CAMDEN PROPERTY TRUST (CPT) stock intrinsic value fair value estimate & owner earnings analysis

Camden Property Trust owns and operates apartment communities concentrated in Sunbelt growth markets — Texas (Houston, Dallas/Fort Worth, Austin), Atlanta, Charlotte, Raleigh, Nashville, Phoenix, Denver, Southern California, Washington D.C., and Florida (Orlando, Tampa, Southeast Florida). At the end of 2025 it owned and operated 172 communities totaling roughly 59,500 apartment homes, with three more projects (1,162 homes) under construction. The business is straightforward: collect rent, cover operating costs and interest, and reinvest a portion of cash flow to keep communities competitive and fund selective new development. We measure the cash the business generates for owners each year — operating cash flow, less the swings from working-capital timing, less stock-based compensation, less the capital spending required to preserve existing communities (as opposed to spending on brand-new development, which is growth investment). Camden discloses its own recurring capital spending each year, and we used that figure directly rather than a generic estimate, since management is best placed to know what it actually costs to keep a community in shape. On this basis, per-share owner earnings have grown from about $3.76 in 2017 to roughly $6.00 in the most recent year, interrupted by a dip during the 2020 pandemic. We used the median of the last seven years (2019-2025) — about $5.88 per share — as our normalized starting point, because that span captures a full cycle: a normal pre-pandemic year, the pandemic trough, the sharp post-pandemic rent surge, and the current slowdown. The most important thing happening in the business right now is a wave of new apartment construction that hit Sunbelt markets over the last two years. Same-store revenue grew only 0.8% in 2025, and looking more closely, actual rents grew even less — the average monthly rate rose from $1,997 to $2,006, less than half a percent — with most of the reported revenue gain instead coming from utility/ancillary fees and lower unpaid-rent write-offs. Cash flow through the first half of 2026 was also down about 5% from the year-earlier period. We built this softness directly into the starting point of our forecast rather than assuming a quick rebound. Our bear case assumes rent growth stays near zero for longer than expected, the company's largest single market (Houston, still about 14% of the portfolio despite recent sales there) experiences renewed softness, and the two remaining undeveloped land parcels on the books suffer further write-downs similar to the $12.9 million impairment already taken in the fourth quarter of 2025. Owner earnings per share declines modestly for two years before stabilizing at a low, roughly flat long-run pace. Our base case assumes rent growth stays subdued for the next one to two years, then gradually reaccelerates from year three onward as the three communities currently under construction (1,162 homes, expected to open within about two years) begin contributing, and as the sharp pullback in new construction starts nationally in 2023-2024 works through to fewer new buildings competing for tenants. Growth peaks in the mid-single digits around the middle of the next decade before settling into a low, steady long-run pace in line with the company's most recently reported same-property growth. Our bull case assumes the construction pipeline delivers and leases up on schedule, the company continues its acquisition program (it bought four properties for $423 million in 2025, funded by a largely unencumbered, conservatively financed balance sheet), and new supply clears faster than the base case assumes, supporting a sustained, healthier growth path for several years. For the years beyond our ten-year forecast, we did not assume a return to the stronger growth of 2021-2023, since that was tied to a one-time pandemic reopening surge rather than a repeatable driver. Instead we anchored the long-run pace to the company's own most recently reported same-store performance (0.3% net operating income growth in 2025), which is a conservative but directly evidenced basis — modest growth in the base case, roughly flat in the bear case, and somewhat better in the bull case. Because owner earnings already have the ongoing cost of keeping buildings competitive subtracted out, this tail still contributes a large share of the total value, which means our estimate depends more on the durability of the existing portfolio's cash generation than on any near-term catalyst. Putting it together, we estimate the shares are worth roughly $101 in a bad scenario, $123 in our central scenario, and $149 in a good scenario. Given the real, currently-visible softness in rent growth, the company's exposure to swings in construction activity and interest rates, and its geographic concentration in a few large markets, the margin-of-safety price sits meaningfully below our central estimate — around $86 — a level below even our bear-case estimate, to allow for the risk that the current supply glut proves deeper or more persistent than we expect. One accounting judgment worth noting: Camden periodically books large one-time gains from selling properties (a $260.9 million gain in 2025 alone) that appear in net income but are properly excluded from the operating cash flow figure we use, so they do not inflate our estimate of recurring earning power.