Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2007
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 1-12110
CAMDEN PROPERTY TRUST
(Exact name of registrant as specified in its charter)
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Texas
(State or other jurisdiction of
incorporation or organization)
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76-6088377
(I.R.S. Employer
Identification No.) |
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3 Greenway Plaza, Suite 1300
Houston, Texas
(Address of principle executive offices)
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77046
(Zip Code) |
Registrants telephone number, including area code: (713) 354-2500
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered |
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Common Shares of Beneficial Interest, $.01 par value
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes þ No o |
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No þ |
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Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes þ No o |
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Indicated by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Smaller reporting company o
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in the Rule 12b-2 of
the Exchange Act).
Yes o No þ
The aggregate market value of voting and non-voting common equity held by non-affiliates of the
registrant was $3,449,575,611 based on a June 30, 2007 share price of $66.97.
On February 15, 2008, the number of outstanding common shares of the registrants was 52,693,750
(net of 12,828,468 treasury shares).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrants Proxy Statement in connection with its Annual Meeting of Shareholders
to be held May 6, 2008 are incorporated by reference in Part III.
PART I
Item 1. Business
General Development of Business
Formed on May 25, 1993, Camden Property Trust, a Texas real estate investment trust (REIT),
is engaged in the ownership, development, construction and management of multifamily apartment
communities. Our multifamily apartment communities are referred to as communities, multifamily
communities, properties, or multifamily properties in the following discussion.
Our executive offices are located at 3 Greenway Plaza, Suite 1300, Houston, Texas 77046 and
our telephone number is (713) 354-2500. Our website is located at www.camdenliving.com. On our
website, we make available free of charge our annual, quarterly and current reports, and amendments
to such reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended, as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange Commission (the SEC). We also make
available, free of charge on our website, our Guidelines on Governance, Code of Business Conduct
and Ethics, Code of Ethical Conduct for Senior Financial Officers and the charters of each of our
Audit, Compensation, Nominating and Corporate Governance Committees. This information is also
available in print free of charge to any person who requests it by contacting us at Camden Property
Trust, 3 Greenway Plaza, Suite 1300, Houston, Texas 77046, attention: Investor Relations.
Our annual, quarterly and current reports, proxy statements and other information are
electronically filed with the SEC. You may read and copy any materials we file with the SEC at the
SECs Public Reference Room at 100 F Street, NE., Washington, D.C. 20549. Please contact the SEC
at 1-800-SEC-0330 for further information about the operation of the SECs Public Reference Room.
The SEC also maintains a website at www.sec.gov which contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC.
Financial Information about Segments
We are engaged in the ownership, development, construction and management of multifamily
apartment communities. As each of our apartment communities has similar economic characteristics,
residents, and products and services, our operations have been aggregated into one reportable
segment. See our consolidated financial statements and notes included thereto in Item 15 of this
Annual Report on Form 10-K for certain information required by Item 1.
Narrative Description of Business
As of December 31, 2007, we owned interests in, operated or were developing 193 multifamily
properties comprising 66,468 apartment homes located in 13 states. We had 3,383 apartment homes
under development at 11 of our multifamily properties, including 1,257 apartment homes at four
multifamily properties owned through joint ventures and several sites we intend to develop into
multifamily apartment communities. Additionally, two properties comprised of 391 apartment homes
were designated as held for sale.
Operating Strategy
We believe producing consistent earnings growth through property operations, development and
acquisitions, achieving market balance and recycling capital are crucial factors to our success.
We rely heavily on our sophisticated property management capabilities and innovative operating
strategies to produce consistent earnings growth.
Real Estate Investments and Market Balance. We believe we are well positioned in our current
markets and have the expertise to take advantage of opportunities in new markets which have healthy
long-term fundamentals and strong growth projections. These capabilities, combined with what we
believe is a conservative financial structure, allow us to concentrate our growth efforts toward
selective opportunities to achieve our strategy of having a geographically and physically diverse
portfolio of assets which meet the requirements of our residents.
We continue to operate in our core markets in which we believe we have an advantage due to
economies of scale. We feel, where possible, it is best to operate with a strong base of
properties in order to benefit from the personnel allocation and the market strength associated
with managing several properties in the same market. However, consistent with our goal of
generating consistent earnings growth, we intend to selectively dispose of properties and redeploy
capital if we determine a property cannot meet long-term earnings growth expectations.
We believe we have a strong development pipeline, and we expect selective development of new
apartment properties will continue to be important to the growth of our portfolio for the next
several years. We use experienced on-site construction superintendents, operating under the
supervision of project managers and senior management, to control the construction process. Risks
inherent to developing real estate include zoning changes, environmental matters and changes in
economic conditions during the development process. See further discussion of risks associated
with development and construction in our Risk Factors section.
We typically make physical improvements at our acquired properties, such as new or enhanced
landscaping design, new or upgraded amenities and redesigned building structures, which, coupled
with a strong focus on property management, branding and marketing, have resulted in attractive
yields on acquired properties.
Our expertise in development and redevelopment allow us to selectively acquire apartment
communities. In the fourth quarter of 2007, we had the first closing of our discretionary
investment vehicle, which during its investment period (ending no later than December 2011) will be
our exclusive vehicle for acquiring apartment communities, subject to certain exceptions. Over the
next several years, we expect to increase our acquisition activity through the discretionary
investment vehicle, focusing on communities in our markets that can benefit from redevelopment,
repositioning or market cycle opportunities. Please review the Risk Factors section for a
discussion of risks associated with acquisitions and our discretionary investment vehicle.
Sophisticated Property Management. We believe the depth of our organization enables us to
deliver quality services, promote resident satisfaction and improve resident retention, thereby
reducing operating expenses. We manage our properties utilizing a staff of professionals and
support personnel, including certified property managers, experienced apartment managers and
leasing agents, and trained apartment maintenance technicians. Our on-site personnel are trained to
deliver high quality services to their residents. We strive to motivate our on-site employees
through incentive compensation arrangements based upon operational results produced at their
property, rental rate increases and level of lease renewals achieved.
Operations. We believe an intense focus on operations is necessary to realize consistent,
sustained earnings growth. Ensuring resident satisfaction, increasing rents as market conditions
allow, maximizing rent collections, maintaining property occupancy at optimal levels and
controlling operating costs comprise our principal strategies to maximize property net operating
income. We believe our web-based property management and revenue management systems strengthen
on-site operations and allow us to quickly adjust rental rates as local market conditions change.
Lease terms are generally staggered based on vacancy exposure by apartment type so lease
expirations are matched to each propertys seasonal rental patterns. We generally offer leases
ranging from six to fifteen months, with individual property marketing plans structured to respond
to local market conditions. In addition, we conduct ongoing customer service surveys to ensure
timely response to residents changing needs and a high level of satisfaction.
Investments in Joint Ventures. We have entered into, and may continue in the future to enter
into, joint ventures (including limited liability companies) or partnerships through which we would
own an indirect economic interest in less than 100% of the community or communities owned directly
by the joint venture or partnership. Our decision whether to hold the entire interest in an
apartment community ourselves, or to have an indirect interest in the community through a joint
venture or partnership, is based on a variety of factors and considerations, including: (i) our
projection, in some circumstances, we will achieve higher returns on our invested capital or reduce
our risk if a joint venture or partnership vehicle is used; (ii) our desire to diversify our
portfolio of communities by market; (iii) our desire at times to preserve our capital resources to
maintain liquidity or balance sheet strength; and (iv) the economic and tax terms required by a
seller of land or of a community, who may prefer or who may require less payment if the land or
community is contributed to a joint venture or partnership. Investments in joint ventures or
partnerships are not limited to a specified percentage of our assets. Each joint venture or
partnership agreement is individually negotiated, and our ability to operate and/or dispose of a community in our sole
discretion may be limited to varying degrees depending on the terms of the joint venture or
partnership agreement.
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We have formed the Camden Multifamily Value Add Fund, L.P., (the Fund), a discretionary
investment vehicle to make direct and indirect investments in multifamily real estate throughout
the United States, primarily through acquisitions of operating properties and certain land parcels
which we will contribute to the Fund for development. The Fund will serve, until the earlier of
(i) four years from the date of the final closing of the Fund or (ii) such time as 90% of the
Funds committed capital is invested, as the exclusive vehicle through which we will acquire
fully-developed multifamily properties, subject to certain exceptions. These exceptions include
properties acquired in tax-deferred transactions, follow-on investments made with respect to prior
investments, significant transactions which include the issuance of our securities, significant
individual asset and portfolio acquisitions, significant merger and acquisition activities,
acquisitions which are inadvisable or inappropriate for the Fund, transactions with our existing
ventures, contributions or sales of properties to or entities in which we remain an investor and
transactions approved by the Funds advisory board. The Fund will not restrict our development
activities and will terminate after a term of eight years from the final closing, subject to two
one-year extensions. As of December 31, 2007, we have acquired two communities with the intent of
being owned by the Fund, but which are currently consolidated and included in our operating
results. We are currently targeting acquisitions for the Fund where value creation opportunities
are present through one or more of the following: redevelopment activities, market cycle
opportunities or improved property operations. We expect the Fund to have equity commitments of up
to $300 million, and the ability to employ leverage through debt
financings up to 70% on a stabilized portfolio basis, which would enable the Fund to invest up to approximately $1 billion. One of our
wholly-owned subsidiaries is the general partner of the Fund, and we have committed 20% of the
total equity of the Fund, up to $60 million. We have received commitments from an unaffiliated
investor of $150 million as of December 31, 2007. We expect the final closing of the Fund to occur
during 2008. There can be no assurance as to the timing of such closing, the size or investment
performance of the Fund.
Competition
There are numerous housing alternatives which compete with our properties in attracting
residents. Our properties compete directly with other multifamily properties as well as
condominiums and single family homes which are available for rent or purchase in the markets in
which our properties are located. This competitive environment could have a material adverse
effect on our ability to lease apartment homes at our present properties or any newly developed or
acquired property, as well as on the rents charged.
Employees
At December 31, 2007, we had approximately 1,900 employees, including executive,
administrative and community personnel.
Qualification as a Real Estate Investment Trust
As of December 31, 2007, we met the qualification of a REIT under Sections 856-860 of the
Internal Revenue Code of 1986, as amended (the Code). As a result, we, with the exception of our
taxable REIT subsidiaries, will not be subject to federal income tax to the extent we meet certain
requirements of the Code.
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Item 1A. Risk Factors
In addition to the other information contained in this Form 10-K, the following risk factors
should be considered carefully in evaluating our business. Our business, financial condition, or
results of operations could be materially adversely affected by any of these risks. Please note
additional risks not presently known to us or which we currently consider immaterial may also
impair our business and operations.
Risks Associated with Real Estate
Unfavorable changes in economic conditions could adversely impact occupancy or rental rates.
Economic conditions may significantly affect apartment home occupancy or rental rates.
Occupancy and rental rates in the markets in which we operate, in turn, may have a material adverse
impact on our cash flows and operating results. The risks which may affect conditions in these
markets include the following:
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changes in the national, regional and local economic climates; |
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local conditions, such as an oversupply of apartments or other housing available for
rent, or a reduction in demand for apartments in the area; |
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a future economic downturn which simultaneously effects more than one of our
geographical markets; and |
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increased operating costs, if these costs cannot be passed through to residents. |
National, regional and local economic climates may be adversely affected should population or
job growth continue to slow. Certain of the markets in which we operate have recently experienced
a decrease in job growth. To the extent this worsens, market rental rates will likely be adversely
affected. We could also face challenges of adequately managing and maintaining our properties due
to increasing operating costs associated with resident turnover and other factors. As a result, we
may experience a decrease in rental revenues, which may adversely affect our results of operations
and our ability to satisfy our financial obligations and to pay distributions to shareholders.
Difficulties of selling real estate could limit our flexibility.
Real estate investments generally cannot be disposed of quickly, especially when market
conditions are poor. This may limit our ability to vary our portfolio promptly in response to
changes in economic or other conditions. In addition, in order to maintain our status as a REIT,
the Code imposes restrictions on our ability to sell properties held fewer than four years, which
may cause us to incur losses thereby reducing our cash flows and adversely impacting distributions
to shareholders.
Compliance or failure to comply with laws requiring access to our properties by disabled persons
could result in substantial cost.
The Americans with Disabilities Act (ADA), the Fair Housing Amendments Act of 1988 (FHAA),
and other federal, state and local laws generally require public accommodations be made accessible
to disabled persons. Noncompliance could result in the imposition of fines by the government or
the award of damages to private litigants. These laws may require us to modify our existing
properties. These laws may also restrict renovations by requiring improved access to such
buildings by disabled persons or may require us to add other structural features which increase our
construction costs. Legislation or regulations adopted in the future may impose further burdens or
restrictions on us with respect to improved access by disabled persons. We may incur unanticipated
expenses that may be material to our financial condition or results of operations to comply with
ADA, FHAA, and other federal, state and local laws, or in connection with lawsuits brought by
private litigants.
Competition could limit our ability to lease apartments or increase or maintain rental income.
There are numerous housing alternatives which compete with our properties in attracting
residents. Our properties compete directly with other multifamily properties as well as
condominiums and single family homes which are available for rent or purchase in the markets in
which our properties are located. This competitive
environment could have a material adverse effect on our ability to lease apartment homes at our
present properties or any newly developed or acquired property, as well as on the rents charged.
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Risks Associated with Our Operations
Development and construction risks could impact our profitability.
We intend to continue to develop and construct multifamily apartment communities for our
property portfolio. Our development and construction activities may be exposed to a number of
risks which may increase our construction costs including the following:
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inability to obtain, or delays in obtaining, necessary zoning, land-use,
building, occupancy and other required permits and authorizations, or problems with
subcontractors could result in increased costs; |
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incurring construction costs exceeding our original estimates due to increased
materials, labor or other costs, or due to errors and omissions which occur in the
design or construction process; |
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experiencing fluctuations in occupancy rates and rents at a newly completed
property which may not be adequate to make the property profitable; |
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inability to obtain financing with favorable terms for the development of a
community; |
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inability to complete construction and lease-up of a community on schedule,
resulting in increased costs; |
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incurring costs related to the abandonment of development opportunities which we
have pursued and deemed unfeasible; and |
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our inability to successfully implement our development and construction
strategy could adversely affect our results of operations and our ability to
satisfy our financial obligations and pay distributions to shareholders. |
We also develop and construct properties for unrelated third parties pursuant to guaranteed
maximum price contracts. The terms of these contracts require us to estimate the time and costs to
complete a project and we assume the risk the time and costs associated with our performance may be
greater than was anticipated. As a result, our profitability on guaranteed maximum price contracts
is dependent on our ability to accurately predict these factors. The time and costs may be
affected by a variety of factors, including those listed above, many of which are beyond our
control. In addition, the terms of these contracts generally require a warranty period, which may
have a duration of up to ten years, during which we may be required to repair, replace or rebuild a
project in the event of a material defect.
Our property acquisition strategy may not produce the cash flows expected.
Subject to the requirements of the Fund, we may acquire additional operating properties on a
select basis. Our acquisition activities are subject to a number of risks, including the
following:
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we may not be able to successfully integrate acquired properties into our
existing operations; |
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our estimates of the costs of repositioning or redeveloping the acquired
property may prove inaccurate; and |
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the expected occupancy and rental rates may differ from the actual results. |
Competition could adversely affect our ability to acquire properties.
We expect other real estate investors, including insurance companies, pension and investment
funds, private investors and other apartment REITs will compete with us to acquire new properties.
This competition could increase prices for the type of properties we would likely pursue and
adversely affect our ability to acquire these properties or the profitability of such properties
upon acquisition.
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Losses from catastrophes may exceed our insurance coverage.
We carry comprehensive property and liability insurance on our properties, which we believe
is of the type and amount customarily obtained on similar real property assets. We intend to obtain
similar coverage for properties we acquire in the future. However, some losses, generally of a
catastrophic nature, such as losses from floods, hurricanes or earthquakes, may be subject to
coverage limitations. We exercise our discretion in determining amounts, coverage limits and
deductibility provisions of insurance, to maintain appropriate insurance on our investments at a
reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may
not be sufficient to pay the full current market value or current replacement value of our lost
investment, as well as the anticipated future revenues from the property. Inflation, changes in
building codes and ordinances, environmental considerations and other factors also may reduce the
feasibility of using insurance proceeds to replace a property after it has been damaged or
destroyed.
Potential liability for environmental contamination could result in substantial costs.
Under various federal, state and local laws, ordinances and regulations, we are liable for
costs to investigate and remove or remediate hazardous or toxic substances on or in our properties,
in some cases, regardless of whether we knew of or were responsible for the presence of these
substances. These costs, and other costs of investigation, remediation or removal of hazardous
substances, may be substantial. Also, the presence of hazardous or toxic substances on a property,
or the failure to properly remediate such substances, may adversely affect our ability to sell or
rent the property or use the property as collateral.
Additionally, we occasionally develop, manage, lease and/or operate various properties for
third parties. Consequently, we may be considered to have been or to be an operator of these
properties and, therefore, potentially liable for removal or remediation costs or other potential
costs which could relate to hazardous or toxic substances.
Over the past several years, there have been an increasing number of lawsuits against owners
and managers of multifamily properties alleging personal injury and property damage caused by the
presence of mold in residential real estate. Some of these lawsuits have resulted in substantial
monetary judgments or settlements. Insurance carriers have subsequently excluded mold related
claims from standard policies and increased the pricing of mold endorsements. Therefore, should we
be named in a lawsuit regarding mold infiltration, the amount of damages may not be fully covered
under insurance.
Investments through joint ventures and partnerships involve risks not present in investments in
which we are the sole investor.
Instead of acquiring or developing apartment communities directly, we have invested and may
continue to invest in a joint venture or partnership as a partner. These investments involve
risks, including the possibility our partner may become insolvent, our partner may have business
goals which are inconsistent with ours, or our partner may be in a position to take action or
withhold consent contrary to our requests. We and our partner may each have the right to trigger a
buy-sell arrangement, which could cause us to sell our interest, or acquire our partners interest,
at a time when we otherwise would not have initiated such a transaction. Each joint venture or
partnership agreement is individually negotiated, and our ability to operate and/or dispose of a
community in our sole discretion may be limited to varying degrees depending on the terms of the
joint venture or partnership agreement.
We face risks associated with an investment in and management of a discretionary fund.
We have formed the Fund which, through wholly-owned subsidiaries, we manage as the general
partner and advisor and to which we have committed 20% of the total equity interest, up to $60
million. As of December 31, 2007, the Fund had total capital commitments of $187.5 million. There
are risks associated with the investment in and management of the Fund, including the following:
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investors in the Fund may fail to make their capital contributions when due and, as
a result, the Fund may be unable to execute its investment objectives; |
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our subsidiary which is the general partner of the Fund is generally liable, under
partnership law, for the debts and obligations of the Fund, subject to certain
exculpation and indemnification rights pursuant to the terms of the partnership
agreement of the Fund; |
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investors in the Fund (other than us), by majority vote, may remove our subsidiary
as the general partner of the Fund with or without cause and the Funds advisory board,
by a majority vote of its members, may remove our subsidiary as the general partner of
the Fund at any time for cause; |
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while we have broad discretion to manage the Fund and make investment decisions on
behalf of the Fund, the investors or the advisory committee must approve certain
matters, and as a result we may be unable to cause the Fund to make certain investments
or implement certain decisions we consider beneficial; |
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we are permitted to acquire
land and develop communities but are generally prohibited from
acquiring fully developed multifamily properties outside of the Fund until the earlier
of (i) four years from the date of the final closing of the Fund or (ii) such time as
90% of the Funds committed capital is invested, subject to certain exceptions; |
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our ability to redeem all or a portion of our investment in the Fund is subject to
significant restrictions; and |
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we may be liable if the Fund fails to comply with various tax or other regulatory
matters. |
We depend on our key personnel.
Our success depends in part on our ability to attract and retain the services of executive
officers and other personnel. There is substantial competition for qualified personnel in the real
estate industry and the loss of several of our key personnel could have an adverse effect on us.
Changes in laws and litigation risks could affect our business.
As a large publicly-traded owner of multifamily properties, we may become involved in legal
proceedings, including consumer, employment, tort or commercial litigation, which if decided
adversely to or settled by us, could result in liability which is material to our financial
condition or results of operations.
Risks Associated with Our Indebtedness and Financing
Volatility in debt markets could adversely impact future acquisitions and values of real estate
assets
The commercial real estate debt markets are currently experiencing volatility as a result of
certain factors including the tightening of underwriting standards by lenders and credit rating
agencies and the significant inventory of unsold Collateralized Mortgage Backed Securities in the
market. The volatility has resulted in lenders decreasing the availability of debt financing as
well as increasing the cost of debt financing. As a result, we may not be able to obtain debt
financing in the future on favorable terms, or at all. This may result in future acquisitions
generating lower overall economic returns, which may adversely affect our results of operations and
distributions to shareholders. In addition, the volatility in debt markets could adversely impact
the overall amount of capital investing in real estate, which may result in price or value
decreases of real estate assets and in turn negatively impact the current value of our existing
assets.
Insufficient cash flows could limit our ability to make required payments for debt obligations or
pay distributions to shareholders and create refinancing risk.
Substantially all of our income is derived from rental income from our multifamily
communities. As a result, our performance depends on our ability to collect rent from residents
which could be negatively affected by a number of factors, including the following:
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delay in resident lease commencements; |
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decline in occupancy; |
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failure of residents to make rental payments when due; |
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the attractiveness of our properties to residents and potential residents; |
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our ability to adequately manage and maintain our properties; |
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competition from other available apartments and housing alternatives; and |
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changes in market rents. |
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Cash flow could be insufficient to meet required payments of principal and interest with
respect to debt financing. We are required to distribute annual dividends equal to a minimum of
90% of our REIT taxable income, computed without regards to the dividends paid deduction and our
net capital gain, in order for us to continue to qualify as a REIT; this requirement limits the
cash flow available to meet required principal and interest payments on our debt. We may need to
refinance all or a portion of our outstanding debt as it matures. We may not be able to refinance
existing debt or a refinancing may not occur on favorable terms, either of which may have a
material adverse effect on our financial condition and results of operations.
We have significant debt, which could have important adverse consequences.
As of December 31, 2007, we had outstanding debt of approximately $2.8 billion. This
indebtedness could have important consequences, including:
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if a property is mortgaged to secure payment of indebtedness, and if we are
unable to meet our mortgage obligations, we could sustain a loss as a result of
foreclosure on the mortgage; |
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our vulnerability to general adverse economic and industry conditions is
increased; and |
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our flexibility in planning for, or reacting to, changes in business and
industry is limited. |
Variable rate debt is subject to interest rate risk.
We have mortgage debt with varying interest rates dependent upon the market index. In
addition, we have a revolving credit facility bearing interest at a variable rate on all amounts
drawn on the facility. We may incur additional variable rate debt in the future. Increases in
interest rates on variable rate debt would increase our interest expense, unless we make
arrangements that hedge the risk of rising interest rates, which would adversely affect net income
and cash available for payment of our debt obligations and distributions to shareholders.
We may incur losses on interest rate hedging arrangements.
Periodically, we have entered into agreements to reduce the risks associated with increases in
interest rates, and may continue to do so. Although these agreements may partially protect against
rising interest rates, they also may reduce the benefits to us if interest rates decline. If a
hedging arrangement is not indexed to the same rate as the indebtedness which is hedged, we may be
exposed to losses to the extent which the rate governing the indebtedness and the rate governing
the hedging arrangement change independently of each other. Finally, nonperformance by the other
party to the hedging arrangement may subject us to increased credit risks.
Issuances of additional debt or equity may adversely impact our financial condition.
Our capital requirements depend on numerous factors, including the occupancy rates of our
apartment properties, dividend payment rates to our shareholders, development and capital
expenditures, costs of operations and potential acquisitions. If our capital requirements vary
materially from our plans, we may require additional financing sooner than anticipated.
Accordingly, we could become more leveraged, resulting in increased risk of default on our
obligations and an increase in our debt service requirements, both of which could adversely affect
our financial condition and ability to access debt and equity capital markets in the future.
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Risks associated with our shares
Share ownership limits and our ability to issue additional equity securities may prevent takeovers
beneficial to shareholders.
For us to maintain our qualification as a REIT, we must have 100 or more shareholders during
the year and not more than 50% in value of our outstanding shares may be owned, directly or
indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term individuals includes a number
of specified entities. To minimize the possibility we will fail to qualify as a REIT under this
test, our declaration of trust includes restrictions on transfers of our shares and ownership
limits. The ownership limits, as well as our ability to issue other classes of equity securities,
may delay, defer or prevent a change in control. These provisions may also deter tender offers for
our common shares which may be attractive to you, or limit your opportunity to receive a premium
for your shares that might otherwise exist if a third party were attempting to effect a change in
control transaction.
Various changes could adversely impact the market price of our common shares.
The market price of our publicly traded common shares depends on various conditions. The
risks which may affect this market price include the following:
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investor interest in our property portfolio; |
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|
the reputation and performance of REITs; |
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|
the attractiveness of REITs as compared to other investment vehicles; |
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|
the results of our financial condition and operations; |
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|
the perception of our growth and earnings potential; |
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dividend payment rates; and |
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increases in market rates, which may lead purchasers of our common shares to
demand a higher yield. |
Risks Associated with Income Tax Laws
Tax matters, including failure to qualify as a REIT, could have adverse consequences.
We may not continue to qualify in the future as a REIT. The Internal Revenue Service may
challenge our qualification as a REIT for prior years and new legislation, regulations,
administrative interpretations or court decisions may change the tax laws or the application of the
tax laws with respect to qualification as a REIT or the federal tax consequences of such
qualification.
For any taxable year we fail to qualify as a REIT:
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we would be subject to federal income tax on our taxable income at corporate
rates, subject to any applicable alternative minimum tax; |
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we would be disqualified from treatment as a REIT for the four taxable years
following the year in which we failed to qualify, thereby reducing our net earnings
available for operations, including any distributions to shareholders, as we would
be required to pay significant income taxes for the year or years involved; and |
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our ability to expand our business and raise capital would be impaired, which
may adversely affect the value of our common shares. |
We may face other tax liabilities in the future which may impact our cash flow. These
potential tax liabilities may be calculated on our income or property at either the corporate or
individual property levels. Any additional tax expense incurred would decrease the cash available
for distribution to our shareholders.
Item 1B. Unresolved Staff Comments
None.
9
Item 2. Properties
The Properties
Our properties typically consist of mid-rise buildings or two- and three-story buildings in a
landscaped setting and provide residents with a variety of amenities. Most of the properties have
one or more swimming pools and a clubhouse and many have whirlpool spas, tennis courts and
controlled-access gates. Many of the apartment homes offer additional features such as fireplaces,
vaulted ceilings, microwave ovens, covered parking, icemakers, washers and dryers and ceiling fans.
Operating Properties
The 182 operating properties, including properties held through joint ventures, which we owned
interests in and operated at December 31, 2007, averaged 914 square feet of living area per
apartment home. For the year ended December 31, 2007, no single operating property accounted for
greater than 2.1% of our total revenues. Our operating properties, including properties held
through joint ventures, had a weighted average occupancy rate of 93.7% and 95.2% for 2007 and 2006,
respectively. Resident lease terms generally range from six to fifteen months. One hundred and
fifty-four of our operating properties have over 200 apartment homes, with the largest having 904
apartment homes. Our operating properties have an average age of 9.4 years (calculated on the
basis of investment dollars). Our operating properties were constructed and placed in service as
follows:
|
|
|
Year Placed in Service |
|
Number of Operating Properties |
2001-2007
|
|
39 |
|
|
|
1996-2000
|
|
58 |
|
|
|
1991-1995
|
|
19 |
|
|
|
1986-1990
|
|
40 |
|
|
|
1980-1985
|
|
21 |
|
|
|
Prior to 1980
|
|
5 |
10
Property Table
The following table sets forth information with respect to our operating properties at
December 31, 2007.
OPERATING PROPERTIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
|
2007 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
|
Occupancy (1) |
|
ARIZONA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phoenix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Copper Square |
|
|
332 |
|
|
|
2000 |
|
|
|
786 |
|
|
|
94.2 |
% |
Camden Fountain Palms (2) |
|
|
192 |
|
|
|
1986/1996 |
|
|
|
1,050 |
|
|
|
93.5 |
|
Camden Legacy |
|
|
428 |
|
|
|
1996 |
|
|
|
1,067 |
|
|
|
93.0 |
|
Camden Pecos Ranch (2) |
|
|
272 |
|
|
|
2001 |
|
|
|
924 |
|
|
|
95.5 |
|
Camden San Paloma |
|
|
324 |
|
|
|
1993/1994 |
|
|
|
1,042 |
|
|
|
95.4 |
|
Camden Sierra (2) |
|
|
288 |
|
|
|
1997 |
|
|
|
925 |
|
|
|
94.6 |
|
Camden Towne Center (2) |
|
|
240 |
|
|
|
1998 |
|
|
|
871 |
|
|
|
94.1 |
|
Camden Vista Valley |
|
|
357 |
|
|
|
1986 |
|
|
|
923 |
|
|
|
94.1 |
|
CALIFORNIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Los Angeles/Orange County |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Crown Valley |
|
|
380 |
|
|
|
2001 |
|
|
|
1,009 |
|
|
|
95.0 |
|
Camden Harbor View |
|
|
538 |
|
|
|
2004 |
|
|
|
976 |
|
|
|
93.5 |
|
Camden Martinique |
|
|
714 |
|
|
|
1986 |
|
|
|
795 |
|
|
|
92.2 |
|
Camden Parkside (2) |
|
|
421 |
|
|
|
1972 |
|
|
|
836 |
|
|
|
94.7 |
|
Camden Sea Palms |
|
|
138 |
|
|
|
1990 |
|
|
|
891 |
|
|
|
94.8 |
|
San Diego/Inland Empire |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Old Creek (4) |
|
|
350 |
|
|
|
2007 |
|
|
|
1,036 |
|
|
Lease-up |
|
Camden Sierra at Otay Ranch |
|
|
422 |
|
|
|
2003 |
|
|
|
962 |
|
|
|
95.1 |
|
Camden Tuscany |
|
|
160 |
|
|
|
2003 |
|
|
|
891 |
|
|
|
95.0 |
|
Camden Vineyards |
|
|
264 |
|
|
|
2002 |
|
|
|
1,053 |
|
|
|
91.9 |
|
COLORADO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denver |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Arbors |
|
|
358 |
|
|
|
1986 |
|
|
|
792 |
|
|
|
94.1 |
|
Camden Caley |
|
|
218 |
|
|
|
2000 |
|
|
|
925 |
|
|
|
96.2 |
|
Camden Centennial |
|
|
276 |
|
|
|
1985 |
|
|
|
744 |
|
|
|
95.7 |
|
Camden Denver West (3) |
|
|
320 |
|
|
|
1997 |
|
|
|
1,015 |
|
|
|
96.8 |
|
Camden Highlands Ridge |
|
|
342 |
|
|
|
1996 |
|
|
|
1,149 |
|
|
|
95.9 |
|
Camden Interlocken |
|
|
340 |
|
|
|
1999 |
|
|
|
1,022 |
|
|
|
96.6 |
|
Camden Lakeway |
|
|
451 |
|
|
|
1997 |
|
|
|
932 |
|
|
|
95.9 |
|
Camden Pinnacle (11) |
|
|
224 |
|
|
|
1985 |
|
|
|
748 |
|
|
|
92.4 |
|
WASHINGTON DC METRO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Ashburn Farms |
|
|
162 |
|
|
|
2000 |
|
|
|
1,061 |
|
|
|
96.4 |
|
Camden Clearbrook (7) |
|
|
297 |
|
|
|
2007 |
|
|
|
1,049 |
|
|
|
95.1 |
|
Camden Fair Lakes |
|
|
530 |
|
|
|
1999 |
|
|
|
996 |
|
|
|
94.7 |
|
Camden Fairfax Corner (7) |
|
|
488 |
|
|
|
2006 |
|
|
|
934 |
|
|
|
95.2 |
|
Camden Fallsgrove |
|
|
268 |
|
|
|
2004 |
|
|
|
996 |
|
|
|
96.1 |
|
Camden Grand Parc |
|
|
105 |
|
|
|
2002 |
|
|
|
904 |
|
|
|
96.6 |
|
Camden Lansdowne |
|
|
690 |
|
|
|
2002 |
|
|
|
1,006 |
|
|
|
95.4 |
|
Camden Largo Town Center |
|
|
245 |
|
|
|
2000/2007 |
|
|
|
1,028 |
|
|
|
92.8 |
|
Camden Monument Place (4) |
|
|
368 |
|
|
|
2007 |
|
|
|
865 |
|
|
Lease-up |
|
Camden Roosevelt |
|
|
198 |
|
|
|
2003 |
|
|
|
856 |
|
|
|
97.1 |
|
Camden Russett |
|
|
426 |
|
|
|
2000 |
|
|
|
1,025 |
|
|
|
94.4 |
|
Camden Silo Creek |
|
|
284 |
|
|
|
2004 |
|
|
|
971 |
|
|
|
95.5 |
|
Camden Westwind (7) |
|
|
464 |
|
|
|
2006 |
|
|
|
1,036 |
|
|
|
92.6 |
|
FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast Florida |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Aventura |
|
|
379 |
|
|
|
1995 |
|
|
|
1,106 |
|
|
|
94.5 |
|
Camden Brickell |
|
|
405 |
|
|
|
2003 |
|
|
|
937 |
|
|
|
97.1 |
|
Camden Doral |
|
|
260 |
|
|
|
1999 |
|
|
|
1,172 |
|
|
|
95.7 |
|
Camden Doral Villas |
|
|
232 |
|
|
|
2000 |
|
|
|
1,253 |
|
|
|
96.4 |
|
Camden Las Olas |
|
|
420 |
|
|
|
2004 |
|
|
|
1,043 |
|
|
|
94.3 |
|
Camden Plantation |
|
|
502 |
|
|
|
1997 |
|
|
|
1,152 |
|
|
|
94.3 |
|
Camden Portofino |
|
|
322 |
|
|
|
1995 |
|
|
|
1,307 |
|
|
|
95.8 |
|
11
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
|
2007 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
|
Occupancy (1) |
|
Orlando |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Club |
|
|
436 |
|
|
|
1986 |
|
|
|
1,077 |
|
|
|
93.6 |
% |
Camden Hunters Creek |
|
|
270 |
|
|
|
2000 |
|
|
|
1,082 |
|
|
|
94.2 |
|
Camden Lago Vista |
|
|
366 |
|
|
|
2005 |
|
|
|
954 |
|
|
|
93.6 |
|
Camden Landings |
|
|
220 |
|
|
|
1983 |
|
|
|
748 |
|
|
|
93.0 |
|
Camden Lee Vista |
|
|
492 |
|
|
|
2000 |
|
|
|
937 |
|
|
|
92.5 |
|
Camden Renaissance |
|
|
578 |
|
|
|
1996/1998 |
|
|
|
899 |
|
|
|
92.7 |
|
Camden Reserve |
|
|
526 |
|
|
|
1990/1991 |
|
|
|
824 |
|
|
|
93.3 |
|
Camden World Gateway |
|
|
408 |
|
|
|
2000 |
|
|
|
979 |
|
|
|
93.2 |
|
Tampa/St. Petersburg |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Bay |
|
|
760 |
|
|
|
1997/2001 |
|
|
|
943 |
|
|
|
93.1 |
|
Camden Bay Pointe |
|
|
368 |
|
|
|
1984 |
|
|
|
771 |
|
|
|
94.6 |
|
Camden Bayside |
|
|
832 |
|
|
|
1987/1989 |
|
|
|
748 |
|
|
|
94.5 |
|
Camden Citrus Park |
|
|
247 |
|
|
|
1985 |
|
|
|
704 |
|
|
|
95.0 |
|
Camden Lakes |
|
|
688 |
|
|
|
1982/1983 |
|
|
|
728 |
|
|
|
93.2 |
|
Camden Lakeside |
|
|
228 |
|
|
|
1986 |
|
|
|
728 |
|
|
|
93.5 |
|
Camden Live Oaks |
|
|
770 |
|
|
|
1990 |
|
|
|
1,093 |
|
|
|
94.2 |
|
Camden Preserve |
|
|
276 |
|
|
|
1996 |
|
|
|
942 |
|
|
|
95.1 |
|
Camden Providence Lakes (12) |
|
|
260 |
|
|
|
1996 |
|
|
|
1,024 |
|
|
|
87.3 |
|
Camden Royal Palms (8) |
|
|
352 |
|
|
|
2006 |
|
|
|
1,017 |
|
|
|
84.3 |
|
Camden Westshore (12) |
|
|
278 |
|
|
|
1986 |
|
|
|
728 |
|
|
|
81.3 |
|
Camden Woods |
|
|
444 |
|
|
|
1986 |
|
|
|
1,223 |
|
|
|
94.3 |
|
GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlanta |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Brookwood |
|
|
359 |
|
|
|
2002 |
|
|
|
906 |
|
|
|
94.1 |
|
Camden Deerfield |
|
|
292 |
|
|
|
2000 |
|
|
|
1,187 |
|
|
|
95.0 |
|
Camden Dunwoody |
|
|
324 |
|
|
|
1997 |
|
|
|
1,007 |
|
|
|
95.3 |
|
Camden Midtown Atlanta |
|
|
296 |
|
|
|
2001 |
|
|
|
953 |
|
|
|
94.0 |
|
Camden Peachtree City |
|
|
399 |
|
|
|
2001 |
|
|
|
1,026 |
|
|
|
95.5 |
|
Camden River |
|
|
352 |
|
|
|
1997 |
|
|
|
1,103 |
|
|
|
94.8 |
|
Camden Shiloh |
|
|
232 |
|
|
|
1999/2002 |
|
|
|
1,151 |
|
|
|
93.6 |
|
Camden St. Clair |
|
|
336 |
|
|
|
1997 |
|
|
|
969 |
|
|
|
94.6 |
|
Camden Stockbridge |
|
|
304 |
|
|
|
2003 |
|
|
|
1,009 |
|
|
|
93.7 |
|
Camden Sweetwater |
|
|
308 |
|
|
|
2000 |
|
|
|
1,151 |
|
|
|
94.2 |
|
KENTUCKY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louisville |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Brookside (5) |
|
|
224 |
|
|
|
1987 |
|
|
|
732 |
|
|
|
96.5 |
|
Camden Meadows (5) |
|
|
400 |
|
|
|
1987/1990 |
|
|
|
746 |
|
|
|
95.8 |
|
Camden Oxmoor (5) |
|
|
432 |
|
|
|
2000 |
|
|
|
903 |
|
|
|
95.9 |
|
Camden Prospect Park (5) |
|
|
138 |
|
|
|
1990 |
|
|
|
916 |
|
|
|
94.5 |
|
MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kansas City |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Passage (5) |
|
|
596 |
|
|
|
1989/1997 |
|
|
|
832 |
|
|
|
94.3 |
|
St. Louis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Cedar Lakes (5) |
|
|
420 |
|
|
|
1986 |
|
|
|
852 |
|
|
|
94.3 |
|
Camden Cove West (5) |
|
|
276 |
|
|
|
1990 |
|
|
|
828 |
|
|
|
95.8 |
|
Camden Cross Creek (5) |
|
|
591 |
|
|
|
1973/1980 |
|
|
|
947 |
|
|
|
95.5 |
|
Camden Westchase (5) |
|
|
160 |
|
|
|
1986 |
|
|
|
945 |
|
|
|
96.1 |
|
12
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
|
2007 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
|
Occupancy (1) |
|
NEVADA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Bel Air |
|
|
528 |
|
|
|
1988/1995 |
|
|
|
943 |
|
|
|
93.5 |
% |
Camden Breeze |
|
|
320 |
|
|
|
1989 |
|
|
|
846 |
|
|
|
95.6 |
|
Camden Canyon (12) |
|
|
200 |
|
|
|
1995 |
|
|
|
987 |
|
|
|
94.4 |
|
Camden Commons |
|
|
376 |
|
|
|
1988 |
|
|
|
936 |
|
|
|
95.0 |
|
Camden Cove |
|
|
124 |
|
|
|
1990 |
|
|
|
898 |
|
|
|
96.2 |
|
Camden Del Mar (12) |
|
|
560 |
|
|
|
1995 |
|
|
|
986 |
|
|
|
89.2 |
|
Camden Fairways (12) |
|
|
320 |
|
|
|
1989 |
|
|
|
896 |
|
|
|
90.1 |
|
Camden Hills |
|
|
184 |
|
|
|
1991 |
|
|
|
579 |
|
|
|
96.2 |
|
Camden Legends |
|
|
113 |
|
|
|
1994 |
|
|
|
792 |
|
|
|
94.5 |
|
Camden Palisades |
|
|
624 |
|
|
|
1991 |
|
|
|
905 |
|
|
|
94.7 |
|
Camden Pines (2) |
|
|
315 |
|
|
|
1997 |
|
|
|
1,005 |
|
|
|
97.3 |
|
Camden Pointe |
|
|
252 |
|
|
|
1996 |
|
|
|
985 |
|
|
|
96.9 |
|
Camden Summit (2) |
|
|
234 |
|
|
|
1995 |
|
|
|
1,187 |
|
|
|
96.0 |
|
Camden Tiara (2) |
|
|
400 |
|
|
|
1996 |
|
|
|
1,043 |
|
|
|
95.5 |
|
Camden Vintage |
|
|
368 |
|
|
|
1994 |
|
|
|
978 |
|
|
|
93.2 |
|
Oasis Bay (6) |
|
|
128 |
|
|
|
1990 |
|
|
|
876 |
|
|
|
95.9 |
|
Oasis Crossings (6) |
|
|
72 |
|
|
|
1996 |
|
|
|
983 |
|
|
|
95.7 |
|
Oasis Emerald (6) |
|
|
132 |
|
|
|
1988 |
|
|
|
873 |
|
|
|
95.3 |
|
Oasis Gateway (6) |
|
|
360 |
|
|
|
1997 |
|
|
|
1,146 |
|
|
|
93.9 |
|
Oasis Island (6) |
|
|
118 |
|
|
|
1990 |
|
|
|
901 |
|
|
|
93.1 |
|
Oasis Landing (6) |
|
|
144 |
|
|
|
1990 |
|
|
|
938 |
|
|
|
93.8 |
|
Oasis Meadows (6) |
|
|
383 |
|
|
|
1996 |
|
|
|
1,031 |
|
|
|
96.2 |
|
Oasis Palms (6) |
|
|
208 |
|
|
|
1989 |
|
|
|
880 |
|
|
|
93.8 |
|
Oasis Pearl (6) |
|
|
90 |
|
|
|
1989 |
|
|
|
930 |
|
|
|
96.8 |
|
Oasis Place (6) |
|
|
240 |
|
|
|
1992 |
|
|
|
440 |
|
|
|
95.9 |
|
Oasis Ridge (6) |
|
|
477 |
|
|
|
1984 |
|
|
|
391 |
|
|
|
92.2 |
|
Oasis Sands |
|
|
48 |
|
|
|
1994 |
|
|
|
1,125 |
|
|
|
93.8 |
|
Oasis Sierra (6) |
|
|
208 |
|
|
|
1998 |
|
|
|
922 |
|
|
|
94.6 |
|
Oasis Springs (6) |
|
|
304 |
|
|
|
1988 |
|
|
|
838 |
|
|
|
93.9 |
|
Oasis Vinings (6) |
|
|
234 |
|
|
|
1994 |
|
|
|
1,152 |
|
|
|
93.1 |
|
NORTH CAROLINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charlotte |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Ballantyne |
|
|
400 |
|
|
|
1998 |
|
|
|
1,053 |
|
|
|
94.9 |
|
Camden Cotton Mills |
|
|
180 |
|
|
|
2002 |
|
|
|
906 |
|
|
|
96.7 |
|
Camden Dilworth |
|
|
145 |
|
|
|
2006 |
|
|
|
857 |
|
|
|
96.4 |
|
Camden Fairview |
|
|
135 |
|
|
|
1983 |
|
|
|
1,036 |
|
|
|
96.1 |
|
Camden Forest |
|
|
208 |
|
|
|
1989 |
|
|
|
703 |
|
|
|
93.3 |
|
Camden Foxcroft (12) |
|
|
156 |
|
|
|
1979 |
|
|
|
940 |
|
|
|
93.7 |
|
Camden Grandview |
|
|
266 |
|
|
|
2000 |
|
|
|
1,145 |
|
|
|
95.5 |
|
Camden Habersham |
|
|
240 |
|
|
|
1986 |
|
|
|
773 |
|
|
|
95.7 |
|
Camden Park Commons |
|
|
232 |
|
|
|
1997 |
|
|
|
859 |
|
|
|
94.0 |
|
Camden Pinehurst |
|
|
407 |
|
|
|
1967 |
|
|
|
1,147 |
|
|
|
95.5 |
|
Camden Sedgebrook |
|
|
368 |
|
|
|
1999 |
|
|
|
1,017 |
|
|
|
95.2 |
|
Camden Simsbury |
|
|
100 |
|
|
|
1985 |
|
|
|
874 |
|
|
|
95.9 |
|
Camden South End |
|
|
299 |
|
|
|
2003 |
|
|
|
883 |
|
|
|
95.1 |
|
Camden Stonecrest |
|
|
306 |
|
|
|
2001 |
|
|
|
1,169 |
|
|
|
94.7 |
|
Camden Touchstone (12) |
|
|
132 |
|
|
|
1986 |
|
|
|
899 |
|
|
|
90.0 |
|
13
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
|
2007 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
|
Occupancy (1) |
|
Raleigh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Crest |
|
|
438 |
|
|
|
2001 |
|
|
|
1,129 |
|
|
|
94.4 |
% |
Camden Governors Village |
|
|
242 |
|
|
|
1999 |
|
|
|
1,134 |
|
|
|
92.7 |
|
Camden Lake Pine |
|
|
446 |
|
|
|
1999 |
|
|
|
1,075 |
|
|
|
93.1 |
|
Camden Manor Park (7) |
|
|
484 |
|
|
|
2006 |
|
|
|
966 |
|
|
|
93.2 |
|
Camden Overlook |
|
|
320 |
|
|
|
2001 |
|
|
|
1,056 |
|
|
|
94.2 |
|
Camden Reunion Park |
|
|
420 |
|
|
|
2000/2004 |
|
|
|
972 |
|
|
|
92.4 |
|
Camden Westwood |
|
|
354 |
|
|
|
1999 |
|
|
|
1,112 |
|
|
|
95.2 |
|
PENNSYLVANIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Valleybrook |
|
|
352 |
|
|
|
2002 |
|
|
|
992 |
|
|
|
95.0 |
|
TEXAS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Austin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Briar Oaks |
|
|
430 |
|
|
|
1980 |
|
|
|
711 |
|
|
|
92.8 |
|
Camden Gaines Ranch |
|
|
390 |
|
|
|
1997 |
|
|
|
955 |
|
|
|
93.5 |
|
Camden Huntingdon |
|
|
398 |
|
|
|
1995 |
|
|
|
903 |
|
|
|
95.7 |
|
Camden Laurel Ridge |
|
|
183 |
|
|
|
1986 |
|
|
|
702 |
|
|
|
94.3 |
|
Camden Ridgecrest |
|
|
284 |
|
|
|
1995 |
|
|
|
851 |
|
|
|
94.9 |
|
Camden Ridgeview (11) |
|
|
167 |
|
|
|
1984 |
|
|
|
859 |
|
|
|
95.7 |
|
Camden South Congress (8) |
|
|
253 |
|
|
|
2001 |
|
|
|
975 |
|
|
|
91.2 |
|
Camden Stoneleigh |
|
|
390 |
|
|
|
2001 |
|
|
|
908 |
|
|
|
94.7 |
|
Camden Woodview |
|
|
283 |
|
|
|
1984 |
|
|
|
644 |
|
|
|
94.7 |
|
Corpus Christi |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Breakers (12) |
|
|
288 |
|
|
|
1996 |
|
|
|
868 |
|
|
|
90.5 |
|
Camden Copper Ridge |
|
|
344 |
|
|
|
1986 |
|
|
|
775 |
|
|
|
92.7 |
|
Camden Miramar (9) |
|
|
778 |
|
|
|
1994/2004 |
|
|
|
468 |
|
|
|
77.2 |
|
Dallas/Fort Worth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Addison (2) |
|
|
456 |
|
|
|
1996 |
|
|
|
942 |
|
|
|
94.8 |
|
Camden Buckingham |
|
|
464 |
|
|
|
1997 |
|
|
|
919 |
|
|
|
95.2 |
|
Camden Centreport |
|
|
268 |
|
|
|
1997 |
|
|
|
910 |
|
|
|
94.4 |
|
Camden Cimarron |
|
|
286 |
|
|
|
1992 |
|
|
|
772 |
|
|
|
95.8 |
|
Camden Farmers Market |
|
|
904 |
|
|
|
2001/2005 |
|
|
|
933 |
|
|
|
94.9 |
|
Camden Gardens |
|
|
256 |
|
|
|
1983 |
|
|
|
652 |
|
|
|
94.1 |
|
Camden Glen Lakes (12) |
|
|
424 |
|
|
|
1979 |
|
|
|
877 |
|
|
|
83.6 |
|
Camden Lakeview |
|
|
476 |
|
|
|
1985 |
|
|
|
853 |
|
|
|
92.5 |
|
Camden Legacy Creek |
|
|
240 |
|
|
|
1995 |
|
|
|
831 |
|
|
|
96.0 |
|
Camden Legacy Park |
|
|
276 |
|
|
|
1996 |
|
|
|
871 |
|
|
|
96.7 |
|
Camden Oasis |
|
|
602 |
|
|
|
1986 |
|
|
|
548 |
|
|
|
87.0 |
|
Camden Place |
|
|
442 |
|
|
|
1984 |
|
|
|
772 |
|
|
|
93.7 |
|
Camden Springs |
|
|
304 |
|
|
|
1987 |
|
|
|
713 |
|
|
|
93.2 |
|
Camden Towne Village |
|
|
188 |
|
|
|
1983 |
|
|
|
735 |
|
|
|
93.7 |
|
Camden Valley Creek |
|
|
380 |
|
|
|
1984 |
|
|
|
855 |
|
|
|
93.7 |
|
Camden Valley Park |
|
|
516 |
|
|
|
1986 |
|
|
|
743 |
|
|
|
94.1 |
|
Camden Valley Ridge |
|
|
408 |
|
|
|
1987 |
|
|
|
773 |
|
|
|
92.5 |
|
Camden Westview |
|
|
335 |
|
|
|
1983 |
|
|
|
697 |
|
|
|
95.1 |
|
14
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
|
2007 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
|
Occupancy (1) |
|
Houston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Baytown |
|
|
272 |
|
|
|
1999 |
|
|
|
844 |
|
|
|
94.9 |
% |
Camden City Centre (4) |
|
|
379 |
|
|
|
2007 |
|
|
|
932 |
|
|
Lease-up |
|
Camden Creek |
|
|
456 |
|
|
|
1984 |
|
|
|
639 |
|
|
|
91.8 |
|
Camden Greenway |
|
|
756 |
|
|
|
1999 |
|
|
|
861 |
|
|
|
96.3 |
|
Camden Holly Springs (2) |
|
|
548 |
|
|
|
1999 |
|
|
|
934 |
|
|
|
94.9 |
|
Camden Midtown |
|
|
337 |
|
|
|
1999 |
|
|
|
843 |
|
|
|
97.9 |
|
Camden Oak Crest |
|
|
364 |
|
|
|
2003 |
|
|
|
870 |
|
|
|
96.4 |
|
Camden Park (2) |
|
|
288 |
|
|
|
1995 |
|
|
|
866 |
|
|
|
96.3 |
|
Camden Plaza (4) (10) |
|
|
271 |
|
|
|
2007 |
|
|
|
915 |
|
|
Lease-up |
|
Camden Royal Oaks (4) |
|
|
236 |
|
|
|
2006 |
|
|
|
923 |
|
|
Lease-up |
|
Camden Steeplechase |
|
|
290 |
|
|
|
1982 |
|
|
|
748 |
|
|
|
93.1 |
|
Camden Stonebridge |
|
|
204 |
|
|
|
1993 |
|
|
|
845 |
|
|
|
97.5 |
|
Camden Sugar Grove (2) |
|
|
380 |
|
|
|
1997 |
|
|
|
917 |
|
|
|
95.0 |
|
Camden Vanderbilt (12) |
|
|
894 |
|
|
|
1996/1997 |
|
|
|
863 |
|
|
|
87.0 |
|
Camden West Oaks |
|
|
671 |
|
|
|
1982 |
|
|
|
726 |
|
|
|
93.2 |
|
|
|
|
(1) |
|
Represents average physical occupancy for the year except as noted below. |
|
(2) |
|
Properties owned through a joint venture in which we own a 20% interest. The remaining
interest is owned by an unaffiliated private investor. |
|
(3) |
|
Property owned through a joint venture in which we own a 50% interest. The remaining
interest is owned by an unaffiliated private investor. |
|
(4) |
|
Properties under lease-up at December 31, 2007. |
|
(5) |
|
Properties owned through a joint venture in which we own a 15% interest. The remaining
interest is owned by an unaffiliated private investor. |
|
(6) |
|
Properties owned through a joint venture in which we own a 20% interest. The remaining
interest is owned by an unaffiliated private pension fund. |
|
(7) |
|
Development property completed during 2007 average occupancy calculated from date at which
occupancy exceeded 90% through year-end. |
|
(8) |
|
Properties acquired during 2007 average occupancy calculated from date of acquisition date
through year-end. |
|
(9) |
|
Miramar is a student housing project for Texas A&M at Corpus Christi. Average occupancy
includes summer which is normally subject to high vacancies. |
|
(10) |
|
Property owned through a joint venture in which we own 30%. The remaining interest is owned
by an unaffiliated private investor. |
|
(11) |
|
Properties held for sale at December 31, 2007. |
|
(12) |
|
Properties under redevelopment at December 31, 2007. |
15
Item 3. Legal Proceedings
For discussion regarding legal proceedings, see Note 17, Commitments and
Contingencies in the Notes to Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
The high and low closing prices per share of our common shares, as reported on the
New York Stock Exchange composite tape, and distributions per share declared for the
quarters indicated are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
Low |
|
|
Distributions |
|
2007 Quarters: |
|
|
|
|
|
|
|
|
|
|
|
|
First |
|
$ |
79.26 |
|
|
$ |
68.09 |
|
|
$ |
0.69 |
|
Second |
|
|
75.32 |
|
|
|
66.97 |
|
|
|
0.69 |
|
Third |
|
|
68.74 |
|
|
|
54.96 |
|
|
|
0.69 |
|
Fourth |
|
|
66.82 |
|
|
|
45.78 |
|
|
|
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Quarters: |
|
|
|
|
|
|
|
|
|
|
|
|
First |
|
$ |
72.70 |
|
|
$ |
58.40 |
|
|
$ |
0.66 |
|
Second |
|
|
73.55 |
|
|
|
65.50 |
|
|
|
0.66 |
|
Third |
|
|
77.99 |
|
|
|
72.80 |
|
|
|
0.66 |
|
Fourth |
|
|
80.97 |
|
|
|
71.40 |
|
|
|
0.66 |
|
As of February 15, 2008, there were 727 shareholders of record and approximately
28,500 beneficial owners of our common shares.
The following table summarizes repurchases of our equity securities in the quarter
ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate |
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Dollar Value of |
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased as |
|
|
Shares That May Yet |
|
|
|
Total Number of |
|
|
Average Price Paid |
|
|
Part of Publicly |
|
|
Be Purchased Under |
|
|
|
Shares Purchased |
|
|
per Share |
|
|
Announced Programs |
|
|
the Program (1) |
|
Month ended October 31, 2007 |
|
|
21,100 |
|
|
$ |
59.88 |
|
|
|
21,100 |
|
|
$ |
163,550,000 |
|
Month ended November 30, 2007 |
|
|
1,575,000 |
|
|
|
52.03 |
|
|
|
1,575,000 |
|
|
|
81,603,000 |
|
Month ended December 31, 2007 |
|
|
680,400 |
|
|
|
46.68 |
|
|
|
680,400 |
|
|
|
49,842,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (2) |
|
|
2,276,500 |
|
|
$ |
50.50 |
|
|
|
2,276,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In April 2007, our Board of Trust Managers approved a program to repurchase up to $250.0
million of our common equity securities through open market purchases and privately negotiated
transactions. In January 2008, our Board of Trust Managers approved the repurchase up to an
additional $250.0 million of our common equity securities. |
|
(2) |
|
During the year ended December 31, 2007, we repurchased approximately 3.6 million common
shares for cash totaling approximately $200.2 million, or $55.54 average price per share. |
16
Item 6. Selected Financial Data
The following table provides selected financial data relating to our historical
financial condition and results of operations as of and for each of the years ending
December 31, 2003 through 2007. This data should be read in conjunction with Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations
and the consolidated financial statements and related notes. Prior year amounts have been
restated for amounts classified as discontinued operations.
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands, except per share amounts and property data) |
|
2007 |
|
|
2006 |
|
|
2005(d) |
|
|
2004 |
|
|
2003 |
|
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
$ |
609,080 |
|
|
$ |
580,576 |
|
|
$ |
504,061 |
|
|
$ |
365,261 |
|
|
$ |
348,209 |
|
Total property expenses |
|
|
227,306 |
|
|
|
220,163 |
|
|
|
193,792 |
|
|
|
147,621 |
|
|
|
138,333 |
|
Total non-property income |
|
|
25,002 |
|
|
|
35,530 |
|
|
|
50,912 |
|
|
|
27,884 |
|
|
|
12,066 |
|
Total other expenses |
|
|
344,996 |
|
|
|
350,850 |
|
|
|
343,155 |
|
|
|
211,236 |
|
|
|
194,859 |
|
Income from continuing operations |
|
|
47,078 |
|
|
|
125,016 |
|
|
|
151,526 |
|
|
|
22,767 |
|
|
|
18,329 |
|
Net income |
|
|
148,457 |
|
|
|
232,846 |
|
|
|
199,086 |
|
|
|
41,341 |
|
|
|
29,430 |
|
|
Income from continuing operations per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.81 |
|
|
$ |
2.21 |
|
|
$ |
2.91 |
|
|
$ |
0.55 |
|
|
$ |
0.47 |
|
Diluted |
|
|
0.80 |
|
|
|
2.14 |
|
|
|
2.72 |
|
|
|
0.54 |
|
|
|
0.44 |
|
Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.55 |
|
|
$ |
4.11 |
|
|
$ |
3.83 |
|
|
$ |
1.00 |
|
|
$ |
0.75 |
|
Diluted |
|
|
2.51 |
|
|
|
3.96 |
|
|
|
3.58 |
|
|
|
0.98 |
|
|
|
0.71 |
|
Distributions declared per common share |
|
$ |
2.76 |
|
|
$ |
2.64 |
|
|
$ |
2.54 |
|
|
$ |
2.54 |
|
|
$ |
2.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data (at end of year) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate assets |
|
$ |
5,527,403 |
|
|
$ |
5,141,467 |
|
|
$ |
5,039,007 |
|
|
$ |
3,159,077 |
|
|
$ |
3,099,856 |
|
Total assets |
|
|
4,890,760 |
|
|
|
4,586,050 |
|
|
|
4,487,799 |
|
|
|
2,629,364 |
|
|
|
2,625,561 |
|
Notes payable |
|
|
2,828,095 |
|
|
|
2,330,976 |
|
|
|
2,633,091 |
|
|
|
1,576,405 |
|
|
|
1,509,677 |
|
Minority interests |
|
|
219,952 |
|
|
|
223,511 |
|
|
|
221,023 |
|
|
|
159,567 |
|
|
|
196,385 |
|
Shareholders equity |
|
|
1,531,313 |
|
|
|
1,734,356 |
|
|
|
1,370,903 |
|
|
|
738,515 |
|
|
|
784,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
223,106 |
|
|
$ |
231,569 |
|
|
$ |
200,845 |
|
|
$ |
156,997 |
|
|
$ |
144,703 |
|
Investing activities |
|
|
(346,798 |
) |
|
|
(52,067 |
) |
|
|
(207,561 |
) |
|
|
(65,321 |
) |
|
|
(94,386 |
) |
Financing activities |
|
|
123,555 |
|
|
|
(180,044 |
) |
|
|
6,039 |
|
|
|
(92,780 |
) |
|
|
(47,365 |
) |
Funds from operations diluted (a) |
|
|
227,153 |
|
|
|
237,790 |
|
|
|
195,290 |
|
|
|
143,669 |
|
|
|
135,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of operating properties (at the end of year) (b) |
|
|
182 |
|
|
|
186 |
|
|
|
191 |
|
|
|
144 |
|
|
|
144 |
|
Number of operating apartment homes (at end of year) (b) |
|
|
63,085 |
|
|
|
63,843 |
|
|
|
65,580 |
|
|
|
51,456 |
|
|
|
51,344 |
|
Number of
operating apartment homes (weighted
average) (b)(c) |
|
|
53,132 |
|
|
|
55,850 |
|
|
|
55,056 |
|
|
|
47,118 |
|
|
|
46,382 |
|
Weighted average monthly total property revenue
per apartment home |
|
$ |
1,005 |
|
|
$ |
951 |
|
|
$ |
871 |
|
|
$ |
777 |
|
|
$ |
754 |
|
Properties under development (at end of period) |
|
|
11 |
|
|
|
11 |
|
|
|
9 |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
(a) |
|
Management considers FFO to be an appropriate measure of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts
(NAREIT) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America (GAAP)),
excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, and adjustments for
unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including minority interests, which
are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on
dispositions of operating properties and excluding depreciation, FFO can help one compare the operating performance of a companys real estate between periods or as
compared to different companies. |
|
(b) |
|
Includes discontinued operations. |
|
(c) |
|
Excludes apartment homes owned in joint ventures. |
|
(d) |
|
The 2005 results include the operations of Summit Properties Inc. subsequent to February 28, 2005. |
17
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial
statements and notes appearing elsewhere in this report. Historical results and trends which might
appear in the consolidated financial statements should not be interpreted as being indicative of
future operations.
We consider portions of this report to be forward-looking within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as
amended, with respect to our expectations for future periods. Forward-looking statements do not
discuss historical fact, but instead include statements related to expectations, projections,
intentions or other items relating to the future. Although we believe the expectations reflected
in our forward-looking statements are based upon reasonable assumptions, we can give no assurance
our expectations will be achieved. Any statements contained herein that are not statements of
historical fact should be deemed forward-looking statements. Reliance should not be placed on
these forward-looking statements as they are subject to known and unknown risks, uncertainties and
other factors beyond our control and could differ materially from our actual results and
performance.
Factors that may cause our actual results or performance to differ materially from those
contemplated by forward-looking statements include, but are not limited to, the following:
|
|
|
Insufficient cash flows could affect our ability to make required payments for
debt obligations or pay distributions to shareholders and create refinancing risk; |
|
|
|
|
Unfavorable changes in economic conditions could adversely impact occupancy or
rental rates; |
|
|
|
|
We have significant debt; which could have important adverse consequences; |
|
|
|
|
Volatility in debt markets could adversely impact future acquisitions and values
of real estate assets; |
|
|
|
|
Various changes could adversely impact the market price of our common shares; |
|
|
|
|
Development and construction risks could impact our profitability; |
|
|
|
|
Our property acquisition strategy may not produce the cash flows expected; |
|
|
|
|
Difficulties of selling real estate could limit our flexibility; |
|
|
|
|
Variable rate debt is subject to interest rate risk; |
|
|
|
|
Issuances of additional debt or equity may adversely impact our financial
condition; |
|
|
|
|
Losses from catastrophes may exceed our insurance coverage; |
|
|
|
|
Potential liability for environmental contamination could result in substantial
costs; |
|
|
|
|
Tax matters, including failure to qualify as a real estate investment trust
(REIT) could have adverse consequences; |
|
|
|
|
Investments through joint ventures and partnerships involve risks not present in
investments in which we are the sole investor; |
|
|
|
|
We face risks associated with investment in and management of a discretionary
fund; |
|
|
|
|
Our dependence on our key personnel; |
|
|
|
|
We may incur losses on interest rate hedging arrangements; |
|
|
|
|
Competition could limit our ability to lease apartments or increase or maintain
rental income; and |
|
|
|
|
Changes in laws and litigation risks could affect our business. |
These forward-looking statements represent our estimates and assumptions as of the date of this
report.
Executive Summary
Based on our results for the year ended December 31, 2007 and the projected economic
conditions, we expect moderating growth during 2008. Economic factors affecting our revenue
include declining job growth and continued population growth and household formations in the
markets in which we operate, as well as declining fundamentals in the for-sale single-family
housing market. Negative sentiment currently surrounding single-family housing could have a
positive impact on multifamily demand, as more potential home buyers choose to rent and existing
renters extend their stays in apartment homes. However, high inventories of unsold single-family
homes in select markets could cause further declines in home prices, making home buying a more
attractive option for some renters or resulting in additional single-family homes becoming rental
units.
18
We intend to look for opportunities to acquire existing communities through our investment in
and management of a discretionary investment fund. During its term, which will end eight years
from the final closing, subject to two one-year extensions, the Fund will be our exclusive
investment vehicle for acquiring fully developed multifamily properties, subject to certain
exceptions. We expect market concentration risk to be mitigated as our property operations are not
centralized in any one market and our portfolio of apartment communities are geographically
diverse. We also intend to continue focusing on our development
pipeline with approximately $2.0 billion to $2.5 billion in our current and future development pipelines. Total
projected capital costs and the commencement of future developments may be impacted by increasing
construction costs and other factors.
Property Portfolio
Our multifamily property portfolio, excluding land held for future development and joint
venture properties which we do not manage, is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
Apartment |
|
|
|
|
|
|
Apartment |
|
|
|
|
|
|
Homes |
|
|
Properties |
|
|
Homes |
|
|
Properties |
|
Operating Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas, Nevada |
|
|
8,064 |
|
|
|
30 |
|
|
|
8,064 |
|
|
|
30 |
|
Dallas, Texas (1) |
|
|
7,225 |
|
|
|
18 |
|
|
|
7,773 |
|
|
|
21 |
|
Houston, Texas |
|
|
6,346 |
|
|
|
15 |
|
|
|
5,696 |
|
|
|
13 |
|
Tampa, Florida |
|
|
5,503 |
|
|
|
12 |
|
|
|
5,635 |
|
|
|
12 |
|
Washington, D.C. Metro |
|
|
4,525 |
|
|
|
13 |
|
|
|
3,834 |
|
|
|
11 |
|
Charlotte, North Carolina |
|
|
3,574 |
|
|
|
15 |
|
|
|
4,146 |
|
|
|
17 |
|
Orlando, Florida |
|
|
3,296 |
|
|
|
8 |
|
|
|
3,296 |
|
|
|
8 |
|
Atlanta, Georgia |
|
|
3,202 |
|
|
|
10 |
|
|
|
3,202 |
|
|
|
10 |
|
Austin, Texas |
|
|
2,778 |
|
|
|
9 |
|
|
|
2,525 |
|
|
|
8 |
|
Raleigh, North Carolina |
|
|
2,704 |
|
|
|
7 |
|
|
|
2,704 |
|
|
|
7 |
|
Denver, Colorado |
|
|
2,529 |
|
|
|
8 |
|
|
|
2,529 |
|
|
|
8 |
|
Southeast Florida |
|
|
2,520 |
|
|
|
7 |
|
|
|
2,520 |
|
|
|
7 |
|
Phoenix, Arizona |
|
|
2,433 |
|
|
|
8 |
|
|
|
2,433 |
|
|
|
8 |
|
Los Angeles/Orange County, California |
|
|
2,191 |
|
|
|
5 |
|
|
|
2,191 |
|
|
|
5 |
|
San Diego/Inland Empire, California |
|
|
1,196 |
|
|
|
4 |
|
|
|
846 |
|
|
|
3 |
|
Other |
|
|
4,999 |
|
|
|
13 |
|
|
|
6,449 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Properties |
|
|
63,085 |
|
|
|
182 |
|
|
|
63,843 |
|
|
|
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Properties Under Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington, D.C. Metro |
|
|
1,543 |
|
|
|
4 |
|
|
|
2,237 |
|
|
|
6 |
|
Houston, Texas |
|
|
733 |
|
|
|
3 |
|
|
|
650 |
|
|
|
2 |
|
Austin, Texas |
|
|
556 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
Los Angeles/Orange County, California |
|
|
290 |
|
|
|
1 |
|
|
|
290 |
|
|
|
1 |
|
Orlando, Florida |
|
|
261 |
|
|
|
1 |
|
|
|
261 |
|
|
|
1 |
|
San Diego/Inland Empire, California |
|
|
|
|
|
|
|
|
|
|
350 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties Under Development |
|
|
3,383 |
|
|
|
11 |
|
|
|
3,788 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties |
|
|
66,468 |
|
|
|
193 |
|
|
|
67,631 |
|
|
|
197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Joint Venture Properties (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas, Nevada |
|
|
4,047 |
|
|
|
17 |
|
|
|
4,047 |
|
|
|
17 |
|
Houston, Texas |
|
|
1,946 |
|
|
|
6 |
|
|
|
1,487 |
|
|
|
4 |
|
Phoenix, Arizona |
|
|
992 |
|
|
|
4 |
|
|
|
992 |
|
|
|
4 |
|
Los Angeles/Orange County, California |
|
|
711 |
|
|
|
2 |
|
|
|
711 |
|
|
|
2 |
|
Washington, D.C. Metro |
|
|
508 |
|
|
|
1 |
|
|
|
508 |
|
|
|
1 |
|
Dallas, Texas |
|
|
456 |
|
|
|
1 |
|
|
|
456 |
|
|
|
1 |
|
Denver, Colorado |
|
|
320 |
|
|
|
1 |
|
|
|
320 |
|
|
|
1 |
|
Other |
|
|
3,237 |
|
|
|
9 |
|
|
|
3,237 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Joint Venture Properties |
|
|
12,217 |
|
|
|
41 |
|
|
|
11,758 |
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties Owned 100% |
|
|
54,251 |
|
|
|
152 |
|
|
|
55,873 |
|
|
|
158 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Effective January 1, 2007, the operations of two adjacent properties were combined. |
|
(2) |
|
Refer to Note 8, Investments in Joint Ventures in the Notes to Consolidated Financial
Statements for further discussion of our joint venture investments. |
19
Stabilized Communities
We consider a property stabilized once it reaches 90% occupancy. During the year ended
December 31, 2007, stabilization was achieved at four completed properties as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Apartment |
|
|
Date of |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Completion |
|
|
Stabilization |
|
Camden Fairfax Corner
Fairfax, VA |
|
|
488 |
|
|
|
3Q06 |
|
|
|
1Q07 |
|
Camden Manor Park
Raleigh, NC |
|
|
484 |
|
|
|
3Q06 |
|
|
|
2Q07 |
|
Camden Clearbrook
Frederick, MD |
|
|
297 |
|
|
|
1Q07 |
|
|
|
2Q07 |
|
Camden Westwind
Ashburn, VA |
|
|
464 |
|
|
|
2Q06 |
|
|
|
3Q07 |
|
Acquisition Communities
During April 2007, we acquired Camden South Congress, a 253-apartment home community located
in Austin, Texas for $42.8 million and during June 2007 we acquired Camden Royal Palms, a
352-apartment home community located in Tampa, Florida for $41.1 million. Both properties were
purchased with proceeds using our unsecured line of credit. The purchase prices of these
properties were allocated to the tangible and intangible assets and liabilities acquired based on
their estimated fair values at the date of acquisition.
Dispositions and Partial Sales to Joint Ventures Included in Continuing Operations
During the year ended December 31, 2006, we recognized gains of $91.5 million from the partial
sale of nine properties to an affiliated unconsolidated joint venture. This partial sale generated
net proceeds of approximately $170.9 million. During the year ended December 31, 2005, we
recognized gains of $132.1 million from the partial sales of twelve properties to twelve affiliated
unconsolidated joint ventures. These partial sales generated net proceeds of approximately $316.8
million. The gains recognized on the partial sales of these assets were included in continuing
operations as we retained a partial interest in the ventures which own these assets.
During the year ended December 31, 2006, we recognized gains of $0.5 million and $4.7 million
on the partial sales of land to two joint ventures located in Houston, Texas and College Park,
Maryland, respectively. The gains recognized on the sales of these assets were included in
continuing operations as we retained a partial interest in the ventures which own these assets.
During the year ended December 31, 2006, we recognized a gain of $0.8 million on the sale of
land located adjacent to one of our pre-development assets in College Park, Maryland. During the
year ended December 31, 2005, we recognized a gain of $0.8 million on the sale of land located
adjacent to one of our pre-development assets in Houston, Texas. Also during 2005, we sold
undeveloped land located in Dallas, Texas to an unrelated third party. In connection with our
decision to sell this undeveloped land, we recognized an impairment loss of $0.3 million. These
transactions were included in continuing operations as the cash flows from these land parcels were
not separately identifiable from the cash flows generated by the adjacent pre-development assets.
20
Discontinued Operations
We intend to maintain a strategy of managing our invested capital through the selective sale
of properties and to utilize the proceeds to fund investments with higher anticipated growth
prospects in our markets. Income from discontinued operations includes the operations of
properties, including land, sold during the period or classified as held for sale as of December
31, 2007. The components of earnings classified as discontinued operations include separately
identifiable property-specific revenues, expenses, depreciation and interest expense, if any. The
gain on the disposal of the held for sale properties is also classified as discontinued operations.
A summary of our 2007 dispositions and properties held for sale as of December 31, 2007 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
Apartment |
|
|
Date of |
|
|
|
|
|
|
Net Book |
|
Property and Location |
|
Homes |
|
|
Disposition |
|
|
Year Built |
|
|
Value (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dispositions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Taravue
St. Louis, MO |
|
|
304 |
|
|
|
2Q07 |
|
|
|
1975 |
|
|
|
n/a |
|
Camden Trace
Maryland Heights, MO |
|
|
372 |
|
|
|
2Q07 |
|
|
|
1972 |
|
|
|
n/a |
|
Camden Downs
Louisville, KY |
|
|
254 |
|
|
|
2Q07 |
|
|
|
1975 |
|
|
|
n/a |
|
Camden Ridge
Ft. Worth, TX |
|
|
208 |
|
|
|
4Q07 |
|
|
|
1985 |
|
|
|
n/a |
|
Camden Terrace
Ft, Worth, TX |
|
|
340 |
|
|
|
4Q07 |
|
|
|
1984 |
|
|
|
n/a |
|
Camden Eastchase
Charlotte, NC |
|
|
220 |
|
|
|
4Q07 |
|
|
|
1986 |
|
|
|
n/a |
|
Camden Glen
Greensboro, NC |
|
|
304 |
|
|
|
4Q07 |
|
|
|
1980 |
|
|
|
n/a |
|
Camden Isles
Tampa, FL |
|
|
484 |
|
|
|
4Q07 |
|
|
|
1983/1985 |
|
|
|
n/a |
|
Camden Timber Creek
Charlotte, NC |
|
|
352 |
|
|
|
4Q07 |
|
|
|
1984 |
|
|
|
n/a |
|
Camden Wendover
Greensboro, NC |
|
|
216 |
|
|
|
4Q07 |
|
|
|
1985 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total apartment homes sold |
|
|
3,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Pinnacle
Westminster, CO |
|
|
224 |
|
|
|
n/a |
|
|
|
1985 |
|
|
$ |
11.2 |
|
Camden Ridgeview
Austin, TX |
|
|
167 |
|
|
|
n/a |
|
|
|
1984 |
|
|
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total apartment homes sold and held for sale |
|
|
3,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net Book Value is land and buildings and improvements less the related accumulated
depreciation as of December 31, 2007. |
During the year ended December 31, 2007, we received net proceeds of approximately $166.4
million and recognized gains of $106.3 million from the sale of the ten operating properties listed
above to unaffiliated third parties. During the year ended December 31, 2006, we received net
proceeds of approximately $137.3 million and recognized gains of $78.8 million from the sale of
eight operating properties, containing 3,041 apartment homes, to unaffiliated third parties. During
the year ended December 31, 2005, we received net proceeds of approximately $125.1 million and
recognized a gain of $36.1 million on the sale of three operating properties, containing
1,317 apartment homes, to unaffiliated third parties.
21
Upon our decision to abandon efforts to develop certain land parcels and to market the parcels
as held for sale, we reclassified the operating expenses associated with those assets to
discontinued operations. At December 31, 2007, we had several undeveloped land parcels classified
as held for sale as follows:
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
Net Book |
|
Location |
|
Acres |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
Southeast Florida |
|
|
2.2 |
|
|
$ |
7.2 |
|
Dallas |
|
|
2.4 |
|
|
|
1.8 |
|
|
|
|
|
|
|
|
|
Total land held for sale |
|
|
|
|
|
$ |
9.0 |
|
|
|
|
|
|
|
|
|
During the year ended December 31, 2007, we sold 0.9 acres of undeveloped land to an unrelated
third party. In connection with this sale, we received net proceeds of $6.0 million and recognized
gains totaling $0.7 million. During the year ended December 31, 2006, we sold undeveloped land
totaling 8.7 acres to unrelated third parties. In connection with these sales, we received net
proceeds of $41.0 million and recognized gains totaling $20.5 million. Land sales during the year
ended December 31, 2005 were immaterial.
Development and Lease-Up Properties
At December 31, 2007, we had five completed properties in lease-up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
% Leased |
|
|
|
|
|
|
Estimated |
|
($ in millions) |
|
Apartment |
|
|
Cost |
|
|
at |
|
|
Date of |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Incurred |
|
|
2 /11/08 |
|
|
Completion |
|
|
Stabilization |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Old Creek
San Marcos, CA |
|
|
350 |
|
|
$ |
92.1 |
|
|
|
90 |
% |
|
|
1Q07 |
|
|
|
1Q08 |
|
Camden Royal Oaks
Houston, TX |
|
|
236 |
|
|
|
21.0 |
|
|
|
78 |
% |
|
|
3Q06 |
|
|
|
2Q08 |
|
Camden Monument Place
Fairfax, VA |
|
|
368 |
|
|
|
62.2 |
|
|
|
73 |
% |
|
|
4Q07 |
|
|
|
2Q08 |
|
Camden City Centre
Houston, TX |
|
|
379 |
|
|
|
51.1 |
|
|
|
60 |
% |
|
|
4Q07 |
|
|
|
3Q08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated |
|
|
1,333 |
|
|
$ |
226.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Plaza
Houston, TX |
|
|
271 |
|
|
$ |
40.7 |
|
|
|
61 |
% |
|
|
3Q07 |
|
|
|
2Q08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
At December 31, 2007, we had several properties in various stages of construction as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in |
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Properties |
|
|
Estimated |
|
|
Estimated |
|
($ in millions) |
|
Apartment |
|
|
Estimated |
|
|
Cost |
|
|
Under |
|
|
Date of |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Cost |
|
|
Incurred |
|
|
Development |
|
|
Completion |
|
|
Stabilization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Potomac Yard (1)
Arlington, VA |
|
|
378 |
|
|
$ |
110.0 |
|
|
$ |
101.6 |
|
|
$ |
65.6 |
|
|
|
1Q08 |
|
|
|
1Q09 |
|
Camden Orange Court
Orlando, FL |
|
|
261 |
|
|
|
49.0 |
|
|
|
42.2 |
|
|
|
42.2 |
|
|
|
3Q08 |
|
|
|
1Q09 |
|
Camden Circle C
Austin, TX |
|
|
208 |
|
|
|
27.0 |
|
|
|
10.0 |
|
|
|
10.0 |
|
|
|
4Q08 |
|
|
|
1Q09 |
|
Camden Summerfield (1)
Landover, MD |
|
|
291 |
|
|
|
68.0 |
|
|
|
57.9 |
|
|
|
25.2 |
|
|
|
4Q08 |
|
|
|
1Q09 |
|
Camden Dulles Station
Oak Hill, VA |
|
|
366 |
|
|
|
77.0 |
|
|
|
51.7 |
|
|
|
51.7 |
|
|
|
1Q09 |
|
|
|
3Q09 |
|
Camden Whispering Oaks
Houston, TX |
|
|
274 |
|
|
|
30.0 |
|
|
|
10.2 |
|
|
|
10.2 |
|
|
|
1Q09 |
|
|
|
3Q09 |
|
Camden Amber Oaks
Austin, TX |
|
|
348 |
|
|
|
40.0 |
|
|
|
8.2 |
|
|
|
8.2 |
|
|
|
2Q09 |
|
|
|
3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated |
|
|
2,126 |
|
|
$ |
401.0 |
|
|
$ |
281.8 |
|
|
$ |
213.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Properties in lease-up as of December 31, 2007. |
Our consolidated balance sheet at December 31, 2007 included $446.7 million related to
properties under development. Of this amount, $213.1 million related to our projects currently
under development. Additionally, at December 31, 2007, we had $233.6 million invested in land held
for future development, which includes $185.4 million related to projects we expect to begin
constructing during the next 18 months. We also had $43.8 million invested in land tracts adjacent
to recently completed and current development projects, which we may utilize to further develop
apartment homes in these areas. We may also sell certain parcels of these undeveloped land tracts
to third parties for commercial and retail development.
At December 31, 2007, we had investments in four joint ventures which were developing four
multi-family communities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Total |
|
($ in millions) |
|
Apartment |
|
|
Estimated |
|
|
Cost |
|
Property and Location |
|
Homes |
|
|
Cost |
|
|
Incurred |
|
Braeswood Place (2)
Houston, TX |
|
|
340 |
|
|
$ |
48.6 |
|
|
$ |
21.4 |
|
Belle Meade (2)
Houston, TX |
|
|
119 |
|
|
|
33.2 |
|
|
|
8.6 |
|
Camden Main & Jamboree (1)
Irvine, CA |
|
|
290 |
|
|
|
112.0 |
|
|
|
107.8 |
|
Camden College Park (1)
College Park, MD |
|
|
508 |
|
|
|
139.9 |
|
|
|
118.5 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,257 |
|
|
$ |
333.7 |
|
|
$ |
256.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Properties in lease-up as of December 31, 2007. |
|
(2) |
|
Properties being developed by joint venture partner. |
23
Geographic Diversification
At December 31, 2007 and 2006, our investments in various geographic areas, excluding
investments in joint ventures and properties held for sale, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington, D.C. Metro |
|
$ |
1,196,451 |
|
|
|
21.8 |
% |
|
$ |
1,038,981 |
|
|
|
20.4 |
% |
Southeast Florida |
|
|
444,645 |
|
|
|
8.1 |
|
|
|
442,550 |
|
|
|
8.7 |
|
Houston, Texas |
|
|
374,177 |
|
|
|
6.8 |
|
|
|
334,019 |
|
|
|
6.6 |
|
Dallas, Texas |
|
|
372,075 |
|
|
|
6.8 |
|
|
|
378,985 |
|
|
|
7.4 |
|
Tampa, Florida |
|
|
370,379 |
|
|
|
6.7 |
|
|
|
322,684 |
|
|
|
6.3 |
|
Los Angeles/Orange County, California |
|
|
346,452 |
|
|
|
6.3 |
|
|
|
343,853 |
|
|
|
6.7 |
|
Orlando, Florida |
|
|
336,768 |
|
|
|
6.1 |
|
|
|
288,088 |
|
|
|
5.6 |
|
Atlanta, Georgia |
|
|
316,733 |
|
|
|
5.8 |
|
|
|
314,595 |
|
|
|
6.2 |
|
Las Vegas, Nevada |
|
|
314,609 |
|
|
|
5.7 |
|
|
|
281,069 |
|
|
|
5.5 |
|
Charlotte, North Carolina |
|
|
312,760 |
|
|
|
5.7 |
|
|
|
336,337 |
|
|
|
6.6 |
|
Raleigh, North Carolina |
|
|
235,263 |
|
|
|
4.3 |
|
|
|
232,973 |
|
|
|
4.6 |
|
San Diego/Inland Empire, California |
|
|
225,769 |
|
|
|
4.1 |
|
|
|
190,341 |
|
|
|
3.7 |
|
Austin, Texas |
|
|
221,807 |
|
|
|
4.1 |
|
|
|
158,673 |
|
|
|
3.1 |
|
Denver, Colorado |
|
|
202,962 |
|
|
|
3.7 |
|
|
|
198,185 |
|
|
|
3.9 |
|
Phoenix, Arizona |
|
|
117,092 |
|
|
|
2.1 |
|
|
|
115,418 |
|
|
|
2.3 |
|
Other |
|
|
105,742 |
|
|
|
1.9 |
|
|
|
122,708 |
|
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets, at cost |
|
$ |
5,493,684 |
|
|
|
100.0 |
% |
|
$ |
5,099,459 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of Operations
Changes in revenues and expenses related to our operating properties from period to period are
due primarily to acquisitions, sales of assets to joint ventures, the performance of stabilized
properties in the portfolio, and the lease-up of newly constructed properties. Where appropriate,
comparisons of income and expense on communities included in continuing operations are made on a
per-weighted average apartment home basis in order to adjust for changes in the number of apartment
homes owned during each period. Selected weighted averages for the years ended December 31 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Average monthly property revenue per apartment home |
|
$ |
1,005 |
|
|
$ |
951 |
|
|
$ |
871 |
|
Annualized total property expenses per apartment home |
|
$ |
4,501 |
|
|
$ |
4,328 |
|
|
$ |
4,016 |
|
Weighted average number of operating apartment homes owned 100% |
|
|
50,504 |
|
|
|
50,872 |
|
|
|
48,250 |
|
Weighted average occupancy of operating apartment homes owned 100% |
|
|
93.7 |
% |
|
|
95.1 |
% |
|
|
95.1 |
% |
24
Property-level operating results
The following tables present the property-level revenues and property-level expenses,
excluding discontinued operations, for the year ended December 31, 2007 as compared to 2006 and for
the year ended December 31, 2006 as compared to 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Year Ended |
|
|
|
|
|
|
Homes |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
at 12/31/07 |
|
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
42,089 |
|
|
$ |
499,776 |
|
|
$ |
480,305 |
|
|
$ |
19,471 |
|
|
|
4.1 |
% |
Non-same store communities |
|
|
8,312 |
|
|
|
96,372 |
|
|
|
75,448 |
|
|
|
20,924 |
|
|
|
27.7 |
|
Development and lease-up communities |
|
|
3,459 |
|
|
|
8,473 |
|
|
|
508 |
|
|
|
7,965 |
|
|
|
* |
|
Dispositions/other |
|
|
|
|
|
|
4,459 |
|
|
|
24,315 |
|
|
|
(19,856 |
) |
|
|
(81.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
|
53,860 |
|
|
$ |
609,080 |
|
|
$ |
580,576 |
|
|
$ |
28,504 |
|
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
42,089 |
|
|
$ |
185,145 |
|
|
$ |
180,862 |
|
|
$ |
4,283 |
|
|
|
2.4 |
% |
Non-same store communities |
|
|
8,312 |
|
|
|
35,488 |
|
|
|
27,392 |
|
|
|
8,096 |
|
|
|
29.6 |
|
Development and lease-up communities |
|
|
3,459 |
|
|
|
4,726 |
|
|
|
532 |
|
|
|
4,194 |
|
|
|
* |
|
Dispositions/other |
|
|
|
|
|
|
1,947 |
|
|
|
11,377 |
|
|
|
(9,430 |
) |
|
|
(82.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
53,860 |
|
|
$ |
227,306 |
|
|
$ |
220,163 |
|
|
$ |
7,143 |
|
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Not a meaningful percentage |
Same store communities are communities we owned and were stabilized as of January 1, 2006. Non-same
store communities are stabilized communities we have acquired or developed after January 1, 2006.
Development and lease-up communities are non-stabilized communities we have acquired or developed
after January 1, 2006. Dispositions primarily represent communities we have partially sold to
joint ventures in which we retained an ownership interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Year Ended |
|
|
|
|
|
|
Homes |
|
|
December 31, |
|
|
Change |
|
|
|
at 12/31/06 |
|
|
2006 |
|
|
2005 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
30,950 |
|
|
$ |
317,222 |
|
|
$ |
296,288 |
|
|
$ |
20,934 |
|
|
|
7.1 |
% |
Non-same store communities |
|
|
17,087 |
|
|
|
225,449 |
|
|
|
166,152 |
|
|
|
59,297 |
|
|
|
35.7 |
|
Development and lease-up communities |
|
|
4,391 |
|
|
|
13,585 |
|
|
|
405 |
|
|
|
13,180 |
|
|
|
* |
|
Dispositions/other |
|
|
|
|
|
|
24,320 |
|
|
|
41,216 |
|
|
|
(16,896 |
) |
|
|
(41.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
|
52,428 |
|
|
$ |
580,576 |
|
|
$ |
504,061 |
|
|
$ |
76,515 |
|
|
|
15.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
30,950 |
|
|
$ |
128,255 |
|
|
$ |
121,622 |
|
|
$ |
6,633 |
|
|
|
5.5 |
% |
Non-same store communities |
|
|
17,087 |
|
|
|
76,472 |
|
|
|
57,517 |
|
|
|
18,955 |
|
|
|
33.0 |
|
Development and lease-up communities |
|
|
4,391 |
|
|
|
4,308 |
|
|
|
87 |
|
|
|
4,221 |
|
|
|
* |
|
Dispositions/other |
|
|
|
|
|
|
11,128 |
|
|
|
14,566 |
|
|
|
(3,438 |
) |
|
|
(23.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
52,428 |
|
|
$ |
220,163 |
|
|
$ |
193,792 |
|
|
$ |
26,371 |
|
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Not a meaningful percentage |
Same store communities are communities we owned and were stabilized as of January 1, 2005.
Non-same store communities are stabilized communities we have acquired or developed after January
1, 2005. Development and lease-up communities are non-stabilized communities we have developed or
acquired after January 1, 2005. Dispositions primarily represent communities we have partially
sold to joint ventures in which we retained an ownership interest.
25
Same store analysis
Our same store property revenues for the year ended December 31, 2007 increased $19.5 million,
or 4.1%, from 2006 resulting primarily from higher average rental income per apartment home and
increases in other property income, partially offset by declines in occupancy. Same store property
revenues for the year ended December 31, 2006 increased $20.9 million, or 7.1%, from 2005 primarily
from higher average rental income per apartment home.
Same store property revenues for 2007 as compared to 2006 were positively impacted by
increases in revenues in substantially all markets. These revenue increases were driven by other
property income which increased due to the implementation of Perfect
Connection (also known as CamdenTV) which provides cable services
to our residents and other utility rebilling programs. Our same store communities recognized an
overall increase in average rental rates, as we experienced rental rate increases in all markets.
The increase in average rental rates was a result of moderate improvements in fundamentals
resulting from continued job growth, population growth, and household formations. Average
occupancy at our same store properties declined less than 1% in 2007, as we saw decreases in
occupancy in a majority of our markets. We believe our operating performance was also a result of
the continued operational and technological enhancements we are making at many of our communities,
which have created opportunities to take advantage of additional revenue sources.
Same store property revenues for 2006 as compared to 2005 were impacted by increases in
revenues in all markets. These revenue increases were a result of an overall increase in average
rental rates at our same store communities and increases in other property income.
Total property expenses from our same store communities increased 2.4% and 5.5% for the year
ended December 31, 2007 as compared to 2006 and for the year ended December 31, 2006 as compared to
2005, respectively. The increases in same store property expenses per apartment home for the year
ended December 31, 2007 as compared to 2006 were primarily due to increases in repair and
maintenance expenses and utility expenses in connection with our utility rebilling program
discussed above. The increases for the year ended December 31, 2006 as compared to 2005 were
primarily due to increases in salary and benefit expenses, real estate tax expenses and utilities
expenses.
Non-same store analysis and other analysis
Property revenues from non-same store, development and lease-up communities increased $28.9
million for the year ended December 31, 2007 as compared to 2006 and increased $72.5 million for
the year ended December 31, 2006 as compared to 2005. Both periods realized increases due to the
completion and lease-up of certain properties in our development pipeline. See Development and
Lease-Up Properties for additional detail of occupancy at properties in our development pipeline.
Increases in 2006 as compared to 2005 were primarily affected by communities acquired in the Summit
merger.
Property revenues from dispositions/other decreased $19.9 million and $16.9 million for the
year ended December 31, 2007 as compared to 2006 and for the year ended December 31, 2006 as
compared to 2005, respectively. For the year ended December 31, 2007, revenue from
dispositions/other primarily related to retail lease income of $4.3 million. Dispositions/other
property revenues earned during the year ended December 31, 2006 primarily related to properties
partially sold to joint ventures of $20.0 million and retail lease income of $3.1 million. For the
year ended December 31, 2005, dispositions/other property revenues earned primarily related to
properties partially sold into joint ventures of $35.1 million, retail lease income of $2.3 million
and income associated with the amortization of above and below market leases on acquired
communities of $2.8 million.
Property expenses from non-same store, development and lease-up communities increased $12.3
million for the year ended December 31, 2007 as compared to 2006 and $23.2 million for 2006 as
compared to 2005. Both periods realized increases due to the completion and lease-up of properties
in our development pipeline. Increases in 2006 as compared to 2005 were primarily affected by
communities acquired in the Summit merger.
Property expenses from dispositions/other decreased $9.4 million and $3.4 million for the year
ended December 31, 2007 as compared to 2006 and for the year ended December 31, 2006 as compared to
2005, respectively. The decrease for the year ended December 31, 2007 as compared to December 31,
2006 was due to
the partial sale of nine properties to a joint venture in 2006. The decrease for the year ended
December 31, 2006 as compared to December 31, 2005 was due to the partial sale of twelve properties
to a joint venture in 2005.
26
Non-property income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
2006 |
|
|
2005 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee and asset management |
|
$ |
8,293 |
|
|
$ |
14,041 |
|
|
$ |
(5,748 |
) |
|
|
(40.9 |
)% |
|
$ |
14,041 |
|
|
$ |
12,912 |
|
|
$ |
1,129 |
|
|
|
8.7 |
% |
Sale of technology investments |
|
|
623 |
|
|
|
1,602 |
|
|
|
(979 |
) |
|
|
(61.1 |
) |
|
|
1,602 |
|
|
|
24,206 |
|
|
|
(22,604 |
) |
|
|
* |
|
Interest and other income |
|
|
8,804 |
|
|
|
9,771 |
|
|
|
(967 |
) |
|
|
(9.9 |
) |
|
|
9,771 |
|
|
|
7,373 |
|
|
|
2,398 |
|
|
|
32.5 |
|
Income on deferred compensation plans |
|
|
7,282 |
|
|
|
10,116 |
|
|
|
(2,834 |
) |
|
|
(28.0 |
) |
|
|
10,116 |
|
|
|
6,421 |
|
|
|
3,695 |
|
|
|
57.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-property income |
|
$ |
25,002 |
|
|
$ |
35,530 |
|
|
$ |
(10,528 |
) |
|
|
(29.6 |
)% |
|
$ |
35,530 |
|
|
$ |
50,912 |
|
|
$ |
(15,382 |
) |
|
|
(30.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Not a meaningful percentage |
Fee and asset management income, which represents income related to third-party construction
and development projects and property management, for the year ended December 31, 2007 decreased
$5.7 million as compared to 2006 and increased $1.1 million for the year ended December 31, 2006 as
compared to 2005. These changes were primarily due to increased fees earned from joint ventures
and third-party construction and development projects in 2006 as compared to both 2007 and 2005.
Income from the sale of technology investments totaled $0.6 million, $1.6 million and $24.2
million for the years ended December 31, 2007, 2006 and 2005, respectively. During the years ended
December 31, 2006 and 2005, we recognized a $1.6 million and $24.2 million gain, respectively, on
the sale of our investment in Rent.com.
Interest and other income decreased $1.0 million for 2007 as compared to 2006 and increased
$2.4 million for 2006 as compared to 2005. Interest income, which primarily relates to interest
earned on notes receivable outstanding under our mezzanine financing program, increased $0.6
million for 2007 as compared to 2006 and decreased $2.9 million for 2006 as compared to 2005. The
increase for 2007 as compared to 2006 was primarily due to new notes issued during 2007 of
approximately $9.1 million and the decrease for 2006 as compared to 2005 was primarily due to
repayments of approximately $21.4 million. Other income was $3.8 million in 2007 and $5.3 million
in 2006. Other income represents income recognized upon the settlement of legal, insurance and
warranty claims and contract disputes.
Income on deferred compensation plans decreased $2.8 million during the year ended December
31, 2007 as compared to 2006 and increased $3.7 million during the year ended December 31, 2006 as
compared to 2005. The changes in income primarily related to the performance of the assets held in
the deferred compensation plans for plan participants.
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
2006 |
|
|
2005 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management |
|
$ |
18,413 |
|
|
$ |
18,490 |
|
|
$ |
(77 |
) |
|
|
(0.4 |
)% |
|
$ |
18,490 |
|
|
$ |
16,145 |
|
|
$ |
2,345 |
|
|
|
14.5 |
% |
Fee and asset management |
|
|
4,552 |
|
|
|
9,382 |
|
|
|
(4,830 |
) |
|
|
(51.5 |
) |
|
|
9,382 |
|
|
|
6,897 |
|
|
|
2,485 |
|
|
|
36.0 |
|
General and administrative |
|
|
32,590 |
|
|
|
37,584 |
|
|
|
(4,994 |
) |
|
|
(13.3 |
) |
|
|
37,584 |
|
|
|
24,845 |
|
|
|
12,739 |
|
|
|
51.3 |
|
Transaction compensation and merger
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,085 |
|
|
|
(14,085 |
) |
|
|
* |
|
Impairment provision on technology
investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130 |
|
|
|
(130 |
) |
|
|
* |
|
Interest |
|
|
116,281 |
|
|
|
117,862 |
|
|
|
(1,581 |
) |
|
|
(1.3 |
) |
|
|
117,862 |
|
|
|
111,052 |
|
|
|
6,810 |
|
|
|
6.1 |
|
Depreciation and amortization |
|
|
162,189 |
|
|
|
153,609 |
|
|
|
8,580 |
|
|
|
5.6 |
|
|
|
153,609 |
|
|
|
159,841 |
|
|
|
(6,232 |
) |
|
|
(3.9 |
) |
Amortization of deferred financing costs |
|
|
3,689 |
|
|
|
3,807 |
|
|
|
(118 |
) |
|
|
(3.1 |
) |
|
|
3,807 |
|
|
|
3,739 |
|
|
|
68 |
|
|
|
1.8 |
|
Expense on deferred compensation plans |
|
|
7,282 |
|
|
|
10,116 |
|
|
|
(2,834 |
) |
|
|
(28.0 |
) |
|
|
10,116 |
|
|
|
6,421 |
|
|
|
3,695 |
|
|
|
57.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-property expenses |
|
$ |
344,996 |
|
|
$ |
350,850 |
|
|
$ |
(5,854 |
) |
|
|
(1.7 |
)% |
|
$ |
350,850 |
|
|
$ |
343,155 |
|
|
$ |
7,695 |
|
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Not a meaningful percentage |
Property management expense, which represents regional supervision and accounting costs
related to property operations, decreased $0.1 million for the year ended December 31, 2007 as
compared to 2006 and increased $2.3 million for 2006 as compared to 2005. The increase for 2006 as
compared to 2005 was primarily due to an increase in the number of regional office employees which
caused increases in salary and benefit expenses, including long-term incentive compensation and
amortization expense recorded for share awards. Property
management expenses was 3.0% of total property revenues for the year ended December 31, 2007, and
3.2% of total property revenues for the years ended December 31, 2006 and 2005.
27
Fee and asset management expense, which represents expenses related to third-party
construction and development projects and property management, decreased $4.8 million for 2007 as
compared to 2006 and increased $2.5 million for 2006 as compared to 2005, primarily as a result of
the timing of costs and cost over-runs recognized on third party construction and development
projects during each period and a higher level of third-party construction activity in 2006 as
compared to 2007 and 2005.
General and administrative expenses decreased $5.0 million during the year ended December 31,
2007 as compared to 2006 and increased $12.7 million during the year ended December 31, 2006 as
compared to 2005, and were 5.1%, 6.1% and 4.5% of total revenues for the years ended December 31,
2007, 2006 and 2005, respectively. The decrease in general and administrative expenses for the
year ended December 31, 2007 as compared to 2006 was primarily due to reduced legal and incentive
compensation expenses. The increase in general and administrative expenses for the year ended
December 31, 2006 as compared to 2005 was primarily due to costs associated with increases in
salary and benefit expenses, including long-term incentive compensation and amortization expense
recorded for share awards, acceleration of vesting of previously granted share awards and legal
costs. During 2006, an aggregate of 76,542 share awards that otherwise would have vested from time
to time over the next five years became immediately exercisable. By accelerating the vesting of
these share awards, we recognized a one-time expense of approximately $4.2 million for the year
ended December 31, 2006.
During the year ended December 31, 2005, we incurred transaction compensation and merger
expenses totaling $14.1 million related to the Summit merger. Merger expenses primarily related to
training and transitional employee costs.
Interest expense for the year ended 2007 decreased $1.6 million as compared to 2006. Factors
contributing to the decrease in interest expense include repayment of debt from proceeds received
from our July 2006 equity offering, property dispositions during both periods and interest
adjustments related to tax liabilities. Partially offsetting this decrease was interest incurred
on debt used to repurchase our common shares during 2007. While our average debt level outstanding
during 2007 increased slightly as compared to 2006, we continued to fund construction costs
associated with our development pipeline increasing interest capitalized by $2.0 million during
2007 as compared to 2006. Interest expense for 2006 increased $6.8 million over 2005 primarily as
a result of increases in debt outstanding and increases in the effective interest rates associated
with our variable rate debt. These increases were partially offset by repayment of debt from
proceeds received from our July 2006 equity offering and property dispositions. Interest
capitalized for the year ended December 31, 2006 increased $3.1 million over the same period in
2005.
Depreciation and amortization expense and amortization of deferred financing costs increased
5.4% during the year ended December 31, 2007 as compared to 2006 and decreased 3.8% during the year
ended December 31, 2006 as compared to 2005. The increase in 2007 as compared to 2006 was primarily
due to an increased level of new development and capital improvements placed in service during 2007
as compared to 2006. The decrease in 2006 as compared to 2005 was primarily due to amortization
of the value of in-place leases acquired in connection with the merger with Summit of $32.3 million
during the year ended December 31, 2005, offset by additional depreciation on assets acquired and
new development and capital improvements placed in service during the preceding year.
Expense on deferred compensation plans decreased $2.8 million during the year ended December
31, 2007 as compared to 2006 and increased $3.7 million during the year ended December 31, 2006 as
compared to 2005. The changes in expense primarily related to the performance of the assets held
in the deferred compensation plans for plan participants.
28
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
2006 |
|
|
2005 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale
of properties, including land |
|
$ |
|
|
|
$ |
97,452 |
|
|
$ |
(97,452 |
) |
|
|
* |
% |
|
$ |
97,452 |
|
|
$ |
132,914 |
|
|
$ |
(35,462 |
) |
|
|
(26.7 |
)% |
Impairment loss on land |
|
|
(1,447 |
) |
|
|
|
|
|
|
(1,447 |
) |
|
|
* |
|
|
|
|
|
|
|
(339 |
) |
|
|
339 |
|
|
|
* |
|
Equity in income of joint ventures |
|
|
1,526 |
|
|
|
5,156 |
|
|
|
(3,630 |
) |
|
|
(70.4 |
) |
|
|
5,156 |
|
|
|
10,049 |
|
|
|
(4,893 |
) |
|
|
(48.7 |
) |
Distributions on perpetual
preferred units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
|
|
|
|
|
|
|
|
(7,000 |
) |
|
|
(7,028 |
) |
|
|
28 |
|
|
|
0.4 |
|
Original issuance costs on
redeemed perpetual preferred
units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(365 |
) |
|
|
365 |
|
|
|
* |
|
Income allocated to common units
and other minority interests |
|
|
(4,729 |
) |
|
|
(15,685 |
) |
|
|
10,956 |
|
|
|
69.9 |
|
|
|
(15,685 |
) |
|
|
(1,731 |
) |
|
|
(13,954 |
) |
|
|
* |
|
Income tax expense current |
|
|
(3,052 |
) |
|
|
|
|
|
|
(3,052 |
) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Not a meaningful percentage |
Gain on sale of properties for the year ended December 31, 2006 included gains of $91.5
million from the partial sale of nine operating properties to an affiliated joint venture and $5.2
million from the partial sales of land to affiliated joint ventures; also included in gain on sale
of properties for the year ended December 31, 2006 was $0.8 million from the sale of undeveloped
land to an unaffiliated third party. Gain on sale of properties for the year ended December 31,
2005 included a gain of $132.1 million from the partial sale of 12 operating communities to
affiliated joint ventures and $0.8 million from the sale of undeveloped land to an unaffiliated
third party. See further discussion of gains associated with property dispositions in Property
Portfolio.
The impairment loss on land for the year ended December 31, 2007 of $1.4 million coincided
with our decision to abandon development efforts at a site located in Dallas, Texas. Prior to our
decision to abandon efforts, the carrying value of the land was supportable with cash flow
projections from expected development. While no determination has been made to dispose of the
asset, we have written down previously recorded carrying costs to record the asset at fair market
value. During 2005, we sold undeveloped land to an unrelated third party. In connection with our
decision to sell this undeveloped land, we recognized an impairment loss of $0.3 million.
Equity in income of joint ventures decreased $3.6 million for the year ended December 31, 2007
as compared to 2006, and decreased $4.9 million for the year ended December 31, 2006 as compared to
2005. Changes from period to period are due to changes in the number of properties and gains
recognized on the sale of assets held through joint ventures. During 2007, certain of our
development joint ventures completed construction and as such, depreciation recorded during the
period was greater than income recognized as these properties have not reached stabilization. We
recognized $2.8 million of gains for our proportionate share of the sale of three properties held
through a joint venture during the year ended December 31, 2006. During the year ended December
31, 2005, we recognized $11.2 million in gains for our proportionate share of the sale of three
properties held in joint ventures. The gains recognized during the year ended December 31, 2005
were partially offset by losses of $2.0 million recognized in one joint venture due to debt
retirement costs associated with the refinancing of debt.
Income allocated to common units and other minority interests decreased $11.0 million during
the year ended December 31, 2007 as compared to 2006 and increased $14.0 million during the year
ended December 31, 2006 as compared to 2005. Income allocated to common units in 2006 was due
primarily to gains recognized on the partial sale of eight properties held in Camden Operating,
L.P. to a joint venture during the year ended December 31, 2006. A portion of the gains recognized
were allocated to minority interest holders in Camden Operating, L.P.
Income tax expense for year ended December 31, 2007 was $3.1 million. Income tax expense is
comprised of $1.0 million in margin taxes, $0.5 million in federal income taxes on our taxable REIT
subsidiaries, and $1.6 million in state taxes in our operating partnerships.
Funds from Operations (FFO)
Management considers FFO to be an appropriate measure of the financial performance of an
equity REIT. The National Association of Real Estate Investment Trusts (NAREIT) currently
defines FFO as net income (computed in accordance with accounting principles generally accepted in
the United States of America (GAAP)), excluding gains (or losses) associated with the sale of
previously depreciated operating properties, real estate depreciation and amortization, and
adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes
conversion of all potentially dilutive securities, including minority interests, which are
convertible into common shares. We consider FFO to be an appropriate supplemental measure of
operating performance because,
by excluding gains or losses on dispositions of operating properties and excluding depreciation,
FFO can help one compare the operating performance of a companys real estate between periods or as
compared to different companies.
29
We believe in order to facilitate a clear understanding of our consolidated historical
operating results, FFO should be examined in conjunction with net income as presented in the
consolidated statements of operations and data included elsewhere in this report. FFO is not
defined by GAAP and should not be considered as an alternative to net income as an indication of
our operating performance. Additionally, FFO as disclosed by other REITs may not be comparable to
our calculation.
Reconciliations of net income to diluted FFO for the years ended December 31, 2007, 2006 and 2005
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Funds from operations |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
148,457 |
|
|
$ |
232,846 |
|
|
$ |
199,086 |
|
Gain on sale of properties, net of tax (1) |
|
|
(105,098 |
) |
|
|
(170,304 |
) |
|
|
(168,221 |
) |
Real estate depreciation and amortization (1) |
|
|
161,064 |
|
|
|
157,233 |
|
|
|
168,777 |
|
Income allocated to convertible minority interests (1) |
|
|
17,796 |
|
|
|
17,537 |
|
|
|
2,515 |
|
Adjustments for unconsolidated joint ventures (2) |
|
|
4,934 |
|
|
|
478 |
|
|
|
(6,867 |
) |
|
|
|
|
|
|
|
|
|
|
Funds from operations diluted |
|
$ |
227,153 |
|
|
$ |
237,790 |
|
|
$ |
195,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares basic |
|
|
58,135 |
|
|
|
56,660 |
|
|
|
52,000 |
|
Incremental shares assumable from assumed conversion of: |
|
|
|
|
|
|
|
|
|
|
|
|
Common share options and awards granted |
|
|
482 |
|
|
|
725 |
|
|
|
483 |
|
Common units |
|
|
3,503 |
|
|
|
3,868 |
|
|
|
3,830 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares diluted |
|
|
62,120 |
|
|
|
61,253 |
|
|
|
56,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Including amounts for discontinued operations. |
|
(2) |
|
Adjustment for 2006 and 2005 includes $2.8 million and $11.2 million in gains
recognized on sales of properties held in joint ventures. 2006 adjustment is net of $0.5
million in prepayment penalties incurred with the repayment of mortgage notes directly
associated with the sold properties. |
Liquidity and Capital Resources
We are committed to maintaining a strong balance sheet and preserving our financial
flexibility, which we believe enhances our ability to identify and capitalize on investment
opportunities as they become available. We intend to maintain what management believes is a
conservative capital structure by:
|
|
|
using what management believes to be a prudent combination of debt and common and
preferred equity; |
|
|
|
|
extending and sequencing the maturity dates of our debt where possible; |
|
|
|
|
managing interest rate exposure using what management believes to be prudent levels
of fixed and floating rate debt; |
|
|
|
|
borrowing on an unsecured basis in order to maintain a substantial number of
unencumbered assets; and |
|
|
|
|
maintaining conservative coverage ratios. |
Our interest expense coverage ratio, net of capitalized interest, was 3.0, 2.9 and 2.8 times
for the years ended December 31, 2007, 2006 and 2005, respectively. Our interest expense coverage
ratio is calculated by dividing interest expense for the period into the sum of income from
continuing operations before gain on sale of properties, equity in income of joint ventures and
minority interests, depreciation, amortization, interest expense and income from discontinued
operations. At December 31, 2007, 2006 and 2005, 81.6%, 80.5% and 78.8%, respectively, of our
properties (based on invested capital) were unencumbered. Our weighted average maturity of debt,
excluding our line of credit, was 4.9 years at December 31, 2007.
30
As a result of the significant cash flow generated by our operations, the availability under
our unsecured credit facility and other short-term borrowings, proceeds from dispositions of
properties and other investments and access to the capital markets by issuing securities under our
automatic shelf registration statement, we believe our liquidity and financial condition are
sufficient to meet all of our reasonably anticipated cash flow needs during 2008 including:
|
|
|
normal recurring operating expenses; |
|
|
|
|
current debt service requirements; |
|
|
|
|
recurring capital expenditures; |
|
|
|
|
repurchase of common equity securities; |
|
|
|
|
initial funding of property developments, acquisitions and notes receivable; and |
|
|
|
|
the minimum dividend payments required to maintain our REIT qualification under the
Internal Revenue Code of 1986. |
One of our principal long-term liquidity requirements includes the repayment of maturing debt,
including borrowings under our unsecured line of credit used to fund development and acquisition
activities. During 2008 approximately $200.6 million of secured mortgage notes are scheduled to
mature. Additionally, as of December 31, 2007, we had several current development projects in
various stages of construction, for which a total estimated cost of $119.2 million remained to be
funded. We intend to meet our long-term liquidity requirements through the use of debt and equity
offerings under our automatic shelf registration statement, draws on our unsecured credit facility,
property dispositions and secured mortgage notes.
In December 2007, we announced our Board of Trust Managers had declared a dividend
distribution of $0.69 per share to holders of record as of December 21, 2007 of our common shares.
The dividend was subsequently paid on January 17, 2008. We paid equivalent amounts per unit to
holders of the common operating partnership units. This distribution to common shareholders and
holders of common operating partnership units equates to an annualized dividend rate of $2.76 per
share or unit.
In April 2007, our Board of Trust Managers approved a program to repurchase up to $250.0
million of our common equity securities through open market purchases and privately negotiated
transactions. In January 2008, our Board of Trust Managers approved the repurchase of up to an
additional $250.0 million of our common equity securities.
Net cash provided by operating activities decreased to $223.1 million during the year ended
December 31, 2007 from $231.6 million for the same period in 2006. The decrease was due to a
decline in non-property income and timing of payments on trade payables and receivables offset by
growth in revenues from our stabilized and development communities.
Cash flows used in investing activities during the year ended December 31, 2007 totaled $346.8
million, as compared to $52.1 million during the year ended December 31, 2006. Cash outflows for
property development, acquisition, and capital improvements were $500.8 million during 2007 as
compared to $444.3 million during 2006. Proceeds received from sales of properties and technology
investments, sales of assets to joint ventures and joint venture distributions representing returns
of investments totaled $178.9 million for the year ended December 31, 2007 as compared to $445.2 million
for the year ended December 31, 2006. Additionally, during the year ended December 31, 2006 notes
receivable affiliates increased $41.6 million as five mezzanine loans were provided to joint
ventures.
Net cash provided by financing activities totaled $123.6 million for the year ended December
31, 2007, primarily as a result of $808.0 million in proceeds from notes payable, offset by
repayment of balances outstanding on our line of credit of $91.0 million, payments of $213.4
million related to the payoff of two senior unsecured notes and one mortgage note, $200.5 million
of common share repurchases, and distributions paid to shareholders and minority interest holders
of $178.1 million. Net cash used in financing activities totaled $180.0 million for the year ended
December 31, 2006, primarily as a result of the repayment of balances outstanding on our line of
credit of $45.0 million, payments of $227.3 million related to the payoff of senior unsecured notes
and one mortgage note and distributions paid to shareholders and minority interest holders of
$166.2 million. The cash used in financing activities was partially offset by $254.9 million of
proceeds from the issuance of 3.6 million common shares in 2006.
Financial Flexibility
We have a $600 million unsecured credit facility which matures in January 2010. The scheduled
interest rate is based on spreads over the London Interbank Offered Rate (LIBOR) or the Prime
Rate. The scheduled interest rate spreads are subject to change as our credit ratings change.
Advances under the line of credit may be
priced at the scheduled rates, or we may enter into bid rate loans with participating banks at
rates below the scheduled rates. These bid rate loans have terms of six months or less and may not
exceed the lesser of $300 million or the remaining amount available under the line of credit. The
line of credit is subject to customary financial covenants and limitations, all of which we are in
compliance.
31
Our line of credit provides us with the ability to issue up to $100 million in letters of
credit. While our issuance of letters of credit does not increase our borrowings outstanding under
our line, it does reduce the amount available. At December 31, 2007, we had outstanding letters of
credit totaling $14.6 million, and had $470.4 million available under our unsecured line of credit.
As an alternative to our unsecured line of credit, we from time to time borrow using
competitively bid unsecured short-term notes with lenders who may or may not be a part of the
unsecured line of credit bank group. Such borrowings vary in term and pricing and are typically
priced at interest rates below those available under the unsecured line of credit.
During both 2007 and 2006, we repaid $200.0 million of maturing unsecured notes with effective
interest rates of 5.6% and 6.8%, respectively. During 2007, we refinanced one of our maturing
secured conventional mortgage notes, which had a balance of $6.8 million and a variable interest
rate at 7.31%; the new note was for a principal amount of $9.0 million with a fixed interest rate
of 6.0% and matures on August 1, 2014. We also repaid one conventional mortgage note during 2006
totaling $13.1 million, which had an interest rate of 7.6%. We repaid all notes payable using
proceeds available under our unsecured line of credit.
In connection with our partial sale of nine apartment communities to a joint venture during
2006, as discussed in Note 8, Investments in Joint Ventures in the Notes to Consolidated
Financial Statements, three variable rate tax-exempt mortgage notes totaling $30.5 million were
assumed by the joint venture.
At December 31, 2007 and 2006, the weighted average interest rate on our floating rate debt,
which includes our unsecured line of credit, was 5.0% and 5.4%, respectively.
We filed an automatic shelf registration statement with the Securities and Exchange Commission
during 2006 which became effective upon filing. We may use the shelf registration statement to
offer, from time to time, common shares, preferred shares, debt securities or warrants. Our
declaration of trust provides that we may issue up to 110,000,000 shares of beneficial interest,
consisting of 100,000,000 common shares and 10,000,000 preferred shares. As of December 31, 2007,
we had 65,434,369 common shares and no preferred shares outstanding under our declaration of trust.
In June 2006, we issued 3.6 million common shares at $71.25 per share in a public equity
offering under our shelf registration statement. We used the net proceeds of $254.9 million to
reduce indebtedness on our unsecured line of credit and for general corporate purposes.
Contractual Obligations
The following table summarizes our known contractual obligations as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Total |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
2011 |
|
|
2012 |
|
|
Thereafter |
|
Debt maturities |
|
$ |
2,828.1 |
|
|
$ |
200.6 |
|
|
$ |
198.1 |
|
|
$ |
567.7 |
|
|
$ |
248.2 |
|
|
$ |
772.5 |
|
|
$ |
841.0 |
|
Interest payments (1) |
|
|
731.5 |
|
|
|
149.6 |
|
|
|
136.3 |
|
|
|
112.9 |
|
|
|
90.5 |
|
|
|
79.0 |
|
|
|
163.2 |
|
Capital contributions to Fund (2) |
|
|
37.5 |
|
|
|
37.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cancelable lease payments |
|
|
16.2 |
|
|
|
2.5 |
|
|
|
2.3 |
|
|
|
2.3 |
|
|
|
2.2 |
|
|
|
1.8 |
|
|
|
5.1 |
|
Postretirement benefit obligations |
|
|
2.5 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
1.4 |
|
Construction contracts |
|
|
73.4 |
|
|
|
71.9 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,689.2 |
|
|
$ |
462.3 |
|
|
$ |
338.4 |
|
|
$ |
683.1 |
|
|
$ |
341.1 |
|
|
$ |
853.6 |
|
|
$ |
1,010.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes contractual interest payments for our line of credit, senior unsecured notes,
medium-term notes and secured notes. Interest payments on the term loan were calculated
based on the interest rate effectively fixed by the interest rate swap agreement. The
interest payments on certain secured notes with floating interest rates and our line of
credit were calculated based on the interest rates in effect as of December 31, 2007. |
|
(2) |
|
Contingent on timing of capital calls by the Fund; subject to change. |
32
The
joint ventures in which we have an interest have been funded in part with secured, third-party
debt. We are not committed to any additional funding on third-party debt in relation to our joint
ventures. We are committed to funding an additional $6.2 million under mezzanine loans provided to
joint ventures. We have guaranteed the repayment of the construction loans of five of our
development joint ventures in an amount equal to our percentage interest in such joint ventures,
totaling $65.7 million. We believe it is unlikely significant payments will be required under
these guarantees. See further discussion of our investments in various joint ventures in Note 8,
Investments in Joint Ventures in the Notes to Consolidated Financial Statements.
Inflation
Substantially all of our apartment leases are for a term generally ranging from 6 to 15
months. In an inflationary environment, we may realize increased rents at the commencement of new
leases or upon the renewal of existing leases. The short-term nature of our leases generally
minimizes our risk from the adverse affects of inflation.
Critical Accounting Policies
Critical accounting policies are those most important to the presentation of a companys
financial condition and results, and require managements most difficult, subjective or complex
judgments, often as a result of the need to make estimates about the effect of matters that are
inherently uncertain. We follow financial accounting and reporting policies in accordance with
generally accepted accounting principles in the United States of America.
Principles of Consolidation. Our consolidated financial statements include our assets,
liabilities and operations and those of our wholly-owned subsidiaries and partnerships. We also
make co-investments with unrelated third parties and determine whether to consolidate or use the
equity method of accounting for these ventures. FASB Interpretation No. 46R, Consolidation of
Variable Interest Entities (as revised) and Emerging Issues Task Force No. 04-05, Determining
Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or
Similar Entity When the Limited Partners Have Certain Rights are two of the primary sources of
accounting guidance in this area. In accordance with this accounting literature, we will
consolidate joint ventures determined to be variable interest entities for which we are the primary
beneficiary. We will also consolidate any joint ventures that are not determined to be variable
interest entities but where we exercise control over major operating decisions through substantive
participating rights. Any entities that do not meet the criteria for consolidation, but where we
exercise significant influence are accounted for using the equity method. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Income Recognition. Our rental and other property income is recorded when due from residents
and is recognized monthly as it is earned. Other property income consists primarily of utility
rebillings, and administrative, application and other transactional fees charged to our residents.
Our apartment homes are rented to residents on lease terms generally ranging from 6 to 15 months,
with monthly payments due in advance. Interest, fee and asset management and all other sources of
income are recognized as earned. Two of our properties are subject to rent control or rent
stabilization. Operations of apartment properties acquired are recorded from the date of
acquisition in accordance with the purchase method of accounting. In managements opinion, due to
the number of residents, the type and diversity of submarkets in which the properties operate, and
the collection terms, there is no significant concentration of credit risk.
Cost Capitalization. Real estate assets are carried at cost plus capitalized carrying
charges. Carrying charges are primarily interest and real estate taxes which are capitalized as
part of properties under development. Expenditures directly related to the development,
acquisition and improvement of real estate assets, excluding internal costs relating to
acquisitions of operating properties, are capitalized at cost as land, buildings and improvements.
Indirect development costs, including salaries and benefits and other related costs directly
attributable to the development of properties are also capitalized. All construction and carrying
costs are capitalized and reported on the balance sheet in properties under development until the
apartment homes are substantially completed. Upon substantial completion of the apartment homes,
the total cost for the apartment homes and the associated land is transferred to buildings and
improvements and land, respectively, and the assets are depreciated over their estimated useful
lives using the straight-line method of depreciation.
Where possible, we stage our construction to allow leasing and occupancy during the
construction period, which we believe minimizes the duration of the lease-up period following
completion of construction. Our
accounting policy related to properties in the development and leasing phase is all operating
expenses associated with completed apartment homes are expensed.
33
As discussed above, carrying charges are principally interest and real estate taxes
capitalized as part of properties under development and buildings and improvements. Capitalized
interest was $22.6 million in 2007, $20.6 million in 2006 and $17.5 million in 2005. Capitalized
real estate taxes were $3.5 million, $2.6 million and $2.5 million in 2007, 2006 and 2005,
respectively.
We capitalize renovation and improvement costs we believe extend the economic lives. Capital
expenditures subsequent to initial construction are capitalized and depreciated over their
estimated useful lives, which range from 3 to 20 years.
Depreciation and amortization is computed over the expected useful lives of depreciable
property on a straight-line basis with lives generally as follows:
|
|
|
|
|
|
|
Estimated |
|
|
Useful Life |
Buildings and improvements |
|
5-35 years |
Furniture, fixtures, equipment and other |
|
3-20 years |
Intangible assets (in-place leases and above and below market leases) |
|
average lease term |
Allocations of Purchase Price. Upon the acquisition of real estate, we allocate the purchase
price between tangible and intangible assets, which includes land, buildings, furniture and
fixtures, the value of in-place leases, including above and below market leases, and acquired
liabilities. When allocating the purchase price to acquired properties, we allocated costs to the
estimated intangible value of in-place leases and above or below market leases and to the estimated
fair value of furniture and fixtures, land and buildings on a value determined by assuming the
property was vacant by applying methods similar to those used by independent appraisers of
income-producing property. Depreciation and amortization is computed on a straight-line basis over
the remaining useful lives of the related assets. The value of in-place leases and above or below
market leases is amortized over the estimated average remaining life of leases in-place at the time
of acquisition. Estimates of fair value of acquired debt are based upon interest rates available
for the issuance of debt with similar terms and remaining maturities.
Asset Impairment. Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists
if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to
recover the carrying value of such assets. Generally, when impairment exists the long-lived asset
is adjusted to its respective fair value.
We consider projected future undiscounted cash flows, trends, and other factors in our
assessment of whether impairment conditions exist. While we believe our estimates of future cash
flows are reasonable, different assumptions regarding such factors as market rents, economies, and
occupancies could significantly affect these estimates. In determining fair value, management uses
appraisals, management estimates, or discounted cash flow calculations. We recorded impairment
charges on land of $1.4 million and $0.3 million for the years ended December 31, 2007 and 2005.
Our impairment charge in 2007 coincided with our decision to abandon development efforts at a site
located in Dallas, Texas. Prior to our decision to abandon development efforts, the carrying value
of the land was supportable with cash flow projections from expected development.
Derivative Instruments. We utilize derivative financial instruments to manage interest rate
risk and we designate the financial instruments as cash flow hedges under the guidance of SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities, SFAS No. 138, Accounting for
Certain Instruments and Certain Hedging Activities, an Amendment of Statement No. 133, and SFAS
149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. These
statements require every derivative instrument to be recorded on the balance sheet as either an
asset or liability measured at its fair value, with changes in fair value recognized currently in
earnings unless specific hedge accounting criteria are met. For cash flow hedge relationships,
changes in the fair value of the derivative instrument deemed effective at offsetting the risk
being hedged are reported in other comprehensive income. For cash flow hedges where the cumulative
changes in the fair value of the derivative exceed the cumulative changes in the fair value of the
hedged item, the ineffective portion is recognized in current period earnings. All derivative
instruments are recognized on the balance sheet and measured at fair value. Derivatives not
qualifying for hedge treatment must be recorded at fair value with gains or losses recognized in
earnings in the period of change. We enter into derivative financial instruments from time to
time, but
do not use them for trading or speculative purposes. Interest rate swap agreements are used to
reduce the potential impact of changes in interest rates on variable-rate debt.
34
We formally document all relationships between hedging instruments and hedged items, as well
as our risk management objective and strategy for undertaking the hedge. This process includes
specific identification of the hedging instrument and the hedged transaction, the nature of the
risk being hedged, and how the hedging instruments effectiveness in hedging the exposure to the
hedged transactions variability in cash flows attributable to the hedged risk will be assessed and
measured. Both at the inception of the hedge and on an ongoing basis, we assess whether the
derivatives used in hedging transactions are highly effective in offsetting changes in cash flows
or fair values of hedged items. We discontinue hedge accounting if a derivative is not determined
to be highly effective as a hedge or has ceased to be a highly effective hedge.
As of December 31, 2007, we had $500 million in variable rate debt subject to cash flow
hedges. See Note 12, Derivative Instruments and Hedging Activities in the Notes to Consolidated
Financial Statements for further discussion of derivative financial instruments.
Accumulated other comprehensive income or loss on the Consolidated Statements of Stockholders
Equity, reflects the effective portions of cumulative changes in the fair value of derivatives in
qualifying cash flow hedge relationships.
Recent Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No.
(FIN) 48, Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement
No. 109. FIN 48 prescribes a two-step process for the financial statement recognition and
measurement of tax positions taken or expected to be taken in a tax return. The first step involves
evaluation of a tax position to determine whether it is more likely than not the position will be
sustained upon examination, based on the technical merits of the position. The second step involves
measuring the benefit to recognize in the financial statements for those tax positions that meet
the more-likely-than-not recognition threshold.
We adopted FIN 48 as of January 1, 2007. If various tax positions related to certain real
estate dispositions were not sustained upon examination, we would have been required to pay a
deficiency dividend and associated interest for prior years. Accordingly, we decreased
distributions in excess of net income as of January 1, 2007 for the adoption impact of FIN 48 by
approximately $2.5 million. Our period of uncertainty with respect to these real estate
dispositions expired during fiscal year 2007, and we recorded a net credit to interest expense of
approximately $2.5 million for the year ended December 31, 2007. The tax years ended December 31,
2004, 2005, and 2006 remain subject to examination by major tax jurisdictions as of December 31,
2007. We believe we have no uncertain tax positions or unrecognized tax benefits requiring
disclosure.
We may from time to time be assessed interest or penalties by major tax jurisdictions,
although any such assessments historically have been minimal and immaterial to our financial
results. In the event we receive an assessment for interest and/or penalties, it will be
classified in the financial statements as tax expense.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157
defines fair value, establishes a framework for measuring fair value in GAAP and expands
disclosures about fair value measurements. The statement does not require new fair value
measurements, but is applied to the extent other accounting pronouncements require or permit fair
value measurements. The statement emphasizes fair value as a market-based measurement which should
be determined based on assumptions market participants would use in pricing an asset or liability.
We will be required to disclose the extent to which fair value is used to measure assets and
liabilities, the inputs used to develop the measurements, and the effect of certain of the
measurements on earnings (or changes in net assets) for the period. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007. In February 2008 the FASB deferred the effective
date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities except for those that
are recognized or disclosed at fair value in the financial statements on a recurring basis. We
have adopted SFAS No. 157 effective January 1, 2008 for financial assets and financial liabilities
and do not expect this adoption to have a material effect on our consolidated results of operations
or financial position but will enhance the level of disclosures for assets and liabilities recorded
at fair value.
35
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities, which gives entities the option to measure eligible financial assets,
financial liabilities and firm commitments at fair value on an instrument-by-instrument basis
(i.e., the fair value option), which are otherwise not permitted to be accounted for at fair value
under other accounting standards. The election to use the fair value option is available when an
entity first recognizes a financial asset or financial liability or upon entering into a firm
commitment. Subsequent changes in fair value must be recorded in earnings. Additionally, SFAS No.
159 allows for a one-time election for existing positions upon adoption, with the transition
adjustment recorded to beginning retained earnings. This statement is effective for fiscal years
beginning after November 15, 2007. We have adopted this standard effective January 1, 2008 and
have elected not to measure any of our current eligible financial assets or liabilities at fair
value upon adoption; however, we do reserve the right to elect to measure future eligible financial
assets or liabilities at fair value.
In September 2007, the FASB ratified Emerging Issues Task Force (EITF) Issue 07-6,
Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66 When
the Agreement Includes a Buy-Sell Clause, which clarifies that a buy-sell clause, in and of
itself, does not constitute a prohibited form of continuing involvement that would preclude partial
sale treatment under Statement 66. EITF 07-6 applies prospectively to new arrangements entered
into in fiscal years beginning after December 15, 2007.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces
SFAS No. 141, Business Combinations, which, among other things, establishes principles and
requirements for how an acquirer entity recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed (including intangibles) and any
noncontrolling interests in the acquired entity. SFAS No. 141(R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. We are currently evaluating what impact
our adoption of SFAS No. 141(R) will have on our financial statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51. SFAS No. 160 amends ARB 51 to establish
accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It also amends certain of ARB 51s consolidation procedures for
consistency with the requirements of SFAS No. 141(R). SFAS No. 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December 15, 2008. We are
currently evaluating what impact our adoption of SFAS No. 160 will have on our financial
statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The table below provides information about our liabilities sensitive to changes in interest
rates as of December 31, 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
Average |
|
|
|
|
|
|
Amount |
|
|
(in years) |
|
|
Interest |
|
|
% Of |
|
|
Amount |
|
|
(in years) |
|
|
Interest |
|
|
% Of |
|
|
|
(in millions) |
|
|
(1) |
|
|
Rate |
|
|
Total |
|
|
(in millions) |
|
|
(1) |
|
|
Rate |
|
|
Total |
|
|
Fixed rate debt (2) |
|
$ |
2,655.5 |
|
|
|
4.6 |
|
|
|
5.4 |
% |
|
|
93.9 |
% |
|
$ |
2,059.6 |
|
|
|
4.3 |
|
|
|
5.4 |
% |
|
|
88.4 |
% |
Variable rate debt |
|
|
172.6 |
|
|
|
19.8 |
|
|
|
5.0 |
|
|
|
6.1 |
|
|
|
271.4 |
|
|
|
18.7 |
|
|
|
5.4 |
|
|
|
11.6 |
|
|
|
|
(1) |
|
Excludes balances outstanding under our unsecured line of credit, which are included in
variable rate debt. |
|
(2) |
|
Includes $500 million term loan which has become effectively fixed by the use of an
interest rate swap (see discussion below). |
We use variable rate indebtedness available under our revolving credit facility to initially
fund acquisitions and our development pipeline. To the extent we incur additional variable rate
indebtedness, our exposure to increases in interest rates would increase. We believe such
increases in interest expense as a result of inflation would not significantly impact our
distributable cash flow.
For fixed rate debt, interest rate changes affect the fair market value but do not impact net
income to common shareholders or cash flows. Conversely, for floating rate debt, interest rate
changes generally do not affect the fair market value but do impact net income to common
shareholders and cash flows, assuming other factors are held constant.
36
Holding other variables constant, a one percentage point variance in interest rates would
change the unrealized fair market value of the fixed rate debt by approximately $78.8 million. The
net income available to common shareholders and cash flows impact on the next year resulting from a
one percentage point variance in interest rates on floating rate debt, excluding debt effectively
fixed by interest rate swap described below, would be approximately $1.7 million, holding all
other variables constant.
We currently use interest rate swaps to reduce the impact of interest rate fluctuations on
certain variable indebtedness, not for trading or speculative purposes. Under swap agreements:
|
|
|
we agree to pay a counterparty the interest that would have been incurred on a fixed
principal amount at a fixed interest rate; and |
|
|
|
|
the counterparty agrees to pay us the interest rate that would have been incurred on
the same principal amount at an assumed floating interest rate tied to a particular
market index. |
As of December 31, 2007, the effect of our swap agreement was to fix the interest rate on $500
million of our variable rate debt. Had the swap agreement not been in place during 2007, our
annual interest costs would have been approximately $0.3 million higher, based on balances and
reported interest rates through the year. Additionally, if the variable interest rates on this
debt had been 100 basis points higher through 2007 and this swap agreement not been in place, our
annual interest cost would have been approximately $1.6 million higher.
Because the counterparty providing the swap agreements is a major financial institution which
has an AA or better credit rating by the Standard & Poors Ratings Group, we have no reason to
believe there is exposure at this time to a default by the counterparty provider.
Item 8. Financial Statements and Supplementary Data
Our response to this item is included in a separate section at the end of this report
beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures. We carried out an evaluation under the
supervision and with the participation of our management, including the Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report pursuant to Securities Exchange Act (Exchange Act) Rules
13a-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded the disclosure controls and procedures as of the end of the period covered by this report
are effective to ensure information required to be disclosed by us in our Exchange Act filings is
recorded, processed, summarized and reported within the periods specified in the Securities and
Exchange Commissions rules and forms.
Changes in internal controls. During the third quarter of 2007 we completed the conversion
of our accounting systems to the J.D. Edwards financial accounting system. As with any material
change in our internal control over financial reporting, the design of this application, along with
the design of the internal controls included in our processes, were evaluated for effectiveness.
There were no changes in our internal control over financial reporting during our most recent
fiscal quarter that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
37
Managements Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and
15d-15(f) promulgated under the Securities Exchange Act of 1934 as follows:
A process designed by, or under the supervision of, the companys principal executive and
principal financial officers, or persons performing similar functions, and effected by the
companys board of trust managers, management, and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles and includes those
policies and procedures that:
|
|
|
Pertain to the maintenance
of records, that in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; |
|
|
|
|
Provide reasonable assurance transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and |
|
|
|
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect
on the financial statements. |
Management assessed the effectiveness of our internal control over financial reporting as of
December 31, 2007. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework.
Based on our assessment, management concluded our internal control over financial reporting is
effective as of December 31, 2007.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an
attestation report regarding the effectiveness of our internal controls over financial reporting,
which is included herein.
38
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trust Managers and Shareholders of
Camden Property Trust
Houston, Texas
We have audited the internal control over financial reporting of Camden Property Trust and
subsidiaries (the Company) as of December 31, 2007, based on criteria established in Internal
Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Companys management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Managements Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed by, or under the
supervision of, the companys principal executive and principal financial officers, or persons
performing similar functions, and effected by the companys board of directors, management, and
other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2007, based on the criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated financial statements and financial statement schedules as
of and for the year ended December 31, 2007 of the Company and our report dated February 22, 2008
expressed an unqualified opinion on those financial statements and financial statement schedules
and included an explanatory paragraph regarding the adoption of Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes an Interpretation of FASB
Statement No. 109.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 22, 2008
39
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information with respect to this Item 10 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 21, 2008 in connection with the Annual
Meeting of Shareholders to be held May 6, 2008.
Item 11. Executive Compensation
Information with respect to this Item 11 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 21, 2008 in connection with the Annual
Meeting of Shareholders to be held May 6, 2008.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Information with respect to this Item 12 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 21, 2008 in connection with the Annual
Meeting of Shareholders to be held May 6, 2008.
Equity Compensation Plan Information
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
|
|
|
remaining available for |
|
|
|
Number of securities to be |
|
|
Weighted-average |
|
|
future issuance under |
|
|
|
issued upon exercise of |
|
|
exercise price of |
|
|
equity compensation plans |
|
|
|
outstanding options, |
|
|
outstanding options, |
|
|
(excluding securities |
|
|
|
warrants and rights |
|
|
warrants and rights |
|
|
reflected in column (a)) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation
plans approved by
security holders |
|
|
3,507,947 |
|
|
$ |
40.38 |
|
|
|
3,032,625 |
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,507,947 |
|
|
$ |
40.38 |
|
|
|
3,032,625 |
|
|
|
|
|
|
|
|
|
|
|
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information with respect to this Item 13 is incorporated herein by reference from our Proxy
Statement, which we intend to file on or before March 21, 2008 in connection with the Annual
Meeting of Shareholders to be held May 6, 2008.
Item 14. Principal Accounting Fees and Services
Information with respect to this Item 14 is incorporated herein by reference from our Proxy
Statement, which we intend to file on or before March 21, 2008 in connection with the Annual
Meeting of Shareholders to be held May 6, 2008.
40
PART IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this report:
(a) (1) Financial Statements:
(2) Financial Statement Schedules:
All other schedules have been omitted since the required information is presented in the
financial statements and the related notes or is not applicable.
(3) Index to Exhibits:
The following exhibits are filed as part of or incorporated by reference into this report:
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
2.1 |
|
|
Agreement and Plan of Merger, dated October 4, 2004, among
Camden Property Trust, Camden Summit, Inc. and Summit
Properties Inc.
|
|
Current Report on Form 8-K filed on
October 5, 2004 |
|
|
|
|
|
|
|
|
2.2 |
|
|
Amendment No. 1 to Agreement and Plan of Merger, dated
October 6, 2004, among Camden Property Trust, Camden
Summit, Inc. and Summit Properties Inc.
|
|
Exhibit 2.1 to Form 8-K filed on
October 6, 2004 |
|
|
|
|
|
|
|
|
2.3 |
|
|
Amendment No. 2 to Agreement and Plan of Merger, dated
January 24, 2005, among Camden Property Trust, Camden
Summit, Inc. and Summit Properties Inc.
|
|
Exhibit 2.1 to Form 8-K filed on
January 25, 2005 |
|
|
|
|
|
|
|
|
3.1 |
|
|
Amended and Restated Declaration of Trust of Camden
Property Trust
|
|
Exhibit 3.1 to Form 10-K for the
year ended December 31, 1993 |
|
|
|
|
|
|
|
|
3.2 |
|
|
Amendment to the Amended and Restated Declaration of Trust
of Camden Property Trust
|
|
Exhibit 3.1 to Form 10-Q for the
quarter ended June 30, 1997 |
|
|
|
|
|
|
|
|
3.3 |
|
|
Second Amended and Restated Bylaws of Camden Property Trust
|
|
Exhibit 3.3 to Form 10-K for the
year ended December 31, 1997 |
|
|
|
|
|
|
|
|
3.4 |
|
|
Amendment to Second Amended and Restated Bylaws of Camden
Property Trust
|
|
Exhibit 99.2 to Form 8-K filed on
May 4, 2006 |
41
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
4.1 |
|
|
Specimen certificate for Common Shares of Beneficial Interest
|
|
Form S-11 filed on September 15,
1993 (Registration No. 33-68736) |
|
|
|
|
|
|
|
|
4.2 |
|
|
Indenture dated as of February 15, 1996 between Camden
Property Trust and the U.S. Trust Company of Texas, N.A., as
Trustee
|
|
Exhibit 4.1 to Form 8-K filed on
February 15, 1996 |
|
|
|
|
|
|
|
|
4.3 |
|
|
First Supplemental Indenture dated as of February 15, 1996
between Camden Property Trust and U.S. Trust Company of
Texas, N.A., as Trustee
|
|
Exhibit 4.2 to Form 8-K filed on
February 15, 1996 |
|
|
|
|
|
|
|
|
4.4 |
|
|
Form of Indenture for Senior Debt Securities dated as of
February 11, 2003 between Camden Property Trust and SunTrust
Bank, as Trustee
|
|
Exhibit 4.1 to Form S-3 filed on
February 12, 2003 (Registration No.
333-103119) |
|
|
|
|
|
|
|
|
4.5 |
|
|
First Supplemental Indenture dates as of May 4, 2007 between
the Company and U.S. Bank National Association, as successor
to SunTrust Bank, as trustee
|
|
Exhibit 4.2 to Form 8-K filed on May
7, 2007 |
|
|
|
|
|
|
|
|
4.6 |
|
|
Indenture dated as of February 11, 2003 between the Company
and U.S. Bank National Association, as successor to SunTrust
Bank, as trustee.
|
|
Exhibit 4.1 to Form 8-K filed on May
7, 2007 |
|
|
|
|
|
|
|
|
4.7 |
|
|
Registration Rights Agreement, dated as of February 23,
1999, between Camden Property Trust and the unitholders
named therein
|
|
Exhibit 99.3 to Form 8-K filed on
March 10, 1999 |
|
|
|
|
|
|
|
|
4.8 |
|
|
Form of Amendment to Registration Rights Agreement, dated as
of December 1, 2003, between Camden Property Trust and the
unitholders named therein
|
|
Exhibit 4.8 to Form 10-K for the
year ended December 31, 2003 |
|
|
|
|
|
|
|
|
4.9 |
|
|
Form of Registration Rights Agreement between Camden
Property Trust and the holders named therein
|
|
Form S-4 filed on November 24, 2004
(Registration No. 333-120733) |
|
|
|
|
|
|
|
|
4.10 |
|
|
Form of Statement of Designation of Series B Cumulative
Redeemable Preferred Shares of Beneficial Interest
|
|
Exhibit 4.1 to Form 8-K filed on
March 10, 1999 |
|
|
|
|
|
|
|
|
4.11 |
|
|
Form of Amendment to Statement of Designation of Series B
Cumulative Redeemable Preferred Shares of Beneficial
Interest, effective as of December 31, 2003
|
|
Exhibit 4.10 to Form 10-K for the
year ended December 31, 2003 |
|
|
|
|
|
|
|
|
4.12 |
|
|
Form of Camden Property Trust 7.625% Note due 2011
|
|
Exhibit 4.4 to Form 8-K filed on
February 20, 2001 |
|
|
|
|
|
|
|
|
4.13 |
|
|
Form of Camden Property Trust 6.75% Note due 2010
|
|
Exhibit 4.3 to Form 8-K filed on
September 17, 2001 |
|
|
|
|
|
|
|
|
4.14 |
|
|
Form of Camden Property Trust 5.875% Note due 2007
|
|
Exhibit 4.3 to Form 8-K filed on
June 4, 2002 |
|
|
|
|
|
|
|
|
4.15 |
|
|
Form of Camden Property Trust 5.875% Note due 2012
|
|
Exhibit 4.3 to Form 8-K filed on
November 25, 2002 |
|
|
|
|
|
|
|
|
4.16 |
|
|
Form of Camden Property Trust 5.375% Note due 2013
|
|
Exhibit 4.2 to Form 8-K filed on
December 9, 2003 |
42
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
4.17 |
|
|
Form of Camden Property Trust 4.70% Note due 2009
|
|
Exhibit 4.2 to Form 8-K filed on
July 12, 2004 |
|
|
|
|
|
|
|
|
4.18 |
|
|
Form of Camden Property Trust 4.375% Note due 2010
|
|
Exhibit 4.2 to Form 8-K filed on
December 20, 2004 |
|
|
|
|
|
|
|
|
4.19 |
|
|
Form of Camden Property Trust 5.00% Note due 2015
|
|
Exhibit 4.2 to Form 8-K filed on
June 7, 2005 |
|
|
|
|
|
|
|
|
4.20 |
|
|
Form of Camden Property Trust 5.700% Notes due 2017
|
|
Exhibit 4.3 to Form 8-K filed on May
7, 2007 |
|
|
|
|
|
|
|
|
4.21 |
|
|
Indenture dated as of August 7, 1997 between Camden
Summit Partnership, L.P. (f/k/a Summit Properties
Partnership, L.P.) and First Union National Bank
|
|
Exhibit 4.1 to Camden Summit
Partnership, L.P.s Form 8-K filed
on August 11, 1997 (File No.
000-22411) |
|
|
|
|
|
|
|
|
4.22 |
|
|
Supplemental Indenture No. 1, dated as of August 12,
1997, between Camden Summit Partnership, L.P. (f/k/a
Summit Properties Partnership, L.P.) and First Union
National Bank
|
|
Exhibit 4.1 to Camden Summit
Partnership, L.P.s Form 8-K/A-1
filed on August 18, 1997 (File No.
000-22411) |
|
|
|
|
|
|
|
|
4.23 |
|
|
Supplemental Indenture No. 2, dated as of December 17,
1997, between Camden Summit Partnership, L.P. (f/k/a
Summit Properties Partnership, L.P.) and First Union
National Bank
|
|
Exhibit 4.1 to Camden Summit
Partnership, L.P.s Form 8-K/A-1
filed on December 17, 1997 (File No.
000-22411) |
|
|
|
|
|
|
|
|
4.24 |
|
|
Supplemental Indenture No. 3, dated as of May 29,
1998, between Camden Summit Partnership, L.P. (f/k/a
Summit Properties Partnership, L.P.) and First Union
National Bank
|
|
Exhibit 4.2 to Camden Summit
Partnership, L.P.s Form 8-K filed
on June 2, 1998 (File No. 000-22411) |
|
|
|
|
|
|
|
|
4.25 |
|
|
Supplemental Indenture No. 4, dated as of April 20,
2000, between Camden Summit Partnership, L.P. (f/k/a
Summit Properties Partnership, L.P.) and First Union
National Bank
|
|
Exhibit 4.2 to Camden Summit
Partnership, L.P.s Form 8-K filed
on April 28, 2000 (File No.
000-22411) |
|
|
|
|
|
|
|
|
4.26 |
|
|
Supplemental Indenture No. 5, dated as of June 21,
2005, among Camden Summit Partnership, L.P., Camden
Property Trust and Wachovia Bank, N.A.
|
|
Exhibit 99.1 to Form 8-K filed on
June 23, 2005 |
|
|
|
|
|
|
|
|
4.27 |
|
|
Form of Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) 7.59% Medium-Term Note
due 2009
|
|
Exhibit 4.1 to Camden Summit
Partnership, L.P.s Form 10-Q for
the quarter ended March 31, 1999
(File No. 000-22411) |
|
|
|
|
|
|
|
|
4.28 |
|
|
Form of Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) 8.50% Medium-Term Note
due 2010
|
|
Exhibit 10.2 to Summit Property
Inc.s Form 10-Q for the quarter
ended September 30, 2000 (File No.
001-12792) |
|
|
|
|
|
|
|
|
4.29 |
|
|
Form of Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) 7.703% Medium-Term Note
due 2011
|
|
Exhibit 10.3 to Summit Property
Inc.s Form 10-Q for the quarter
ended June 30, 2001 (File No.
001-12792) |
|
|
|
|
|
|
|
|
10.1 |
|
|
Form of Indemnification Agreement between Camden
Property Trust and certain of its trust managers and
executive officers
|
|
Form S-11 filed on July 9, 1993
(Registration No. 33-63588) |
|
|
|
|
|
|
|
|
10.2 |
|
|
Second Amended and Restated Employment Agreement dated
July 11, 2003 between Camden Property Trust and
Richard J. Campo
|
|
Exhibit 10.1 to Form 10-Q for the
quarter ended June 30, 2003 |
|
|
|
|
|
|
|
|
10.3 |
|
|
Second Amended and Restated Employment Agreement dated
July 11, 2003 between Camden Property Trust and D.
Keith Oden
|
|
Exhibit 10.2 to Form 10-Q for the
quarter ended June 30, 2003 |
43
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
10.4 |
|
|
Form of First Amendment to Second Amended and Restated
Employment Agreements, effective as of January 1,
2008, between Camden Property Trust and each of
Richard J. Campo and D. Keith Oden.
|
|
Exhibit 99.1 to Form 8-K filed on
November 30, 2007 |
|
|
|
|
|
|
|
|
10.5 |
|
|
Form of Employment Agreement by and between Camden
Property Trust and certain senior executive officers
|
|
Exhibit 10.13 to Form 10-K for the
year ended December 31, 1996 |
|
|
|
|
|
|
|
|
10.6 |
|
|
Form of First Amendment to Employment Agreement,
effective as of January 1, 2008, between the Company
and each of H. Malcolm Stewart, Dennis M. Steen, and
Steven K. Eddington.
|
|
Exhibit 99.2 to Form 8-K filed on
November 30, 2007 |
|
|
|
|
|
|
|
|
10.7 |
|
|
Second Amended and Restated Camden Property Trust Key
Employee Share Option Plan (KEYSOPTM),
effective as of January 1, 2008
|
|
Exhibit 99.5 to Form 8-K filed on
November 30, 2007 |
|
|
|
|
|
|
|
|
10.8 |
|
|
Distribution Agreement dated March 20, 1997 among
Camden Property Trust and the Agents listed therein
relating to the issuance of Medium Term Notes
|
|
Exhibit 1.1 to Form 8-K filed on
March 21, 1997 |
|
|
|
|
|
|
|
|
10.9 |
|
|
Form of Amended and Restated Master Exchange Agreement
between Camden Property Trust and certain key
employees
|
|
Exhibit 10.7 to Form 10-K for the
year ended December 31, 2003 |
|
|
|
|
|
|
|
|
10.10 |
|
|
Form of Amended and Restated Master Exchange Agreement
between Camden Property Trust and certain trust
managers
|
|
Exhibit 10.8 to Form 10-K for the
year ended December 31, 2003 |
|
|
|
|
|
|
|
|
10.11 |
|
|
Form of Amended and Restated Master Exchange Agreement
between Camden Property Trust and certain key
employees
|
|
Exhibit 10.9 to Form 10-K for the
year ended December 31, 2003 |
|
|
|
|
|
|
|
|
10.12 |
|
|
Form of Master Exchange Agreement between Camden
Property Trust and certain trust managers
|
|
Exhibit 10.10 to Form 10-K for the
year ended December 31, 2003 |
|
|
|
|
|
|
|
|
10.13 |
|
|
Form of Amendment No. 1 to Amended and Restated Master
Exchange Agreement (Trust Managers) effective November
27, 2007
|
|
Exhibit 99.3 to Form 8-K filed on
November 30, 2007 |
|
|
|
|
|
|
|
|
10.14 |
|
|
Form of Amendment No. 1 to Amended and Restated Master
Exchange Agreement (Key Employees) effective November
27, 2007
|
|
Exhibit 99.4 to Form 8-K filed on
November 30, 2007 |
|
|
|
|
|
|
|
|
10.15 |
|
|
Form of Third Amended and Restated Agreement of
Limited Partnership of Camden Operating, L.P.
|
|
Exhibit 10.1 to Form S-4 filed on
February 26, 1997 (Registration No.
333-22411) |
|
|
|
|
|
|
|
|
10.16 |
|
|
First Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating,
L.P., dated as of February 23, 1999
|
|
Exhibit 99.2 to Form 8-K filed on
March 10, 1999 |
|
|
|
|
|
|
|
|
10.17 |
|
|
Form of Second Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating,
L.P., dated as of August 13, 1999
|
|
Exhibit 10.15 to Form 10-K for the
year ended December 31, 1999 |
|
|
|
|
|
|
|
|
10.18 |
|
|
Form of Third Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating,
L.P., dated as of September 7, 1999
|
|
Exhibit 10.16 to Form 10-K for the
year ended December 31, 1999 |
|
|
|
|
|
|
|
|
10.19 |
|
|
Form of Fourth Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating,
L.P., dated as of January 7, 2000
|
|
Exhibit 10.17 to Form 10-K for the
year ended December 31, 1999 |
44
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
10.20 |
|
|
Form of Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating,
L.P., dated as of December 1, 2003
|
|
Exhibit 10.19 to Form 10-K for the
year ended December 31, 2003 |
|
|
|
|
|
|
|
|
10.21 |
|
|
Amended and Restated Limited Liability Company
Agreement of Sierra-Nevada Multifamily Investments,
LLC, adopted as of June 29, 1998 by Camden Subsidiary,
Inc. and TMT-Nevada, L.L.C.
|
|
Exhibit 99.1 to Form 8-K filed on
July 15, 1998 |
|
|
|
|
|
|
|
|
10.22 |
|
|
Amended and Restated Limited Liability Company
Agreement of Oasis Martinique, LLC, adopted as of
October 23, 1998 among Oasis Residential, Inc. and the
persons named therein
|
|
Exhibit 10.59 to Oasis Residential,
Inc.s Form 10-K for the year ended
December 31, 1997 (File No.
001-12428) |
|
|
|
|
|
|
|
|
10.23 |
|
|
Exchange Agreement, dated as of October 23, 1998, by
and among Oasis Residential, Inc., Oasis Martinique,
LLC and the holders listed therein
|
|
Exhibit 10.60 to Oasis Residential,
Inc.s Form 10-K for the year ended
December 31, 1997 (File No.
001-12428) |
|
|
|
|
|
|
|
|
10.24 |
|
|
Contribution Agreement, dated as of February 23, 1999,
by and among Belcrest Realty Corporation, Belair Real
Estate Corporation, Camden Operating, L.P. and Camden
Property Trust
|
|
Exhibit 99.1 to Form 8-K filed on
March 10, 1999 |
|
|
|
|
|
|
|
|
10.25 |
|
|
Amended and Restated 1993 Share Incentive Plan of
Camden Property Trust
|
|
Exhibit 10.18 to Form 10-K for the
year ended December 31, 1999 |
|
|
|
|
|
|
|
|
10.26 |
|
|
Camden Property Trust 1999 Employee Share Purchase Plan
|
|
Exhibit 10.19 to Form 10-K for the
year ended December 31, 1999 |
|
|
|
|
|
|
|
|
10.27 |
|
|
Amended and Restated 2002 Share Incentive Plan of
Camden Property Trust
|
|
Exhibit 10.1 to Form 10-Q for the
quarter ended March 31, 2002 |
|
|
|
|
|
|
|
|
10.28 |
|
|
Amendment to Amended and Restated 2002 Share Incentive
Plan of Camden Property Trust
|
|
Exhibit 99.1 to Form 8-K filed on
May 4, 2006 |
|
|
|
|
|
|
|
|
10.29 |
|
|
Camden Property Trust Short Term Incentive Plan
|
|
Exhibit 10.2 to Form 10-Q for the
quarter ended March 31, 2002 |
|
|
|
|
|
|
|
|
10.30 |
|
|
Amended and Restated Camden Property Trust
Non-Qualified Deferred Compensation Plan, effective as
of January 1, 2008
|
|
Exhibit 99.6 to Form 8-K filed on
November 30, 2007 |
|
|
|
|
|
|
|
|
10.31 |
|
|
Form of Second Amended and Restated Agreement of
Limited Partnership of Camden Summit Partnership, L.P.
among Camden Summit, Inc., as general partner, and the
persons whose names are set forth on Exhibit A thereto
|
|
Exhibit 10.4 to Form S-4 filed on
November 24, 2004 (Registration No.
333-120733) |
|
|
|
|
|
|
|
|
10.32 |
|
|
Form of Tax, Asset and Income Support Agreement among
Camden Property Trust, Camden Summit, Inc., Camden
Summit Partnership, L.P. and each of the limited
partners who has executed a signature page thereto
|
|
Exhibit 10.5 to Form S-4 filed on
November 24, 2004 (Registration No.
333-120733) |
|
|
|
|
|
|
|
|
10.33 |
|
|
Form of Amended and Restated Credit Agreement dated
January 14, 2005 among Camden Property Trust, Bank of
America, N.A., as administrative agent, J.P. Morgan
Chase Bank, N.A., as syndication agent, Wachovia Bank,
N.A. and Wells Fargo Bank, N.A., as the documentation
agents, and the Lenders named therein
|
|
Exhibit 99.1 to Form 8-K filed on
January 18, 2005 |
45
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
10.34 |
|
|
Form of First Amendment to Credit
Agreement, dated as of January
18, 2006, among Camden Property
Trust and Bank of America, N.A.
on behalf of itself and the
Lenders
|
|
Exhibit 99.1 to Form 8-K filed on
January 20, 2006 |
|
|
|
|
|
|
|
|
10.35 |
|
|
Form of Credit Agreement dated as
of August 17, 2007 among Camden
Property Trust, Bank of America,
N.A., as administrative agent and
JPMorgan Chase Bank, N.A., as
syndication agent.
|
|
Exhibit 99.1 to Form 8-K filed on
August 21, 2007 |
|
|
|
|
|
|
|
|
10.36 |
|
|
Form of Credit Agreement dated as
of October 4, 2007 among Camden
Property Trust, Bank of America,
N.A., as administrative agent,
JPMorgan Chase Bank, N.A., as
syndication agent, and the
financial institutions and other
entities designated as Lenders
on Schedule I thereto.
|
|
Exhibit 99.1 to Form 8-K filed on
October 10, 2007 |
|
|
|
|
|
|
|
|
10.37 |
|
|
Employment Agreement dated
February 15, 1999, by and among
William B. McGuire, Jr., Summit
Properties Inc. and Summit
Management Company, as restated
on August 24, 2001
|
|
Exhibit 10.1 to Summit Properties
Inc.s Form 10-Q for the quarter
ended September 30, 2001 (File No.
000-12792) |
|
|
|
|
|
|
|
|
10.38 |
|
|
Noncompetition Agreement between
Summit Properties Inc. and
William F. Paulsen
|
|
Exhibit 10.5 to Summit Properties
Inc.s Form 10-Q for the quarter
ended March 31, 2000 (File No.
001-12792) |
|
|
|
|
|
|
|
|
10.39 |
|
|
Noncompetition Agreement between
Summit Properties Inc. and
William B. McGuire, Jr.
|
|
Exhibit 10.7 to Summit Properties
Inc.s Form 10-Q for the quarter
ended March 31, 2000 (File No.
001-12792) |
|
|
|
|
|
|
|
|
10.40 |
|
|
Amendment Agreement, dated as of
June 19, 2004, among William B.
McGuire, Jr., Summit Properties
Inc. and Summit Management
Company
|
|
Exhibit 10.8.2 to Summit Properties
Inc.s Form 10-Q for the quarter
ended June 30, 2004 (File No.
001-12792) |
|
|
|
|
|
|
|
|
10.41 |
|
|
Amendment Agreement, dated as of
June 19, 2004, among William F.
Paulsen, Summit Properties Inc.
and Summit Management Company
|
|
Exhibit 10.8.2 to Summit Properties
Inc.s Form 10-Q for the quarter
ended June 30, 2004 (File No.
001-12792) |
|
|
|
|
|
|
|
|
10.42 |
|
|
Separation Agreement, dated as of
February 28, 2005, between Camden
Property Trust and William B.
McGuire, Jr.
|
|
Exhibit 99.1 to Form 8-K filed on
April 28, 2005 |
|
|
|
|
|
|
|
|
10.43 |
|
|
Separation Agreement, dated as of
February 28, 2005, between Camden
Property Trust and William F.
Paulsen
|
|
Exhibit 99.2 to Form 8-K filed on
April 28, 2005 |
|
|
|
|
|
|
|
|
10.44 |
|
|
Separation Agreements and General
Release, dated as of March 16,
2007, between Camden Property
Trust and James M. Hinton
|
|
Exhibit 99.1 to Form 8-K filed on
March 22, 2007 |
|
|
|
|
|
|
|
|
10.45 |
|
|
Credit Agreement dated July 28,
2003 by and among Camden Summit
Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.),
Summit Sweetwater, LLC, Summit
Shiloh, LLC, Summit Grandview,
LLC, Summit Portofino Place,
LTD., and L.J. Melody & Company
|
|
Exhibit 10.1 to Camden Summit
Partnership, L.P.s Form 10-Q for
the quarter ended June 30, 2003 |
|
|
|
|
|
|
|
|
10.46 |
|
|
Distribution Agreement, dated as
of April 20, 2000, by and among
Camden Summit Partnership, L.P.
(f/k/a Summit Properties
Partnership, L.P.), Summit
Properties Inc. and the Agents
listed therein
|
|
Camden Summit Partnership, L.P.s
Form 8-K filed on April 28, 2000 |
|
|
|
|
|
|
|
|
10.47 |
|
|
First Amendment to Distribution
Agreement, dated as of May 8,
2001, among Camden Summit
Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.),
Summit Properties Inc. and the
Agents named therein
|
|
Exhibit 10.2 to Summit Properties
Inc.s Form 10-Q for the quarter
ended March 31, 2001 |
|
|
|
|
|
|
|
|
12.1 |
|
|
Statement Re Computation of Ratios
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
21.1 |
|
|
List of Subsidiaries
|
|
Filed Herewith |
46
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
23.1 |
|
|
Consent of Deloitte & Touche LLP
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
23.2 |
|
|
Consent of Deloitte & Touche LLP
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
24.1 |
|
|
Powers of Attorney for Richard J.
Campo, D. Keith Oden, William R. Cooper, Scott S.
Ingraham, Lewis A. Levey, William
B. McGuire, Jr., F. Gardner
Parker, William F. Paulsen and
Steven A. Webster
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
31.1 |
|
|
Certification of Chief Executive
Officer pursuant to Rule
13a-14(a) of the Securities
Exchange Act
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
31.2 |
|
|
Certification of Chief Financial
Officer pursuant to Rule
13a-14(a) of the Securities
Exchange Act
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
32.1 |
|
|
Certification pursuant to 18
U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.1 |
|
|
Consolidated Financial Statements
of G&I V Midwest Residential, LLC
for the Year Ended December 31,
2007 and the Period from
September 20, 2006 (Date of
Inception) through December 31,
2006, and Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.2 |
|
|
Combined Financial Statements of
Tuckerman Camden Joint Ventures
as of and for the Years Ended
December 31, 2007 and 2006
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.3 |
|
|
Financial Statements of CPT
Addison, LP for the Period from
March 18, 2005 (Date of
Inception) through December 31,
2005, and Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.4 |
|
|
Financial Statements of CPT
Fountain Palms, LP for the Period
from March 18, 2005 (Date of
Inception) through December 31,
2005, and Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.5 |
|
|
Financial Statements of CPT Holly
Springs, LP for the Period from
March 18, 2005 (Date of
Inception) through December 31,
2005, and Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.6 |
|
|
Financial Statements of CPT Park,
LP for the Period from March 18,
2005 (Date of Inception) through
December 31, 2005, and
Independent Auditors Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.7 |
|
|
Financial Statements of CPT
Parkside, LP for the Period from
March 18, 2005 (Date of
Inception) through December 31,
2005, and Independent Auditors
Report
|
|
Filed Herewith |
47
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
99.8 |
|
|
Financial Statements of
CPT Pecos Ranch, LP for
the Period from March
18, 2005 (Date of
Inception) through
December 31, 2005, and
Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.9 |
|
|
Financial Statements of
CPT Pines, LP for the
Period from March 18,
2005 (Date of
Inception) through
December 31, 2005, and
Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.10 |
|
|
Financial Statements of
CPT Sierra, LP for the
Period from March 18,
2005 (Date of
Inception) through
December 31, 2005, and
Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.11 |
|
|
Financial Statements of
CPT Sugar Grove, LP for
the Period from March
18, 2005 (Date of
Inception) through
December 31, 2005, and
Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.12 |
|
|
Financial Statements of
CPT Summit, LP for the
Period from March 18,
2005 (Date of
Inception) through
December 31, 2005, and
Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.13 |
|
|
Financial Statements of
CPT Tiara, LP for the
Period from March 18,
2005 (Date of
Inception) through
December 31, 2005, and
Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
99.14 |
|
|
Financial Statements of
CPT Towne Center, LP
for the Period from
March 18, 2005 (Date of
Inception) through
December 31, 2005, and
Independent Auditors
Report
|
|
Filed Herewith |
|
|
|
(1) |
|
Unless otherwise indicated, all references to reports or registration statements are to
reports or registration statements filed by Camden Property Trust (File No. 1-12110). |
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
Camden Property Trust has duly caused this Report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
|
|
|
|
February 22, 2008 |
CAMDEN PROPERTY TRUST
|
|
|
By: |
/s/ Michael P. Gallagher
|
|
|
|
Michael P. Gallagher |
|
|
|
Vice President - Chief Accounting Officer |
|
49
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of Camden Property Trust and in the capacities and
on the dates indicated.
|
|
|
|
|
Name |
|
Title |
|
Date |
|
/s/ Richard J. Campo
Richard J. Campo
|
|
Chairman of the Board of
Trust Managers and Chief
Executive Officer
(Principal Executive Officer)
|
|
February 22, 2008 |
|
|
|
|
|
/s/ D. Keith Oden
D. Keith Oden
|
|
President, Chief Operating
Officer and Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
/s/ Dennis M. Steen
Dennis M. Steen
|
|
Chief Financial Officer,
Senior Vice President-Finance
and Secretary
(Principal Financial Officer)
|
|
February 22, 2008 |
|
|
|
|
|
/s/ Michael P. Gallagher
Michael P. Gallagher
|
|
Vice President Chief
Accounting Officer
(Principal Accounting Officer)
|
|
February 22, 2008 |
|
|
|
|
|
*
William R. Cooper
|
|
Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
*
Scott S. Ingraham
|
|
Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
*
Lewis A. Levey
|
|
Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
*
William B. McGuire, Jr.
|
|
Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
*
F. Gardner Parker
|
|
Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
*
William F. Paulsen
|
|
Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
*
Steven A. Webster
|
|
Trust Manager
|
|
February 22, 2008 |
|
|
|
|
|
*By:
|
|
/s/ Dennis M. Steen
Dennis M. Steen
|
|
|
|
|
Attorney-in-fact |
|
|
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trust Managers and Shareholders of
Camden Property Trust
Houston, Texas
We have audited the accompanying consolidated balance sheets of Camden Property Trust and
subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated
statements of operations, shareholders equity, and cash flows for each of the three years in the
period ended December 31, 2007. Our audits also included the financial statement schedules listed
in the Index at Item 15. These financial statements and financial statement schedules are the
responsibility of the Companys management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects,
the financial position of Camden Property Trust and subsidiaries as of December 31, 2007 and 2006,
and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2007, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, on January 1, 2007, the Company
adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in
Income Taxes an Interpretation of FASB Statement No. 109.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Companys internal control over financial reporting as of December 31,
2007, based on the criteria established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22,
2008 expressed an unqualified opinion on the Companys internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 22, 2008
F-1
CAMDEN
PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
(in thousands, except per share amounts) |
|
2007 |
|
|
2006 |
|
Assets |
|
|
|
|
|
|
|
|
Real estate assets, at cost |
|
|
|
|
|
|
|
|
Land |
|
$ |
730,548 |
|
|
$ |
693,312 |
|
Buildings and improvements |
|
|
4,316,472 |
|
|
|
4,036,286 |
|
|
|
|
|
|
|
|
|
|
|
5,047,020 |
|
|
|
4,729,598 |
|
Accumulated depreciation |
|
|
(868,074 |
) |
|
|
(762,011 |
) |
|
|
|
|
|
|
|
Net operating real estate assets |
|
|
4,178,946 |
|
|
|
3,967,587 |
|
Properties under development, including land |
|
|
446,664 |
|
|
|
369,861 |
|
Investments in joint ventures |
|
|
8,466 |
|
|
|
9,245 |
|
Properties held for sale, including land |
|
|
25,253 |
|
|
|
32,763 |
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
4,659,329 |
|
|
|
4,379,456 |
|
|
Accounts receivable affiliates |
|
|
35,940 |
|
|
|
34,170 |
|
Notes receivable
|
|
|
|
|
|
|
|
|
Affiliates |
|
|
50,358 |
|
|
|
41,478 |
|
Other |
|
|
11,565 |
|
|
|
3,855 |
|
Other assets, net |
|
|
126,996 |
|
|
|
121,336 |
|
Cash and cash equivalents |
|
|
897 |
|
|
|
1,034 |
|
Restricted cash |
|
|
5,675 |
|
|
|
4,721 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
4,890,760 |
|
|
$ |
4,586,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Notes payable |
|
|
|
|
|
|
|
|
Unsecured |
|
$ |
2,265,319 |
|
|
$ |
1,759,498 |
|
Secured |
|
|
562,776 |
|
|
|
571,478 |
|
Accounts payable and accrued expenses |
|
|
107,403 |
|
|
|
124,834 |
|
Accrued real estate taxes |
|
|
24,943 |
|
|
|
23,306 |
|
Distributions payable |
|
|
42,689 |
|
|
|
43,068 |
|
Other liabilities |
|
|
136,365 |
|
|
|
105,999 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,139,495 |
|
|
|
2,628,183 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests |
|
|
|
|
|
|
|
|
Perpetual preferred units |
|
|
97,925 |
|
|
|
97,925 |
|
Common units |
|
|
111,624 |
|
|
|
115,280 |
|
Other minority interests |
|
|
10,403 |
|
|
|
10,306 |
|
|
|
|
|
|
|
|
Total minority interests |
|
|
219,952 |
|
|
|
223,511 |
|
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
|
|
|
|
|
|
Common shares of beneficial interest; $0.01 par value per share;
100,000 shares authorized; 68,030 and 67,451 issued; 65,434 and 65,006
outstanding at December 31, 2007 and 2006, respectively |
|
|
654 |
|
|
|
650 |
|
Additional paid-in capital |
|
|
2,209,631 |
|
|
|
2,183,622 |
|
Distributions in excess of net income |
|
|
(227,025 |
) |
|
|
(213,665 |
) |
Employee notes receivable |
|
|
(1,950 |
) |
|
|
(2,036 |
) |
Treasury shares, at cost |
|
|
(433,874 |
) |
|
|
(234,215 |
) |
Accumulated other comprehensive loss |
|
|
(16,123 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
1,531,313 |
|
|
|
1,734,356 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
4,890,760 |
|
|
$ |
4,586,050 |
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-2
CAMDEN
PROPERTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands, except per share amounts) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
|
$ |
543,475 |
|
|
$ |
527,554 |
|
|
$ |
462,935 |
|
Other property revenues |
|
|
65,605 |
|
|
|
53,022 |
|
|
|
41,126 |
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
|
609,080 |
|
|
|
580,576 |
|
|
|
504,061 |
|
|
|
|
|
|
|
|
|
|
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Property operating and maintenance |
|
|
162,639 |
|
|
|
158,624 |
|
|
|
138,293 |
|
Real estate taxes |
|
|
64,667 |
|
|
|
61,539 |
|
|
|
55,499 |
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
227,306 |
|
|
|
220,163 |
|
|
|
193,792 |
|
|
|
|
|
|
|
|
|
|
|
Non-property income |
|
|
|
|
|
|
|
|
|
|
|
|
Fee and asset management |
|
|
8,293 |
|
|
|
14,041 |
|
|
|
12,912 |
|
Sale of technology investments |
|
|
623 |
|
|
|
1,602 |
|
|
|
24,206 |
|
Interest and other income |
|
|
8,804 |
|
|
|
9,771 |
|
|
|
7,373 |
|
Income on deferred compensation plans |
|
|
7,282 |
|
|
|
10,116 |
|
|
|
6,421 |
|
|
|
|
|
|
|
|
|
|
|
Total non-property income |
|
|
25,002 |
|
|
|
35,530 |
|
|
|
50,912 |
|
|
|
|
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Property management |
|
|
18,413 |
|
|
|
18,490 |
|
|
|
16,145 |
|
Fee and asset management |
|
|
4,552 |
|
|
|
9,382 |
|
|
|
6,897 |
|
General and administrative |
|
|
32,590 |
|
|
|
37,584 |
|
|
|
24,845 |
|
Transaction compensation and merger expenses |
|
|
|
|
|
|
|
|
|
|
14,085 |
|
Impairment provision on technology investment |
|
|
|
|
|
|
|
|
|
|
130 |
|
Interest |
|
|
116,281 |
|
|
|
117,862 |
|
|
|
111,052 |
|
Depreciation and amortization |
|
|
162,189 |
|
|
|
153,609 |
|
|
|
159,841 |
|
Amortization of deferred financing costs |
|
|
3,689 |
|
|
|
3,807 |
|
|
|
3,739 |
|
Expense on deferred compensation plans |
|
|
7,282 |
|
|
|
10,116 |
|
|
|
6,421 |
|
|
|
|
|
|
|
|
|
|
|
Total other expenses |
|
|
344,996 |
|
|
|
350,850 |
|
|
|
343,155 |
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before gain on sale of properties,
impairment loss on land, equity in income of joint ventures,
minority interests and income taxes |
|
|
61,780 |
|
|
|
45,093 |
|
|
|
18,026 |
|
Gain on sale of properties, including land |
|
|
|
|
|
|
97,452 |
|
|
|
132,914 |
|
Impairment loss on land |
|
|
(1,447 |
) |
|
|
|
|
|
|
(339 |
) |
Equity in income of joint ventures |
|
|
1,526 |
|
|
|
5,156 |
|
|
|
10,049 |
|
Income allocated to minority interests |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions on perpetual preferred units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
(7,028 |
) |
Original issuance costs on redeemed perpetual preferred units |
|
|
|
|
|
|
|
|
|
|
(365 |
) |
Income allocated to common units and other minority interests |
|
|
(4,729 |
) |
|
|
(15,685 |
) |
|
|
(1,731 |
) |
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes |
|
|
50,130 |
|
|
|
125,016 |
|
|
|
151,526 |
|
Income tax expense current |
|
|
(3,052 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
47,078 |
|
|
|
125,016 |
|
|
|
151,526 |
|
Income from discontinued operations |
|
|
7,857 |
|
|
|
10,864 |
|
|
|
12,341 |
|
Gain on sale of discontinued operations, including land, net of tax |
|
|
107,039 |
|
|
|
99,273 |
|
|
|
36,175 |
|
Income from discontinued operations, allocated to common units |
|
|
(13,517 |
) |
|
|
(2,307 |
) |
|
|
(956 |
) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
148,457 |
|
|
$ |
232,846 |
|
|
$ |
199,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share basic |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
0.81 |
|
|
$ |
2.21 |
|
|
$ |
2.91 |
|
Income from discontinued operations |
|
|
1.74 |
|
|
|
1.90 |
|
|
|
0.92 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
2.55 |
|
|
$ |
4.11 |
|
|
$ |
3.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
0.80 |
|
|
$ |
2.14 |
|
|
$ |
2.72 |
|
Income from discontinued operations |
|
|
1.71 |
|
|
|
1.82 |
|
|
|
0.86 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
2.51 |
|
|
$ |
3.96 |
|
|
$ |
3.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared per common share |
|
$ |
2.76 |
|
|
$ |
2.64 |
|
|
$ |
2.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
58,135 |
|
|
|
56,660 |
|
|
|
52,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and common dilutive
equivalent shares outstanding |
|
|
59,125 |
|
|
|
59,524 |
|
|
|
56,313 |
|
See Notes to Consolidated Financial Statements.
F-3
CAMDEN
PROPERTY TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
shares of |
|
|
Additional |
|
|
Distributions |
|
|
Employee |
|
|
Treasury |
|
|
other |
|
|
Total |
|
|
|
beneficial |
|
|
paid-in |
|
|
in excess of |
|
|
notes |
|
|
shares, at |
|
|
comprehensive |
|
|
shareholders |
|
(in thousands, except per share amounts) |
|
interest |
|
|
capital |
|
|
net income |
|
|
receivable |
|
|
cost |
|
|
loss |
|
|
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity, January 1, 2005 |
|
$ |
486 |
|
|
$ |
1,335,825 |
|
|
$ |
(361,973 |
) |
|
$ |
|
|
|
$ |
(235,823 |
) |
|
$ |
|
|
|
$ |
738,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
199,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,086 |
|
Common shares issued in Summit merger (11,802 shares) |
|
|
118 |
|
|
|
543,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
543,999 |
|
Common shares issued under dividend reinvestment plan |
|
|
|
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34 |
|
Share awards issued under benefit plan (298 shares) |
|
|
3 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 |
|
Share awards canceled under benefit plan (19 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of previously granted share awards |
|
|
|
|
|
|
11,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,325 |
|
Employee share purchase plan |
|
|
|
|
|
|
523 |
|
|
|
|
|
|
|
|
|
|
|
675 |
|
|
|
|
|
|
|
1,198 |
|
Acquisition of employee notes receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,882 |
) |
|
|
|
|
|
|
|
|
|
|
(3,882 |
) |
Repayment of employee notes receivable, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,804 |
|
|
|
|
|
|
|
|
|
|
|
1,804 |
|
Share awards placed into deferred plans (202 shares) |
|
|
(2 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share options exercised (264 shares) |
|
|
3 |
|
|
|
10,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,464 |
|
Conversions and redemptions of operating partnership units |
|
|
|
|
|
|
539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539 |
|
Cash distributions ($2.54 per share) |
|
|
|
|
|
|
|
|
|
|
(132,187 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(132,187 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity, December 31, 2005 |
|
$ |
608 |
|
|
$ |
1,902,595 |
|
|
$ |
(295,074 |
) |
|
$ |
(2,078 |
) |
|
$ |
(235,148 |
) |
|
$ |
|
|
|
$ |
1,370,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
232,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232,846 |
|
Common shares issued (3,600 shares) |
|
|
36 |
|
|
|
254,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
254,931 |
|
Common shares issued under dividend reinvestment plan |
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
|
Share awards issued under benefit plan (317 shares) |
|
|
3 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
Share awards canceled under benefit plan (31 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of previously granted share awards |
|
|
|
|
|
|
12,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,964 |
|
Employee share purchase plan |
|
|
|
|
|
|
1,359 |
|
|
|
|
|
|
|
|
|
|
|
935 |
|
|
|
|
|
|
|
2,294 |
|
Repayment of employee notes receivable, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
42 |
|
Share awards placed into deferred plans (97 shares) |
|
|
(1 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share options exercised (119 shares) |
|
|
1 |
|
|
|
5,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,294 |
|
Conversions and redemptions of operating partnership units |
|
|
3 |
|
|
|
6,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,489 |
|
Cash distributions ($2.64 per share) |
|
|
|
|
|
|
|
|
|
|
(151,437 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(151,437 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity, December 31, 2006 |
|
$ |
650 |
|
|
$ |
2,183,622 |
|
|
$ |
(213,665 |
) |
|
$ |
(2,036 |
) |
|
$ |
(234,215 |
) |
|
$ |
|
|
|
$ |
1,734,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
148,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
148,457 |
|
Other comprehensive loss -
Change in fair value of cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,123 |
) |
|
|
(16,123 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,334 |
|
Common shares issued under dividend reinvestment plan |
|
|
|
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38 |
|
Share awards issued under benefit plan (282 shares) |
|
|
3 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
(64 |
) |
|
|
|
|
|
|
(43 |
) |
Share awards canceled under benefit plan (65 shares) |
|
|
(1 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of previously granted share awards |
|
|
|
|
|
|
9,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,327 |
|
Employee share purchase plan |
|
|
|
|
|
|
817 |
|
|
|
|
|
|
|
|
|
|
|
562 |
|
|
|
|
|
|
|
1,379 |
|
Repayment of employee notes receivable, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
86 |
|
Share awards placed into deferred plans (151 shares) |
|
|
(2 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share options exercised (96 shares) |
|
|
1 |
|
|
|
4,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,334 |
|
Conversions and redemptions of operating partnership units |
|
|
3 |
|
|
|
11,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,476 |
|
Common shares repurchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(200,157 |
) |
|
|
|
|
|
|
(200,157 |
) |
Cumulative effect of a change in accounting principle |
|
|
|
|
|
|
|
|
|
|
(2,496 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,496 |
) |
Cash distributions ($2.76 per share) |
|
|
|
|
|
|
|
|
|
|
(159,321 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(159,321 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity, December 31, 2007 |
|
$ |
654 |
|
|
$ |
2,209,631 |
|
|
$ |
(227,025 |
) |
|
$ |
(1,950 |
) |
|
$ |
(433,874 |
) |
|
$ |
(16,123 |
) |
|
$ |
1,531,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-4
CAMDEN
PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
148,457 |
|
|
$ |
232,846 |
|
|
$ |
199,086 |
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization, including discontinued operations |
|
|
157,137 |
|
|
|
159,860 |
|
|
|
171,254 |
|
Amortization of deferred financing costs |
|
|
3,689 |
|
|
|
3,813 |
|
|
|
3,739 |
|
Equity in income of joint ventures |
|
|
(1,526 |
) |
|
|
(5,156 |
) |
|
|
(10,049 |
) |
Distributions of income from joint ventures |
|
|
5,406 |
|
|
|
|
|
|
|
|
|
Gain on sale of properties, including land |
|
|
|
|
|
|
(97,452 |
) |
|
|
(132,914 |
) |
Gain on sale of discontinued operations |
|
|
(107,039 |
) |
|
|
(99,273 |
) |
|
|
(36,175 |
) |
Gain on sale of technology investments |
|
|
(623 |
) |
|
|
(1,602 |
) |
|
|
(24,206 |
) |
Impairment loss on land |
|
|
1,447 |
|
|
|
|
|
|
|
339 |
|
Impairment provision on technology investment |
|
|
|
|
|
|
|
|
|
|
130 |
|
Original issuance costs on redeemed perpetual preferred units |
|
|
|
|
|
|
|
|
|
|
365 |
|
Income allocated to minority interests |
|
|
25,246 |
|
|
|
24,992 |
|
|
|
9,715 |
|
Accretion of discount on unsecured notes payable |
|
|
590 |
|
|
|
694 |
|
|
|
687 |
|
Share-based compensation |
|
|
7,547 |
|
|
|
11,619 |
|
|
|
9,549 |
|
Interest on notes receivable affiliates |
|
|
(4,112 |
) |
|
|
(108 |
) |
|
|
(96 |
) |
Net change in operating accounts |
|
|
(13,113 |
) |
|
|
1,336 |
|
|
|
9,421 |
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities |
|
|
223,106 |
|
|
|
231,569 |
|
|
|
200,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Development and capital improvements |
|
|
(417,789 |
) |
|
|
(334,339 |
) |
|
|
(199,175 |
) |
Acquisition of operating properties |
|
|
(83,031 |
) |
|
|
(109,961 |
) |
|
|
(98,615 |
) |
Proceeds from sale of properties, including land and discontinued operations |
|
|
171,757 |
|
|
|
181,963 |
|
|
|
134,882 |
|
Proceeds from the sale of technology investments |
|
|
623 |
|
|
|
1,602 |
|
|
|
24,651 |
|
Proceeds from sales of assets to joint ventures |
|
|
|
|
|
|
213,720 |
|
|
|
316,746 |
|
Distributions of investments from joint ventures |
|
|
6,525 |
|
|
|
47,922 |
|
|
|
79,425 |
|
Investments in joint ventures |
|
|
(6,015 |
) |
|
|
(3,147 |
) |
|
|
(878 |
) |
Payments received on notes receivable other |
|
|
1,000 |
|
|
|
9,406 |
|
|
|
31,383 |
|
Issuance of notes receivable other |
|
|
(8,710 |
) |
|
|
|
|
|
|
(97 |
) |
Increase in notes receivable affiliates |
|
|
(3,154 |
) |
|
|
(41,615 |
) |
|
|
|
|
Cash of Summit at merger date |
|
|
|
|
|
|
|
|
|
|
16,696 |
|
Cash consideration paid for Summit |
|
|
|
|
|
|
|
|
|
|
(458,050 |
) |
Payment of merger related liabilities |
|
|
|
|
|
|
(8,233 |
) |
|
|
(51,794 |
) |
Earnest money deposits on potential transactions |
|
|
(340 |
) |
|
|
(4,803 |
) |
|
|
|
|
Change in restricted cash |
|
|
(954 |
) |
|
|
368 |
|
|
|
362 |
|
Increase in non-real estate assets and other |
|
|
(6,710 |
) |
|
|
(4,950 |
) |
|
|
(3,097 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash from investing activities |
|
|
(346,798 |
) |
|
|
(52,067 |
) |
|
|
(207,561 |
) |
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-5
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in unsecured line of credit and short-term borrowings |
|
|
(91,000 |
) |
|
|
(45,000 |
) |
|
|
195,000 |
|
Proceeds from notes payable |
|
|
807,990 |
|
|
|
|
|
|
|
248,423 |
|
Repayment of Summit secured credit facility |
|
|
|
|
|
|
|
|
|
|
(188,500 |
) |
Repayment of notes payable |
|
|
(213,376 |
) |
|
|
(227,284 |
) |
|
|
(79,753 |
) |
Proceeds from issuance of common shares |
|
|
|
|
|
|
254,931 |
|
|
|
|
|
Distributions to shareholders and minority interests |
|
|
(178,142 |
) |
|
|
(166,234 |
) |
|
|
(148,318 |
) |
Redemption of perpetual preferred units |
|
|
|
|
|
|
|
|
|
|
(17,500 |
) |
Repayment of employee notes receivable |
|
|
190 |
|
|
|
150 |
|
|
|
1,900 |
|
Repurchase of common shares and units |
|
|
(200,467 |
) |
|
|
(170 |
) |
|
|
(5,688 |
) |
Net increase (decrease) in accounts receivable affiliates |
|
|
(1,452 |
) |
|
|
382 |
|
|
|
(1,439 |
) |
Common share options exercised |
|
|
3,795 |
|
|
|
4,155 |
|
|
|
9,238 |
|
Payment of deferred financing costs |
|
|
(5,113 |
) |
|
|
(2,945 |
) |
|
|
(7,247 |
) |
Other |
|
|
1,130 |
|
|
|
1,971 |
|
|
|
(77 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash from financing activities |
|
|
123,555 |
|
|
|
(180,044 |
) |
|
|
6,039 |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) in cash and cash equivalents |
|
|
(137 |
) |
|
|
(542 |
) |
|
|
(677 |
) |
Cash and cash equivalents, beginning of year |
|
|
1,034 |
|
|
|
1,576 |
|
|
|
2,253 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year |
|
$ |
897 |
|
|
$ |
1,034 |
|
|
$ |
1,576 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental information |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of interest capitalized |
|
$ |
114,531 |
|
|
$ |
121,396 |
|
|
$ |
106,020 |
|
Cash paid for income taxes |
|
|
2,555 |
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Summit, net of cash acquired, at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
Assets acquired |
|
$ |
|
|
|
$ |
1,881 |
|
|
$ |
1,591,899 |
|
Liabilities assumed |
|
|
|
|
|
|
1,881 |
|
|
|
982,966 |
|
Common shares issued |
|
|
|
|
|
|
|
|
|
|
544,065 |
|
Common units issued |
|
|
|
|
|
|
|
|
|
|
81,564 |
|
Value of shares issued under benefit plans, net |
|
|
15,381 |
|
|
|
16,144 |
|
|
|
11,330 |
|
Cancellation of notes receivable affiliate in connection with property acquisition |
|
|
|
|
|
|
12,053 |
|
|
|
|
|
Distributions declared but not paid |
|
|
42,693 |
|
|
|
43,068 |
|
|
|
38,922 |
|
Conversion of operating partnership units to common shares |
|
|
11,638 |
|
|
|
6,569 |
|
|
|
424 |
|
Minority interests issued in connection with real estate contributions |
|
|
532 |
|
|
|
|
|
|
|
|
|
(Increase) decrease in liabilities associated with construction and capital expenditures |
|
|
40 |
|
|
|
(5,261 |
) |
|
|
(5,493 |
) |
Contribution of real estate assets to joint ventures |
|
|
|
|
|
|
33,493 |
|
|
|
45,297 |
|
Assumption of debt by joint venture |
|
|
|
|
|
|
30,525 |
|
|
|
|
|
Common units issued in connection with investment in joint venture |
|
|
|
|
|
|
1,900 |
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Business. Formed on May 25, 1993, Camden Property Trust, a Texas real estate investment trust
(REIT), is engaged in the ownership, development, construction and management of multifamily
apartment communities. Our multifamily apartment communities are referred to as communities,
multifamily communities, properties, or multifamily properties in the following discussion.
As of December 31, 2007, we owned interests in, operated or were developing 193 multifamily
properties comprising 66,468 apartment homes located in 13 states. We had 3,383 apartment homes
under development at 11 of our multifamily properties, including 1,257 apartment homes at four
multifamily properties owned through joint ventures, 2,126 apartment homes at seven operating
properties, and several sites we intend to develop into multifamily apartment communities.
Additionally, two properties comprised of 391 apartment homes were designated as held for sale.
2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Principles of Consolidation. Our consolidated financial statements include our assets,
liabilities and operations and those of our wholly-owned subsidiaries and partnerships. We also
make co-investments with unrelated third parties and determine whether to consolidate or use the
equity method of accounting for these ventures. FASB Interpretation No. 46R, Consolidation of
Variable Interest Entities (as revised) and Emerging Issues Task Force No. 04-05, Determining
Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or
Similar Entity When the Limited Partners Have Certain Rights are two of the primary sources of
accounting guidance in this area. In accordance with this accounting literature, we will
consolidate joint ventures determined to be variable interest entities for which we are the primary
beneficiary. We will also consolidate any joint ventures that are not determined to be variable
interest entities but where we exercise control over major operating decisions through substantive
participating rights. Any entities that do not meet the criteria for consolidation, but where we
exercise significant influence are accounted for using the equity method. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Allocations of Purchase Price. Upon the acquisition of real estate, we allocate the purchase
price between tangible and intangible assets, which includes land, buildings, furniture and
fixtures, the value of in-place leases, including above and below market leases, and acquired
liabilities. When allocating the purchase price to acquired properties, we allocated costs to the
estimated intangible value of in-place leases and above or below market leases and to the estimated
fair value of furniture and fixtures, land and buildings on a value determined by assuming the
property was vacant by applying methods similar to those used by independent appraisers of
income-producing property. Depreciation and amortization is computed on a straight-line basis over
the remaining useful lives of the related assets. The value of in-place leases and above or below
market leases is amortized over the estimated average remaining life of leases in-place at the time
of acquisition. Estimates of fair value of acquired debt are based upon interest rates available
for the issuance of debt with similar terms and remaining maturities.
Asset Impairment. Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists
if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to
recover the carrying value of such assets. Generally, when impairment exists the long-lived asset
is adjusted to its respective fair value.
We consider projected future undiscounted cash flows, trends, and other factors in our
assessment of whether impairment conditions exist. While we believe our estimates of future cash
flows are reasonable, different assumptions regarding such factors as market rents, economies, and
occupancies could significantly affect these estimates. In determining fair value, management uses
appraisals, management estimates, or discounted cash flow calculations. We recorded impairment
charges on land of $1.4 million and $0.3 million for the years ended December 31, 2007 and 2005.
Our impairment charge in 2007 coincided with our decision to abandon development efforts at a site
located in Dallas, Texas. Prior to our decision to abandon development efforts, the carrying value
of the land was supportable with cash flow projections from expected development.
F-7
Cash and Cash Equivalents. All cash and investments in money market accounts and other highly
liquid securities with a maturity of three months or less at the date of purchase are considered to
be cash and cash equivalents.
Cost Capitalization. Real estate assets are carried at cost plus capitalized carrying
charges. Carrying charges are primarily interest and real estate taxes which are capitalized as
part of properties under development. Expenditures directly related to the development,
acquisition and improvement of real estate assets, excluding internal costs relating to
acquisitions of operating properties, are capitalized at cost as land, buildings and improvements.
Indirect development costs, including salaries and benefits and other related costs directly
attributable to the development of properties are also capitalized. All construction and carrying
costs are capitalized and reported on the balance sheet in properties under development until the
apartment homes are substantially completed. Upon substantial completion of the apartment homes,
the total cost for the apartment homes and the associated land is transferred to buildings and
improvements and land, respectively, and the assets are depreciated over their estimated useful
lives using the straight-line method of depreciation.
Where possible, we stage our construction to allow leasing and occupancy during the
construction period, which we believe minimizes the duration of the lease-up period following
completion of construction. Our accounting policy related to properties in the development and
leasing phase is all operating expenses associated with completed apartment homes are expensed.
As discussed above, carrying charges are principally interest and real estate taxes
capitalized as part of properties under development and buildings and improvements. Capitalized
interest was $22.6 million in 2007, $20.6 million in 2006 and $17.5 million in 2005. Capitalized
real estate taxes were $3.5 million, $2.6 million and $2.5 million in 2007, 2006 and 2005,
respectively.
We capitalize renovation and improvement costs we believe extend the economic lives of
depreciable property. Capital expenditures subsequent to initial construction are capitalized and
depreciated over their estimated useful lives, which range from 3 to 20 years.
Depreciation and amortization is computed over the expected useful lives of depreciable
property on a straight-line basis with lives generally as follows:
|
|
|
|
|
Estimated |
|
|
Useful Life |
Buildings and improvements |
|
5-35 years |
Furniture, fixtures, equipment and other |
|
3-20 years |
Intangible assets (in-place leases and above and below market leases) |
|
underlying lease term |
Derivative Instruments. We utilize derivative financial instruments to manage interest rate
risk and we designate the financial instruments as cash flow hedges under the guidance of SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities, SFAS No. 138, Accounting for
Certain Instruments and Certain Hedging Activities, an Amendment of Statement No. 133, and SFAS
149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. These
statements require every derivative instrument to be recorded on the balance sheet as either an
asset or liability measured at its fair value, with changes in fair value recognized currently in
earnings unless specific hedge accounting criteria are met. For cash flow hedge relationships,
changes in the fair value of the derivative instrument deemed effective at offsetting the risk
being hedged are reported in other comprehensive income. For cash flow hedges where the cumulative
changes in the fair value of the derivative exceed the cumulative changes in the fair value of the
hedged item, the ineffective portion is recognized in current period earnings. All derivative
instruments are recognized on the balance sheet and measured at fair value. Derivatives not
qualifying for hedge treatment must be recorded at fair value with gains or losses recognized in
earnings in the period of change. We enter into derivative financial instruments from time to
time, but do not use them for trading or speculative purposes. Interest rate swap agreements are
used to reduce the potential impact of changes in interest rates on variable-rate debt.
F-8
We formally document all relationships between hedging instruments and hedged items, as well
as our risk management objective and strategy for undertaking the hedge. This process includes
specific identification of the
hedging instrument and the hedged transaction, the nature of the risk being hedged, and how the
hedging instruments effectiveness in hedging the exposure to the hedged transactions variability
in cash flows attributable to the hedged risk will be assessed and measured. Both at the inception
of the hedge and on an ongoing basis, we assess whether the derivatives used in hedging
transactions are highly effective in offsetting changes in cash flows or fair values of hedged
items. We discontinue hedge accounting if a derivative is not determined to be highly effective as
a hedge or has ceased to be a highly effective hedge.
As of December 31, 2007, we had $500 million in variable rate debt subject to cash flow
hedges. See Note 12, Derivative Instruments and Hedging Activities for further discussion of
derivative financial instruments.
Accumulated other comprehensive income or loss on the Consolidated Statements of Shareholders
Equity, reflects the effective portions of cumulative changes in the fair value of derivatives in
qualifying cash flow hedge relationships.
Discontinued Operations. The results of operations for properties sold during the period or
classified as held for sale at the end of the current period are required to be classified as
discontinued operations in the current and prior periods. The property-specific components of
earnings that are classified as discontinued operations include separately identifiable
property-specific revenues, expenses, depreciation and interest expense, if any. The gain or loss
on the eventual disposal of the held for sale properties is also classified as discontinued
operations. Real estate assets held for sale are measured at the lower of the carrying amount or
the fair value less costs to sell, and are presented separately in the accompanying consolidated
balance sheets. Subsequent to classification of a property as held for sale, no further
depreciation is recorded. Properties sold by our unconsolidated entities are not included in
discontinued operations and related gains or losses are reported as a component of equity in income
of joint ventures.
Gains on sale of real estate are recognized using the full accrual or partial sale methods, as
applicable, in accordance with SFAS No. 66 Accounting for Real Estate Sales, provided various
criteria relating to the terms of sale and any subsequent involvement with the real estate sold are
met.
Income Recognition. Our rental and other property income is recorded when due from residents
and is recognized monthly as it is earned. Other property income consists primarily of utility
rebillings, and administrative, application and other transactional fees charged to our residents.
Our apartment homes are rented to residents on lease terms generally ranging from 6 to 15 months,
with monthly payments due in advance. Interest, fee and asset management and all other sources of
income are recognized as earned. Two of our properties are subject to rent control or rent
stabilization. Operations of apartment properties acquired are recorded from the date of
acquisition in accordance with the purchase method of accounting. In managements opinion, due to
the number of residents, the type and diversity of submarkets in which the properties operate, and
the collection terms, there is no significant concentration of credit risk.
Insurance. Our primary lines of insurance coverage are property, general liability, health
and workers compensation. We believe our insurance coverage adequately insures our properties
against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood and other
perils and adequately insures us against other risks. Losses are accrued based upon our estimates
of the aggregate liability for claims incurred using certain actuarial assumptions followed in the
insurance industry and based on our experience.
Other Assets, Net. Other assets in our consolidated financial statements include investments
under deferred compensation plans, deferred financing costs, non-real estate leasehold improvements
and equipment, prepaid expenses, the value of in-place leases net of related accumulated
amortization, and other miscellaneous receivables. Investments under deferred compensation plans
are held as trading securities and are adjusted to fair market value at period end. See further
discussion of our investments under deferred compensation plans in Note 13, Shared Based
Compensation and Benefit Plans. Deferred financing costs are amortized over the terms of the
related debt on the straight-line method, which approximates the effective interest method.
Corporate leasehold improvements and equipment are depreciated on the straight-line method over the
shorter of the expected useful lives or the lease terms which range from 3 to 10 years.
F-9
Reclassifications. Certain reclassifications have been made to amounts in prior period
financial statements to conform to current period presentations. We reclassified nine properties
previously included in continuing operations to discontinued operations during the year ended
December 31, 2007. Please see further discussion of assets held for sale in Note 7, Property
Acquisitions, Dispositions and Assets Held for Sale.
Reportable Segments. Our multifamily communities are geographically diversified throughout
the United States and management evaluates operating performance on an individual property level.
As each of our apartment communities has similar economic characteristics, residents, and products
and services, our apartment communities have been aggregated into one reportable segment. Our
multifamily communities generate rental revenue and other income through the leasing of apartment
homes, which comprised 96%, 95% and 95% of our total consolidated revenues, excluding non-recurring
gains on technology investments, for the years ended December 31, 2007, 2006 and 2005,
respectively.
Restricted Cash. Restricted cash consists of escrow deposits held by lenders for property
taxes, insurance and replacement reserves, cash required to be segregated for the repayment of
residents security deposits and escrowed amounts related to our development activities.
Substantially all restricted cash is invested in demand and short-term instruments.
Share Based Compensation. We account for share-based awards under SFAS 123(R), with
compensation expense being recognized in our statement of operations using the grant-date fair
values. Compensation cost for all share-based awards, including options, requires measurement at
fair value on the grant date and recognition of compensation expense over the requisite service
period for awards expected to vest. Share awards can have vesting periods of up to ten years. The
fair value of stock option grants was determined using the Black-Scholes valuation model. The
compensation cost for share awards is based on the market value of the shares on the date of grant.
Third-Party Construction Services. Our construction division performs services for our
internally developed communities, as well as provides construction management and general
contracting services for third-party owners of multifamily, commercial and retail properties.
Income from these third-party projects is recognized on a percentage-of-completion basis with
progress measured on a cost-to-cost basis. For projects where our fee is based on a fixed price,
any cost overruns, as compared to the original budget, incurred during construction will reduce the
fee generated on those projects. For any project where cost overruns are expected to be in excess
of the fee generated on the project, we will recognize the total projected loss in the period in
which the loss is first estimated. See Note 9, Third Party Construction Services for further
discussion of our third-party construction services.
Use of Estimates. In the application of accounting principles generally accepted in the
United States of America, management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements, results of
operations during the reporting periods, and related disclosures. Our more significant estimates
relate to determining the allocation of the purchase price of our acquisitions, estimates
supporting our impairment analysis related to the carrying values of our real estate assets,
estimates of the useful lives of our assets, general liability and employee benefit programs, and
estimates of expected losses of variable interest entities. These estimates are based on
historical experience and various other assumptions believed to be reasonable under the
circumstances. Future events rarely develop exactly as forecast, and the best estimates routinely
require adjustment.
Recent Accounting Pronouncements. In June 2006, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes
an Interpretation of FASB Statement No. 109. FIN 48 prescribes a two-step process for the
financial statement recognition and measurement of tax positions taken or expected to be taken in a
tax return. The first step involves evaluation of a tax position to determine whether it is more
likely than not the position will be sustained upon examination, based on the technical merits of
the position. The second step involves measuring the benefit to recognize in the financial
statements for those tax positions that meet the more-likely-than-not recognition threshold.
F-10
We adopted FIN 48 as of January 1, 2007. If various tax positions related to certain real
estate dispositions were not sustained upon examination, we would have been required to pay a
deficiency dividend and associated interest for prior years. Accordingly, we decreased
distributions in excess of net income as of January 1, 2007 for
the adoption impact of FIN 48 by approximately $2.5 million. Our period of uncertainty with
respect to these real estate dispositions expired during fiscal year 2007, and we recorded a net
credit to interest expense of approximately $2.5 million for the year ended December 31, 2007. The
tax years ended December 31, 2004, 2005, and 2006 remain subject to examination by major tax
jurisdictions as of December 31, 2007. We believe we have no uncertain tax positions or
unrecognized tax benefits requiring disclosure.
We may from time to time be assessed interest or penalties by major tax jurisdictions,
although any such assessments historically have been minimal and immaterial to our financial
results. In the event we receive an assessment for interest and/or penalties, it will be
classified in the financial statements as tax expense.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157
defines fair value, establishes a framework for measuring fair value in GAAP and expands
disclosures about fair value measurements. The statement does not require new fair value
measurements, but is applied to the extent other accounting pronouncements require or permit fair
value measurements. The statement emphasizes fair value as a market-based measurement which should
be determined based on assumptions market participants would use in pricing an asset or liability.
We will be required to disclose the extent to which fair value is used to measure assets and
liabilities, the inputs used to develop the measurements, and the effect of certain of the
measurements on earnings (or changes in net assets) for the period. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007. In February 2008 the FASB deferred the effective
date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities except for those that
are recognized or disclosed at fair value in the financial statements on a recurring basis. We
have adopted SFAS No. 157 effective January 1, 2008 for financial assets and financial liabilities
and do not expect this adoption to have a material effect on our consolidated results of operations
or financial position but will enhance the level of disclosures for assets and liabilities recorded
at fair value.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities, which gives entities the option to measure eligible financial assets,
financial liabilities and firm commitments at fair value on an instrument-by-instrument basis
(i.e., the fair value option), which are otherwise not permitted to be accounted for at fair value
under other accounting standards. The election to use the fair value option is available when an
entity first recognizes a financial asset or financial liability or upon entering into a firm
commitment. Subsequent changes in fair value must be recorded in earnings. Additionally, SFAS No.
159 allows for a one-time election for existing positions upon adoption, with the transition
adjustment recorded to beginning retained earnings. This statement is effective for fiscal years
beginning after November 15, 2007. We have adopted this standard effective January 1, 2008 and
have elected not to measure any of our current eligible financial asset or liabilities at fair
value upon adoption; however, we do reserve the right to elect to measure future eligible financial
assets or liabilities at fair value.
In September 2007, the FASB ratified Emerging Issues Task Force (EITF) Issue 07-6,
Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66 When
the Agreement Includes a Buy-Sell Clause, which clarifies that a buy-sell clause, in and of
itself, does not constitute a prohibited form of continuing involvement that would preclude partial
sale treatment under Statement 66. EITF 07-6 applies prospectively to new arrangements entered
into in fiscal years beginning after December 15, 2007.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces
SFAS No. 141, Business Combinations, which, among other things, establishes principles and
requirements for how an acquirer entity recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed (including intangibles) and any
noncontrolling interests in the acquired entity. SFAS No. 141(R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. We are currently evaluating what impact
our adoption of SFAS No. 141(R) will have on our financial statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51. SFAS No. 160 amends ARB 51 to establish
accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It also amends certain of ARB 51s consolidation procedures for
consistency with the requirements of SFAS No. 141(R). SFAS No. 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December 15, 2008. We are
currently evaluating what impact our adoption of SFAS No. 160 will have on our financial
statements.
F-11
3. Share Data
Basic earnings per share is computed using income from continuing operations and the weighted
average number of common shares outstanding. Diluted earnings per share reflects common shares
issuable from the assumed conversion of common share options and awards granted and units
convertible into common shares. Only those items that have a dilutive impact on our basic earnings
per share are included in diluted earnings per share. For the years ended December 31, 2007 and
2006, 3.0 million and 1.7 million units convertible into common shares, respectively, were excluded
from the diluted earnings per share calculated as they were not dilutive.
The following table presents information necessary to calculate basic and diluted earnings per
share for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands, except per share amounts) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Basic earnings per share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
47,078 |
|
|
$ |
125,016 |
|
|
$ |
151,526 |
|
Income from discontinued operations |
|
|
101,379 |
|
|
|
107,830 |
|
|
|
47,560 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
148,457 |
|
|
$ |
232,846 |
|
|
$ |
199,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per share |
|
$ |
0.81 |
|
|
$ |
2.21 |
|
|
$ |
2.91 |
|
Income from discontinued operations per share |
|
|
1.74 |
|
|
|
1.90 |
|
|
|
0.92 |
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
$ |
2.55 |
|
|
$ |
4.11 |
|
|
$ |
3.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
58,135 |
|
|
|
56,660 |
|
|
|
52,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
47,078 |
|
|
$ |
125,016 |
|
|
$ |
151,526 |
|
Income allocated to common units |
|
|
27 |
|
|
|
2,432 |
|
|
|
1,560 |
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, as adjusted |
|
|
47,105 |
|
|
|
127,448 |
|
|
|
153,086 |
|
Income from discontinued operations |
|
|
101,379 |
|
|
|
107,830 |
|
|
|
47,560 |
|
Income from discontinued operations allocated to common units |
|
|
|
|
|
|
652 |
|
|
|
956 |
|
|
|
|
|
|
|
|
|
|
|
Net income, as adjusted |
|
$ |
148,484 |
|
|
$ |
235,930 |
|
|
$ |
201,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, as adjusted per share |
|
$ |
0.80 |
|
|
$ |
2.14 |
|
|
$ |
2.72 |
|
Income from discontinued operations per share |
|
|
1.71 |
|
|
|
1.82 |
|
|
|
0.86 |
|
|
|
|
|
|
|
|
|
|
|
Net income, as adjusted per share |
|
$ |
2.51 |
|
|
$ |
3.96 |
|
|
$ |
3.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
58,135 |
|
|
|
56,660 |
|
|
|
52,000 |
|
Incremental shares issuable from assumed conversion of: |
|
|
|
|
|
|
|
|
|
|
|
|
Common share options and awards granted |
|
|
482 |
|
|
|
725 |
|
|
|
483 |
|
Common units |
|
|
508 |
|
|
|
2,139 |
|
|
|
3,830 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, as adjusted
outstanding |
|
|
59,125 |
|
|
|
59,524 |
|
|
|
56,313 |
|
|
|
|
|
|
|
|
|
|
|
In 1998, we began repurchasing our common equity securities under a program approved by our
Board of Trust Managers who authorized us to repurchase or redeem up to $250 million of our
securities through open market purchases and private transactions. We repurchased approximately
8.8 million common shares and redeemed approximately 106,000 common units for a total cost of
$243.6 million under this repurchase program. At December 31, 2006 and 2005, 8.6 million shares
were held in treasury. No shares or units were repurchased under this program during 2006 and
2005. We are currently holding 8.6 million shares in treasury repurchased under this program, and
no shares or units have been repurchased under this program since 2002.
In April 2007, our Board of Directors approved a program to repurchase up to $250 million of
our common equity securities through open market purchases, block purchases, and privately
negotiated transactions. We intend to use the proceeds from asset sales and borrowings under our
secured line of credit to fund any share repurchases. Under this share repurchase program, we
repurchased 3.6 million shares for a total of $200.2 million during 2007.
F-12
Subsequent to December 31, 2007, we repurchased an additional 690,400 shares for a total of
$30.0 million. In January 2008, our Board of Trust Managers approved the repurchase of up to an
additional $250.0 million of our common equity securities.
In June 2006, we issued 3.6 million common shares at $71.25 per share in a public equity
offering. We used the net proceeds of $254.9 million to reduce indebtedness on our unsecured line
of credit and for general corporate purposes.
We filed an automatic shelf registration statement with the Securities and Exchange Commission
in June 2006 which became effective upon filing. We may use the shelf registration statement to
offer, from time to time, common shares, preferred shares, debt securities or warrants. Our
declaration of trust provides that we may issue up to 110,000,000 shares of beneficial interest,
consisting of 100,000,000 common shares and 10,000,000 preferred shares. As of December 31, 2007,
we had 65,434,369 common shares outstanding under our declaration of trust.
4. Merger with Summit Properties Inc.
On February 28, 2005, Summit Properties Inc. (Summit) was merged with and into Camden Summit
Inc., one of our wholly-owned subsidiaries (Camden Summit), pursuant to an Agreement and Plan of
Merger dated as of October 4, 2004 (the Merger Agreement), as amended. At the time of the
merger, Summit was the sole general partner of Summit Properties Partnership, L.P. (the Camden
Summit Partnership). At the effective time, Camden Summit became the sole general partner of the
Camden Summit Partnership and the name of such partnership was changed to Camden Summit
Partnership, L.P. As of February 28, 2005, Summit owned or held an ownership interest in 48
operating communities comprised of 15,002 apartment homes with an additional 1,834 apartment homes
under construction in five new communities.
5. Operating Partnership and Minority Interests
At December 31, 2007, approximately 11% of our multifamily apartment homes were held in Camden
Operating, L.P (Camden Operating). Camden Operating has issued both common and preferred limited
partnership units. As of December 31, 2007, we held 85.3% of the common limited partnership units
and the sole 1% general partnership interest of the operating partnership. The remaining common
limited partnership units, comprising 1,625,400 units, are primarily held by former officers,
directors and investors of Paragon Group, Inc., which we acquired in 1997. Each common limited
partnership unit is redeemable for one common share of Camden or cash at our election. Holders of
common limited partnership units are not entitled to rights as shareholders prior to redemption of
their common limited partnership units. No member of our management owns Camden Operating common
limited partnership units, and two of our nine trust managers own Camden Operating common limited
partnership units.
Camden Operating has $100 million of 7.0% Series B Cumulative Redeemable Perpetual Preferred
Units outstanding. Distributions on the preferred units are payable quarterly in arrears. The
Series B preferred units are redeemable beginning in December 2008 by the operating partnership for
cash at par plus the amount of any accumulated and unpaid distributions. The preferred units are
convertible beginning in 2013 by the holder into a fixed number of corresponding Series B
Cumulative Redeemable Perpetual Preferred Shares. The Series B preferred units are subordinate to
present and future debt. Distributions on the Series B preferred units totaled $7.0 million for
the years ended December 31, 2007, 2006 and 2005.
Additionally, Camden Operating had issued $53 million of 8.25% Series C Cumulative Redeemable
Perpetual Preferred Units. In January 2005, we redeemed the remaining 0.7 million Series C
preferred units at their redemption price of $25.00 per unit, or an aggregate of $17.5 million,
plus accrued and unpaid distributions, at which time we expensed the issuance cost associated with
these units. Distributions on the Series C preferred units totaled $28,000 for the year ended
December 31, 2005.
In conjunction with our acquisition of Oasis Residential, Inc. in 1998, we acquired the
controlling managing member interest in Oasis Martinique, LLC, which owns one property in Orange
County, California and is included in our consolidated financial statements. The remaining
interests, comprising 669,348 units, are exchangeable into 508,035 common shares.
F-13
At December 31, 2007, approximately 23% of our multifamily apartment homes were held in the
Camden Summit Partnership, as discussed in Note 4, Merger with Summit Properties Inc. This
operating partnership has issued common limited partnership units. As of December 31, 2007, we
held 93.1% of the common limited partnership units and the sole 1% general partnership interest of
the Camden Summit Partnership. The remaining common limited partnership units, comprising
1,356,162 units, are primarily held by former officers, directors and investors of Summit. Each
common limited partnership unit is redeemable for one common share of Camden or cash at our
election. Holders of common limited partnership units are not entitled to rights as shareholders
prior to redemption of their common limited partnership units. No member of our management owns
Camden Summit Partnership common limited partnership units, and two of our nine trust managers own
Camden Summit Partnership common limited partnership units.
6. Income Taxes
We have maintained and intend to maintain our election as a REIT under the Internal Revenue
Code of 1986, as amended. To qualify as a REIT, we must meet a number of organizational and
operational requirements, including a requirement we distribute at least 90% of our taxable income
to our shareholders. As a REIT, we generally will not be subject to
federal income tax if we distribute 100% of our taxable income to our
shareholders and satisfy certain other requirements. Income tax is paid directly by our shareholders on the dividends
distributed to them. If our taxable income exceeds our dividends in a tax year, REIT tax rules
allow us to designate dividends from the subsequent tax year in order to avoid current taxation on
undistributed income. For the years ended December 31, 2006 and 2005, we designated dividends from
2007 and 2006, respectively, to meet our dividend distribution requirements. If we fail to qualify
as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate
rates, including any applicable alternative minimum tax. Taxable income from non-REIT activities
managed through taxable REIT subsidiaries is subject to applicable federal, state and local income
taxes.
The following table reconciles net income to REIT taxable income for the years ended December
31, 2007, 2006 and 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Net income |
|
$ |
148,457 |
|
|
$ |
232,846 |
|
|
$ |
199,086 |
|
Net (income) loss of taxable REIT subsidiaries included above |
|
|
(3,449 |
) |
|
|
(6,540 |
) |
|
|
6,871 |
|
|
|
|
|
|
|
|
|
|
|
Net income from REIT operations |
|
|
145,008 |
|
|
|
226,306 |
|
|
|
205,957 |
|
Book depreciation and amortization, including discontinued operations |
|
|
164,978 |
|
|
|
163,673 |
|
|
|
174,993 |
|
Tax depreciation and amortization |
|
|
(155,173 |
) |
|
|
(177,153 |
) |
|
|
(142,303 |
) |
Book/tax difference on gains/losses from capital transactions |
|
|
(24,538 |
) |
|
|
(90,694 |
) |
|
|
5,439 |
|
Book/tax difference on merger costs |
|
|
(234 |
) |
|
|
(331 |
) |
|
|
(21,024 |
) |
Other book/tax differences, net |
|
|
7,843 |
|
|
|
(767 |
) |
|
|
(17,867 |
) |
|
|
|
|
|
|
|
|
|
|
REIT taxable income |
|
|
137,884 |
|
|
|
121,034 |
|
|
|
205,195 |
|
Dividends paid deduction |
|
|
(144,604 |
) |
|
|
(121,034 |
) |
|
|
(205,195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid in excess of taxable income |
|
$ |
(6,720 |
) |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
A schedule of per share distributions we paid and reported to our shareholders is set forth in
the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2007 |
|
|
2006 |
|
|
2005 (1) |
|
Common Share Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income |
|
$ |
1.20 |
|
|
$ |
0.26 |
|
|
$ |
0.11 |
|
Post May 5, 2004 long-term capital gain |
|
|
1.18 |
|
|
|
1.85 |
|
|
|
2.28 |
|
25% Sec. 1250 capital gain |
|
|
0.38 |
|
|
|
0.53 |
|
|
|
0.79 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2.76 |
|
|
$ |
2.64 |
|
|
$ |
3.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of distributions representing tax preference items |
|
|
7.15 |
% |
|
|
5.99 |
% |
|
|
3.91 |
% |
|
|
|
(1) |
|
The dividend declared for the fourth quarter of 2004, with a record date of January 3, 2005, was taxable in 2005. |
F-14
At December 31, 2007, our taxable REIT subsidiaries had net operating loss carryforwards
(NOLs) of approximately $16.0 million for income tax purposes that expire in years 2020 to 2027.
Because NOLs are subject to certain change of ownership and separate return limitations, and
because it is unlikely the available NOLs will be utilized, no benefits of these NOLs have been
recognized in these consolidated financial statements.
SFAS No. 109, Accounting for Income Taxes, requires a public enterprise to disclose the
aggregate difference in the basis of its net assets for financial and tax reporting purposes. The
carrying value reported in our consolidated financial statements exceeded the tax basis by $1,141.6
million.
Income Tax Expense Current. For the tax year ended December 31, 2007, we have current
income tax expense of $3.1 million. Included in that number is $1.0 million in margin taxes (see
below discussion), $0.5 million in federal income taxes on our taxable REIT subsidiaries, and $1.6
million in state taxes in our operating partnerships.
Texas Margin Tax. On May 18, 2006, the Texas Governor signed into law a Texas margin tax
which restructures the state business tax by replacing the taxable capital components of the
current franchise tax with a taxable margin component. Since the tax base on the Texas margin
tax is derived from an income based measure, we believe the margin tax is an income tax and,
therefore, the provisions of SFAS 109 regarding the recognition of deferred taxes apply to the
margin tax. In accordance with SFAS 109, the effect on deferred tax liabilities of a change in tax
law should be included in tax expense attributable to continuing operations in the period including
the enactment date. As a result, we calculated our deferred tax assets and liabilities for Texas
based on the margin tax. The cumulative effect of the change was immaterial and the impact of the
change in deferred tax liabilities did not have a material impact on tax expense. For 2007, we
incurred tax expense related to this margin tax of $1.1 million.
7. Property Acquisitions, Dispositions and Assets Held for Sale
Acquisitions. In April 2007, we acquired Camden South Congress, a 253-apartment home
community located in Austin, Texas for $42.8 million and in June 2007, we acquired Camden Royal
Palms, a 352-apartment home community located in Tampa, Florida for $41.1 million. Both properties
were purchased using proceeds from our unsecured line of credit. The purchase prices of these
properties were allocated to the tangible and intangible assets and liabilities acquired based on
their estimated fair values at the date of acquisition.
Discontinued Operations and Assets Held for Sale. For the years ended December 31, 2007, 2006
and 2005, income from discontinued operations included the results of operations of two operating
properties, containing 391 apartment homes, classified as held for sale at December 31, 2007 and
the results of operations of ten operating properties sold in 2007 through their sale dates. For
the years ended December 31, 2006 and 2005, income from discontinued operations also included the
results of operations of eight operating properties sold during 2006 and three operating property
sold during 2005 through their sale dates. As of December 31, 2007, the two operating properties
held for sale had a combined net book value of $15.5 million.
The following is a summary of income from discontinued operations for the years presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Total property revenues |
|
$ |
20,932 |
|
|
$ |
36,686 |
|
|
|
48,489 |
|
Total property expenses |
|
|
10,570 |
|
|
|
19,083 |
|
|
|
24,239 |
|
|
|
|
|
|
|
|
|
|
|
Net operating income |
|
|
10,362 |
|
|
|
17,603 |
|
|
|
24,250 |
|
Interest |
|
|
472 |
|
|
|
482 |
|
|
|
496 |
|
Depreciation and amortization |
|
|
2,033 |
|
|
|
6,257 |
|
|
|
11,413 |
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
$ |
7,857 |
|
|
$ |
10,864 |
|
|
|
12,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of discontinued operations |
|
$ |
107,039 |
|
|
$ |
99,273 |
|
|
$ |
36,175 |
|
|
|
|
|
|
|
|
|
|
|
F-15
Upon our decision to abandon efforts to develop certain land parcels and to market these parcels
for sale, we reclassified the operating expenses associated with these assets to discontinued
operations. At December 31, 2007, we had undeveloped land parcels classified as held for sale as
follows:
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
Net Book |
|
Location |
|
Acres |
|
|
Value |
|
|
Southeast Florida |
|
|
2.2 |
|
|
$ |
7.2 |
|
Dallas |
|
|
2.4 |
|
|
|
1.8 |
|
|
|
|
|
|
|
|
|
Total land held for sale |
|
|
|
|
|
$ |
9.0 |
|
|
|
|
|
|
|
|
|
Asset Dispositions and Partial Sales to Joint Ventures. During the year ended December 31,
2006, we recognized gains of $91.5 million from the partial sale of nine properties to an
affiliated unconsolidated joint venture. This partial sale generated net proceeds of approximately
$170.9 million. During the year ended December 31, 2005, we recognized gains of $132.1 million
from the partial sales of twelve properties to twelve affiliated unconsolidated joint ventures.
These partial sales generated net proceeds of approximately $316.8 million. The gains recognized
on the partial sales of these assets were included in continuing operations as we retained a
partial interest in the ventures which own these assets.
During the year ended December 31, 2006, we recognized gains of $0.5 million and $4.7 million
on the partial sales of land to two joint ventures located in Houston, Texas and College Park,
Maryland, respectively. The gains recognized on the sales of these assets were included in
continuing operations as we retained a partial interest in the ventures which own these assets.
During the year ended December 31, 2006, we recognized a gain of $0.8 million on the sale of
land located adjacent to one of our pre-development assets in College Park, Maryland. During the
year ended December 31, 2005, we recognized a gain of $0.8 million on the sale of land located
adjacent to one of our pre-development assets in Houston, Texas. Also during 2005, we sold
undeveloped land adjacent to one of our operating properties located in Dallas, Texas to an
unrelated third party. In connection with our decision to sell this undeveloped land, we
recognized an impairment loss of $0.3 million. The gains on these sales were not included in
discontinued operations as the operations and cash flows of these assets were not clearly
distinguished, operationally or for reporting purposes, from the adjacent assets.
8. Investments in Joint Ventures
The joint ventures described below are accounted for using the equity method. The joint
ventures in which we have an interest have been funded with secured, third-party debt. We have
guaranteed our proportionate interest on construction loans in five of our development joint
ventures totaling $65.7 million. We believe it is unlikely that significant payments will be
required under these guarantees. Additionally, we eliminate fee income from property management
services to the extent of our ownership.
Our contributions of real estate assets to joint ventures at formation where we receive cash
are treated as partial sales and, as a result, the amounts recorded as gain on sale of assets to
joint ventures represents the change in ownership of the underlying assets. Our initial investment
is determined based on our ownership percentage in the net book value of the underlying assets on
the date of the transaction.
As of December 31, 2007, our equity investments in unconsolidated joint ventures accounted for
under the equity method of accounting consisted of:
|
|
|
A 20% interest in Sierra-Nevada Multifamily Investments, LLC (Sierra-Nevada),
which owns 14 apartment communities with 3,098 apartment homes located in Las
Vegas. We are providing property management services to Sierra-Nevada and fees
earned for these services totaled $1.0 million, $1.0 million and $1.1 million for
the years ended December 31, 2007, 2006 and 2005, respectively. At December 31,
2007, Sierra-Nevada had total assets of $131.3 million and third-party secured debt
totaling $179.9 million. |
F-16
|
|
|
A 50% interest in Denver West Apartments, LLC (Denver West), which owns Camden
Denver West, a 320-apartment home community located in Denver, Colorado. We are
providing property management services to Denver West and fees earned for these
services totaled $0.1 million for each of the years ended December 31, 2007, 2006
and 2005, respectively. At December 31, 2007, Denver West had total assets of
$21.7 million and third-party secured debt totaling $27.4 million. |
|
|
|
|
A 20% interest in 12 apartment communities containing 4,034 apartment homes
located in the Las Vegas, Phoenix, Houston, Dallas and Orange County, California
markets, (the TG Properties). We are providing property management services to
the joint ventures and fees earned for these services totaled $1.1 million, $1.1
million and $0.8 million, for the years ended December 31, 2007, 2006 and 2005,
respectively. At December 31, 2007, the joint ventures had total assets of $381.0
million and had third-party secured debt totaling $272.6 million. |
|
|
|
|
A 30% interest in Camden Plaza, LP to which we sold undeveloped land located in
Houston, Texas in January 2006. The joint venture is a 271-apartment home community
for which construction completed during 2007. We are providing property management
services to this joint venture and fees earned for these services totaled $0.1
million for the year ended December 31, 2007. We provided construction and
development services to this joint venture which totaled $0.7 million and $1.1
million for 2007 and 2006, respectively. Concurrent with this transaction, we
provided a $6.4 million mezzanine loan to the joint venture which had a balance of
$8.4 million at December 31, 2007, and is reported as Notes receivable -
affiliates as discussed in Note 10, Notes Receivable. At December 31, 2007, the
joint venture had total assets of $41.7 million and had third-party secured debt
totaling $30.7 million. |
|
|
|
|
A 30% interest in Camden Main & Jamboree, LP to which we contributed $1.4
million in cash and $1.9 million in Camden Operating Series B common units in March
2006. The joint venture purchased Camden Main & Jamboree, a 290-apartment home
community located in Irvine, California, which is currently under development and
has a total estimated cost of $112.0 million as of December 31, 2007. We provided
construction management services to this joint venture which totaled $1.9 million
for the year ended December 31, 2006. Concurrent with this transaction, we
provided a mezzanine loan totaling $15.8 million to the joint venture, which had a
balance of $20.3 million at December 31, 2007, and is reported as Notes receivable
affiliates as discussed in Note 10, Notes Receivable. At December 31, 2007,
the joint venture had total assets of $112.6 million and had third-party secured
debt totaling $80.8 million. |
|
|
|
|
A 30% interest in Camden College Park, LP to which we sold undeveloped land
located in College Park, Maryland in August 2006. The joint venture is developing
a 508-apartment home community and has a total estimated cost of $139.9 million as
of December 31, 2007. We are providing property management services to this joint
venture and fees earned for these services totaled $0.1 million for the year ended
December 31, 2007. We are providing construction and development services to this
joint venture which totaled $2.0 million and $1.9 million for 2007 and 2006,
respectively. Concurrent with this transaction, we provided a mezzanine loan
totaling $6.7 million to the joint venture, which had a balance of $8.2 million at
December 31, 2007, and is reported as Notes receivable affiliates as discussed
in Note 10, Notes Receivable. At December 31, 2007, the joint venture had total
assets of $121.4 million and had third-party secured debt totaling $99.8 million. |
|
|
|
|
A 15% interest in G&I V Midwest Residential LLC (G&I V) to which we sold nine
apartment communities containing 3,237 apartment homes located in Kentucky and
Missouri in September 2006. We are providing property management services to the
joint venture, and fees earned for these services totaled $0.7 million and $0.2
million for 2007 and 2006, respectively. At December 31, 2007, the joint venture
had total assets of $234.7 million and had third-party secured debt totaling $169.0
million. |
F-17
|
|
|
A 30% interest in two development joint ventures to which we contributed an
aggregate of $2.4 million in cash. Each joint venture is developing a multifamily
community located in Houston, Texas. One project has 340 apartment homes and a
total estimated cost of $48.6 million, and the other project has 119 apartment
homes at total estimated cost of $33.2 million as of December 31, 2007. Concurrent
with this transaction, we provided mezzanine loans totaling $9.3 million to the
joint ventures, which had a balance of $13.0 at December 31, 2007, and is reported
as Notes receivable affiliates as discussed in Note 10, Notes Receivable. We
are committed to funding an additional $6.2 million under the mezzanine loan. At
December 31, 2007, the joint ventures had total assets of $30.5 million and had
third-party secured debt totaling $7.4 million. |
|
|
|
|
A 72% limited partner interest in GrayCo Town Lake Investment 2007 LP to which
we contributed $5.8 million in cash. Our venture partner, an unrelated third
party, contributed $2.3 million in exchange for a 28% interest in the venture
comprised of a 0.01% general partner interest and a 27.99% limited partner
interest. The venture has purchased approximately 26 acres in Austin, Texas and
intends to develop the acreage into multifamily apartment homes. At December 31,
2007, the joint venture had total assets of $24.3 million and third-party secured
debt totaling $16.3 million. |
|
|
|
|
A 30% limited partner interest in a joint venture to which we contributed $0.1
million in cash. The remaining 70% interest is owned by an unaffiliated third
party who contributed $0.2 million. The joint venture is the pre-development stage
of an integrated mixed use development. Concurrent with this transaction, we
provided a mezzanine loan to the joint venture, which had a balance of $0.4 million
at December 31, 2007, and is reported as Notes receivable affiliates as
discussed in Note 10, Notes Receivable. |
The following table summarizes balance sheet financial data of significant unconsolidated
joint ventures in which we had ownership interests as of December 31, 2007 and December 31, 2006
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
|
Total Debt |
|
|
Total Equity |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TG Properties |
|
$ |
381,039 |
|
|
$ |
388,554 |
|
|
$ |
272,606 |
|
|
$ |
272,606 |
|
|
$ |
102,128 |
|
|
$ |
109,596 |
|
G&I V |
|
|
234,691 |
|
|
|
244,754 |
|
|
|
169,015 |
|
|
|
169,015 |
|
|
|
63,594 |
|
|
|
73,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
615,730 |
|
|
$ |
633,308 |
|
|
$ |
441,621 |
|
|
$ |
441,621 |
|
|
$ |
165,722 |
|
|
$ |
183,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes income statement financial data of significant unconsolidated
joint ventures in which we had ownership interests for the years ended December 31, 2007, 2006 and
2005 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
|
Net Income |
|
|
Equity in Income (1) |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TG Properties |
|
$ |
47,097 |
|
|
$ |
45,537 |
|
|
$ |
33,577 |
|
|
$ |
2,837 |
|
|
$ |
2,318 |
|
|
$ |
(4,160 |
) |
|
$ |
1,725 |
|
|
$ |
1,636 |
|
|
$ |
427 |
|
G&I V |
|
|
29,255 |
|
|
|
7,794 |
|
|
|
N/A |
|
|
|
(3,353 |
) |
|
|
(1,603 |
) |
|
|
N/A |
|
|
|
364 |
|
|
|
71 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
76,352 |
|
|
$ |
53,331 |
|
|
$ |
33,577 |
|
|
$ |
(516 |
) |
|
$ |
715 |
|
|
$ |
(4,160 |
) |
|
$ |
2,089 |
|
|
$ |
1,707 |
|
|
$ |
427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Equity in Income excludes our ownership interest in transactions with these joint ventures. |
9. Third-Party Construction Services
At December 31, 2007, we were under contract on third-party construction projects ranging from
$2.2 million to $8.3 million. We earn fees on these projects ranging from 4.2% to 4.8% of the
total contracted construction cost, which we recognize as earned. Fees earned from third-party
construction projects totaled $1.0 million, $3.3 million and $2.4 million for the years ended
December 31, 2007, 2006 and 2005, respectively, and are included in Fee and asset management
income in our consolidated statements of operations. We recorded warranty and repair related
costs on third-party construction projects of $1.1 million, $5.3 million and $3.4 million
during the years ended December 31, 2007, 2006 and 2005, respectively. These costs are first
applied against revenues earned on each project and any excess is included in Fee and asset
management expenses in our consolidated statements of operations.
F-18
10. Notes Receivable
Affiliates. We provided mezzanine construction financing in connection with certain of our
joint venture transactions as discussed in Note 8, Investment in Joint Ventures. As of December
31, 2007 and 2006, the balance of Notes receivable affiliates totaled $50.4 million and $41.4
million, respectively. The notes outstanding as of December 31, 2007 accrue interest at rates
ranging from the London Interbank Offered Rate (LIBOR)
plus 3% to, 14% per annum and mature
through 2010.
Other. We have a mezzanine financing program under which we provide secured financing to
owners of real estate properties. As of December 31, 2007, we had $11.6 million of secured notes
receivable due from unrelated third parties. These notes, which mature through 2009, accrue
interest at rates ranging from the LIBOR plus 2% to Prime Rate plus 1% per annum, which is
recognized as earned. We have reviewed the terms and conditions underlying the outstanding notes
receivable and believe these notes are collectible, and no impairment existed at December 31, 2007.
The following is a summary of our notes receivable from third parties under the mezzanine
financing program during the periods presented, excluding notes receivable from affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
December 31, |
|
Location |
|
Property Type |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston, Texas |
|
Multifamily |
|
$ |
11.6 |
|
|
$ |
3.9 |
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended December 31, 2006, three loans totaling $9.4 million were repaid. These
loans had rates ranging from 12.5% to 14.0%. Included in these repayments were approximately $0.1
million of prepayment penalties, which are included in Fee and asset management income in our
consolidated statements of operations during the year ended December 31, 2006.
F-19
11. Debt
The following is a summary of our indebtedness:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
(in millions) |
|
2007 |
|
|
2006 |
|
Commercial Banks |
|
|
|
|
|
|
|
|
Unsecured line of credit and short-term borrowings |
|
$ |
115.0 |
|
|
$ |
206.0 |
|
$500 million term loan, due 2012 |
|
|
500.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
615.0 |
|
|
|
206.0 |
|
|
|
|
|
|
|
|
|
|
Senior unsecured notes |
|
|
|
|
|
|
|
|
$50.0 million 4.30% Notes, due 2007 |
|
|
|
|
|
|
51.0 |
|
$150.0 million 5.98% Notes, due 2007 |
|
|
|
|
|
|
149.9 |
|
$100.0 million 4.74% Notes, due 2009 |
|
|
99.9 |
|
|
|
99.9 |
|
$250.0 million 4.39% Notes, due 2010 |
|
|
249.9 |
|
|
|
249.9 |
|
$100.0 million 6.77% Notes, due 2010 |
|
|
100.0 |
|
|
|
99.9 |
|
$150.0 million 7.69% Notes, due 2011 |
|
|
149.7 |
|
|
|
149.7 |
|
$200.0 million 5.93% Notes, due 2012 |
|
|
199.5 |
|
|
|
199.4 |
|
$200.0 million 5.45% Notes, due 2013 |
|
|
199.2 |
|
|
|
199.1 |
|
$250.0 million 5.08% Notes, due 2015 |
|
|
248.8 |
|
|
|
248.6 |
|
$300.0 million 5.75% Notes, due 2017 |
|
|
299.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,546.0 |
|
|
|
1,447.4 |
|
|
|
|
|
|
|
|
|
|
Medium-term notes |
|
|
|
|
|
|
|
|
$15.0 million 7.63% Notes, due 2009 |
|
|
15.0 |
|
|
|
15.0 |
|
$25.0 million 4.64% Notes, due 2009 |
|
|
25.9 |
|
|
|
26.6 |
|
$10.0 million 4.90% Notes, due 2010 |
|
|
10.9 |
|
|
|
11.2 |
|
$14.5 million 6.79% Notes, due 2010 |
|
|
14.5 |
|
|
|
14.5 |
|
$35.0 million 4.99% Notes, due 2011 |
|
|
38.0 |
|
|
|
38.8 |
|
|
|
|
|
|
|
|
|
|
|
104.3 |
|
|
|
106.1 |
|
|
|
|
|
|
|
|
Total unsecured debt |
|
|
2,265.3 |
|
|
|
1,759.5 |
|
|
|
|
|
|
|
|
|
|
Secured notes |
|
|
|
|
|
|
|
|
4.55% - 8.50% Conventional Mortgage Notes, due 2008 - 2014 |
|
|
498.8 |
|
|
|
506.4 |
|
4.25% - 4.60% Tax-exempt Mortgage Notes, due 2025 - 2028 |
|
|
57.6 |
|
|
|
58.6 |
|
7.29% Tax-exempt Mortgage Note due 2025 on property held for sale as of
December 31, 2007 |
|
|
6.4 |
|
|
|
6.5 |
|
|
|
|
|
|
|
|
|
|
|
562.8 |
|
|
|
571.5 |
|
|
|
|
|
|
|
|
Total debt |
|
$ |
2,828.1 |
|
|
$ |
2,331.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating rate debt included in commercial bank indebtedness (4.98% - 5.52%) |
|
$ |
115.0 |
|
|
$ |
206.0 |
|
Floating rate tax-exempt debt included in secured notes (4.25% - 4.60%) |
|
|
57.6 |
|
|
|
58.6 |
|
Net book value of real estate assets subject to secured notes |
|
|
898.9 |
|
|
|
914.1 |
|
We have a $600 million unsecured credit facility which matures in January 2010. The scheduled
interest rate is based on spreads over LIBOR or the Prime Rate. The scheduled interest rate
spreads are subject to change as our credit ratings change. Advances under the line of credit may
be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at
rates below the scheduled rates. These bid rate loans have terms of six months or less and may not
exceed the lesser of $300 million or the remaining amount available under the line of credit. The
line of credit is subject to customary financial covenants and limitations, all of which we are in
compliance.
Our line of credit provides us with the ability to issue up to $100 million in letters of
credit. While our issuance of letters of credit does not increase our borrowings outstanding under
our line, it does reduce the amount available. At December 31, 2007, we had outstanding letters
of credit totaling $14.6 million, and had $470.4 million available under our unsecured line of
credit.
F-20
On May 4, 2007, we issued $300 million in senior unsecured notes from our previously filed
universal shelf registration statement. The public offering price of the notes was $299.0 million,
and we received net proceeds of $297.0 million, after underwriter fees of $2.0 million. The notes
bear interest at 5.7% beginning May 4, 2007, and interest is payable each May 15 and November 15,
beginning November 15, 2007. The entire principal amount of the notes is due on May 15, 2017. The
notes are redeemable at any time at our option, in whole or in part, at a redemption price equal to
the principal amount and accrued interest of the notes being redeemed, plus a make-whole provision.
This provision is consistent with all of our previously issued unsecured note offerings.
On October 4, 2007, we entered into a $500 million credit agreement with an interest rate of
LIBOR plus 0.5%. The initial term of the credit agreement ends on October 4, 2010 and may be
extended at our option for two one-year periods. Concurrently with the closing of this
transaction, we entered into an interest rate swap, with a notional amount of $500 million, to fix
the LIBOR interest rate at 4.74% per annum for five years. This swap has been formally designated
as a hedge and is expected to be a highly effective cash flow hedge of the interest rate risk. The
resulting effective interest rate for the term loan is 5.24%.
As part of the 2005 Summit merger we assumed certain debt and recorded a $33.9 million fair
value adjustment which is being amortized over the respective debt terms. As of December 31, 2007
$12.0 million of the fair value adjustment remained unamortized. We recorded amortization of the
fair value adjustment, which resulted in a decrease of interest expense, of $7.1 million, $7.6
million and $7.2 million during the years ended December 31, 2007, 2006 and 2005, respectively.
During both 2007 and 2006, we repaid $200.0 million of maturing unsecured notes with effective
interest rates of 5.6% and 6.8%, respectively. During 2007, we refinanced one of our maturing
secured conventional mortgage notes, which had a balance of $6.8 million and a variable interest
rate at 7.31%. The new note was for a principal amount of $9.0 million with a fixed interest rate
of 6.0% and matures on August 1, 2014. We also repaid one conventional mortgage note during 2006
totaling $13.1 million, which had an interest rate of 7.6%.
In connection with our partial sale of nine apartment communities to a joint venture during
the year ended December 31, 2006, as discussed in Note 8, Investment in Joint Ventures, three
tax-exempt mortgage notes totaling $30.5 million were assumed by the joint venture.
At December 31, 2007 and 2006, the weighted average interest rate on our floating rate debt,
which includes our unsecured line of credit, was 5.0% and 5.4%, respectively.
Our indebtedness, excluding our unsecured line of credit, had a weighted average maturity of
4.9 years. Scheduled repayments on outstanding debt, including our line of credit, and the
weighted average interest rate on maturing debt at December 31, 2007 are as follows:
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
Weighted Average |
|
Year |
|
Amount |
|
|
Interest Rate |
|
2008 |
|
$ |
200.6 |
|
|
|
4.8 |
% |
2009 |
|
|
198.1 |
|
|
|
5.0 |
|
2010 |
|
|
567.7 |
|
|
|
5.1 |
|
2011 |
|
|
248.2 |
|
|
|
6.5 |
|
2012 |
|
|
772.5 |
|
|
|
5.4 |
|
2013 and thereafter |
|
|
841.0 |
|
|
|
5.4 |
|
|
|
|
|
|
|
|
Total |
|
$ |
2,828.1 |
|
|
|
5.4 |
% |
|
|
|
|
|
|
|
F-21
12. Derivative Instruments & Hedging Activities
We have entered into interest rate swap agreement to reduce the impact of interest rate
fluctuations on our variable rate debt. We have not entered into any interest rate hedge
agreements for our fixed-rate debt and do not enter into derivative transactions for trading or
other speculative purposes. The following table summarizes our interest rate swap agreement at
December 31, 2007 (dollars in thousands):
|
|
|
|
|
Notional balance |
|
$ |
500,000 |
|
Interest rate |
|
|
5.24 |
% |
Maturity date |
|
|
10/4/2012 |
|
Estimated liability fair value |
|
|
($16,123 |
) |
We have determined our interest rate swap agreement qualifies as an effective cash flow hedge
under SFAS No. 133, resulting in our recording the effective portion of cumulative changes in the
fair value of the interest rate swap agreement in other comprehensive income. Amounts recorded in
other comprehensive income will be reclassified into earnings in the periods in which earnings are
affected by the hedged cash flow. To adjust the interest rate swap agreement to its fair value, we
recorded unrealized losses in other comprehensive income of approximately $16.1 million during the
year ended December 31, 2007. These amounts will be reclassified into interest expense in
conjunction with the periodic adjustment of the floating rates on the variable rate debt above.
The amounts reclassified into earnings in 2007 resulted in a decrease in interest expense of
approximately $0.3 million, whereas the estimated amount included in accumulated other
comprehensive loss as of December 31, 2007, expected to be reclassified into earnings within the
next twelve months to offset the variability of cash flows of the hedged item during this period is
a charge to interest expense of approximately $3.8 million.
We measure, both at inception and on an on-going basis, the effectiveness of the qualifying
cash flow hedge. During the year ended December 31, 2007, we recorded no other expense for hedge
ineffectiveness, and we do not anticipate a material effect in the future. The fair value of the
interest rate swap agreement is included in other liabilities.
Derivative financial instruments expose us to credit risk in the event of non-performance by
the counterparties under the terms of the interest rate swap agreements. We minimized our credit
risk on these transactions by dealing with major, creditworthy financial institutions which have an
AA or better credit rating by Standard & Poors Ratings Group. As part of our on-going control
procedures, we monitor the credit ratings of counterparties and our exposure to any single entity,
thus minimizing credit risk concentration. We believe the likelihood of realizes losses from
counterparty non-performance is remote.
13. Share Based Compensation and Benefit Plans
Incentive Plan. During 2002, our Board of Trust Managers adopted, and our shareholders
approved, the 2002 Share Incentive Plan of Camden Property Trust (the 2002 Share Plan). Under
the 2002 Share Plan, we may issue up to 10% of the total of (i) the number of our common shares
outstanding as of the plan date, February 5, 2002, plus (ii) the number of our common shares
reserved for issuance upon conversion of securities convertible into or exchangeable for our common
shares, plus (iii) the number of our common shares held as treasury shares. Compensation awards
that can be granted under the 2002 Share Plan include various forms of incentive awards, including
incentive share options, non-qualified share options and share awards. The class of eligible
persons that can receive grants of incentive awards under the 2002 Share Plan consists of key
employees, consultants and non-employee trust managers as determined by the Compensation Committee
of our Board of Trust Managers. The 2002 Share Plan does not have a termination date; however, no
incentive share options will be granted under this plan after February 5, 2012.
We also have a non-compensatory option plan (the 1993 Share Plan) that was amended in 2000
by our shareholders and Board of Trust Managers. The terms and conditions of the 1993 Share Plan
are similar to the 2002 Share Plan, except no incentive awards were able to be granted under the
1993 Share Plan after May 27, 2004. As the terms and conditions of the 1993 Share Plan and the
2002 Share Plan are similar, when the term plan is used in the following discussion, we are
referring to the plan from which the incentive award was granted.
F-22
Valuation Assumptions. The weighted average fair value of options granted was $11.04 and $7.88 in
2007 and 2006, respectively. We calculated the fair value of each option award on the date of
grant using the Black-Scholes option pricing model. The following assumptions were used for each
respective period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Expected volatility |
|
|
17.1 |
% |
|
|
16.6 |
% |
|
|
18.0 |
% |
Risk-free interest rate |
|
|
4.6 |
% |
|
|
4.4 |
% |
|
|
4.2 |
% |
Expected dividend yield |
|
|
3.7 |
% |
|
|
4.1 |
% |
|
|
5.6 |
% |
Expected life (in years) |
|
|
6 |
|
|
|
5 |
|
|
|
10 |
|
Our computation of expected volatility for 2007 was based on the historical volatility of our
common shares over a time period equal to the expected term of the option and ending on the grant
date. The interest rate for periods within the contractual life of the award is based on the
U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield on our
common shares is calculated using the annual dividends paid in prior year. Our computation of
expected life for 2007 was determined based on historical experience of similar awards, giving
consideration to the contractual terms of the share-based awards.
Options. Options are exercisable, subject to the terms and conditions of the plan, in
increments of 33.33% per year on each of the first three anniversaries of the date of grant. The
plan provides that the exercise price of an option will be determined by the Compensation Committee
of the Board of Trust Managers on the day of grant, and to date all options have been granted at an
exercise price that equals the fair market value on the date of grant. Options exercised during
2007 were exercised at prices ranging from $24.88 to $43.90 per share. At December 31, 2007,
options outstanding were exercisable at prices ranging from $24.88 to $73.32 per share and had a
weighted average remaining contractual life of 5.3 years.
The following table summarizes share options outstanding and exercisable at December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Options |
|
|
Exercisable Options |
|
Range of |
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
Remaining |
|
Exercise |
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
Contractual |
|
Prices |
|
Number |
|
|
Price |
|
|
Number |
|
|
Price |
|
|
Life |
|
$24.88-$41.91 |
|
|
329,321 |
|
|
$ |
35.73 |
|
|
|
329,321 |
|
|
$ |
35.73 |
|
|
|
3.9 |
|
$42.90-$43.90 |
|
|
354,486 |
|
|
|
42.98 |
|
|
|
354,486 |
|
|
|
42.98 |
|
|
|
5.9 |
|
$44.00-$73.32 |
|
|
466,360 |
|
|
|
49.49 |
|
|
|
399,694 |
|
|
|
50.15 |
|
|
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total options |
|
|
1,150,167 |
|
|
$ |
43.54 |
|
|
|
1,083,501 |
|
|
$ |
43.42 |
|
|
|
5.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-23
The following are summaries of the activity of the 1993 Share Plan and the 2002 Share Plan for the
three years ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1993 Share Plan |
|
Options and Share awards |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
2007 |
|
|
2007 Price |
|
|
2006 |
|
|
2006 Price |
|
|
2005 |
|
|
2005 Price |
|
Balance at January 1 |
|
|
1,953,800 |
|
|
$ |
31.99 |
|
|
|
2,045,730 |
|
|
$ |
32.12 |
|
|
|
2,201,915 |
|
|
$ |
31.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(60,695 |
) |
|
|
33.37 |
|
|
|
(89,879 |
) |
|
|
32.24 |
|
|
|
(154,165 |
) |
|
|
32.17 |
|
Forfeited |
|
|
(6,986 |
) |
|
|
33.98 |
|
|
|
(1,086 |
) |
|
|
29.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net options |
|
|
(67,681 |
) |
|
|
|
|
|
|
(90,965 |
) |
|
|
|
|
|
|
(154,165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(130 |
) |
|
|
34.72 |
|
|
|
(965 |
) |
|
|
34.71 |
|
|
|
(2,020 |
) |
|
|
34.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net share awards |
|
|
(130 |
) |
|
|
|
|
|
|
(965 |
) |
|
|
|
|
|
|
(2,020 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31 |
|
|
1,885,989 |
|
|
$ |
31.06 |
|
|
|
1,953,800 |
|
|
$ |
31.99 |
|
|
|
2,045,730 |
|
|
$ |
32.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable options at December 31 |
|
|
174,576 |
|
|
$ |
32.68 |
|
|
|
262,779 |
|
|
$ |
32.78 |
|
|
|
245,454 |
|
|
$ |
33.61 |
|
Vested share awards at December 31 |
|
|
1,337,273 |
|
|
|
|
|
|
|
1,317,733 |
|
|
|
|
|
|
|
1,283,225 |
|
|
|
|
|