Coming into the apartment REITs third quarter conference calls, analysts had one overriding concern: Is there a slowdown looming?

“People were really focused on fundamentals trends,” says Paula Poskon, a senior research analyst with Robert W. Baird & Co., a Milwaukee-based wealth management, capital markets, asset management, and private equity firm. “Because these stocks have been priced to perfection for a long time, the market is hyper-sensitive to bad news. In this round of calls, I think there was a lot of questioning in trying to understand if there was a real slowdown happening.”

Coming in, one analyst saw observers in two specific camps. "Heading into earnings, the bears were saying apartments were going to show weakness from the summer pause and thus the apartment rebound was coming to an end. The bulls were saying the landlords had pushed hard during the summer, and post-peak leasing, they were switching the focus to occupancy," says Alexander Goldfarb, managing director of equity research of REITs for New York-based Sandler O'Neill + Partners. "We still think the apartment recovery has legs, but third-quarter results were not strong enough either way to dissuade the bulls or the bears from their respective views."

In some ways, reactions may have depended on what call you tune into. Ric Campo, CEO of Houston-based Camden Property Trust, said the company’s quarter-over-quarter traffic increased 4 percent across the portfolio. Chicago-based Equity Residential said daily unique visitors to, its key proxy for relative demand, beat last year’s activity by more than 20 percent. On a quarter-over-quarter basis, Equity's e-leads or guest cards increased 7 percent, applicants increased 6 percent, and move-ins were up 4 percent.

“My dashboard is telling me that our future is bright,” said David Santee, executive vice president of operations at Equity on the firm’s third-quarter conference call, transcribed by “That in the near term, job growth is less important than previous downturns and we have the wind at our back. How hard and fast that wind blows remains to be seen.”

Signs of Trouble
Unfortunately, that positive sentiment wasn’t consistent across the board. Palo Alto, Calif.-based REIT Essex Property Trust saw weakness and had to lower its guidance, while Denver-based Aimco reported that traffic fell dramatically from August through September. “In mid-August, we saw a drop off in demand that persisted,” says Ernie Freedman, Aimco's CFO, on the company's third-quarter earning’s call. “In October 2011, visits are down more than 20 percent compared to the same period last year.”

Freedman emphasizes that Aimco generally focuses on retention, and that it’s been successful pushing their renewals about 5 percent quarter-over-quarter. And it has a broader property mix (with more C-level assets) than many of its competitors. “We’re seeing some across-the-board evidence that there has been a pause and a bit of a slowdown,” he says. “But the most important part of our business is our renewal business.”

One analyst commented that too much shouldn’t be made out of Aimco's numbers since web platforms are constantly drawing more traffic to the Internet instead of properties. However, Haendel St. Juste, an analyst with Keefe, Bruyette & Woods (KBW), an investment banking and security brokerage firm based in New York, thinks the Aimco results could be a sign of things to come. “Heading into 2012, you’re going to see more separation among market growth rates,” he says. “There’s going to be a distinction between the haves and have nots. People who have tenants with below-average incomes will be challenged to continue to grow rents at the same pace.”

Others see similar factors. “You had a divergence in tone,” says Andrew J. McCulloch, an analyst for Newport Beach, Calif.-based Green Street Advisors. “Some companies were still very positive, and some were seeing some weakness on the margin. We don’t know what that means yet. You did seem to hear, more consistently, that the renter-by-necessity, or less affluent tenant, is feeling the weakness in the economy a little more.”