Did I hear you correctly that there is a 100 basis point impact from the tech package rollout embedded in the 2016 number and do you care to share what is the new renewal increase assumptions are embedded in there?

Richard J. Campo

Sure so I'll take the first part. And yes that’s correct, so we've got a 100 basis points in our 2016 numbers from the tech rollout on the revenue side. And another 200 basis points on expense side. And then we are excited just to close the loop to 50 bips on NOI.

Karin Ford

And then just on new and renewals can you share what your assumptions are on that?

Alexander Jessett

We don’t actually break it out that way. What we do is when we do our assumptions we just sort of use a net number based on the market. So we don’t really have that data.

Karin Ford

Okay, thank you.

Alexander Jessett

Thanks.

Operator

Our next question comes from Vincent Chao of Deutsche Bank.

Vincent Chao

Hey guys. Sorry to prolong this a little bit longer, but I was just curious in Houston obviously longer term happy with the market. But just curious what is your appetite for further investment in that market would be maybe how much would you have to see cap rates backup before got interesting?

Alexander Jessett

Quite a bit. These people calls all the time, private equity people saying “hey can we come down there and take advantage of some of the blood in the water in Houston” and I tell them I say don’t waste a trip, there is no bargains here at this point, I don’t see them happening. They sort of look at that 80’s collapse and look at history and say “oh jee with everything is going on in Houston, it's got to be cheap” and when you look at it it's not cheap.

When you think about the structure of the capital today, I don't know anybody who has built the property or bought a property that doesn't have anywhere from 25% to 35% equity in the property and those people don't have pressure on them, you have heard, you saw what our numbers looked like we had top line growth of nearly 3%. We did have a negative NOI print because of the operating expense tax side of equation, but you don't have that opportunity.

We like Houston long-term, we think it's a great market to be in, 12% of our portfolio feels pretty good, I would rather have less right now, but probably more when it recovers. But I don't think there is a lot of opportunities for us to do much in Houston right now given the market and there is just no opportunity at this point for great deals, if you want to call on those.

Vincent Chao

Right. Okay and then on Camden County, I mean how far away are we from that potentially starting?

Alexander Jessett

We are about three miles away from it right now. sorry, just getting punchy on this, this call getting so long and I know why it is, because we don't have any other people reporting. So whenever we have a shadow pipeline we look at it and we think about the market, we think about capital allocation, we think about what the cost structure would be for us to build that project today and I think people also thinking that Houston costs have obviously come down which they haven't.

So we still have a labor shortage in Houston from a construction perspective, cost continue to go up. So we will take a look at that it's likely not to be a 2016 start, I think it's in our shadow pipeline sometime in 2017. But the good news is we will look at it and decide what we are going to do based on the market conditions at the time. So it's not on the horizon at this point, but we always have it on our pipeline.

Vincent Chao

Alright, thanks a lot guys.

Operator

Our next question comes from Dan Oppenheim of Zelman & Associates. Please go ahead.

Daniel Oppenheim

Thanks very much. Let me be quick given the time and I was just wondering about Denver, I think last comment was that feeling it will be another great market in 2016. Given the sort of occupancy loss in the fourth quarter, is that something where you view that as a hiccup or are you adjusting based on that. How do you look at that to given the account for the market being great for 2016?

Richard J. Campo

It's cold in the fourth quarter in Denver. We think that just a seasonal fluctuation. We still have great traffic, very strong, like I said we are coming off a year. Last year where we did 8.2% top line, our revenue budget for Denver for 2016 is right at 7% top line growth, again we think that's very doable.

Daniel Oppenheim

Okay, thank you.

Richard J. Campo

You bet.

Operator

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

Richard J. Campo

Well I appreciate you be on the call today and have fun on the rest of the calls for the next week or two. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line. Have a great day.

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