PREVIEW-Hard-hit housing market may weigh on Camden results

* What: Camden Property Trust Q1 earnings

* When: Thursday, April 30

* Company exposed to worst hit real estate markets

* Strong balance sheet, unencumbered properties positive

By Biswarup Gooptu

BANGALORE, April 28 (Reuters) - Falling rentals and rising vacancy rates are expected to weigh on Camden Property Trust's (CPT.N) quarterly results, as the apartment REIT combats a skittish economy that has seen U.S. unemployment hit a 16-year high.

Job creation, seen as the No. 1 driver of demand for apartments, has plunged sharply as the unemployment rate climbed to 8.5 percent.

Investors and analysts are concerned with Camden's exposure to some of the worst-affected real estate markets in the country, such as Tampa, Las Vegas and Phoenix. Camden mostly operates luxury and middle market apartment complexes.

"Over the past couple of years, they have moved heavily into markets that are now in the forefront of the real estate downturn, and because they operate nicer properties within those markets, we believe they are more at risk than, perhaps, operators in more stable markets," Macquarie Securities' Michael Levy told Reuters.

Benchmark Co's Bill Acheson points out that Camden gets the majority of its net operating income from some of the most beaten-down apartment markets in the country.

"If you look at the bottom 20 markets in the country, Camden gets more than half of its net operating income from those markets," said Acheson.

The apartment REIT sector has seen asking rents fall by 0.6 percent in the first quarter, the largest single-quarter decline in about 10 years, according to Reis, a real estate research firm.

National apartment vacancy rates rose to a three-year high of 7.2 percent in the same period, showcasing the sector's sensitivity to job losses.

Levy said he remained concerned that Camden's tenants were more likely to move to cheaper apartments or force the company to renew existing leases at much lower monthly rental rates.

"Recent press reports indicate that Camden has become more willing to take on riskier tenants in some of its more precarious markets than was historically the case," Levy wrote in a recent note to clients.

For the first quarter, analysts expect Camden to report an occupancy rate of 93 percent, down from about 94 percent a year ago. Tenant retention is expected to range between 63 percent and 65 percent for the same period.