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, 2008
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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 |
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
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
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
Indicate 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 definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act
(check one):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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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 $2,271,950,779 based on a June 30, 2008 share price of $44.26.
On February 17, 2009, the number of outstanding common shares of the
registrants was 53,321,917.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrants Proxy Statement in connection with its Annual Meeting of Shareholders
to be held May 6, 2009 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. Unless the context requires otherwise, we, our, us, and the Company refer to
Camden Property Trust and its consolidated subsidiaries and partnerships, collectively. 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, N.E., 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, 2008, we owned interests in, operated, or were developing 186 multifamily
properties comprising 64,329 apartment homes across the United States. We had 1,426 apartment
homes under development at five of our multifamily properties, including 1,060 apartment homes at
four multifamily properties owned through joint ventures, in which we own an interest, in addition
to other sites we may develop into multifamily apartment communities. Additionally, one
property comprised of 671 apartment homes was 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 help us to produce 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 new opportunities as they arise. These
capabilities, combined with what we believe is a conservative financial structure, should allow us
to concentrate our growth efforts toward selective
opportunities to enhance our strategy of having a geographically diverse portfolio of assets which
meet the requirements of our residents.
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We have historically focused our operating strategy on capturing greater market share,
selectively disposing of properties, and redeploying capital in new multifamily communities while
also maintaining a strong balance sheet. We have also actively evaluated acquisition opportunities
as they arose, some of which were consummated and contributed to our growth and profitability.
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 sustained earnings growth, we intend to selectively dispose of properties and redeploy
capital for various strategic reasons, including if we determine a property cannot meet long-term
earnings growth expectations.
Due to weakness and unpredictability in the capital and credit markets and real estate
fundamentals, we believe our revenues may decline in 2009 as compared to 2008. Although we believe
our business and long-term fundamentals which support increased revenues, such as population
growth, remain strong and the current difficult conditions will moderate over time, the timing of
an economic recovery is unclear and these conditions may not improve quickly. Consequently, our
near-term primary focus is to strengthen our capital and liquidity position by selectively
disposing of properties, controlling and reducing construction and overhead costs, generating
positive cash flows from operations, and reducing outstanding debt and leverage ratios. While we
expect development to continue to be important to the growth of our portfolio in the long term, we
expect decreasing levels of development activity in 2009 as compared to prior years. Please review
the Risk Factors section for a further discussion of the potential impact on us of current
economic conditions.
We believe the current economic downturn may provide us with opportunities to acquire
selective multifamily assets at attractive valuations. In certain instances, such acquisitions may
provide us with benefits we would not be able to achieve by developing our own multifamily
communities, such as the avoidance of incurring development or construction expenses. We intend
to seek to limit the risks associated with such acquisitions by targeting those opportunities we
believe will have a positive impact on our earnings within an acceptable period of time.
In the fourth quarter of 2007, we had the final closing of our discretionary investment
vehicle, Camden Multifamily Value Add Fund, L.P. (the Fund), followed by the final closing of a
co-investment limited partnership (the Co-Investment Vehicle and, together with the Fund, the
Funds) in the second quarter of 2008. During the investment period (ending no later than
December 2011), the Funds will be our exclusive vehicles for acquiring apartment communities,
subject to certain exceptions. Over the next several years, we expect to increase our acquisition
activity through the Funds, focusing on communities 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 the Funds.
Sophisticated Property Management. We believe the depth of our organization enables us to
deliver quality services, promote resident satisfaction, and retain residents, 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 our residents. We strive to motivate our on-site employees through
incentive compensation arrangements based upon property operational results, 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.
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Investments in Joint Ventures. We have entered into, and may continue in the future to enter
into, joint ventures or partnerships (including limited liability companies) through which we own
an indirect economic interest of less than 100% of the community or communities owned directly by
the joint venture or partnership. See Note 7, Investments in Joint Ventures, and Note 14,
Commitments and Contingencies, of the Notes to Consolidated Financial Statements for further
discussion of our investments in joint ventures.
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, 2008, we had approximately 1,800 employees, including executive,
administrative, and community personnel.
Qualification as a Real Estate Investment Trust
As of December 31, 2008, 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.
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, Real Estate Capital, and Credit Markets
Volatility in capital and credit markets could adversely impact us.
The capital and credit markets have been experiencing extreme volatility and disruption, which
has caused the spreads on prospective debt financings to widen considerably and made it more
difficult to borrow money. If current levels of market disruption and volatility continue or
worsen, we may not be able to obtain new debt financing or refinance our existing debt on favorable
terms or at all, which would adversely affect our liquidity and our ability to make distributions
to shareholders. This market turmoil and tightening of credit have led to an increased lack of
consumer confidence and widespread reduction of business activity generally, which have adversely
impacted and may continue to adversely impact us, including our ability to acquire and dispose of
assets and continue our development pipeline.
We could be negatively impacted by the condition of Fannie Mae or Freddie Mac.
Fannie Mae and Freddie Mac are a major source of financing for secured multifamily rental real
estate. We and other multifamily companies depend heavily on Fannie Mae and Freddie Mac to finance
growth by purchasing apartment loans. In September 2008, the U.S. government assumed control of
Fannie Mae and Freddie Mac and placed both companies into a government conservatorship under the
recently created Federal Housing Finance
Agency. The U.S. government has not determined which of Fannie Maes and Freddie Macs
businesses to retain and which to dissolve. A decision by the government to reduce Fannie Maes or
Freddie Macs acquisitions of apartment loans could adversely affect interest rates, capital
availability, and the development of multifamily communities. Governmental actions could also make
it easier for individuals to finance loans for single-family homes, which would make renting a less
attractive option and adversely affect our occupancy or rental rates.
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Unfavorable changes in economic conditions could adversely impact occupancy or rental rates.
Weakened economic conditions, including decreased job growth and job losses, have affected and
continue to significantly affect apartment home occupancy and rental rates. Significant decreases
in occupancy or 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 continued economic downturn which simultaneously effects one or more of our
geographical markets; and |
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increased operating costs, if these costs cannot be passed through to residents. |
We may experience a decrease in rental revenues, an increase in operating expenses, or a
combination of both, which may adversely affect our results of operations and our ability to
satisfy our financial obligations and to pay distributions to shareholders.
We face risks associated with land holdings.
We hold land for future development and may in the future acquire additional land holdings.
The risks inherent in owning or purchasing and developing land increase as demand for apartments,
or rental rates, decrease. Real estate markets are highly uncertain and, as a result, the value of
undeveloped land has fluctuated significantly and may continue to fluctuate as a result of changing
market conditions. In addition, carrying costs can be significant and can result in losses or
reduced margins in a poorly performing project. As a result, we hold certain land and may in the
future acquire additional land in our development pipeline at a cost we may not be able to recover
fully or on which we cannot build and develop into a profitable multifamily community. Also, real
estate markets are highly uncertain and, as a result, the value of undeveloped land has fluctuated
significantly and may continue to fluctuate as a result of changing market conditions. Under
current market conditions, we have recorded impairment charges on certain of our land held for
development and may have future impairments of our land. These impairment charges are based on
estimates of fair value. Given the current environment, the amount of market information available
to estimate fair value is less than usual; if additional market information becomes available in
future periods we may take additional impairment charges in the future.
Difficulties of selling real estate could limit our flexibility.
We intend to evaluate the potential disposition of assets that may no longer help us meet our
objectives. When we decide to sell an asset, we may encounter difficulty in finding buyers in a
timely manner as real estate investments generally cannot be disposed of quickly, especially when
market conditions are poor. These difficulties have been exacerbated in the current credit
environment because buyers have experienced difficulty in obtaining the necessary financing. These
factors may limit our ability to vary our portfolio promptly in response to changes in economic or
other conditions and may also limit our ability to utilize sales proceeds as a source of liquidity,
which would adversely affect our ability to make distributions to shareholders or repay debt. In
addition, in order to maintain our status as a REIT, the Code imposes restrictions on our ability
to sell properties held fewer than two years, which may cause us to incur losses thereby reducing
our cash flows and adversely impacting our ability to make distributions to shareholders or repay
debt.
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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 which 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.
Risks Associated with Our Operations
Development and construction risks could impact our profitability.
Although we expect decreasing levels of development activity in 2009, as compared to prior
years, in the long term 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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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 serve as the general contractor on a limited number of development and construction
projects related to properties owned by 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.
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Our acquisition strategy may not produce the cash flows expected.
Subject to the requirements of the Funds, 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; |
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the expected occupancy and rental rates may differ from the actual results; and |
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we may not be able to obtain adequate financing. |
With respect to acquisitions of operating companies, we may not be able to identify suitable
candidates on terms acceptable to us, or may not achieve expected returns and other benefits as a
result of integration challenges, such as personnel and technology.
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.
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 or develop 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 deductible 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.
Investments through joint ventures and partnerships involve risks not present in investments in
which we are the sole investor.
We have invested and may continue to invest as a partner in joint ventures or partnerships.
These investments involve risks, including the possibility our partner may have business goals
which are inconsistent with ours, be in a position to take action or withhold consent contrary to
our requests, or become insolvent and require us to assume and fulfill the joint ventures or
partnerships financial obligations. We and our partner may each have the right to initiate 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 entered into 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 investments in and management of discretionary funds.
We have formed the Funds 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 $75
million in the aggregate. As of December 31, 2008, the Funds had total capital commitments of $375
million. There are risks associated with the investment in and management of the Funds, including
the following:
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investors in the Funds may fail to make their capital contributions when due and, as
a result, the Funds may be unable to execute their investment objectives; |
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the general partner of the Funds, our wholly-owned subsidiary, has unlimited
liability for the third-party debts, obligations, and liabilities of the Funds pursuant
to general partnership law; |
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investors in the Funds (other than us), by majority vote, may remove our subsidiary
as the general partner of the Funds with or without cause and the Funds advisory
boards, by a majority vote of their members, may remove our subsidiary as the general
partner of the Funds at any time for cause; |
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while we have broad discretion to manage the Funds and make investment decisions on
behalf of the Funds, the investors or the advisory committees must approve certain
matters, and as a result we may be unable to cause the Funds 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 Funds
until the earlier of (i) December 31, 2011 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 investments in the Funds is subject to
significant restrictions; and |
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we may be liable if the Funds fail 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.
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 and do not qualify under statutory relief
provisions:
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we would be subject to federal income tax on our taxable income at regular
corporate rates, including 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.
7
Risks Associated with Our Indebtedness and Financing
Insufficient cash flows could limit our ability to make required payments for debt obligations or
pay distributions to shareholders.
Substantially all of our income is derived from rental and other income from our multifamily
communities. As a result, our performance depends in large part 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. |
Cash flow could be insufficient to meet required payments of principal and interest with
respect to debt financing. In order for us to continue to qualify as a REIT 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 gains. This requirement limits the
cash flow available to meet required principal payments on our debt.
We have significant debt, which could have important adverse consequences.
As of December 31, 2008, 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. |
The mortgages on our properties subject to secured debt, our unsecured credit facility, and
the indentures under which our unsecured debt was issued contain customary restrictions,
requirements, and other limitations, as well as certain financial and operating covenants including
maintenance of certain financial ratios. Maintaining compliance with these provisions could limit
our financial flexibility. A default in these provisions, if uncured, could require us to repay the
indebtedness, which could severely affect our liquidity and increase our financing costs.
We may be unable to renew, repay, or refinance our outstanding debt.
We are subject to the risk that indebtedness on our properties, or unsecured indebtedness,
will not be able to be renewed, repaid, or refinanced when due or the terms of any renewal or
refinancing will not be as favorable as the existing terms of such indebtedness. If we are unable
to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one
or more of the properties on disadvantageous terms, which might result in losses to us. Such
losses could have a material adverse effect on us and our ability to make distributions to our
shareholders and pay amounts due on our debt. Furthermore, if a property is mortgaged to secure
payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose
upon the property, appoint a receiver and exercise rights under an assignment of rents and leases
or pursue other remedies, all with a consequent loss of our revenues and asset value. Foreclosures
could also create taxable income without accompanying cash proceeds, thereby hindering our ability
to meet the REIT distribution requirements of the Internal Revenue Code.
8
Variable rate debt is subject to interest rate risk.
We have mortgage debt with varying interest rates dependent upon various market indexes. 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 which 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 changes in
interest rates, and we may continue to do so in the future. Although these agreements may
partially protect against rising interest rates, they may also 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.
Additionally, 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 earlier 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.
Failure to maintain our current credit ratings could adversely affect our cost of funds, related
margins, liquidity, and access to capital markets.
Moodys and Standard & Poors, the major debt rating agencies, routinely evaluate our debt and
have given us ratings of Baa1 and BBB+, respectively, on our senior unsecured debt. These ratings
are based on a number of factors, which include their assessment of our financial strength,
liquidity, capital structure, asset quality, and sustainability of cash flow and earnings. In
light of the difficulties in the real estate industry and the volatile financial markets, we may
not be able to maintain our current credit ratings, which could adversely affect our cost of funds
and related margins, liquidity, and access to capital markets.
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 of us failing
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 which might otherwise exist if a third party were
attempting to effect a change in control transaction.
9
Our share price will fluctuate.
Stock markets in general and our common shares have experienced significant price volatility
over the past year. The market price and volume of our common shares may continue to be subject to
significant fluctuations due not only to general stock market conditions but also to the risk
factors discussed in this report and the following:
|
|
|
operating results which vary from the expectations of securities analysts and
investors; |
|
|
|
|
investor interest in our property portfolio; |
|
|
|
|
the reputation and performance of REITs; |
|
|
|
|
the attractiveness of REITs as compared to other investment vehicles; |
|
|
|
|
the results of our financial condition and operations; |
|
|
|
|
the perception of our growth and earnings potential; |
|
|
|
|
dividend payment rates; |
|
|
|
|
increases in market rates, which may lead purchasers of our common shares to
demand a higher yield; and |
|
|
|
|
changes in financial markets and national economic and general market
conditions. |
We may reduce dividends on our equity securities or elect to pay a portion of the dividend in
common shares.
On November 24, 2008, we announced our Board of Trust Managers had declared a fourth quarter
dividend of $0.70 per common share, totaling $2.80 per share for the year ended December 31, 2008.
In order for us to continue to qualify as a REIT 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 gains. However, in the event of, among other factors, continued
material future deterioration in business conditions, or continuing tightening in the credit
markets, our Board of Trust Managers may decide to reduce our
dividend while ensuring compliance with the
requirements of the Code related to REIT qualification. In December 2008, the Internal Revenue
Service announced it would treat a cash option share dividend as satisfying a public REITs
distribution requirements for 2008 and 2009 so long as certain requirements are met. We may elect
to pay dividends during this period in part in our common shares which would cause dilution to our
earnings per share given the additional shares outstanding.
Item 1B. Unresolved Staff Comments
None.
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.
10
Operating Properties
The 181 operating properties, including properties held through joint ventures, which we owned
interests in and operated at December 31, 2008, averaged 915 square feet of living area per
apartment home. For the year ended December 31, 2008, no single operating property accounted for
greater than 2.2% of our total revenues. Our operating properties, including properties held
through joint ventures, had a weighted average occupancy rate of 93.9% and 93.7% for 2008 and 2007,
respectively. Resident lease terms generally range from six to fifteen months. One hundred and
fifty-six of our operating properties have over 200 apartment homes, with the largest having 904
apartment homes. Our operating properties have an average age of 9.6 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 |
|
|
|
|
|
|
2001-2008 |
|
|
46 |
|
|
|
|
|
|
1996-2000 |
|
|
57 |
|
|
|
|
|
|
1991-1995 |
|
|
19 |
|
|
|
|
|
|
1986-1990 |
|
|
39 |
|
|
|
|
|
|
1980-1985 |
|
|
15 |
|
|
|
|
|
|
Prior to 1980 |
|
|
5 |
|
11
Property Table
The following table sets forth information with respect to our operating properties at
December 31, 2008.
OPERATING PROPERTIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
2008 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
Occupancy (1) |
|
ARIZONA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phoenix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Copper Square |
|
|
332 |
|
|
|
2000 |
|
|
786 |
|
|
93.1 |
% |
Camden Fountain Palms (8) |
|
|
192 |
|
|
|
1986/1996 |
|
|
1,050 |
|
|
91.5 |
|
Camden Legacy |
|
|
428 |
|
|
|
1996 |
|
|
1,067 |
|
|
93.7 |
|
Camden Pecos Ranch (8) |
|
|
272 |
|
|
|
2001 |
|
|
924 |
|
|
93.6 |
|
Camden San Paloma |
|
|
324 |
|
|
|
1993/1994 |
|
|
1,042 |
|
|
94.0 |
|
Camden Sierra (8) |
|
|
288 |
|
|
|
1997 |
|
|
925 |
|
|
91.4 |
|
Camden Towne Center (8) |
|
|
240 |
|
|
|
1998 |
|
|
871 |
|
|
92.2 |
|
Camden Vista Valley |
|
|
357 |
|
|
|
1986 |
|
|
923 |
|
|
91.1 |
|
CALIFORNIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Los Angeles/Orange County |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Crown Valley |
|
|
380 |
|
|
|
2001 |
|
|
1,009 |
|
|
95.1 |
|
Camden Harbor View |
|
|
538 |
|
|
|
2004 |
|
|
975 |
|
|
94.8 |
|
Camden Main & Jamboree (2) (12) |
|
|
290 |
|
|
|
2008 |
|
|
1,011 |
|
Lease-Up |
|
Camden Martinique |
|
|
714 |
|
|
|
1986 |
|
|
794 |
|
|
93.8 |
|
Camden Parkside (8) |
|
|
421 |
|
|
|
1972 |
|
|
836 |
|
|
92.9 |
|
Camden Sea Palms |
|
|
138 |
|
|
|
1990 |
|
|
891 |
|
|
95.4 |
|
San Diego/Inland Empire |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Old Creek (3) |
|
|
350 |
|
|
|
2007 |
|
|
1,037 |
|
|
92.8 |
|
Camden Sierra at Otay Ranch |
|
|
422 |
|
|
|
2003 |
|
|
962 |
|
|
94.6 |
|
Camden Tuscany |
|
|
160 |
|
|
|
2003 |
|
|
896 |
|
|
96.4 |
|
Camden Vineyards |
|
|
264 |
|
|
|
2002 |
|
|
1,053 |
|
|
91.3 |
|
COLORADO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denver |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Caley |
|
|
218 |
|
|
|
2000 |
|
|
925 |
|
|
95.9 |
|
Camden Centennial |
|
|
276 |
|
|
|
1985 |
|
|
744 |
|
|
94.2 |
|
Camden Denver West (9) |
|
|
320 |
|
|
|
1997 |
|
|
1,015 |
|
|
95.4 |
|
Camden Highlands Ridge |
|
|
342 |
|
|
|
1996 |
|
|
1,149 |
|
|
96.0 |
|
Camden Interlocken |
|
|
340 |
|
|
|
1999 |
|
|
1,022 |
|
|
96.7 |
|
Camden Lakeway |
|
|
451 |
|
|
|
1997 |
|
|
932 |
|
|
94.1 |
|
Camden Pinnacle |
|
|
224 |
|
|
|
1985 |
|
|
748 |
|
|
92.7 |
|
WASHINGTON DC METRO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Ashburn Farms |
|
|
162 |
|
|
|
2000 |
|
|
1,062 |
|
|
95.7 |
|
Camden Clearbrook |
|
|
297 |
|
|
|
2007 |
|
|
1,048 |
|
|
94.9 |
|
Camden College Park (2) (12) |
|
|
508 |
|
|
|
2008 |
|
|
942 |
|
Lease-Up |
|
Camden Fair Lakes |
|
|
530 |
|
|
|
1999 |
|
|
1,056 |
|
|
95.0 |
|
Camden Fairfax Corner |
|
|
488 |
|
|
|
2006 |
|
|
934 |
|
|
96.5 |
|
Camden Fallsgrove |
|
|
268 |
|
|
|
2004 |
|
|
996 |
|
|
97.8 |
|
Camden Grand Parc |
|
|
105 |
|
|
|
2002 |
|
|
674 |
|
|
95.9 |
|
Camden Lansdowne |
|
|
690 |
|
|
|
2002 |
|
|
1,006 |
|
|
96.0 |
|
Camden Largo Town Center |
|
|
245 |
|
|
|
2000/2007 |
|
|
1,027 |
|
|
91.3 |
|
Camden Monument Place (3) |
|
|
368 |
|
|
|
2007 |
|
|
856 |
|
|
93.2 |
|
Camden Potomac Yard (2) |
|
|
378 |
|
|
|
2008 |
|
|
835 |
|
Lease-Up |
|
Camden Roosevelt |
|
|
198 |
|
|
|
2003 |
|
|
856 |
|
|
96.1 |
|
Camden Russett |
|
|
426 |
|
|
|
2000 |
|
|
992 |
|
|
95.3 |
|
Camden Silo Creek |
|
|
284 |
|
|
|
2004 |
|
|
975 |
|
|
95.2 |
|
Camden Summerfield (2) |
|
|
291 |
|
|
|
2008 |
|
|
957 |
|
Lease-Up |
|
Camden Westwind |
|
|
464 |
|
|
|
2006 |
|
|
1,036 |
|
|
95.9 |
|
FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast Florida |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Aventura |
|
|
379 |
|
|
|
1995 |
|
|
1,108 |
|
|
94.7 |
|
Camden Brickell |
|
|
405 |
|
|
|
2003 |
|
|
937 |
|
|
96.4 |
|
Camden Doral |
|
|
260 |
|
|
|
1999 |
|
|
1,120 |
|
|
97.3 |
|
Camden Doral Villas |
|
|
232 |
|
|
|
2000 |
|
|
1,253 |
|
|
97.4 |
|
Camden Las Olas |
|
|
420 |
|
|
|
2004 |
|
|
1,043 |
|
|
92.8 |
|
Camden Plantation |
|
|
502 |
|
|
|
1997 |
|
|
1,201 |
|
|
93.7 |
|
Camden Portofino |
|
|
322 |
|
|
|
1995 |
|
|
1,112 |
|
|
96.1 |
|
12
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
2008 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
Occupancy (1) |
|
Orlando |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Club |
|
|
436 |
|
|
|
1986 |
|
|
1,077 |
|
|
94.1 |
% |
Camden Hunters Creek |
|
|
270 |
|
|
|
2000 |
|
|
1,075 |
|
|
96.7 |
|
Camden Lago Vista |
|
|
366 |
|
|
|
2005 |
|
|
955 |
|
|
93.8 |
|
Camden Landings |
|
|
220 |
|
|
|
1983 |
|
|
748 |
|
|
93.6 |
|
Camden Lee Vista |
|
|
492 |
|
|
|
2000 |
|
|
937 |
|
|
92.8 |
|
Camden Orange Court (2) |
|
|
261 |
|
|
|
2008 |
|
|
812 |
|
Lease-Up |
|
Camden Renaissance |
|
|
578 |
|
|
|
1996/1998 |
|
|
899 |
|
|
93.3 |
|
Camden Reserve |
|
|
526 |
|
|
|
1990/1991 |
|
|
824 |
|
|
93.6 |
|
Camden World Gateway |
|
|
408 |
|
|
|
2000 |
|
|
979 |
|
|
95.4 |
|
Tampa/St. Petersburg |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Bay |
|
|
760 |
|
|
|
1997/2001 |
|
|
943 |
|
|
93.2 |
|
Camden Bay Pointe |
|
|
368 |
|
|
|
1984 |
|
|
771 |
|
|
93.8 |
|
Camden Bayside |
|
|
832 |
|
|
|
1987/1989 |
|
|
748 |
|
|
94.7 |
|
Camden Citrus Park |
|
|
247 |
|
|
|
1985 |
|
|
704 |
|
|
93.3 |
|
Camden Lakes |
|
|
688 |
|
|
|
1982/1983 |
|
|
732 |
|
|
93.4 |
|
Camden Lakeside |
|
|
228 |
|
|
|
1986 |
|
|
729 |
|
|
93.8 |
|
Camden Live Oaks |
|
|
770 |
|
|
|
1990 |
|
|
1,093 |
|
|
94.2 |
|
Camden Preserve |
|
|
276 |
|
|
|
1996 |
|
|
942 |
|
|
94.2 |
|
Camden Providence Lakes (4) |
|
|
260 |
|
|
|
1996 |
|
|
1,024 |
|
|
92.2 |
|
Camden Royal Palms |
|
|
352 |
|
|
|
2006 |
|
|
1,017 |
|
|
88.5 |
|
Camden Westshore (4) |
|
|
278 |
|
|
|
1986 |
|
|
728 |
|
|
92.4 |
|
Camden Woods |
|
|
444 |
|
|
|
1986 |
|
|
1,223 |
|
|
93.8 |
|
GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlanta |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Brookwood |
|
|
359 |
|
|
|
2002 |
|
|
912 |
|
|
93.7 |
|
Camden Deerfield |
|
|
292 |
|
|
|
2000 |
|
|
1,187 |
|
|
93.5 |
|
Camden Dunwoody |
|
|
324 |
|
|
|
1997 |
|
|
1,007 |
|
|
95.1 |
|
Camden Midtown Atlanta |
|
|
296 |
|
|
|
2001 |
|
|
935 |
|
|
94.1 |
|
Camden Peachtree City |
|
|
399 |
|
|
|
2001 |
|
|
1,027 |
|
|
95.5 |
|
Camden River |
|
|
352 |
|
|
|
1997 |
|
|
1,103 |
|
|
94.4 |
|
Camden Shiloh |
|
|
232 |
|
|
|
1999/2002 |
|
|
1,143 |
|
|
95.3 |
|
Camden St. Clair |
|
|
336 |
|
|
|
1997 |
|
|
999 |
|
|
94.1 |
|
Camden Stockbridge |
|
|
304 |
|
|
|
2003 |
|
|
1,009 |
|
|
92.2 |
|
Camden Sweetwater |
|
|
308 |
|
|
|
2000 |
|
|
1,151 |
|
|
92.4 |
|
KENTUCKY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louisville |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Brookside (10) |
|
|
224 |
|
|
|
1987 |
|
|
732 |
|
|
96.4 |
|
Camden Meadows (10) |
|
|
400 |
|
|
|
1987/1990 |
|
|
746 |
|
|
95.7 |
|
Camden Oxmoor (10) |
|
|
432 |
|
|
|
2000 |
|
|
903 |
|
|
95.6 |
|
Camden Prospect Park (10) |
|
|
138 |
|
|
|
1990 |
|
|
916 |
|
|
95.9 |
|
MISSOURI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kansas City |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Passage (10) |
|
|
596 |
|
|
|
1989/1997 |
|
|
834 |
|
|
95.3 |
|
St. Louis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Cedar Lakes (10) |
|
|
420 |
|
|
|
1986 |
|
|
852 |
|
|
92.6 |
|
Camden Cove West (10) |
|
|
276 |
|
|
|
1990 |
|
|
828 |
|
|
95.6 |
|
Camden Cross Creek (10) |
|
|
591 |
|
|
|
1973/1980 |
|
|
947 |
|
|
95.4 |
|
Camden Westchase (10) |
|
|
160 |
|
|
|
1986 |
|
|
945 |
|
|
96.3 |
|
13
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
2008 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
Occupancy (1) |
|
NEVADA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Bel Air |
|
|
528 |
|
|
|
1988/1995 |
|
|
943 |
|
|
94.2 |
% |
Camden Breeze |
|
|
320 |
|
|
|
1989 |
|
|
846 |
|
|
94.7 |
|
Camden Canyon (4) |
|
|
200 |
|
|
|
1995 |
|
|
987 |
|
|
94.7 |
|
Camden Commons |
|
|
376 |
|
|
|
1988 |
|
|
936 |
|
|
92.9 |
|
Camden Cove |
|
|
124 |
|
|
|
1990 |
|
|
898 |
|
|
96.1 |
|
Camden Del Mar (4) |
|
|
560 |
|
|
|
1995 |
|
|
986 |
|
|
91.2 |
|
Camden Fairways (4) |
|
|
320 |
|
|
|
1989 |
|
|
896 |
|
|
92.8 |
|
Camden Hills |
|
|
184 |
|
|
|
1991 |
|
|
439 |
|
|
96.3 |
|
Camden Legends |
|
|
113 |
|
|
|
1994 |
|
|
792 |
|
|
92.9 |
|
Camden Palisades |
|
|
624 |
|
|
|
1991 |
|
|
905 |
|
|
94.1 |
|
Camden Pines (8) |
|
|
315 |
|
|
|
1997 |
|
|
982 |
|
|
96.8 |
|
Camden Pointe |
|
|
252 |
|
|
|
1996 |
|
|
983 |
|
|
95.5 |
|
Camden Summit (8) |
|
|
234 |
|
|
|
1995 |
|
|
1,187 |
|
|
96.6 |
|
Camden Tiara (8) |
|
|
400 |
|
|
|
1996 |
|
|
1,043 |
|
|
95.2 |
|
Camden Vintage |
|
|
368 |
|
|
|
1994 |
|
|
978 |
|
|
93.7 |
|
Oasis Bay (11) |
|
|
128 |
|
|
|
1990 |
|
|
876 |
|
|
94.9 |
|
Oasis Crossings (11) |
|
|
72 |
|
|
|
1996 |
|
|
983 |
|
|
95.9 |
|
Oasis Emerald (11) |
|
|
132 |
|
|
|
1988 |
|
|
873 |
|
|
95.9 |
|
Oasis Gateway (11) |
|
|
360 |
|
|
|
1997 |
|
|
1,146 |
|
|
94.3 |
|
Oasis Island (11) |
|
|
118 |
|
|
|
1990 |
|
|
901 |
|
|
93.5 |
|
Oasis Landing (11) |
|
|
144 |
|
|
|
1990 |
|
|
938 |
|
|
95.4 |
|
Oasis Meadows (11) |
|
|
383 |
|
|
|
1996 |
|
|
1,031 |
|
|
94.3 |
|
Oasis Palms (11) |
|
|
208 |
|
|
|
1989 |
|
|
880 |
|
|
92.9 |
|
Oasis Pearl (11) |
|
|
90 |
|
|
|
1989 |
|
|
930 |
|
|
97.5 |
|
Oasis Place (11) |
|
|
240 |
|
|
|
1992 |
|
|
440 |
|
|
95.5 |
|
Oasis Ridge (11) |
|
|
477 |
|
|
|
1984 |
|
|
391 |
|
|
89.6 |
|
Oasis Sierra (11) |
|
|
208 |
|
|
|
1998 |
|
|
923 |
|
|
94.9 |
|
Oasis Springs (11) |
|
|
304 |
|
|
|
1988 |
|
|
838 |
|
|
93.0 |
|
Oasis Vinings (11) |
|
|
234 |
|
|
|
1994 |
|
|
1,152 |
|
|
93.4 |
|
NORTH CAROLINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charlotte |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Ballantyne |
|
|
400 |
|
|
|
1998 |
|
|
1,045 |
|
|
92.3 |
|
Camden Cotton Mills |
|
|
180 |
|
|
|
2002 |
|
|
905 |
|
|
95.0 |
|
Camden Dilworth |
|
|
145 |
|
|
|
2006 |
|
|
857 |
|
|
95.9 |
|
Camden Fairview |
|
|
135 |
|
|
|
1983 |
|
|
1,036 |
|
|
95.5 |
|
Camden Forest |
|
|
208 |
|
|
|
1989 |
|
|
703 |
|
|
92.7 |
|
Camden Foxcroft (5) |
|
|
156 |
|
|
|
1979 |
|
|
940 |
|
|
Redevelopment |
|
Camden Grandview |
|
|
266 |
|
|
|
2000 |
|
|
1,057 |
|
|
93.7 |
|
Camden Habersham |
|
|
240 |
|
|
|
1986 |
|
|
773 |
|
|
94.8 |
|
Camden Park Commons |
|
|
232 |
|
|
|
1997 |
|
|
861 |
|
|
91.5 |
|
Camden Pinehurst |
|
|
407 |
|
|
|
1967 |
|
|
1,147 |
|
|
93.2 |
|
Camden Sedgebrook |
|
|
368 |
|
|
|
1999 |
|
|
972 |
|
|
94.3 |
|
Camden Simsbury |
|
|
100 |
|
|
|
1985 |
|
|
874 |
|
|
95.7 |
|
Camden South End Square |
|
|
299 |
|
|
|
2003 |
|
|
882 |
|
|
92.8 |
|
Camden Stonecrest |
|
|
306 |
|
|
|
2001 |
|
|
1,098 |
|
|
93.7 |
|
Camden Touchstone (4) |
|
|
132 |
|
|
|
1986 |
|
|
899 |
|
|
94.6 |
|
14
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
2008 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
Occupancy (1) |
|
Raleigh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Crest |
|
|
438 |
|
|
|
2001 |
|
|
1,013 |
|
|
94.1 |
% |
Camden Governors Village |
|
|
242 |
|
|
|
1999 |
|
|
1,046 |
|
|
91.8 |
|
Camden Lake Pine |
|
|
446 |
|
|
|
1999 |
|
|
1,066 |
|
|
94.4 |
|
Camden Manor Park |
|
|
484 |
|
|
|
2006 |
|
|
966 |
|
|
94.6 |
|
Camden Overlook |
|
|
320 |
|
|
|
2001 |
|
|
1,060 |
|
|
95.6 |
|
Camden Reunion Park |
|
|
420 |
|
|
|
2000/2004 |
|
|
972 |
|
|
92.7 |
|
Camden Westwood |
|
|
354 |
|
|
|
1999 |
|
|
1,027 |
|
|
94.3 |
|
PENNSYLVANIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Valleybrook |
|
|
352 |
|
|
|
2002 |
|
|
992 |
|
|
96.3 |
|
TEXAS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Austin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Cedar Hills (2) |
|
|
208 |
|
|
|
2008 |
|
|
911 |
|
Lease-Up |
|
Camden Gaines Ranch |
|
|
390 |
|
|
|
1997 |
|
|
955 |
|
|
93.8 |
|
Camden Huntingdon |
|
|
398 |
|
|
|
1995 |
|
|
903 |
|
|
95.7 |
|
Camden Laurel Ridge |
|
|
183 |
|
|
|
1986 |
|
|
702 |
|
|
92.9 |
|
Camden Ridgecrest |
|
|
284 |
|
|
|
1995 |
|
|
855 |
|
|
95.1 |
|
Camden South Congress (13) |
|
|
253 |
|
|
|
2001 |
|
|
975 |
|
|
92.4 |
|
Camden Stoneleigh |
|
|
390 |
|
|
|
2001 |
|
|
908 |
|
|
95.1 |
|
Corpus Christi |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Breakers (4) |
|
|
288 |
|
|
|
1996 |
|
|
868 |
|
|
92.9 |
|
Camden Copper Ridge |
|
|
344 |
|
|
|
1986 |
|
|
775 |
|
|
93.4 |
|
Camden Miramar (7) |
|
|
778 |
|
|
|
1994-2004 |
|
|
482 |
|
|
80.8 |
|
Dallas/Fort Worth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Addison (8) |
|
|
456 |
|
|
|
1996 |
|
|
942 |
|
|
94.8 |
|
Camden Buckingham |
|
|
464 |
|
|
|
1997 |
|
|
919 |
|
|
95.3 |
|
Camden Centreport |
|
|
268 |
|
|
|
1997 |
|
|
911 |
|
|
93.8 |
|
Camden Cimarron |
|
|
286 |
|
|
|
1992 |
|
|
772 |
|
|
95.5 |
|
Camden Farmers Market |
|
|
904 |
|
|
|
2001/2005 |
|
|
932 |
|
|
94.8 |
|
Camden Gardens |
|
|
256 |
|
|
|
1983 |
|
|
652 |
|
|
94.5 |
|
Camden Glen Lakes (4) |
|
|
424 |
|
|
|
1979 |
|
|
877 |
|
|
91.7 |
|
Camden Legacy Creek |
|
|
240 |
|
|
|
1995 |
|
|
831 |
|
|
96.2 |
|
Camden Legacy Park |
|
|
276 |
|
|
|
1996 |
|
|
871 |
|
|
95.7 |
|
Camden Oasis |
|
|
602 |
|
|
|
1986 |
|
|
548 |
|
|
83.6 |
|
Camden Springs |
|
|
304 |
|
|
|
1987 |
|
|
713 |
|
|
92.6 |
|
Camden Valley Creek |
|
|
380 |
|
|
|
1984 |
|
|
855 |
|
|
93.9 |
|
Camden Valley Park (5) |
|
|
516 |
|
|
|
1986 |
|
|
743 |
|
|
Redevelopment |
|
Camden Valley Ridge |
|
|
408 |
|
|
|
1987 |
|
|
773 |
|
|
93.6 |
|
Camden Westview |
|
|
335 |
|
|
|
1983 |
|
|
697 |
|
|
94.4 |
|
15
OPERATING PROPERTIES (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Year Placed |
|
|
Average Apartment |
|
2008 Average |
|
Property and Location |
|
Apartments |
|
|
In Service |
|
|
Size (Sq. Ft.) |
|
Occupancy (1) |
|
Houston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Baytown |
|
|
272 |
|
|
|
1999 |
|
|
844 |
|
|
95.8 |
% |
Camden City Centre (3) |
|
|
379 |
|
|
|
2007 |
|
|
932 |
|
|
94.0 |
|
Camden Creek |
|
|
456 |
|
|
|
1984 |
|
|
639 |
|
|
92.4 |
|
Camden Greenway |
|
|
756 |
|
|
|
1999 |
|
|
861 |
|
|
96.3 |
|
Camden Holly Springs (8) |
|
|
548 |
|
|
|
1999 |
|
|
934 |
|
|
95.1 |
|
Camden Midtown |
|
|
337 |
|
|
|
1999 |
|
|
844 |
|
|
97.4 |
|
Camden Oak Crest |
|
|
364 |
|
|
|
2003 |
|
|
870 |
|
|
95.9 |
|
Camden Park (8) |
|
|
288 |
|
|
|
1995 |
|
|
866 |
|
|
96.4 |
|
Camden Plaza (3) (12) |
|
|
271 |
|
|
|
2007 |
|
|
915 |
|
|
94.4 |
|
Camden Royal Oaks (3) |
|
|
236 |
|
|
|
2006 |
|
|
923 |
|
|
90.0 |
|
Camden Steeplechase |
|
|
290 |
|
|
|
1982 |
|
|
748 |
|
|
93.5 |
|
Camden Stonebridge |
|
|
204 |
|
|
|
1993 |
|
|
845 |
|
|
97.2 |
|
Camden Sugar Grove (8) |
|
|
380 |
|
|
|
1997 |
|
|
921 |
|
|
95.1 |
|
Camden Vanderbilt (4) |
|
|
894 |
|
|
|
1996/1997 |
|
|
863 |
|
|
94.3 |
|
Camden West Oaks (6) |
|
|
671 |
|
|
|
1982 |
|
|
726 |
|
|
94.7 |
|
Camden Whispering Oaks (2) |
|
|
274 |
|
|
|
2008 |
|
|
934 |
|
Lease-Up |
|
|
|
|
(1) |
|
Represents average physical occupancy for the year except as noted below. |
|
(2) |
|
Properties under lease-up at December 31, 2008. |
|
(3) |
|
Development property completed during 2008 average occupancy calculated from date at which
occupancy exceeded 90% through year-end. |
|
(4) |
|
Redevelopment completed during 2008 average occupancy calculated from date at which
occupancy exceeded 90% through year-end. |
|
(5) |
|
Properties under redevelopment at December 31, 2008. |
|
(6) |
|
Property held for sale at December 31, 2008. |
|
(7) |
|
Miramar is a student housing project for Texas A&M at Corpus Christi. Average occupancy
includes summer which is normally subject to high vacancies. |
|
(8) |
|
Properties owned through a joint venture in which we own a 20% interest. The remaining
interest is owned by an unaffiliated private investor. |
|
(9) |
|
Property owned through a joint venture in which we own a 50% interest. The remaining
interest is owned by an unaffiliated private investor. |
|
(10) |
|
Properties owned through a joint venture in which we own a 15% interest. The remaining
interest is owned by an unaffiliated private investor. |
|
(11) |
|
Properties owned through a joint venture in which we own a 20% interest. The remaining
interest is owned by an unaffiliated private pension fund. |
|
(12) |
|
Properties owned through a joint venture in which we own a 30% interest. The remaining
interest is owned by an unaffiliated private investor. |
|
(13) |
|
Property owned through a joint venture in which we own a 20% interest. The remaining
interest is owned by an unaffiliated private pension fund. |
Item 3. Legal Proceedings
For discussion regarding legal proceedings, see Note 14, Commitments and
Contingencies, in the Notes to Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
None.
16
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 |
|
2008 Quarters: |
|
|
|
|
|
|
|
|
|
|
|
|
First |
|
$ |
54.65 |
|
|
$ |
42.18 |
|
|
$ |
0.70 |
|
Second |
|
|
55.35 |
|
|
|
44.08 |
|
|
|
0.70 |
|
Third |
|
|
54.87 |
|
|
|
41.79 |
|
|
|
0.70 |
|
Fourth |
|
|
44.95 |
|
|
|
18.96 |
|
|
|
0.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
5-Year
Performance
Key Market Indices
This graph assumes the investment of $100 on December 31, 2003
and quarterly reinvestments of dividends. [Source: NAREIT]
As of February 17, 2009, there were
659 shareholders of record and approximately 22,500 beneficial owners of our common shares.
The following table summarizes repurchases of our equity securities during the
quarter ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Approximate |
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased |
|
|
Dollar Value of |
|
|
|
Total Number of |
|
|
|
|
|
|
as Part of Publicly |
|
|
Shares That May Yet |
|
|
|
Shares |
|
|
Average Price |
|
|
Announced |
|
|
Be Purchased Under |
|
|
|
Purchased |
|
|
Paid per Share |
|
|
Programs |
|
|
the Program (1) |
|
|
Month ended October 31, 2008 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
269,869,000 |
|
Month ended November 30, 2008 |
|
|
4,400 |
|
|
|
22.97 |
|
|
|
4,400 |
|
|
|
269,768,097 |
|
Month ended December 31, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
269,768,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (2) |
|
|
4,400 |
|
|
$ |
22.97 |
|
|
|
4,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 of up to an
additional $250.0 million of our common equity securities. |
|
(2) |
|
From April 2007 through December 31, 2008, we repurchased approximately 4.3 million common
shares for cash totaling approximately $230.2 million, or $53.56 average price per share. |
17
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, 2004 through 2008. 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
reclassified for discontinued operations.
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands, except per share amounts and property data) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
2005(e) |
|
|
2004 |
|
Operating Data (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
$ |
624,016 |
|
|
$ |
588,319 |
|
|
$ |
561,029 |
|
|
$ |
485,696 |
|
|
$ |
347,174 |
|
Total property expenses |
|
|
238,915 |
|
|
|
217,350 |
|
|
|
210,621 |
|
|
|
184,566 |
|
|
|
138,700 |
|
Total non-property income (loss) |
|
|
(19,540 |
) |
|
|
25,002 |
|
|
|
35,530 |
|
|
|
50,912 |
|
|
|
27,884 |
|
Total other expenses |
|
|
331,278 |
|
|
|
339,548 |
|
|
|
345,908 |
|
|
|
338,520 |
|
|
|
206,022 |
|
Income (loss) from continuing operations |
|
|
(13,705 |
) |
|
|
41,721 |
|
|
|
119,953 |
|
|
|
147,022 |
|
|
|
18,815 |
|
Net income |
|
|
70,973 |
|
|
|
148,457 |
|
|
|
232,846 |
|
|
|
199,086 |
|
|
|
41,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.25 |
) |
|
$ |
0.72 |
|
|
$ |
2.12 |
|
|
$ |
2.83 |
|
|
$ |
0.45 |
|
Diluted |
|
|
(0.25 |
) |
|
|
0.71 |
|
|
|
2.06 |
|
|
|
2.64 |
|
|
|
0.44 |
|
Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.28 |
|
|
$ |
2.55 |
|
|
$ |
4.11 |
|
|
$ |
3.83 |
|
|
$ |
1.00 |
|
Diluted |
|
|
1.28 |
|
|
|
2.51 |
|
|
|
3.96 |
|
|
|
3.58 |
|
|
|
0.98 |
|
|
Distributions declared per common share |
|
$ |
2.80 |
|
|
$ |
2.76 |
|
|
$ |
2.64 |
|
|
$ |
2.54 |
|
|
$ |
2.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data (at end of year) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets, at cost |
|
$ |
5,491,593 |
|
|
$ |
5,527,403 |
|
|
$ |
5,141,467 |
|
|
$ |
5,039,007 |
|
|
$ |
3,159,077 |
|
Total assets |
|
|
4,730,342 |
|
|
|
4,890,760 |
|
|
|
4,586,050 |
|
|
|
4,487,799 |
|
|
|
2,629,364 |
|
Notes payable |
|
|
2,832,396 |
|
|
|
2,828,095 |
|
|
|
2,330,976 |
|
|
|
2,633,091 |
|
|
|
1,576,405 |
|
Minority interests |
|
|
187,787 |
|
|
|
219,952 |
|
|
|
223,511 |
|
|
|
221,023 |
|
|
|
159,567 |
|
Shareholders equity |
|
|
1,411,494 |
|
|
|
1,531,313 |
|
|
|
1,734,356 |
|
|
|
1,370,903 |
|
|
|
738,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
216,958 |
|
|
$ |
223,106 |
|
|
$ |
231,569 |
|
|
$ |
200,845 |
|
|
$ |
156,997 |
|
Investing activities |
|
|
(37,374 |
) |
|
|
(346,798 |
) |
|
|
(52,067 |
) |
|
|
(207,561 |
) |
|
|
(65,321 |
) |
Financing activities |
|
|
(173,074 |
) |
|
|
123,555 |
|
|
|
(180,044 |
) |
|
|
6,039 |
|
|
|
(92,780 |
) |
Funds from operations diluted (b) |
|
|
169,585 |
|
|
|
227,153 |
|
|
|
237,790 |
|
|
|
195,290 |
|
|
|
143,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of operating properties (at the end of year) (c) |
|
|
181 |
|
|
|
182 |
|
|
|
186 |
|
|
|
191 |
|
|
|
144 |
|
Number of operating apartment homes (at end of year) (c) |
|
|
62,903 |
|
|
|
63,085 |
|
|
|
63,843 |
|
|
|
65,580 |
|
|
|
51,456 |
|
Number of operating apartment homes (weighted average) (c)(d) |
|
|
51,277 |
|
|
|
53,132 |
|
|
|
55,850 |
|
|
|
55,056 |
|
|
|
47,118 |
|
Weighted average monthly total property revenue
per apartment home |
|
$ |
1,055 |
|
|
$ |
1,025 |
|
|
$ |
970 |
|
|
$ |
888 |
|
|
$ |
792 |
|
Properties under development (at end of period) |
|
|
5 |
|
|
|
11 |
|
|
|
11 |
|
|
|
9 |
|
|
|
3 |
|
|
|
|
(a) |
|
Excludes discontinued operations. |
|
(b) |
|
Management considers Funds from Operations (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 assist in the comparison of the operating performance of a companys real
estate between periods or as compared to different companies. |
|
(c) |
|
Includes discontinued operations. |
|
(d) |
|
Excludes apartment homes owned in joint ventures. |
|
(e) |
|
The 2005 results include the operations of Summit Properties Inc. subsequent to February 28, 2005. |
18
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; forward-looking statements are not guarantees of
future performances, results, or events. 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 which 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:
|
|
|
Volatility in capital and credit markets could adversely impact us; |
|
|
|
|
We could be negatively impacted by the condition of Fannie Mae or Freddie Mac; |
|
|
|
|
Unfavorable changes in economic conditions could adversely impact occupancy or
rental rates; |
|
|
|
|
We face risks associated with land holdings; |
|
|
|
|
Difficulties of selling real estate could limit our flexibility; |
|
|
|
|
Compliance or failure to comply with laws requiring access to our properties by
disabled persons could result in substantial cost; |
|
|
|
|
Competition could limit our ability to lease apartments or increase or maintain
rental income; |
|
|
|
|
Development and construction risks could impact our profitability; |
|
|
|
|
Our acquisition strategy may not produce the cash flows expected; |
|
|
|
|
Competition could adversely affect our ability to acquire properties; |
|
|
|
|
Losses from catastrophes may exceed our insurance coverage; |
|
|
|
|
Investments through joint ventures and partnerships involve risks not present in
investments in which we are the sole investor; |
|
|
|
|
We face risks associated with investments in and management of discretionary
funds; |
|
|
|
|
We depend on our key personnel; |
|
|
|
|
Changes in laws and litigation risks could affect our business; |
|
|
|
|
Tax matters, including failure to qualify as a REIT, could have adverse
consequences; |
|
|
|
|
Insufficient cash flows could limit our ability to make required payments for
debt obligations or pay distributions to shareholders; |
|
|
|
|
We have significant debt, which could have important adverse consequences; |
|
|
|
|
We may be unable to renew, repay, or refinance our outstanding debt; |
|
|
|
|
Variable rate debt is subject to interest rate risk; |
|
|
|
|
We may incur losses on interest rate hedging arrangements; |
|
|
|
|
Issuances of additional debt or equity may adversely impact our financial
condition; |
|
|
|
|
Failure to maintain current credit ratings could adversely affect our cost of
funds, related margins, liquidity, and access to capital markets; |
|
|
|
|
Share ownership limits and our ability to issue additional equity securities may
prevent takeovers beneficial to shareholders; |
|
|
|
|
Our share price will fluctuate; and |
|
|
|
|
We may reduce dividends on our equity securities or elect to pay a portion of
the dividend in common shares. |
These forward-looking statements represent our estimates and assumptions as of the date of
this report, and we assume no obligation to update or supplement forward-looking statements because
of subsequent events.
19
Unless the context requires otherwise, we, our, us, and the Company, refer to Camden
Property Trust and Camdens consolidated subsidiaries and partnerships, collectively.
Executive Summary
Our fiscal year 2008 results reflect the challenges the multifamily industry faced during the
year. During fiscal year 2008, the factors adversely affecting demand for and rents received in
our multifamily communities became more intense and pervasive across the United States. As a
result, the already difficult conditions within the industry became progressively more challenging.
High inventory levels of single-family homes and condominiums in the markets in which we operate,
overall weak consumer confidence, and fears of a prolonged recession, among other factors, have
persisted throughout fiscal year 2008. The effects of these factors have been further magnified by
credit tightening in the financial markets, increasing home foreclosures, and severe shortages of
liquidity in the financial markets.
Based on our results for fiscal year 2008, the deteriorating market conditions discussed
above, and our belief these conditions may not improve quickly, we expect negative growth in
property revenues during fiscal year 2009. Current factors which may negatively affect our future
performance include recent and expected future job losses, liquidity disruptions in the capital
markets, recessionary concerns, uncertainty in the financial markets, and a continued oversupply of
single-family homes and condominiums in many of the markets in which we operate. However, positive
impacts on our performance may result from reductions in the U.S. home ownership rate, more
stringent lending criteria for prospective home-buyers, and long-term growth prospects for
population, employment, and household formations in our markets, although there can be no assurance
any of these factors will continue or will positively impact our operating results.
Due to the instability experienced during the current economic downturn, we believe the timing
of an economic recovery is unclear and these conditions may not improve quickly. Our near term
primary focus is to strengthen our capital and liquidity position by selectively disposing of
properties, controlling and reducing construction and overhead costs, generating positive cash
flows from operations, and reducing outstanding debt and leverage ratios.
We intend to continue to look for opportunities to acquire existing communities through our
investment in and management of discretionary investment funds. Until the earlier of (i) December
31, 2011 or (ii) such time as 90% of its committed capital is invested, subject to two one-year
extensions, the Fund and the Co-Investment Vehicle will be our exclusive investment vehicles for
acquiring fully developed multifamily properties, subject to certain exceptions. Our portfolio of
apartment communities is geographically diverse, which we believe mitigates risks such as changes
in demographics or job growth which may occur within individual markets, although may not mitigate
such risks with respect to more wide spread economic declines. In the
long term, we also intend to
continue focusing on our development pipeline which currently contains twelve properties in various
stages of construction, lease-up, and pre-development. The commencement of future developments has
and may continue to be impacted by macroeconomic issues, increasing construction costs, and other
factors. We expect decreasing levels of development activity in 2009 as compared to prior years.
We review our assets for impairment on an annual basis or whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable. Our impairment
evaluations reflected our expectation of continued and increased challenges in the development of
future multifamily communities, our belief these challenges will persist for some time, and our
decision to not continue with five future development projects. Based on our evaluations, we
recorded significant impairment charges in the fourth quarter to our land valuations, which
materially affected our operating results during fiscal year 2008. Land valuations may continue to
have significant fluctuations due to, among other things, the current economic environment and, as
a result, there can be no assurance we will not have further impairments in the future.
The continuation of the current economic environment and capital market disruptions have and
could continue to have a negative impact on us and adversely affect our future results of
operations.
20
Property Portfolio
Our multifamily property portfolio, excluding land and joint venture properties which we do
not manage, is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008 |
|
|
December 31, 2007 |
|
|
|
Apartment |
|
|
|
|
|
|
Apartment |
|
|
|
|
|
|
Homes |
|
|
Properties |
|
|
Homes |
|
|
Properties |
|
Operating Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas, Nevada |
|
|
8,016 |
|
|
|
29 |
|
|
|
8,064 |
|
|
|
30 |
|
Houston, Texas |
|
|
6,620 |
|
|
|
16 |
|
|
|
6,346 |
|
|
|
15 |
|
Dallas, Texas |
|
|
6,119 |
|
|
|
15 |
|
|
|
7,225 |
|
|
|
18 |
|
Washington, D.C. Metro |
|
|
5,702 |
|
|
|
16 |
|
|
|
4,525 |
|
|
|
13 |
|
Tampa, Florida |
|
|
5,503 |
|
|
|
12 |
|
|
|
5,503 |
|
|
|
12 |
|
Charlotte, North Carolina |
|
|
3,574 |
|
|
|
15 |
|
|
|
3,574 |
|
|
|
15 |
|
Orlando, Florida |
|
|
3,557 |
|
|
|
9 |
|
|
|
3,296 |
|
|
|
8 |
|
Atlanta, Georgia |
|
|
3,202 |
|
|
|
10 |
|
|
|
3,202 |
|
|
|
10 |
|
Raleigh, North Carolina |
|
|
2,704 |
|
|
|
7 |
|
|
|
2,704 |
|
|
|
7 |
|
Southeast Florida |
|
|
2,520 |
|
|
|
7 |
|
|
|
2,520 |
|
|
|
7 |
|
Los Angeles/Orange County, California |
|
|
2,481 |
|
|
|
6 |
|
|
|
2,191 |
|
|
|
5 |
|
Phoenix, Arizona |
|
|
2,433 |
|
|
|
8 |
|
|
|
2,433 |
|
|
|
8 |
|
Denver, Colorado |
|
|
2,171 |
|
|
|
7 |
|
|
|
2,529 |
|
|
|
8 |
|
Austin, Texas |
|
|
2,106 |
|
|
|
7 |
|
|
|
2,778 |
|
|
|
9 |
|
San Diego/Inland Empire, California |
|
|
1,196 |
|
|
|
4 |
|
|
|
1,196 |
|
|
|
4 |
|
Other |
|
|
4,999 |
|
|
|
13 |
|
|
|
4,999 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Properties |
|
|
62,903 |
|
|
|
181 |
|
|
|
63,085 |
|
|
|
182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Properties Under Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston, Texas |
|
|
712 |
|
|
|
3 |
|
|
|
733 |
|
|
|
3 |
|
Washington, D.C. Metro |
|
|
366 |
|
|
|
1 |
|
|
|
1,543 |
|
|
|
4 |
|
Austin, Texas |
|
|
348 |
|
|
|
1 |
|
|
|
556 |
|
|
|
2 |
|
Los Angeles/Orange County, California |
|
|
|
|
|
|
|
|
|
|
290 |
|
|
|
1 |
|
Orlando, Florida |
|
|
|
|
|
|
|
|
|
|
261 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties Under Development |
|
|
1,426 |
|
|
|
5 |
|
|
|
3,383 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties |
|
|
64,329 |
|
|
|
186 |
|
|
|
66,468 |
|
|
|
193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Joint Venture Properties (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas, Nevada |
|
|
4,047 |
|
|
|
17 |
|
|
|
4,047 |
|
|
|
17 |
|
Houston,
Texas (2) |
|
|
2,199 |
|
|
|
7 |
|
|
|
1,946 |
|
|
|
6 |
|
Phoenix, Arizona |
|
|
992 |
|
|
|
4 |
|
|
|
992 |
|
|
|
4 |
|
Los Angeles/Orange County, California |
|
|
711 |
|
|
|
2 |
|
|
|
711 |
|
|
|
2 |
|
Austin, Texas |
|
|
601 |
|
|
|
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 |
|
|
13,071 |
|
|
|
44 |
|
|
|
12,217 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties Owned 100% |
|
|
51,258 |
|
|
|
142 |
|
|
|
54,251 |
|
|
|
152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Refer to Note 7, Investments in Joint Ventures, in the Notes to Consolidated Financial
Statements for further discussion of our joint venture investments. |
|
(2) |
|
Figures for 2008 include
Camden Travis Street, a fully-consolidated joint venture, of which we
retain a 25% ownership. |
21
Stabilized Communities
We generally consider a property stabilized once it reaches 90% occupancy. During the year
ended December 31, 2008, stabilization was achieved at five recently completed properties as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Date of |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Completion |
|
|
Stabilization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Old Creek
San Marcos, CA |
|
|
350 |
|
|
|
1Q07 |
|
|
|
1Q08 |
|
Camden Monument Place
Fairfax, VA |
|
|
368 |
|
|
|
4Q07 |
|
|
|
2Q08 |
|
Camden Plaza joint venture
Houston, TX |
|
|
271 |
|
|
|
3Q07 |
|
|
|
2Q08 |
|
City Centre
Houston, TX |
|
|
379 |
|
|
|
4Q07 |
|
|
|
3Q08 |
|
Camden Royal Oaks
Houston, TX |
|
|
236 |
|
|
|
3Q06 |
|
|
|
4Q08 |
|
Partial Sales and Dispositions to Joint Ventures Included in Continuing Operations
In March 2008, we sold Camden Amber Oaks, a development community in Austin, Texas, to the
Fund for approximately $8.9 million. No gain or loss was recognized on the sale. Concurrent with
the transaction, we invested approximately $1.9 million in the Fund. In August 2008, we sold Camden
South Congress to the Fund for approximately $44.2 million and recognized a gain of approximately
$1.8 million on the sale. In conjunction with the transaction, we invested approximately $2.8
million in the Fund.
There were no partial sales or dispositions to joint ventures for the year ended December 31,
2007.
During the year ended December 31, 2006, we recognized gains of approximately $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. 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. We also recognized gains of approximately $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. We recognized an additional gain of approximately $0.8 million on the sale of land
located adjacent to one of our pre-development assets in College Park, Maryland. The gain on this
sale was 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.
Discontinued Operations and Assets Held for Sale
We intend to maintain a long-term strategy of managing our invested capital through the
selective sale of properties and to utilize the proceeds to reduce our outstanding debt and
leverage ratios and 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, 2008. 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.
22
A summary of our 2008 dispositions and properties held for sale as of December 31, 2008 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Date of |
|
|
|
|
Property and Location |
|
Homes |
|
|
Disposition |
|
|
Year Built |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dispositions |
|
|
|
|
|
|
|
|
|
|
|
|
Camden Ridgeview
Austin, TX |
|
|
167 |
|
|
|
1Q08 |
|
|
|
1984 |
|
Camden Towne Village
Mesquite, TX |
|
|
188 |
|
|
|
2Q08 |
|
|
|
1983 |
|
Oasis Sands
Las Vegas, NV |
|
|
48 |
|
|
|
2Q08 |
|
|
|
1994 |
|
Camden Lakeview
Irving, TX |
|
|
476 |
|
|
|
3Q08 |
|
|
|
1985 |
|
Camden Arbors
Westminster, CO |
|
|
358 |
|
|
|
3Q08 |
|
|
|
1986 |
|
Camden Woodview
Austin, TX |
|
|
283 |
|
|
|
3Q08 |
|
|
|
1984 |
|
Camden Briar Oaks
Austin, TX |
|
|
430 |
|
|
|
3Q08 |
|
|
|
1980 |
|
Camden Place
Mesquite, TX |
|
|
442 |
|
|
|
3Q08 |
|
|
|
1984 |
|
Held for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
Camden West Oaks
Houston, TX |
|
|
671 |
|
|
|
n/a |
|
|
|
1982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total apartment homes sold and held for sale |
|
|
3,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended December 31, 2008, we received net proceeds of approximately $121.7
million and recognized gains of approximately $80.2 million from the sale of the eight operating
properties listed above to unaffiliated third parties. During the year ended December 31, 2007, we received net proceeds
of approximately $166.4 million and recognized gains of approximately $106.3 million from the sale
of ten operating properties, containing 3,054 apartment homes, to unaffiliated third parties.
During the year ended December 31, 2006, we received net proceeds of approximately $137.3 million
and recognized a gain of approximately $78.8 million on the sale of eight operating properties,
containing 3,041 apartment homes, to unaffiliated third parties.
During
the year ended December 31, 2008, we recognized gains of
approximately $1.1 million from the sale of land adjacent to our
regional office in Las Vegas, Nevada. The gain on this sale was not
included in discontinued operations as the operations and cash flows
of this asset were not clearly distinguished, operationally or for
reporting purposes, from the adjacent assets.
Upon our decision to abandon efforts to develop certain land parcels and to market these
parcels for sale, we reclassify the operating expenses associated with these assets to discontinued
operations. At December 31, 2008, we had undeveloped land parcels classified as held for sale as
follows:
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
Net Book |
|
Location |
|
Acres |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
Southeast Florida |
|
|
2.2 |
|
|
$ |
7.4 |
|
Dallas |
|
|
2.4 |
|
|
|
1.8 |
|
|
|
|
|
|
|
|
|
Total land held for sale |
|
|
|
|
|
$ |
9.2 |
|
|
|
|
|
|
|
|
|
There were no sales of undeveloped land during the year ended December 31, 2008. During the
year ended December 31, 2007, we sold undeveloped land totaling approximately 0.9 acres to
unrelated third parties. In connection with these sales, we received net proceeds of approximately
$6.0 million and recognized gains totaling approximately $0.7 million. During the year ended
December 31, 2006, we sold undeveloped land totaling approximately 8.7 acres to unrelated third
parties. In connection with these sales, we received net proceeds of approximately $41.0 million
and recognized gains totaling approximately $20.5 million.
23
Development and Lease-Up Properties
At December 31, 2008, we had five completed consolidated properties in lease-up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
% Leased |
|
|
|
|
|
|
Estimated |
|
($ in millions) |
|
Apartment |
|
|
Cost |
|
|
at |
|
|
Date of |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Incurred |
|
|
2/15/09 |
|
|
Completion |
|
|
Stabilization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Potomac Yard
Arlington, VA |
|
|
378 |
|
|
$ |
104.5 |
|
|
|
73 |
% |
|
|
2Q08 |
|
|
|
4Q09 |
|
Camden Orange Court
Orlando, FL |
|
|
261 |
|
|
|
45.5 |
|
|
|
65 |
% |
|
|
2Q08 |
|
|
|
3Q09 |
|
Camden Summerfield
Landover, MD |
|
|
291 |
|
|
|
62.6 |
|
|
|
78 |
% |
|
|
2Q08 |
|
|
|
4Q09 |
|
Camden Cedar Hills
Austin, TX |
|
|
208 |
|
|
|
23.6 |
|
|
|
88 |
% |
|
|
4Q08 |
|
|
|
2Q09 |
|
Camden Whispering Oaks
Houston, TX |
|
|
274 |
|
|
|
27.3 |
|
|
|
80 |
% |
|
|
4Q08 |
|
|
|
3Q09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,412 |
|
|
$ |
263.5 |
|
|
|
76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2008, we had two consolidated properties under 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 |
|
|
Camden Dulles Station
Oak Hill, VA |
|
|
366 |
|
|
$ |
77.0 |
|
|
$ |
71.4 |
|
|
$ |
14.4 |
|
|
|
1Q09 |
|
|
|
3Q10 |
|
Camden Travis Street (a)
Houston, TX |
|
|
253 |
|
|
|
39.0 |
|
|
|
9.3 |
|
|
|
9.3 |
|
|
|
1Q10 |
|
|
|
3Q10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
619 |
|
|
$ |
116.0 |
|
|
$ |
80.7 |
|
|
$ |
23.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Camden Travis Street is
owned in a fully-consolidated joint venture, of which we
retain a 25% ownership. |
Our consolidated balance sheet at December 31, 2008 included approximately $264.2 million
related to properties under development and land. Of this amount, approximately $23.7 million
related to projects currently under construction. Additionally, at December 31, 2008, we had
approximately $184.3 million invested in land for projects we may begin constructing in the future
and approximately $56.2 million invested primarily in land tracts in which future development activities have
been put on hold.
24
At
December 31, 2008, we had investments in non-consolidated joint ventures which were developing the following
multifamily communities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Total |
|
($ in millions) |
|
|
|
|
|
Apartment |
|
|
Estimated |
|
|
Cost |
|
Property and Location |
|
Ownership % |
|
|
Homes |
|
|
Cost |
|
|
Incurred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completed Communities (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Main & Jamboree
Irvine, CA |
|
|
30 |
% |
|
|
290 |
|
|
|
N/A |
|
|
$ |
110.1 |
|
Camden College Park
College Park, MD |
|
|
30 |
% |
|
|
508 |
|
|
|
N/A |
|
|
|
125.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completed Communities Total |
|
|
|
|
|
|
798 |
|
|
|
|
|
|
$ |
235.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Braeswood Place (1) (2)
Houston, TX |
|
|
30 |
% |
|
|
340 |
|
|
$ |
48.6 |
|
|
$ |
41.1 |
|
Belle Meade (2)
Houston, TX |
|
|
30 |
% |
|
|
119 |
|
|
|
33.2 |
|
|
|
20.0 |
|
Camden Amber Oaks (1)
Austin, TX |
|
|
20 |
% |
|
|
348 |
|
|
|
40.0 |
|
|
|
32.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Construction Total |
|
|
|
|
|
|
807 |
|
|
$ |
121.8 |
|
|
$ |
93.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Development (3) |
|
|
|
|
|
Total Acres |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lakes at 610
Houston, TX |
|
|
30 |
% |
|
|
6.1 |
|
|
|
N/A |
|
|
$ |
6.4 |
|
Town Lake
Austin, TX |
|
|
72 |
% |
|
|
25.9 |
|
|
|
N/A |
|
|
|
37.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Development Total |
|
|
|
|
|
|
32.0 |
|
|
|
|
|
|
$ |
44.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Properties in lease-up as of December 31, 2008. |
|
(2) |
|
Properties being developed by joint venture partner. |
|
(3) |
|
Properties in pre-development by joint venture partner. |
Refer to Note 7, Investments in Joint Ventures in the Notes to Consolidated Financial
Statements for further discussion of our joint venture investments.
25
Geographic Diversification
At December 31, 2008 and 2007, our investments in various geographic areas, excluding
depreciation, investments in joint ventures, and properties held for sale, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington, D.C. Metro |
|
$ |
1,219,866 |
|
|
|
22.4 |
% |
|
$ |
1,196,451 |
|
|
|
21.8 |
% |
Southeast Florida |
|
|
446,629 |
|
|
|
8.2 |
|
|
|
444,645 |
|
|
|
8.1 |
|
Houston, Texas |
|
|
377,041 |
|
|
|
6.9 |
|
|
|
374,177 |
|
|
|
6.8 |
|
Dallas, Texas |
|
|
337,890 |
|
|
|
6.2 |
|
|
|
372,075 |
|
|
|
6.8 |
|
Tampa, Florida |
|
|
386,816 |
|
|
|
7.1 |
|
|
|
370,379 |
|
|
|
6.7 |
|
Los Angeles/Orange County, California |
|
|
330,849 |
|
|
|
6.1 |
|
|
|
346,452 |
|
|
|
6.3 |
|
Orlando, Florida |
|
|
364,379 |
|
|
|
6.7 |
|
|
|
336,768 |
|
|
|
6.1 |
|
Atlanta, Georgia |
|
|
319,047 |
|
|
|
5.8 |
|
|
|
316,733 |
|
|
|
5.8 |
|
Las Vegas, Nevada |
|
|
321,782 |
|
|
|
5.9 |
|
|
|
314,609 |
|
|
|
5.7 |
|
Charlotte, North Carolina |
|
|
316,387 |
|
|
|
5.8 |
|
|
|
312,760 |
|
|
|
5.7 |
|
Raleigh, North Carolina |
|
|
237,023 |
|
|
|
4.3 |
|
|
|
235,263 |
|
|
|
4.3 |
|
San Diego/Inland Empire, California |
|
|
226,556 |
|
|
|
4.1 |
|
|
|
225,769 |
|
|
|
4.1 |
|
Austin, Texas |
|
|
159,897 |
|
|
|
2.9 |
|
|
|
221,807 |
|
|
|
4.1 |
|
Denver, Colorado |
|
|
186,292 |
|
|
|
3.4 |
|
|
|
202,962 |
|
|
|
3.7 |
|
Phoenix, Arizona |
|
|
118,003 |
|
|
|
2.2 |
|
|
|
117,092 |
|
|
|
2.1 |
|
Other |
|
|
107,377 |
|
|
|
2.0 |
|
|
|
105,742 |
|
|
|
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
5,455,834 |
|
|
|
100.0 |
% |
|
$ |
5,493,684 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of Operations
Changes in revenues and expenses related to our operating properties from period to period are
due primarily to the performance of stabilized properties in the portfolio, the lease-up of newly
constructed properties, acquisitions, and dispositions. Where appropriate, comparisons of income
and expense on communities included in continuing operations are made on a dollars-per-weighted
average apartment home basis in order to adjust for such changes in the number of apartment homes
owned during each period. Selected weighted averages for the years ended December 31 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
Average monthly property revenue per apartment home |
|
$ |
1,055 |
|
|
$ |
1,025 |
|
|
$ |
970 |
|
Annualized total property expenses per apartment home |
|
$ |
4,845 |
|
|
$ |
4,544 |
|
|
$ |
4,370 |
|
Weighted average number of operating apartment homes owned 100% |
|
|
49,312 |
|
|
|
47,832 |
|
|
|
48,200 |
|
Weighted average occupancy of operating apartment homes owned 100% |
|
|
93.8 |
% |
|
|
93.7 |
% |
|
|
95.1 |
% |
26
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, 2008 as compared to 2007 and for
the year ended December 31, 2007 as compared to 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Year Ended |
|
|
|
|
|
|
Homes |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
at 12/31/08 |
|
|
2008 |
|
|
2007 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
40,340 |
|
|
$ |
498,875 |
|
|
$ |
491,736 |
|
|
$ |
7,139 |
|
|
|
1.5 |
% |
Non-same store communities |
|
|
8,469 |
|
|
|
108,184 |
|
|
|
88,925 |
|
|
|
19,259 |
|
|
|
21.7 |
|
Development and lease-up communities |
|
|
2,031 |
|
|
|
9,444 |
|
|
|
81 |
|
|
|
9,363 |
|
|
|
* |
|
Dispositions/other |
|
|
|
|
|
|
7,513 |
|
|
|
7,577 |
|
|
|
(64 |
) |
|
|
(0.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
|
50,840 |
|
|
$ |
624,016 |
|
|
$ |
588,319 |
|
|
$ |
35,697 |
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
40,340 |
|
|
$ |
188,644 |
|
|
$ |
180,277 |
|
|
$ |
8,367 |
|
|
|
4.6 |
% |
Non-same store communities |
|
|
8,469 |
|
|
|
40,395 |
|
|
|
33,444 |
|
|
|
6,951 |
|
|
|
20.8 |
|
Development and lease-up communities |
|
|
2,031 |
|
|
|
5,694 |
|
|
|
140 |
|
|
|
5,554 |
|
|
|
* |
|
Dispositions/other |
|
|
|
|
|
|
4,182 |
|
|
|
3,489 |
|
|
|
693 |
|
|
|
19.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
50,840 |
|
|
$ |
238,915 |
|
|
$ |
217,350 |
|
|
$ |
21,565 |
|
|
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Not a meaningful percentage |
Same store communities are communities we owned and were stabilized as of January 1, 2007. Non-same
store communities are stabilized communities we have acquired, developed, or re-developed after
January 1, 2007. Development and lease-up communities are non-stabilized communities we have
acquired or developed after January 1, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Year Ended |
|
|
|
|
|
|
Homes |
|
|
December 31, |
|
|
Change |
|
|
|
at 12/31/07 |
|
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
39,417 |
|
|
$ |
479,015 |
|
|
$ |
460,758 |
|
|
$ |
18,257 |
|
|
|
4.0 |
% |
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 |
|
|
51,188 |
|
|
$ |
588,319 |
|
|
$ |
561,029 |
|
|
$ |
27,290 |
|
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
39,417 |
|
|
$ |
175,189 |
|
|
$ |
171,320 |
|
|
$ |
3,869 |
|
|
|
2.3 |
% |
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 |
|
|
51,188 |
|
|
$ |
217,350 |
|
|
$ |
210,621 |
|
|
$ |
6,729 |
|
|
|
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, developed, or re-developed
after January 1, 2006. Development and lease-up communities are non-stabilized communities we have
developed or acquired after January 1, 2006.
27
Same store analysis
Our same store property revenues for the year ended December 31, 2008 increased approximately
$7.1 million, or 1.5%, from 2007 resulting primarily from increases in other property income,
partially offset by a decline in rental revenues due to slight declines in average occupancy and
average rental rates for our same store portfolio. Same store property revenues for the year ended
December 31, 2007 increased approximately $18.3 million, or 4.0%, from 2006 primarily from
increases in other property income and higher average rental income per apartment home, partially
offset by declines in occupancy.
Same store property revenues for 2008 as compared to 2007 were positively impacted by
increases in other property income due to the continued implementation of the Perfect Connection
(also known as CamdenTV) in 2008, which provides cable services to our residents, and other utility
rebilling programs. The increase in other property income was
partially offset by a decrease in
average rental rates, as we experienced rental rate decreases primarily as a result of the
challenges we and the multifamily industry faced throughout the year, which are discussed in detail
in the Executive Summary. Average total occupancy at our same store properties declined in 2008
as we experienced decreases in occupancy in a majority of our markets. We believe our operating
performance during the current market environment benefited from 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 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, and other utility
rebilling programs. Our same store communities recognized an overall increase in average rental
rates, and we experienced rental rate increases in all markets. The increase in average rental
rates in 2007 was a result of moderate improvements in fundamentals such as job growth, population
growth, and household formations. Average occupancy at our same store properties declined less
than 1% in 2007, as we had slight decreases in occupancy in a majority of our markets.
Total property expenses from our same store communities increased approximately $8.4 million,
or 4.6%, and approximately $3.9 million, or 2.3%, for the year ended December 31, 2008 as compared
to 2007 and for the year ended December 31, 2007 as compared to 2006, respectively. The increases
in same store property expenses per apartment home of $207 for the year ended December 31, 2008 as
compared to 2007 were primarily due to increases in utility expenses in connection with our utility
rebilling programs and real estate taxes. Real estate taxes increased primarily due to increases
in appraisals and taxation rates. The increase for the year ended December 31, 2007 as compared to
2006 was primarily due to increases in repair and maintenance costs
as well as utility expenses in connection with our utility rebilling
programs.
Non-same store analysis and other analysis
Property revenues from non-same store and development and lease-up communities increased
approximately $28.6 million for the year ended December 31, 2008 as compared to 2007 and increased
approximately $28.9 million for the year ended December 31, 2007 as compared to 2006. The
increases in both periods were primarily due to the completion and lease-up of certain properties
in our development pipeline as well as property acquisitions in 2007 and 2006. See Development and
Lease-Up Properties for additional detail of occupancy at properties in our development pipeline.
Property expenses from non-same store and development and lease-up communities increased
approximately $12.5 million for the year ended December 31, 2008 as compared to 2007 and
approximately $12.3 million for 2007 as compared to 2006. The increases in both periods were due
to the completion and lease-up of properties in our development pipeline as well as acquisitions
completed in 2007 and 2006.
Property revenues from dispositions/other decreased approximately $0.1 million and
approximately $19.9 million for the year ended December 31, 2008 as compared to 2007 and for the
year ended December 31, 2007 as compared to 2006, respectively. The decrease for the year ended
December 31, 2007 primarily related to properties partially sold
to joint ventures.
Property expenses from dispositions/other increased approximately $0.7 million and decreased
approximately $9.4 million for the year ended December 31, 2008 as compared to 2007 and for the
year ended December 31, 2007 as compared to 2006, respectively. The increase for the year ended
December 31, 2008 as compared to December 31, 2007 primarily related to insurance costs related to
Hurricane Ike. Refer to Note 14, Commitments and Contingencies, in the Notes to Consolidated
Financial Statements for further discussion. The decrease for the year ended December 31, 2007 as
compared to December 31, 2006 primarily related to properties
partially sold to joint ventures.
28
Non-property income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2008 |
|
|
2007 |
|
|
$ |
|
|
% |
|
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee and asset management |
|
$ |
9,167 |
|
|
$ |
8,293 |
|
|
$ |
874 |
|
|
|
10.5 |
% |
|
$ |
8,293 |
|
|
$ |
14,041 |
|
|
$ |
(5,748 |
) |
|
|
(40.9 |
)% |
Sale of technology investments |
|
|
|
|
|
|
623 |
|
|
|
(623 |
) |
|
|
(100.0 |
) |
|
|
623 |
|
|
|
1,602 |
|
|
|
(979 |
) |
|
|
(61.1 |
) |
Interest and other income |
|
|
4,736 |
|
|
|
8,804 |
|
|
|
(4,068 |
) |
|
|
(46.2 |
) |
|
|
8,804 |
|
|
|
9,771 |
|
|
|
(967 |
) |
|
|
(9.9 |
) |
Income (loss) on deferred compensation
plans |
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
(40,725 |
) |
|
|
* |
|
|
|
7,282 |
|
|
|
10,116 |
|
|
|
(2,834 |
) |
|
|
(28.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-property income (loss) |
|
$ |
(19,540 |
) |
|
$ |
25,002 |
|
|
$ |
(44,542 |
) |
|
|
(178.2 |
)% |
|
$ |
25,002 |
|
|
$ |
35,530 |
|
|
$ |
(10,528 |
) |
|
|
(29.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
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, 2008 increased
approximately $0.9 million as compared to 2007 and decreased approximately $5.7 million for the
year ended December 31, 2007 as compared to 2006. Growth was relatively flat for 2008 as compared
to 2007 due to decreased third-party construction activities in 2008, partially offset by increases
in management fees earned from the Fund. The decrease in 2007 as compared to 2006 was primarily
due to increased fees earned from joint ventures and third-party construction and development
projects in 2006 as compared to 2007 as these 2006 projects were winding down in 2007 and were not
replaced with additional projects.
Interest and other income decreased approximately $4.1 million for 2008 as compared to 2007
and decreased approximately $1.0 million for 2007 as compared to 2006. Interest income, which
primarily relates to interest earned on notes receivable outstanding under our mezzanine financing
program, decreased approximately $0.8 million for 2008 as compared to 2007 and increased
approximately $0.6 million for 2007 as compared to 2006. The decrease for 2008 as compared to 2007
was primarily due to contractual reductions in interest rates related to mezzanine loans for
development communities which have reached stabilization, reductions in interest earned on variable
rate notes due to reductions in the London Interbank Offered Rate (LIBOR), and principal payments
received in 2008. The increase for 2007 as compared to 2006 was primarily due to new notes issued
during the latter part of 2006 of approximately $9.1 million.
Other income decreased approximately $3.3 million for
2008 as compared to 2007 and decreased approximately $1.6 million for 2007 as compared to 2006.
Other income primarily represents income recognized upon the settlement of legal, insurance and
warranty claims, and contract disputes. In 2007, other income included approximately $3.3 million
related to settlement of a contract dispute.
Income on deferred compensation plans decreased approximately $40.7 million during the year
ended December 31, 2008 as compared to 2007 and decreased approximately $2.8 million during the
year ended December 31, 2007 as compared to 2006. The changes in income primarily related to the
performance of the assets held in the deferred compensation plans for plan participants, which is
subject to fluctuations in the financial markets.
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2008 |
|
|
2007 |
|
|
$ |
|
|
% |
|
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
Property management |
|
$ |
19,910 |
|
|
$ |
18,413 |
|
|
$ |
1,497 |
|
|
|
8.1 |
% |
|
$ |
18,413 |
|
|
$ |
18,490 |
|
|
$ |
(77 |
) |
|
|
(0.4 |
)% |
Fee and asset management |
|
|
6,054 |
|
|
|
4,552 |
|
|
|
1,502 |
|
|
|
33.0 |
|
|
|
4,552 |
|
|
|
9,382 |
|
|
|
(4,830 |
) |
|
|
(51.5 |
) |
General and administrative |
|
|
31,586 |
|
|
|
32,590 |
|
|
|
(1,004 |
) |
|
|
(3.1 |
) |
|
|
32,590 |
|
|
|
37,584 |
|
|
|
(4,994 |
) |
|
|
(13.3 |
) |
Interest |
|
|
132,399 |
|
|
|
115,753 |
|
|
|
16,646 |
|
|
|
14.4 |
|
|
|
115,753 |
|
|
|
117,348 |
|
|
|
(1,595 |
) |
|
|
(1.4 |
) |
Depreciation and amortization |
|
|
171,814 |
|
|
|
157,297 |
|
|
|
14,517 |
|
|
|
9.2 |
|
|
|
157,297 |
|
|
|
149,206 |
|
|
|
8,091 |
|
|
|
5.4 |
|
Amortization of deferred financing costs |
|
|
2,958 |
|
|
|
3,661 |
|
|
|
(703 |
) |
|
|
(19.2 |
) |
|
|
3,661 |
|
|
|
3,782 |
|
|
|
(121 |
) |
|
|
(3.2 |
) |
Expense (benefit) on deferred
compensation plans |
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
(40,725 |
) |
|
|
* |
|
|
|
7,282 |
|
|
|
10,116 |
|
|
|
(2,834 |
) |
|
|
(28.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-property expenses |
|
$ |
331,278 |
|
|
$ |
339,548 |
|
|
$ |
(8,270 |
) |
|
|
(2.4 |
)% |
|
$ |
339,548 |
|
|
$ |
345,908 |
|
|
$ |
(6,360 |
) |
|
|
(1.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Not a meaningful percentage |
Property management expense, which represents regional supervision and accounting costs
related to property operations, increased approximately $1.5 million for the year ended December
31, 2008 as compared to 2007 and decreased approximately $0.1 million for 2007 as compared to 2006.
Property management expenses were 3.2%, 3.1%, and 3.3% of total property revenues for the years
ended December 31, 2008, 2007, and 2006, respectively.
29
Fee and asset management expense, which represents expenses related to third-party
construction and development projects and property management, increased approximately $1.5 million
for 2008 as compared to 2007 and decreased approximately $4.8 million for 2007 as compared to 2006.
The increase for 2008 as compared to 2007 was primarily attributable to increased costs associated
with the Fund partially offset by decreases in our third-party construction activities. The
decrease for 2007 as compared to 2006 is primarily attributable to decreased third-party
activities, offset by costs associated with the Fund which was formed in the latter part of 2007.
General and administrative expenses decreased approximately $1.0 million during the year ended
December 31, 2008 as compared to 2007 and decreased approximately $5.0 million during the year
ended December 31, 2007 as compared to 2006, and were 5.0%, 5.4%, and 6.4% of total revenues,
excluding income or loss on deferred compensation plans, for the years ended December 31, 2008,
2007, and 2006, respectively. The decreases in general and administrative expenses for the year
ended December 31, 2008 as compared to 2007 and for December 31, 2007 as compared to 2006 were
primarily due to decreases in salaries, incentive compensation, and legal expenses. Additionally,
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.
Interest expense for the year ended 2008 increased approximately $16.6 million as compared to
2007 primarily due to the repurchase of common shares using debt proceeds, the timing of
refinancing portions of our long-term indebtedness at higher rates, and decreased capitalized
interest, partially offset by decreased amounts outstanding on our line of credit, our repurchases
and early retirement of outstanding debt, and a decline in interest rates on our floating rate
debt, Refer to Note 9, Notes Payable, in the Notes to Consolidated Financial Statements for
further discussion of our debt repurchases and retirements. Interest expense for the year ended
2007 decreased approximately $1.6 million as compared to 2006. Factors contributing to the
decrease in interest expense in 2007 as compared to 2006 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 approximately
$2.0 million in 2007 as compared to 2006.
Depreciation and amortization expense increased approximately $14.5 million during the year
ended December 31, 2008 as compared to 2007 and increased approximately $8.1 million during the
year ended December 31, 2007 as compared to 2006. The increases were primarily due to an increased
level of new development and capital improvements placed in service each year as compared to the
previous year, partially offset by dispositions.
Amortization of deferred financing costs decreased $0.7 million and $0.1 million during the
years ended December 31, 2008, and 2007, respectively. The decrease for fiscal year 2008 was due
to certain deferred financing costs becoming fully amortized.
Expense on deferred compensation plans decreased approximately $40.7 million during the year
ended December 31, 2008 as compared to 2007 and decreased approximately $2.8 million during the
year ended December 31, 2007 as compared to 2006. The changes in expense primarily related to the
performance of the assets held in the deferred compensation plans for plan participants, which is
subject to fluctuations in the financial markets.
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2008 |
|
|
2007 |
|
|
$ |
|
|
% |
|
|
2007 |
|
|
2006 |
|
|
$ |
|
|
% |
|
|
Gain on sale of properties, including
land |
|
$ |
2,929 |
|
|
$ |
|
|
|
$ |
2,929 |
|
|
|
100.0 |
% |
|
$ |
|
|
|
$ |
97,452 |
|
|
$ |
(97,452 |
) |
|
|
(100.0 |
)% |
Gain on early retirement of debt |
|
|
13,566 |
|
|
|
|
|
|
|
13,566 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss on land |
|
|
(51,323 |
) |
|
|
(1,447 |
) |
|
|
(49,876 |
) |
|
|
* |
|
|
|
(1,447 |
) |
|
|
|
|
|
|
(1,447 |
) |
|
|
(100.0 |
) |
Equity in income (loss) of joint ventures |
|
|
(1,265 |
) |
|
|
1,526 |
|
|
|
(2,791 |
) |
|
|
(182.9 |
) |
|
|
1,526 |
|
|
|
5,156 |
|
|
|
(3,630 |
) |
|
|
(70.4 |
) |
Distributions on perpetual preferred
units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
|
|
|
|
|
|
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
|
|
|
|
|
|
Income allocated to common units and
other minority interests |
|
|
(4,052 |
) |
|
|
(4,729 |
) |
|
|
677 |
|
|
|
14.3 |
|
|
|
(4,729 |
) |
|
|
(15,685 |
) |
|
|
10,956 |
|
|
|
69.9 |
|
Income tax expense current |
|
|
(843 |
) |
|
|
(3,052 |
) |
|
|
2,209 |
|
|
|
72.4 |
|
|
|
(3,052 |
) |
|
|
|
|
|
|
(3,052 |
) |
|
|
(100.0 |
) |
|
|
|
* |
|
Not a meaningful percentage |
30
Gain on sale of properties, including land, totaled approximately $2.9 million for the year
ended December 31, 2008 due to gains on the partial sale of properties to the Fund and a gain on
the sale of a land parcel in Las Vegas, Nevada to an unaffiliated third-party. There was no gain
on sale of properties, including land, for the year ended December 31, 2007. Gain on sale of
properties, including land, for the year ended December 31, 2006 included gains of approximately
$91.5 million from the partial sale of nine operating properties to an affiliated joint venture and
approximately $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 approximately $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.
Gain on early retirement of debt was approximately $13.6 million for the year ended December
31, 2008. These gains were the result of various repurchases and
retirements of debt, and included a
tender offer for certain series of outstanding debt, which resulted in the repurchase and
retirement of approximately $108.3 million of debt from unrelated third parties for approximately
$100.6 million. In addition to the tender offer, we repurchased and retired approximately $82.7
million of various series of other outstanding debt from unrelated third parties for approximately
$75.7 million during the year ended December 31, 2008. These gains were partially offset by the
proportionate share of unamortized loan costs and other costs associated with the retirement of the
debt.
The impairment loss on land for the year ended December 31, 2008 of approximately
$51.3 million reflects impairments in the value of land holdings for several potential development
projects we no longer plan to pursue, including approximately $48.6 million related to land
holdings for five projects we no longer plan to develop, approximately $1.6 million in the value of
a land parcel held for future development, and approximately $1.1 million for costs capitalized for
a potential joint venture development we no longer plan to pursue. The impairment loss on land for
the year ended December 31, 2007 of approximately $1.4 million reflects impairment in the value of
one potential development project we no longer plan to pursue. These impairment charges are the
difference between each parcels estimated fair value and the carrying value, which includes
pursuit and other costs.
Equity in income (loss) of joint ventures decreased approximately $2.8 million for the year
ended December 31, 2008 as compared to 2007, and decreased approximately $3.6 million for the year
ended December 31, 2007 as compared to 2006. Changes from period to period were due to changes in
the number of properties held through joint ventures, and the development dilution we are
experiencing on the completion of units in our joint venture development pipeline, which resulted
in depreciation and interest expense recorded exceeding income recognized as these properties have
not reached stabilization. We recognized approximately $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.
Income allocated to common units and other minority interests decreased approximately $0.7
million during the year ended December 31, 2008 as compared to 2007 and decreased approximately
$11.0 million during the year ended December 31, 2007 as compared to 2006. Income allocated to
common units in 2006 included the impact of gains recognized on the partial sale of eight
properties to an affiliated 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.
For the tax year ended December 31, 2008, we had current income tax expense of approximately
$0.8 million. Income tax expense decreased $2.2 million for the year ended December 31, 2008 as
compared to the same period in 2007, primarily attributable to less
gains on property dispositions in states with high income tax rates
and changes in state tax laws affecting
one of 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.
31
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 Income and Comprehensive Income 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, 2008, 2007, and
2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Funds from operations |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
$ |
232,846 |
|
Real estate depreciation and amortization, including discontinued operations |
|
|
171,009 |
|
|
|
161,064 |
|
|
|
157,233 |
|
Adjustments for unconsolidated joint ventures (1) |
|
|
7,103 |
|
|
|
4,934 |
|
|
|
478 |
|
Gain on sale of properties, including land and discontinued operations, net
of |
|
|
(83,117 |
) |
|
|
(105,098 |
) |
|
|
(170,304 |
) |
Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Income allocated to common units, including discontinued operations |
|
|
3,617 |
|
|
|
17,796 |
|
|
|
17,537 |
|
|
|
|
|
|
|
|
|
|
|
Funds from operations diluted |
|
$ |
169,585 |
|
|
$ |
227,153 |
|
|
$ |
237,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares basic |
|
|
55,272 |
|
|
|
58,135 |
|
|
|
56,660 |
|
Incremental shares issuable from assumed conversion of: |
|
|
|
|
|
|
|
|
|
|
|
|
Common share options and awards granted |
|
|
114 |
|
|
|
482 |
|
|
|
725 |
|
Common units |
|
|
3,142 |
|
|
|
3,503 |
|
|
|
3,868 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares diluted |
|
|
58,528 |
|
|
|
62,120 |
|
|
|
61,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjustment for 2006 includes approximately $2.8 million in gains recognized on sales of
properties held in joint ventures. 2006 adjustment is net of approximately $0.5 million in
prepayment penalties incurred with the repayment of mortgage notes directly associated with
the sold properties. |
Liquidity and Capital Resources
Financial Condition and Sources of Liquidity
We intend to maintain a strong balance sheet and preserve our financial flexibility, which we
believe should enhance 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:
|
|
|
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; |
|
|
|
maintaining conservative coverage ratios; and |
|
|
|
using what management believes to be a prudent combination of debt and common and
preferred equity. |
Our interest expense coverage ratio, net of capitalized interest, was 2.6, 3.0, and 2.9 times
for the years ended December 31, 2008, 2007, and 2006, respectively. Our interest expense coverage
ratio is calculated by dividing interest expense for the period into
the sum of property revenues and expenses, non-property income, other
expenses, income from
discontinued operations, depreciation, amortization, and interest expense. At December
31, 2008, 2007, and 2006, 78.3%, 81.6%, and 80.5%, respectively, of our properties (based on
invested capital) were unencumbered. Our weighted average maturity of debt, excluding our line of
credit, was 5.0 years at December 31, 2008.
Due to the instability experienced during the current economic downturn, we believe the timing
of an economic recovery is unclear and these conditions may not improve quickly. Our near term
primary focus is to strengthen our capital and liquidity position by selectively disposing of
properties, controlling and reducing
construction and overhead costs, generating positive cash flows from operations, and reducing
outstanding debt and leverage ratios.
32
Our primary source of liquidity is cash flow generated from operations. Other sources include
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. We believe
our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash
flow needs during 2009 including:
|
|
|
normal recurring operating expenses; |
|
|
|
current debt service requirements; |
|
|
|
recurring capital expenditures; |
|
|
|
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. |
Factors which could increase or decrease our future liquidity include but are not limited to
current volatility in capital and credit markets, sources of financing, completion of planned asset
sales, the effect our debt level and decreases in credit ratings could have on our costs of funds
and our ability to access capital markets, and changes in operating costs resulting from a weakened
economy, which could also impact occupancy and rental rates and ultimately impact our planned
growth of capital.
Cash Flows
Certain sources and uses of cash, such as the level of discretionary capital expenditures,
repurchases of debt and common shares, and distributions paid on our equity securities are within
our control and are adjusted as necessary based upon market conditions. The following is a
discussion of our cash flows for the years ended December 31, 2008 and 2007.
Net cash provided by operating activities was approximately $217.0 million during the year
ended December 31, 2008 as compared to approximately $223.1 million for the same period in 2007.
The decrease was primarily due to increased interest payments on our levels of outstanding debt,
timing of payments of trade payables and receivables, offset by growth in revenues from our same
store, non-same store, and development communities.
Cash flows used in investing activities during the year ended December 31, 2008 totaled
approximately $37.4 million, as compared to approximately $346.8 million during the year ended
December 31, 2007. Cash outflows for property development, acquisition, and capital improvements
were approximately $199.3 million during 2008 as compared to approximately $500.8 million during
2007. Proceeds received from sales of properties, sales of assets to joint ventures, joint venture
distributions representing returns of investments, and sale of technology investments totaled
approximately $177.1 million for the year ended December 31, 2008 as compared to approximately
$178.9 million for the year ended December 31, 2007.
Net cash used in financing activities totaled approximately $173.1 million for the year ended
December 31, 2008, primarily as a result of approximately $379.2 million in repayment of
outstanding notes payable. The repayment consisted of approximately $100.6 million of outstanding
notes payable related to our December 2008 tender offer, repurchase and retirement of approximately
$75.7 million of various series of other outstanding debt, and repayment of approximately $201.9
million of maturing secured notes payable. See Note 9 of the Notes to Consolidated Financial
Statements, Notes Payable, for further discussion. Net cash used in financing activities was
also attributable to distributions paid to shareholders and minority interest holders of
approximately $172.3 million and approximately $33.1 million of common share repurchases, offset by
proceeds from notes payable and increases in our unsecured line of credit of approximately $385.9
million and $30.0 million, respectively. Net cash provided by financing activities totaled
approximately $123.6 million for the year ended December 31, 2007, primarily as a result of
approximately $808.0 million in proceeds from notes payable, offset by repayment of balances
outstanding on our line of credit of approximately $91.0 million, payments of approximately $213.4
million related to the payoff of two senior unsecured notes and one mortgage note, approximately
$200.5 million of common share repurchases, and distributions paid to shareholders and minority
interest holders of approximately $178.1 million.
33
Financial Flexibility
We have a $600 million unsecured credit facility which matures in January 2010 and can be
extended at our option through January 2011. 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 believe
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, 2008, we had outstanding letters of
credit totaling approximately $10.5 million, and had approximately $444.5 million available under
our unsecured line of credit.
As an alternative to our unsecured line of credit, from time to time we 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.
We have an automatic shelf registration statement on file with the Securities and Exchange
Commission which allows us to offer, from time to time, common shares, preferred shares, debt
securities, or warrants. Our declaration of trust provides 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, 2008, we had 66,027,911 common shares and no preferred shares outstanding.
We believe our ability to access capital markets is enhanced by our senior unsecured debt
ratings by Moodys and Standard and Poors, which are currently Baa1 and BBB+, respectively, as
well as the ability to borrow on a secured basis from Fannie Mae or Freddie Mac. However, we may
not be able to maintain our current credit ratings and may not be able to borrow on a secured or unsecured
basis in the future. The capital and credit markets have been experiencing extreme volatility and
disruption, which has caused the spreads on prospective debt financings to widen considerably and
have made it more difficult to borrow money. If current levels of market disruption and volatility
continue or worsen, we may not be able to obtain new debt financing or refinance our existing debt
on favorable terms or at all.
Future Cash Requirements and Contractual Obligations
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 2009 approximately $3.9 million of secured mortgage notes and approximately
$130.5 million of unsecured debt, including scheduled principal amortizations, are
scheduled to mature. See Note 9 of the Notes to Consolidated Financial Statements, Notes
Payable, for further discussion of scheduled maturities. Additionally, as of December 31, 2008,
we had several current development projects in various stages of construction, for which a total
estimated cost of approximately $63.4 million remained to be funded; we anticipate funding
approximately $6 million of these costs through our unsecured line of credit and the remaining
approximate $57 million from existing joint venture construction loans. We intend to meet our
long-term liquidity requirements through the use of cash flows from operations, draws on our
unsecured credit facility, property dispositions, secured mortgage notes, and debt and equity
offerings under our automatic shelf registration statement.
In order for us to continue to qualify as a REIT 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 gains. In November 2008, we announced our Board of
Trust Managers had declared a dividend distribution of $0.70 per
share to our common shareholders of record as of
December 4, 2008. The dividend was subsequently paid on January 2, 2009. 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 $2.80 per share or unit.
34
The following table summarizes our known contractual cash obligations as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Total |
|
|
2009 |
|
|
2010 |
|
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
Thereafter |
|
Debt maturities (1) |
|
$ |
2,832.4 |
|
|
$ |
134.4 |
|
|
$ |
355.5 |
|
|
$ |
421.7 |
|
|
$ |
772.2 |
|
|
$ |
227.2 |
|
|
$ |
921.4 |
|
Interest payments (2) |
|
|
658.6 |
|
|
|
136.6 |
|
|
|
121.9 |
|
|
|
101.5 |
|
|
|
89.2 |
|
|
|
54.6 |
|
|
|
154.8 |
|
Capital contributions to Fund (3) |
|
|
32.8 |
|
|
|
32.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cancelable lease payments |
|
|
14.9 |
|
|
|
2.5 |
|
|
|
2.5 |
|
|
|
2.4 |
|
|
|
2.0 |
|
|
|
1.9 |
|
|
|
3.6 |
|
Postretirement benefit obligations |
|
|
3.0 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
2.0 |
|
Construction contracts |
|
|
63.4 |
|
|
|
61.5 |
|
|
|
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,605.1 |
|
|
$ |
368.0 |
|
|
$ |
482.0 |
|
|
$ |
525.8 |
|
|
$ |
863.6 |
|
|
$ |
283.9 |
|
|
$ |
1,081.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes our line of credit and scheduled principal amortizations. |
|
(2) |
|
Includes contractual interest payments for our line of credit, senior unsecured notes,
medium-term notes, and secured notes. Interest payments on hedged loans were calculated
based on the interest rates effectively fixed by the interest rate swap agreements. 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, 2008 or the
most recent practicable date. |
|
(3) |
|
Contingent on timing of capital calls by the Fund; subject to change. |
Off-Balance Sheet Arrangements
The joint ventures in which we have an interest have been funded in part with secured,
third-party debt. We are committed to additional funding under mezzanine loans provided to joint
ventures. See further discussion of our investments in various joint ventures in Note 7,
Investments in Joint Ventures and a discussion of our mezzanine construction financing in Note 8,
Notes Receivable in the Notes to Consolidated Financial Statements.
Inflation
Substantially all of our apartment leases are for a term generally ranging from six to fifteen
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 effects 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.
General. A comprehensive enumeration of our significant accounting policies is presented in
Note 2 to the accompanying consolidated financial statements as of December 31, 2008 and 2007, and
for the years ended December 31, 2008, 2007, and 2006. Each of our policies has been chosen based
upon current authoritative literature that collectively comprises accounting principles generally
accepted in the United States of America.
Principles of Consolidation. Our consolidated financial statements include our accounts, the
accounts of variable interest entities (VIEs) in which we are the primary beneficiary, and the
accounts of other subsidiaries and joint ventures over which we have control. All intercompany
transactions, balances, and profits have been eliminated in consolidation. Investments acquired or
created are evaluated based on Financial Accounting Standards Board (FASB) Interpretation (FIN)
46R, Consolidation of Variable Interest Entities (as revised), which requires the consolidation
of VIEs in which we are considered to be the primary beneficiary. If the investment is determined
not to be within the scope of FIN 46R, then the investments are evaluated for consolidation using
American Institute of Certified Public Accountants Statement of Position 78-9, Accounting for
Investments in Real Estate Ventures, and Accounting Research Bulletin 51, Consolidated Financial
Statements. If we are the general partner in a limited partnership, we also consider the guidance
of Emerging Issues Task Force Issue 04-5, 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, to assess whether any rights held by the limited partners overcome the
presumption of control by us.
35
Use of Estimates. In the application of GAAP, 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 estimates supporting our impairment analysis related to the
carrying values of our real estate assets, estimates of the useful lives of our assets, reserves related to our general liability and employee benefit programs, estimates
related to our investments in joint ventures and mezzanine construction financing, 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 forecasted, and the best estimates routinely require adjustment.
Income Recognition. Our rental and other property revenue is recorded when due from residents
and is recognized monthly as it is earned. Other property revenue 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 six to fifteen
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 types 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 and 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 in the balance sheet as 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.
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. 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 three to twenty 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 derivative instruments as cash flow hedges. Derivative instruments are
recorded in the balance sheet as either an asset or a liability measured at fair value. 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 or loss and are
reclassified into earnings when the hedged item affects earnings. The ineffective portion is
recognized in current period earnings. Derivatives not designated or not qualifying for hedge
treatment must be recorded at fair value with gains or losses recognized in earnings in the period
of change. We do not use derivative instruments for trading or speculative purposes. We use
derivative instruments to reduce the potential impact of changes in interest rates on variable-rate
debt.
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.
36
Accumulated other comprehensive income or loss on the Consolidated Balance Sheets reflects the
effective portions of cumulative changes in the fair value of derivatives in qualifying cash flow
hedge relationships.
Asset Impairment. Long-lived assets are reviewed for impairment annually or 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. When impairment exists the long-lived
asset is adjusted to its respective fair value. We consider projected future undiscounted cash
flows, trends, strategic decisions regarding future development plans, 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 estimating fair value, management uses
appraisals, management estimates, or discounted cash flow calculations. In addition, we
continually evaluate our investments in joint ventures and mezzanine construction financing and if
we believe there is an other than temporary decline in market value, or if it is probable we will
not collect all interest and principal in accordance with the terms of the mezzanine loan, we will
record an impairment charge based on these evaluations. In general, we provide mezzanine loans to
affiliated joint ventures constructing or operating multifamily assets. While we believe it is
currently probable we will collect all scheduled principal and interest with respect to these
development loans, current market conditions with respect to credit availability and with respect
to real estate market fundamentals inject a significant amount of uncertainty into the environment.
Given this, any future adverse development in market conditions would cause us to re-evaluate our
conclusions, and could result in material impairment charges with respect to our mezzanine loans.
The value of our properties held for development depends on market conditions, including
estimates of the project start date as well as estimates of future demand of multifamily
communities. We have analyzed trends and other information related to each potential development
and have incorporated this information as well as our current outlook into the assumptions we use
in our impairment analyses. Due to the judgment and assumptions applied in the estimation process
with respect to impairments, including the fact that limited market information regarding the value
of comparable land exists at this time, it is possible actual results could differ substantially
from those estimated.
We believe the carrying value of our operating real estate assets, properties under
development, and land is currently recoverable. However, if market conditions worsen beyond our
current expectations, or if changes in our development strategy significantly affect any key
assumptions used in our fair value calculations, we may need to take additional charges in future
periods for impairments related to existing assets. Any such non-cash charges would have an
adverse effect on our consolidated financial position and results of operations.
We
do not purchase land for resale. However, when we own land or
communities which no longer
fit into our plans and we determine the best use of the asset is the sale of the asset, the asset
is accounted for as properties held for sale, including land, assuming the held for sale criteria
defined in Statement of Financial Accounting Standards (SFAS) 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, are met. We record land held for sale at the lesser of its
carrying value or fair value less estimated costs to sell.
Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS 157, Fair
Value Measurements. SFAS 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 a liability. In February 2008, the FASB issued FSP 157-2, Effective Date of FASB Statement
157, which deferred the effective date of SFAS 157 for us to January 1, 2009 for all nonfinancial
assets and nonfinancial liabilities, except for those which are recognized or disclosed at fair
value in the financial statements on a recurring basis. We have adopted FAS 157 for nonfinancial
assets and nonfinancial liabilities effective January 1, 2009, and this adoption has not and is not
expected to materially affect how we determine fair value.
37
In December 2007, the FASB issued SFAS 141R, Business Combinations, which replaced SFAS 141,
Business Combinations. SFAS 141R applies to all transactions or events in which an entity
obtains control of one or more businesses. SFAS 141R requires the acquiring entity in a business
combination to recognize the full fair value of assets acquired and liabilities assumed in the
transaction (whether a full or partial acquisition); establishes the acquisition date fair value as
the measurement objective for all assets acquired and liabilities assumed; requires expensing of
most transaction and restructuring costs; and requires the acquirer to disclose to investors and
other users all of the information needed to evaluate and understand the nature and financial
impact of the business combination. SFAS 141R is effective for us for business combinations made
on or after January 1, 2009. We expect the adoption of SFAS 141R to have a material effect on our
accounting for future acquisitions of properties, which may fall under the definition of a
business, as most transaction costs associated with such acquisitions will be expensed as opposed
to the prior treatment of such charges as capitalized costs.
In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB 51. SFAS 160 clarifies a noncontrolling interest in a
subsidiary is an ownership interest in a consolidated entity which should be reported as equity in
the parents consolidated financial statements. SFAS 160 requires a reconciliation of the
beginning and ending balances of equity attributable to non-controlling interests and disclosure,
on the face of the consolidated income statements, of those amounts of consolidated net income
attributable to the non-controlling interests, eliminating the past practice of reporting these
amounts as an adjustment in arriving at consolidated net income. SFAS 160 also requires a parent
to recognize a gain or loss in net income when a subsidiary is deconsolidated and requires the
parent to attribute to a noncontrolling interest its share of losses, even if such treatment
results in a deficit non-controlling interests balance within the parents equity accounts. SFAS
160 is effective for us on January 1, 2009 and most provisions will be applied retrospectively. We
are currently evaluating the effects, if any, the adoption of SFAS 160 may have on our financial
statements.
In June 2008, the FASB issued FASB Staff Position (FSP) 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating Securities. FSP 03-6-1
affects entities which accrue non-returnable cash dividends on share-based payment awards during
the awards service period. The FASB concluded unvested share-based payment awards which are
entitled to non-forfeitable cash dividends, whether paid or unpaid, are participating securities
and are participants of undistributed earnings. Because the awards are considered participating
securities, the issuer is required to apply the two-class method of computing basic and diluted
earnings per share which involves separate computations for common shares and participating
securities. As we do accrue and pay non-forfeitable cash dividends on unvested share-based payment
awards, these types of awards are considered participating securities and will be
included in our earnings per share calculation in future periods. FSP 03-6-1 is effective for us on January 1, 2009 and will require retrospective
application. The retrospective application on our adoption of this
FSP would not have had any impact on basic or diluted earnings per
share for the year ended December 31, 2008. The impact of our
adoption of this FSP on basic and diluted earnings per share for the
year ended December 31, 2007 would result in a decrease of
approximately $0.01 and $0.02, respectively.
In October 2008, the FASB issued FSP 157-3, Determining the Fair Value of a Financial Asset
When the Market for that Asset is Not Active. FSP 157-3 clarifies the application of SFAS 157,
Fair Value Measurements in a non-active market. FSP 157-3 became effective upon issuance,
including prior periods for which financial statements have not been issued. We adopted FSP 157-3
upon issuance, and it did not have a material impact on our consolidated financial position,
results of operations, or cash flows.
38
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The table below provides information about our assets and our liabilities sensitive to changes
in interest rates as of December 31, 2008 and 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008 |
|
|
December 31, 2007 |
|
|
|
|
|
|
|
Weighted |
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Average |
|
|
|
|
|
|
Amount |
|
|
Maturity |
|
|
Interest |
|
|
% Of |
|
|
Amount |
|
|
Maturity |
|
|
Interest |
|
|
% Of |
|
|
|
(in millions) |
|
|
(in years) (1) |
|
|
Rate |
|
|
Total |
|
|
(in millions) |
|
|
(in years) (1) |
|
|
Rate |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate debt (2) |
|
$ |
2,467.3 |
|
|
|
4.4 |
|
|
|
5.5 |
% |
|
|
87.1 |
% |
|
$ |
2,655.5 |
|
|
|
4.6 |
|
|
|
5.4 |
% |
|
|
93.9 |
% |
Variable rate debt |
|
|
365.1 |
|
|
|
11.5 |
|
|
|
2.7 |
|
|
|
12.9 |
|
|
|
172.6 |
|
|
|
19.8 |
|
|
|
5.0 |
|
|
|
6.1 |
|
(1) |
|
Excludes balances outstanding under our unsecured line of credit, which are included in
variable rate debt. |
|
(2) |
|
Includes a $500 million term loan entered into in 2007 and $3.4 million of a
construction loan entered into in 2008 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.
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.
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 $76.0 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 agreements described below, would be approximately $3.7 million, holding all
other variables constant.
We currently use interest rate caps and swaps to reduce the impact of interest rate
fluctuations on certain variable indebtedness, not for trading or speculative purposes. Under the
cap and 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, 2008, the effect of our swap agreements was to fix the interest rate on
approximately $503.4 million of our variable rate debt. Had the swap agreements not been in place
during 2008, our annual interest costs would have been approximately
$9.3 million lower, based on
balances and reported interest rates through the year as the variable interest rates were less than
the effective interest rates on the associated swap agreements. Additionally, if the variable
interest rates on this debt had been 100 basis points higher through 2008 and the swap agreements
not been in place, our annual interest cost would have been
approximately $4.2 million lower.
Derivative
financial investments expose us to credit risk in the event of
non-performance by the counterparties under the terms of the interest
rate hedge agreements. We believe we minimize our credit risk on
these transactions by dealing with major, creditworthy financial
institutions. 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 realized losses from counterparty non-performance is
remote.
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.
39
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(e) and 15d-15(e). 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. There were no changes in our internal control over financial
reporting (identified in connection with the evaluation required by paragraph (d) in Rules 13a-15
and 15d-15 under the Exchange Act) during our most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
40
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, 2008. 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, 2008.
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.
41
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, 2008, 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 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. 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 the board of trust managers 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, 2008, 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, 2008 of the Company and our report dated February 18, 2009
expressed an unqualified opinion on those financial statements and financial statement schedules.
/s/ DELOITTE & TOUCHE LLP
Houston,
Texas
February 18, 2009
42
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 expect to file on or before March 23, 2009 in connection with the Annual
Meeting of Shareholders to be held May 6, 2009.
Item 11. Executive Compensation
Information with respect to this Item 11 is incorporated by reference from our Proxy
Statement, which we expect to file on or before March 23, 2009 in connection with the Annual
Meeting of Shareholders to be held May 6, 2009.
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 expect to file on or before March 23, 2009 in connection with the Annual
Meeting of Shareholders to be held May 6, 2009.
Equity Compensation Plan Information
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|
Number of securities |
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|
|
remaining available for |
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|
Number of securities to be |
|
|
Weighted-average |
|
|
future issuance under |
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|
|
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 |
|
|
4,125,312 |
|
|
$ |
41.37 |
|
|
|
2,370,310 |
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,125,312 |
|
|
$ |
41.37 |
|
|
|
2,370,310 |
|
|
|
|
|
|
|
|
|
|
|
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 expect to file on or before March 23, 2009 in connection with the Annual
Meeting of Shareholders to be held May 6, 2009.
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 expect to file on or before March 23, 2009 in connection with the Annual
Meeting of Shareholders to be held May 6, 2009.
43
PART IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this report:
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(1) Financial Statements: |
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F-1 |
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F-2 |
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F-3 |
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F-5 |
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F-6 |
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F-8 |
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(2) Financial Statement Schedules: |
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S-1 |
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S-7 |
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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:
|
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|
|
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.
|
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Current Report on Form 8-K filed on
October 5, 2004 |
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2.2 |
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Amendment No. 1 to Agreement and Plan of Merger, dated
October 6, 2004, among Camden Property Trust, Camden
Summit, Inc. and Summit Properties Inc.
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Exhibit 2.1 to Form 8-K filed on
October 6, 2004 |
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2.3 |
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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 |
|
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|
|
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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 |
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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 |
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3.3 |
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|
Second Amended and Restated Bylaws of Camden Property Trust
|
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Exhibit 3.3 to Form 10-K for the
year ended December 31, 1997 |
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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 |
44
|
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|
Exhibit |
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|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
4.1 |
|
|
Specimen certificate for Common Shares of Beneficial Interest
|
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Form S-11 filed on September 15,
1993 (Registration No. 33-68736) |
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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 |
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4.3 |
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|
First Supplemental Indenture dated as of February 15, 1996
between Camden Property Trust and U.S. Trust Company of
Texas, N.A., as Trustee
|
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Exhibit 4.2 to Form 8-K filed on
February 15, 1996 |
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4.4 |
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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) |
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|
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4.5 |
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|
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 |
|
|
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|
|
|
|
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 |
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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 |
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|
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4.8 |
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|
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 |
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4.9 |
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|
Form of Registration Rights Agreement between Camden
Property Trust and the holders named therein
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Form S-4 filed on November 24, 2004
(Registration No. 333-120733) |
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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 |
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4.11 |
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|
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 |
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4.12 |
|
|
Form of Camden Property Trust 7.625% Note due 2011
|
|
Exhibit 4.4 to Form 8-K filed on
February 20, 2001 |
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|
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|
|
4.13 |
|
|
Form of Camden Property Trust 6.75% Note due 2010
|
|
Exhibit 4.3 to Form 8-K filed on
September 17, 2001 |
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|
4.14 |
|
|
Form of Camden Property Trust 5.875% Note due 2012
|
|
Exhibit 4.3 to Form 8-K filed on
November 25, 2002 |
|
|
|
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|
|
|
|
4.15 |
|
|
Form of Camden Property Trust 5.375% Note due 2013
|
|
Exhibit 4.2 to Form 8-K filed on
December 9, 2003 |
45
|
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|
|
Exhibit |
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|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
4.16 |
|
|
Form of Camden Property Trust 4.70% Note due 2009
|
|
Exhibit 4.2 to Form 8-K filed on
July 12, 2004 |
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|
4.17 |
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|
Form of Camden Property Trust 4.375% Note due 2010
|
|
Exhibit 4.2 to Form 8-K filed on
December 20, 2004 |
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4.18 |
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|
Form of Camden Property Trust 5.00% Note due 2015
|
|
Exhibit 4.2 to Form 8-K filed on
June 7, 2005 |
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4.19 |
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|
Form of Camden Property Trust 5.700% Notes due 2017
|
|
Exhibit 4.3 to Form 8-K filed on May
7, 2007 |
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4.20 |
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|
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) |
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4.21 |
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|
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) |
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|
4.22 |
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|
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) |
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|
4.23 |
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|
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) |
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|
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|
4.24 |
|
|
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) |
|
|
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|
4.25 |
|
|
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 |
|
|
|
|
|
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|
4.26 |
|
|
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) |
|
|
|
|
|
|
|
|
4.27 |
|
|
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) |
|
|
|
|
|
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|
|
4.28 |
|
|
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) |
|
|
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|
|
|
|
|
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) |
|
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|
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 |
|
|
|
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|
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 |
46
|
|
|
|
|
|
|
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 |
|
|
|
|
|
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|
10.5 |
|
|
Second Amendment to Second Amended and Restated
Employment Agreement, dated as of March 14, 2008
between Camden Property Trust and D. Keith Oden.
|
|
Exhibit 99.1 to Form 8-K filed on
March 18, 2008 |
|
|
|
|
|
|
|
|
10.6 |
|
|
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 |
|
|
|
|
|
|
|
|
10.7 |
|
|
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 99.1 to Form 8-K filed on
November 30, 2007 |
|
|
|
|
|
|
|
|
10.8 |
|
|
Second Amended and Restated Employment Agreement,
dated November 3, 2008, between Camden Property Trust
and H. Malcolm Stewart
|
|
Exhibit 99.1 to Form 8-K filed on
November 4, 2008 |
|
|
|
|
|
|
|
|
10.9 |
|
|
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 |
|
|
|
|
|
|
|
|
10.10 |
|
|
Amendment No. 1 to Second Amended and Restated Camden
Property Trust Key Employee Share Option Plan,
effective as of January 1, 2008
|
|
Exhibit 99.1 to Form 8-K filed on
December 8, 2008 |
|
|
|
|
|
|
|
|
10.11 |
|
|
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 |
|
|
|
|
|
|
|
|
10.12 |
|
|
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 |
|
|
|
|
|
|
|
|
10.13 |
|
|
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 |
|
|
|
|
|
|
|
|
10.14 |
|
|
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 |
|
|
|
|
|
|
|
|
10.15 |
|
|
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 |
|
|
|
|
|
|
|
|
10.16 |
|
|
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 |
|
|
|
|
|
|
|
|
10.17 |
|
|
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 |
|
|
|
|
|
|
|
|
10.18 |
|
|
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) |
|
|
|
|
|
|
|
|
10.19 |
|
|
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 |
47
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
10.20 |
|
|
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 |
|
|
|
|
|
|
|
|
10.21 |
|
|
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 |
|
|
|
|
|
|
|
|
10.22 |
|
|
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 |
|
|
|
|
|
|
|
|
10.23 |
|
|
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 |
|
|
|
|
|
|
|
|
10.24 |
|
|
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 |
|
|
|
|
|
|
|
|
10.25 |
|
|
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) |
|
|
|
|
|
|
|
|
10.26 |
|
|
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) |
|
|
|
|
|
|
|
|
10.27 |
|
|
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 |
|
|
|
|
|
|
|
|
10.28 |
|
|
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 |
|
|
|
|
|
|
|
|
10.29 |
|
|
Camden Property Trust 1999 Employee Share Purchase Plan
| |
Exhibit 10.19 to Form 10-K for the
year ended December 31, 1999 |
|
|
|
|
|
|
|
|
10.30 |
|
|
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 |
|
|
|
|
|
|
|
|
10.31 |
|
|
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 |
|
|
|
|
|
|
|
|
10.32 |
|
|
Amendment to Amended and Restated 2002 Share Incentive
Plan of Camden Property Trust, effective as of January
1, 2008
| |
Exhibit 99.1 to Form 8-K filed on
July 29, 2008 |
|
|
|
|
|
|
|
|
10.33 |
|
|
Camden Property Trust Short Term Incentive Plan
| |
Exhibit 10.2 to Form 10-Q for the
quarter ended March 31, 2002 |
|
|
|
|
|
|
|
|
10.34 |
|
|
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 |
|
|
|
|
|
|
|
|
10.35 |
|
|
Amendment No. 1 to Amended and Restated Camden
Property Trust Non-Qualified Deferred Compensation
Plan, effective as of January 1, 2008
| |
Exhibit 99.2 to Form 8-K filed on
July 29, 2008 |
|
|
|
|
|
|
|
|
10.36 |
|
|
Amendment No. 2 to Amended and Restated Camden
Property Trust Non-Qualified Deferred Compensation
Plan, effective as of January 1, 2008
| |
Exhibit 99.2 to Form 8-K filed on
December 8, 2008 |
48
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
10.37 |
|
|
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) |
|
|
|
|
|
|
|
|
10.38 |
|
|
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) |
|
|
|
|
|
|
|
|
10.39 |
|
|
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 |
|
|
|
|
|
|
|
|
10.40 |
|
|
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 |
|
|
|
|
|
|
|
|
10.41 |
|
|
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 |
|
|
|
|
|
|
|
|
10.42 |
|
|
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 |
|
|
|
|
|
|
|
|
10.43 |
|
|
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) |
|
|
|
|
|
|
|
|
10.44 |
|
|
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) |
|
|
|
|
|
|
|
|
10.45 |
|
|
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) |
|
|
|
|
|
|
|
|
10.46 |
|
|
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) |
|
|
|
|
|
|
|
|
10.47 |
|
|
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) |
|
|
|
|
|
|
|
|
10.48 |
|
|
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 |
|
|
|
|
|
|
|
|
10.49 |
|
|
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 |
|
|
|
|
|
|
|
|
10.50 |
|
|
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 |
49
|
|
|
|
|
|
|
Exhibit |
|
|
|
Filed Herewith or Incorporated Herein |
No. |
|
Description |
|
by Reference (1) |
|
10.51 |
|
|
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 |
|
|
|
|
|
|
|
|
10.52 |
|
|
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 |
|
|
|
|
|
|
|
|
10.53 |
|
|
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 |
|
|
|
|
|
|
|
|
10.54 |
|
|
Master Credit Agreement, dated as of September 24,
2008, among CSP Community Owner, LLC, CPT Community
Owner, LLC, and Red Mortgage Capital, Inc. (2)
|
|
Exhibit 10.1 to Form 10-Q for the
quarter ended September 30, 2008 |
|
|
|
|
|
|
|
|
12.1 |
|
|
Statement Re Computation of Ratios
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
21.1 |
|
|
List of Subsidiaries
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
23.1 |
|
|
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, Steven A. Webster, and Kelvin R.
Westbrook
|
|
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 |
|
|
|
(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). |
|
(2) |
|
Portions of the exhibit have been omitted pursuant to a request for confidential
treatment. |
50
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 19, 2009 |
CAMDEN PROPERTY TRUST
|
|
|
By: |
/s/ Michael P. Gallagher
|
|
|
|
Michael P. Gallagher |
|
|
|
Vice President Chief Accounting Officer |
|
51
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 19, 2009 |
|
|
|
|
|
/s/ D. Keith Oden
D. Keith Oden
|
|
President and Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
/s/ Dennis M. Steen
Dennis M. Steen
|
|
Chief Financial Officer,
Senior Vice President-Finance
and Secretary (Principal
Financial Officer)
|
|
February 19, 2009 |
|
|
|
|
|
/s/ Michael P. Gallagher
Michael P. Gallagher
|
|
Vice President Chief
Accounting Officer
(Principal Accounting Officer)
|
|
February 19, 2009 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
*
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
*
William B. McGuire, Jr.
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 19, 2009 |
|
|
|
|
|
*By:
|
|
/s/ Dennis M. Steen |
|
|
|
|
Dennis M. Steen
|
|
|
|
|
Attorney-in-fact |
|
|
52
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, 2008 and 2007, and the related consolidated
statements of income and comprehensive income, shareholders equity, and cash flows for each of the three years in the
period ended December 31, 2008. 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, 2008 and 2007,
and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2008, 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.
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,
2008, 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 18,
2009 expressed an unqualified opinion on the Companys internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 18, 2009
F-1
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
(in thousands, except per share amounts) |
|
2008 |
|
|
2007 |
|
Assets |
|
|
|
|
|
|
|
|
Real estate assets, at cost |
|
|
|
|
|
|
|
|
Land |
|
$ |
744,059 |
|
|
$ |
730,548 |
|
Buildings and improvements |
|
|
4,447,587 |
|
|
|
4,316,472 |
|
|
|
|
|
|
|
|
|
|
|
5,191,646 |
|
|
|
5,047,020 |
|
Accumulated depreciation |
|
|
(981,049 |
) |
|
|
(868,074 |
) |
|
|
|
|
|
|
|
Net operating real estate assets |
|
|
4,210,597 |
|
|
|
4,178,946 |
|
Properties under development and land |
|
|
264,188 |
|
|
|
446,664 |
|
Investments in joint ventures |
|
|
15,106 |
|
|
|
8,466 |
|
Properties held for sale, including land |
|
|
20,653 |
|
|
|
25,253 |
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
4,510,544 |
|
|
|
4,659,329 |
|
|
|
|
|
|
|
|
|
|
Accounts receivable affiliates |
|
|
37,000 |
|
|
|
35,940 |
|
Notes receivable |
|
|
|
|
|
|
|
|
Affiliates |
|
|
58,109 |
|
|
|
50,358 |
|
Other |
|
|
8,710 |
|
|
|
11,565 |
|
Other assets, net |
|
|
103,013 |
|
|
|
126,996 |
|
Cash and cash equivalents |
|
|
7,407 |
|
|
|
897 |
|
Restricted cash |
|
|
5,559 |
|
|
|
5,675 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
4,730,342 |
|
|
$ |
4,890,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Notes payable |
|
|
|
|
|
|
|
|
Unsecured |
|
$ |
2,103,187 |
|
|
$ |
2,265,319 |
|
Secured |
|
|
729,209 |
|
|
|
562,776 |
|
Accounts payable and accrued expenses |
|
|
82,575 |
|
|
|
107,403 |
|
Accrued real estate taxes |
|
|
23,600 |
|
|
|
24,943 |
|
Distributions payable |
|
|
42,936 |
|
|
|
42,689 |
|
Other liabilities |
|
|
149,554 |
|
|
|
136,365 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,131,061 |
|
|
|
3,139,495 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Minority interests |
|
|
|
|
|
|
|
|
Perpetual preferred units |
|
|
97,925 |
|
|
|
97,925 |
|
Common units |
|
|
88,075 |
|
|
|
111,624 |
|
Other minority interests |
|
|
1,787 |
|
|
|
10,403 |
|
|
|
|
|
|
|
|
Total minority interests |
|
|
187,787 |
|
|
|
219,952 |
|
|
Shareholders equity |
|
|
|
|
|
|
|
|
Common shares of beneficial interest; $0.01
par value per share; 100,000 shares
authorized; 68,770 and 68,030 issued; 66,028
and 65,434 outstanding at December 31, 2008
and 2007, respectively |
|
|
660 |
|
|
|
654 |
|
Additional paid-in capital |
|
|
2,237,703 |
|
|
|
2,209,631 |
|
Distributions in excess of net income |
|
|
(312,309 |
) |
|
|
(227,025 |
) |
Employee notes receivable |
|
|
(295 |
) |
|
|
(1,950 |
) |
Treasury shares, at cost |
|
|
(463,209 |
) |
|
|
(433,874 |
) |
Accumulated other comprehensive loss |
|
|
(51,056 |
) |
|
|
(16,123 |
) |
|
|
|
|
|
|
|
Total shareholders equity |
|
|
1,411,494 |
|
|
|
1,531,313 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
4,730,342 |
|
|
$ |
4,890,760 |
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-2
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands, except per share amounts) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
|
$ |
547,718 |
|
|
$ |
525,497 |
|
|
$ |
510,129 |
|
Other property revenues |
|
|
76,298 |
|
|
|
62,822 |
|
|
|
50,900 |
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
|
624,016 |
|
|
|
588,319 |
|
|
|
561,029 |
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Property operating and maintenance |
|
|
168,883 |
|
|
|
155,181 |
|
|
|
151,595 |
|
Real estate taxes |
|
|
70,032 |
|
|
|
62,169 |
|
|
|
59,026 |
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
238,915 |
|
|
|
217,350 |
|
|
|
210,621 |
|
Non-property income |
|
|
|
|
|
|
|
|
|
|
|
|
Fee and asset management |
|
|
9,167 |
|
|
|
8,293 |
|
|
|
14,041 |
|
Sale of technology investments |
|
|
|
|
|
|
623 |
|
|
|
1,602 |
|
Interest and other income |
|
|
4,736 |
|
|
|
8,804 |
|
|
|
9,771 |
|
Income (loss) on deferred compensation plans |
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
10,116 |
|
|
|
|
|
|
|
|
|
|
|
Total non-property income (loss) |
|
|
(19,540 |
) |
|
|
25,002 |
|
|
|
35,530 |
|
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Property management |
|
|
19,910 |
|
|
|
18,413 |
|
|
|
18,490 |
|
Fee and asset management |
|
|
6,054 |
|
|
|
4,552 |
|
|
|
9,382 |
|
General and administrative |
|
|
31,586 |
|
|
|
32,590 |
|
|
|
37,584 |
|
Interest |
|
|
132,399 |
|
|
|
115,753 |
|
|
|
117,348 |
|
Depreciation and amortization |
|
|
171,814 |
|
|
|
157,297 |
|
|
|
149,206 |
|
Amortization of deferred financing costs |
|
|
2,958 |
|
|
|
3,661 |
|
|
|
3,782 |
|
Expense (benefit) on deferred compensation plans |
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
10,116 |
|
|
|
|
|
|
|
|
|
|
|
Total other expenses |
|
|
331,278 |
|
|
|
339,548 |
|
|
|
345,908 |
|
Income from continuing operations before gain on sale of properties,
gain on early retirement of debt, impairment loss on land, equity in
income (loss) of joint ventures, minority interests, and income taxes |
|
|
34,283 |
|
|
|
56,423 |
|
|
|
40,030 |
|
Gain on sale of properties, including land |
|
|
2,929 |
|
|
|
|
|
|
|
97,452 |
|
Gain on early retirement of debt |
|
|
13,566 |
|
|
|
|
|
|
|
|
|
Impairment loss on land |
|
|
(51,323 |
) |
|
|
(1,447 |
) |
|
|
|
|
Equity in income (loss) of joint ventures |
|
|
(1,265 |
) |
|
|
1,526 |
|
|
|
5,156 |
|
Income allocated to minority interests |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions on perpetual preferred units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
Income allocated to common units and other minority interests |
|
|
(4,052 |
) |
|
|
(4,729 |
) |
|
|
(15,685 |
) |
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes |
|
|
(12,862 |
) |
|
|
44,773 |
|
|
|
119,953 |
|
Income tax expense current |
|
|
(843 |
) |
|
|
(3,052 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(13,705 |
) |
|
|
41,721 |
|
|
|
119,953 |
|
Income from discontinued operations |
|
|
4,480 |
|
|
|
13,214 |
|
|
|
15,927 |
|
Gain on sale of discontinued operations, including land, net of tax |
|
|
80,198 |
|
|
|
107,039 |
|
|
|
99,273 |
|
Income from discontinued operations allocated to common units |
|
|
|
|
|
|
(13,517 |
) |
|
|
(2,307 |
) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
$ |
232,846 |
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-3
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(In thousands, except per share amounts) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Earnings per share basic |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(0.25 |
) |
|
$ |
0.72 |
|
|
$ |
2.12 |
|
Income from discontinued operations, including
gain on sale and income allocated to common
units |
|
|
1.53 |
|
|
|
1.83 |
|
|
|
1.99 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1.28 |
|
|
$ |
2.55 |
|
|
$ |
4.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(0.25 |
) |
|
$ |
0.71 |
|
|
$ |
2.06 |
|
Income from discontinued operations, including
gain on sale and income allocated to common
units |
|
|
1.53 |
|
|
|
1.80 |
|
|
|
1.90 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1.28 |
|
|
$ |
2.51 |
|
|
$ |
3.96 |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared per common share |
|
$ |
2.80 |
|
|
$ |
2.76 |
|
|
$ |
2.64 |
|
Weighted average number of common shares
outstanding |
|
|
55,272 |
|
|
|
58,135 |
|
|
|
56,660 |
|
Weighted average number of common and common
dilutive equivalent shares outstanding |
|
|
55,272 |
|
|
|
59,125 |
|
|
|
59,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
$ |
232,846 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on cash flow hedging activities |
|
|
(35,069 |
) |
|
|
(16,123 |
) |
|
|
|
|
Gain on postretirement obligations |
|
|
136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
36,040 |
|
|
$ |
132,334 |
|
|
$ |
232,846 |
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-4
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, 2006 |
|
|
608 |
|
|
|
1,902,595 |
|
|
|
(295,074 |
) |
|
|
(2,078 |
) |
|
|
(235,148 |
) |
|
|
|
|
|
|
1,370,903 |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
232,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232,846 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (334 shares) |
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
148,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
148,457 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,123 |
) |
|
|
(16,123 |
) |
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 (266 shares) |
|
|
3 |
|
|
|
11,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,476 |
|
Common shares repurchased (3,604 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
70,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,973 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,933 |
) |
|
|
(34,933 |
) |
Common shares issued under dividend reinvestment plan |
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 |
|
Share awards issued under benefit plan (268 shares) |
|
|
3 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share awards canceled under benefit plan (36 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of previously granted share awards |
|
|
|
|
|
|
10,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,221 |
|
Employee share purchase plan |
|
|
|
|
|
|
142 |
|
|
|
|
|
|
|
|
|
|
|
740 |
|
|
|
|
|
|
|
882 |
|
Repayment of employee notes receivable, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,655 |
|
|
|
|
|
|
|
|
|
|
|
1,655 |
|
Share awards placed into deferred plans (147 shares) |
|
|
(2 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share options exercised (45 shares) |
|
|
|
|
|
|
2,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,155 |
|
Conversions and redemptions of operating partnership
units (464 shares) |
|
|
5 |
|
|
|
15,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,553 |
|
Common shares repurchased (695 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,075 |
) |
|
|
|
|
|
|
(30,075 |
) |
Cash distributions ($2.80 per share) |
|
|
|
|
|
|
|
|
|
|
(156,257 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(156,257 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity, December 31, 2008 |
|
$ |
660 |
|
|
$ |
2,237,703 |
|
|
$ |
(312,309 |
) |
|
$ |
(295 |
) |
|
$ |
(463,209 |
) |
|
$ |
(51,056 |
) |
|
$ |
1,411,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-5
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
$ |
232,846 |
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization, including discontinued operations |
|
|
169,151 |
|
|
|
157,137 |
|
|
|
159,860 |
|
Gain on sale of discontinued operations |
|
|
(80,198 |
) |
|
|
(107,039 |
) |
|
|
(99,273 |
) |
Impairment loss on land |
|
|
51,323 |
|
|
|
1,447 |
|
|
|
|
|
Gain on early retirement of debt |
|
|
(13,566 |
) |
|
|
|
|
|
|
|
|
Income allocated to minority interests |
|
|
11,052 |
|
|
|
25,246 |
|
|
|
24,992 |
|
Share-based compensation |
|
|
7,663 |
|
|
|
7,547 |
|
|
|
11,619 |
|
Distributions of income from joint ventures |
|
|
5,392 |
|
|
|
5,406 |
|
|
|
|
|
Amortization of deferred financing costs |
|
|
2,975 |
|
|
|
3,689 |
|
|
|
3,813 |
|
Equity in loss (income) of joint ventures |
|
|
1,265 |
|
|
|
(1,526 |
) |
|
|
(5,156 |
) |
Accretion of discount on unsecured notes payable |
|
|
571 |
|
|
|
590 |
|
|
|
694 |
|
Gain on sale of technology investments |
|
|
|
|
|
|
(623 |
) |
|
|
(1,602 |
) |
Gain on sale of properties, including land |
|
|
(2,929 |
) |
|
|
|
|
|
|
(97,452 |
) |
Interest on notes receivable affiliates |
|
|
(3,688 |
) |
|
|
(4,112 |
) |
|
|
(108 |
) |
Net change in operating accounts |
|
|
(3,026 |
) |
|
|
(13,113 |
) |
|
|
1,336 |
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities |
|
$ |
216,958 |
|
|
$ |
223,106 |
|
|
$ |
231,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Development and capital improvements |
|
|
(199,269 |
) |
|
|
(417,789 |
) |
|
|
(334,339 |
) |
Proceeds from sales of properties, including land and discontinued operations |
|
|
123,513 |
|
|
|
171,757 |
|
|
|
181,963 |
|
Proceeds from partial sales of assets to joint ventures |
|
|
52,509 |
|
|
|
|
|
|
|
213,720 |
|
Investments in joint ventures |
|
|
(10,444 |
) |
|
|
(6,015 |
) |
|
|
(3,147 |
) |
Distributions of investments from joint ventures |
|
|
1,058 |
|
|
|
6,525 |
|
|
|
47,922 |
|
Acquisition of operating properties |
|
|
|
|
|
|
(83,031 |
) |
|
|
(109,961 |
) |
Payment of merger related liabilities |
|
|
|
|
|
|
|
|
|
|
(8,233 |
) |
Earnest money deposits on potential transactions |
|
|
|
|
|
|
(340 |
) |
|
|
(4,803 |
) |
Increase in notes receivable affiliates |
|
|
(3,487 |
) |
|
|
(3,154 |
) |
|
|
(41,615 |
) |
Payments received on notes receivable other |
|
|
2,855 |
|
|
|
1,000 |
|
|
|
9,406 |
|
Change in restricted cash |
|
|
116 |
|
|
|
(954 |
) |
|
|
368 |
|
Proceeds from the sale of technology investments |
|
|
|
|
|
|
623 |
|
|
|
1,602 |
|
Issuance of notes receivable other |
|
|
|
|
|
|
(8,710 |
) |
|
|
|
|
Other |
|
|
(4,225 |
) |
|
|
(6,710 |
) |
|
|
(4,950 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash from investing activities |
|
$ |
(37,374 |
) |
|
$ |
(346,798 |
) |
|
$ |
(52,067 |
) |
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-6
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from notes payable |
|
$ |
385,927 |
|
|
$ |
807,990 |
|
|
$ |
|
|
Repayment of notes payable |
|
|
(379,213 |
) |
|
|
(213,376 |
) |
|
|
(227,284 |
) |
Net increase (decrease) in unsecured line of credit and short-term borrowings |
|
|
30,000 |
|
|
|
(91,000 |
) |
|
|
(45,000 |
) |
Payment of deferred financing costs |
|
|
(4,321 |
) |
|
|
(5,113 |
) |
|
|
(2,945 |
) |
Distributions to shareholders and minority interests |
|
|
(172,332 |
) |
|
|
(178,142 |
) |
|
|
(166,234 |
) |
Repurchase of common shares and units |
|
|
(33,133 |
) |
|
|
(200,467 |
) |
|
|
(170 |
) |
Common share options exercised |
|
|
1,729 |
|
|
|
3,795 |
|
|
|
4,155 |
|
Repayment of employee notes receivable |
|
|
1,679 |
|
|
|
190 |
|
|
|
150 |
|
Proceeds from issuance of common shares |
|
|
|
|
|
|
|
|
|
|
254,931 |
|
Net increase (decrease) in accounts receivable affiliates |
|
|
(929 |
) |
|
|
(1,452 |
) |
|
|
382 |
|
Other |
|
|
(2,481 |
) |
|
|
1,130 |
|
|
|
1,971 |
|
|
|
|
|
|
|
|
|
|
|
Net cash from financing activities |
|
$ |
(173,074 |
) |
|
$ |
123,555 |
|
|
$ |
(180,044 |
) |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
6,510 |
|
|
|
(137 |
) |
|
|
(542 |
) |
Cash and cash equivalents, beginning of year |
|
|
897 |
|
|
|
1,034 |
|
|
|
1,576 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year |
|
$ |
7,407 |
|
|
$ |
897 |
|
|
$ |
1,034 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of interest capitalized |
|
$ |
136,172 |
|
|
$ |
114,531 |
|
|
$ |
121,396 |
|
Cash paid for income taxes |
|
|
1,651 |
|
|
|
2,555 |
|
|
|
|
|
|
Supplemental
schedule of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared but not paid |
|
$ |
42,937 |
|
|
$ |
42,693 |
|
|
$ |
43,068 |
|
Decrease (increase) in liabilities associated with construction and capital expenditures |
|
|
24,167 |
|
|
|
40 |
|
|
|
(5,261 |
) |
Conversion of operating partnership units to common shares |
|
|
15,793 |
|
|
|
11,638 |
|
|
|
6,569 |
|
Debt disposed of through dispositions |
|
|
14,010 |
|
|
|
|
|
|
|
|
|
Value of shares issued under benefit plans, net of cancellations |
|
|
10,766 |
|
|
|
15,381 |
|
|
|
16,144 |
|
Contribution of real estate assets to joint ventures |
|
|
10,523 |
|
|
|
|
|
|
|
33,493 |
|
Assumption of debt by joint venture |
|
|
|
|
|
|
|
|
|
|
30,525 |
|
Cancellation of notes receivable affiliate in connection with property acquisition |
|
|
|
|
|
|
|
|
|
|
12,053 |
|
Common units issued in connection with investment in joint venture |
|
|
|
|
|
|
|
|
|
|
1,900 |
|
Acquisition of Summit, net of cash acquired, at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
Assets acquired |
|
|
|
|
|
|
|
|
|
|
1,881 |
|
Liabilities assumed |
|
|
|
|
|
|
|
|
|
|
1,881 |
|
Minority interests issued in connection with real estate contribution |
|
|
|
|
|
|
532 |
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description 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. As of
December 31, 2008, we owned interests in, operated, or were developing 186 multifamily properties
comprising 64,329 apartment homes across the United States. We had 1,426 apartment homes under
development at five of our multifamily properties, including 1,060 apartment homes at four
multifamily properties owned through joint ventures, in which we own an interest, in addition to
other sites we may develop into multifamily apartment communities. Additionally, one property
comprised of 671 apartment homes was designated as held for sale.
2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Principles of Consolidation. Our consolidated financial statements include our accounts, the
accounts of variable interest entities (VIEs) in which we are the primary beneficiary, and the
accounts of other subsidiaries and joint ventures over which we have control. All intercompany
transactions, balances, and profits have been eliminated in consolidation. Investments acquired or
created are evaluated based on Financial Accounting Standards Board (FASB) Interpretation (FIN)
46R, Consolidation of Variable Interest Entities (as revised), which requires the consolidation
of VIEs in which we are considered to be the primary beneficiary. If the investment is determined
not to be within the scope of FIN 46R, then the investments are evaluated for consolidation using
American Institute of Certified Public Accountants Statement of Position 78-9, Accounting for
Investments in Real Estate Ventures, and Accounting Research Bulletin 51, Consolidated Financial
Statements. If we are the general partner in a limited partnership, we also consider the guidance
of Emerging Issues Task Force Issue 04-5, 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, to assess whether any rights held by the limited partners overcome the
presumption of control by us.
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 allocate 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 annually or 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. When impairment exists the long-lived
asset is adjusted to its respective fair value. We consider projected future undiscounted cash
flows, trends, strategic decisions regarding future development plans, 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 estimating fair value, management uses
appraisals, management estimates, or discounted cash flow calculations. In addition, we
continually evaluate our investments in joint ventures and mezzanine construction financing and if
we believe there is an other than temporary decline in market value, or if it is probable we will
not collect all interest and principal in accordance with the terms of the mezzanine loan, we will
record an impairment charge based on these evaluations. In general, we provide mezzanine loans to
affiliated joint ventures constructing or operating multifamily assets. While we believe it is
currently probable we will collect all scheduled principal and interest with respect to these
development loans, current market conditions with respect to credit availability and with respect
to real estate market fundamentals inject a significant amount of uncertainty into the environment.
Given this, any future adverse development in market conditions would cause us to re-evaluate our
conclusions, and could result in material impairment charges with respect to our mezzanine loans.
F-8
The value of our properties held for development depends on market conditions, including
estimates of the project start date as well as estimates of demand of multifamily communities. We
have analyzed trends and other information related to each potential development and have
incorporated this information as well as our current outlook into the assumptions we use in our
impairment analyses. Due to the judgment and assumptions applied in the estimation process with
respect to impairments, including the fact that limited market information regarding the value of
comparable land exists at this time, it is possible actual results could differ substantially from
those estimated.
We believe the carrying value of our operating real estate assets, properties under
development, and land is currently recoverable. However, if market conditions worsen beyond our
current expectations, or if changes in our development strategy significantly affect any key
assumptions used in our fair value calculations, we may need to take additional charges in future
periods for impairments related to existing assets. Any such non-cash charges would have an
adverse effect on our consolidated financial position and results of operations.
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 and 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 in the balance sheet as 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.
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 approximately $17.7 million, $22.6 million, and $20.6 million in 2008, 2007, and 2006,
respectively. Capitalized real estate taxes were approximately $3.4 million, $3.5 million, and
$2.6 million in 2008, 2007, and 2006, respectively.
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. 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 three to twenty 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 derivative instruments as cash flow hedges. Derivative instruments are
recorded in the balance sheet as either an asset or a liability measured at fair value. 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 or loss and are
reclassified into earnings when the hedged item affects earnings. The ineffective portion is
recognized in current period earnings. Derivatives not designated or not qualifying for hedge
treatment must be recorded at fair value with gains or losses recognized in earnings in the period
of change. We do not use derivative instruments for trading or speculative purposes. We use
derivative instruments to reduce the potential impact of changes in interest rates on variable-rate
debt.
F-9
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.
See Note 10, Derivative Instruments and Hedging Activities, for further discussion of
derivative financial instruments.
Accumulated other comprehensive income or loss in the Consolidated Balance Sheets includes
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
resulting from 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 carrying
amount or 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 revenue is recorded when due from residents
and is recognized monthly as it is earned. Other property revenue 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 six to fifteen
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 types 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, and
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 classified 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 11, Share 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 using the straight-line method over
the shorter of the expected useful lives or the lease terms which
range from three to ten years.
F-10
Reclassifications. Certain reclassifications have been made to amounts in prior period
financial statements to conform to the current period presentations. We reclassified one property
previously included in discontinued operations to continuing operations during the three months
ended June 30, 2008 as management made the decision not to sell this asset. As a result, we
adjusted the current and prior period consolidated financial statements to reflect this
reclassification. Additionally, we recorded a depreciation charge of approximately $0.6 million
during the year ended December 31, 2008 on this asset in accordance with the provisions of SFAS
144, Accounting for the Impairment or Disposal of Long-Lived Assets.
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 98%, 97%, and 96% of our total consolidated revenues, excluding income or
loss on deferred compensation plans, for the years ended December 31, 2008, 2007, and 2006,
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. Compensation expense associated with share-based awards under SFAS
123R is recognized in our consolidated statements of income and comprehensive income using the
grant-date fair values. Compensation cost for all share-based awards, including options, requires
measurement at estimated 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 estimated 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.
Use of Estimates. In the application of accounting principles generally accepted in the
United States of America (GAAP,) 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 estimates supporting our impairment analysis related to the carrying values of
our real estate assets, estimates of the useful lives of our assets, reserves related to our
general liability and employee benefit programs, estimates related to our investments in joint
ventures and mezzanine construction financing, 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 forecasted, and the best estimates routinely require adjustment.
Recent Accounting Pronouncements. In September 2006, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements.
SFAS 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 a
liability. In February 2008, the FASB issued FSP 157-2, Effective Date of FASB Statement 157,
which deferred the effective date of SFAS 157 for us to January 1, 2009 for all nonfinancial assets
and nonfinancial liabilities, except for those which are recognized or disclosed at fair value in
the financial statements on a recurring basis. We have adopted FAS 157 for nonfinancial assets and
nonfinancial liabilities effective January 1, 2009, and this adoption has not and is not expected
to materially affect how we estimate fair value, although future disclosures regarding how we
develop fair value estimates for nonfinancial assets and liabilities is expected to be enhanced.
In October 2008, the FASB issued FSP 157-3, Determining the Fair Value of a Financial Asset When
the Market for that Asset is Not Active. FSP 157-3 clarifies the application of SFAS 157 in a
non-active market. FSP 157-3 became effective upon issuance, including prior periods for which
financial statements have not been issued. We adopted FSP 157-3 upon issuance, and it did not have
a material impact on our estimated fair value measurements.
F-11
In December 2007, the FASB issued SFAS 141R, Business Combinations, which replaced SFAS 141,
Business Combinations. SFAS 141R applies to all transactions or events in which an entity
obtains control of one or more businesses. SFAS 141R requires the acquiring entity in a business
combination to recognize the full fair value of assets acquired and liabilities assumed in the
transaction (whether a full or partial acquisition); establishes the acquisition date fair value as
the measurement objective for all assets acquired and liabilities assumed; requires expensing of
most transaction and restructuring costs; and requires the acquirer to disclose to investors and
other users all of the information needed to evaluate and understand the nature and financial
impact of the business combination. SFAS 141R is effective for us for business combinations made
on or after January 1, 2009. We expect the adoption of SFAS 141R to have a material effect on our
accounting for acquisitions of properties, which may fall under the definition of a business, as
most transaction costs associated with such acquisitions will be expensed as opposed to the prior
capitalization of such costs.
In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB 51. SFAS 160 clarifies a non-controlling interest in a
subsidiary is an ownership interest in a consolidated entity which should be reported as equity in
the parents consolidated financial statements. SFAS 160 requires a reconciliation of the
beginning and ending balances of equity attributable to non-controlling interests and disclosure,
on the face of the consolidated income statements, of those amounts of consolidated net income
attributable to the non-controlling interests, eliminating the past practice of reporting these
amounts as an adjustment in arriving at consolidated net income. SFAS 160 also requires a parent
to recognize a gain or loss in net income when a subsidiary is deconsolidated and requires the
parent to attribute to a non-controlling interest its share of losses, even if such treatment
results in a deficit non-controlling interests balance within the parents equity accounts. SFAS
160 is effective for us on January 1, 2009 and most provisions will be applied retrospectively. We
are currently evaluating the effects, if any, the adoption of SFAS 160 may have on our financial
statements.
In June 2008, the FASB issued FASB Staff Position (FSP) 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating Securities. FSP 03-6-1
affects entities which accrue non-returnable cash dividends on share-based payment awards during
the awards service period. The FASB concluded unvested share-based payment awards which are
entitled to non-forfeitable cash dividends, whether paid or unpaid, are participating securities
and are participants of undistributed earnings. Because the awards are considered participating
securities, the issuer is required to apply the two-class method of computing basic and diluted
earnings per share which involves separate computations for common shares and participating
securities. As we do accrue and pay non-forfeitable cash dividends on unvested share-based payment
awards, these types of awards are considered participating securities and will be
included in our earnings per share calculation in future periods. FSP 03-6-1 is effective for us on January 1, 2009 and will require retrospective
application. The retrospective application on our adoption of this
FSP would not have had any impact on basic or diluted earnings per
share for the year ended December 31, 2008. The impact of our
adoption of this FSP on basic and diluted earnings per share for the
year ended December 31, 2007 would result in a decrease of
approximately $0.01 and $0.02, respectively.
3. Share Data
Basic earnings per share are computed using income (loss) from continuing operations and the
weighted average number of common shares outstanding. Diluted earnings per share reflect 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, 2008, 2007,
and 2006, 5.2 million, 4.3 million, and 2.8 million common share options and awards granted and
units convertible into common shares, respectively, were excluded from the diluted earnings per
share calculation as they were not determined to be dilutive.
F-12
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) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Basic earnings per share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(13,705 |
) |
|
$ |
41,721 |
|
|
$ |
119,953 |
|
Income from discontinued operations, including gain on sale |
|
|
84,678 |
|
|
|
106,736 |
|
|
|
112,893 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
$ |
232,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations per share |
|
$ |
(0.25 |
) |
|
$ |
0.72 |
|
|
$ |
2.12 |
|
Income from discontinued operations per share |
|
|
1.53 |
|
|
|
1.83 |
|
|
|
1.99 |
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
$ |
1.28 |
|
|
$ |
2.55 |
|
|
$ |
4.11 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
55,272 |
|
|
|
58,135 |
|
|
|
56,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(13,705 |
) |
|
$ |
41,721 |
|
|
$ |
119,953 |
|
Income allocated to common units |
|
|
|
|
|
|
27 |
|
|
|
2,432 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss)from continuing operations, as adjusted |
|
|
(13,705 |
) |
|
|
41,748 |
|
|
|
122,385 |
|
Income from discontinued operations, including gain on sale |
|
|
84,678 |
|
|
|
106,736 |
|
|
|
112,893 |
|
Income from discontinued operations allocated to common units |
|
|
|
|
|
|
|
|
|
|
652 |
|
|
|
|
|
|
|
|
|
|
|
Net income, as adjusted |
|
$ |
70,973 |
|
|
$ |
148,484 |
|
|
$ |
235,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, as adjusted per share |
|
$ |
(0.25 |
) |
|
$ |
0.71 |
|
|
$ |
2.06 |
|
Income from discontinued operations per share |
|
|
1.53 |
|
|
|
1.80 |
|
|
|
1.90 |
|
|
|
|
|
|
|
|
|
|
|
Net income, as adjusted per share |
|
$ |
1.28 |
|
|
$ |
2.51 |
|
|
$ |
3.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
55,272 |
|
|
|
58,135 |
|
|
|
56,660 |
|
Incremental shares issuable from assumed conversion of: |
|
|
|
|
|
|
|
|
|
|
|
|
Common share options and awards granted |
|
|
|
|
|
|
482 |
|
|
|
725 |
|
Common units |
|
|
|
|
|
|
508 |
|
|
|
2,139 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, as adjusted
|
|
|
55,272 |
|
|
|
59,125 |
|
|
|
59,524 |
|
|
|
|
|
|
|
|
|
|
|
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. In January 2008, our Board of Trust Managers voted to increase the April
2007 repurchase plan to allow for the repurchase of up to $500 million of our common equity
securities through open market purchases, block purchases, and privately negotiated transactions.
We intend to use proceeds from asset sales and borrowings under our line of credit to fund share
repurchases. Under this program, we repurchased 4.3 million shares for a total of approximately
$230.2 million from April 2007 through December 31, 2008. The remaining dollar value of our common
equity securities authorized to be repurchased under the program was approximately $269.8 million
as of December 31, 2008.
At
December 31, 2008 and 2007, 12.9 million and 12.2 million shares, respectively, were held
in treasury.
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 approximately $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
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, 2008,
we had 66,027,911 common shares and no preferred shares outstanding under our declaration of trust.
F-13
4. Operating Partnerships
At December 31, 2008, approximately 11% of our multifamily apartment homes were held in Camden
Operating, L.P (Camden Operating or the operating partnership). Camden Operating has issued
both common and preferred limited partnership units. As of December 31, 2008, we held 89.1% of the
common limited partnership units and the sole 1% general partnership interest of the operating
partnership. The remaining common limited partnership units, comprising 1,177,115 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 ten 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. There were no redemptions
as of December 31, 2008. 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 approximately $7.0 million for each of the years ended December 31, 2008,
2007, and 2006.
We are 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.
At December 31, 2008, approximately 24% of our multifamily apartment homes were held in Camden
Summit Partnership, L.P. (the Camden Summit Partnership). This operating partnership has issued
common limited partnership units. As of December 31, 2008, we held 93.5% 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 1,260,085 units, are primarily held by
former officers, directors and investors of Summit Properties, Inc. (Summit), a company we
acquired in 2005. 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 ten
trust managers own Camden Summit Partnership common limited partnership units.
In conjunction with our merger with Summit, we acquired employee notes receivable from former
employees of Summit. At December 31, 2008 and 2007, the notes receivable had an outstanding
balance of approximately $0.3 million and $2.0 million, respectively. During 2008, one employee
repaid all his notes outstanding totaling approximately $1.6 million. As of December 31, 2008, the
one remaining employee note receivable was 100% secured by Camden common shares.
5. Income Taxes
We have maintained and intend to maintain our election as a REIT under the Internal Revenue
Code of 1986, as amended. In order for us to continue to qualify as a REIT we must meet a number
of organizational and operational requirements, including a requirement to distribute annual
dividends to our shareholders equal to a minimum of 90% of our REIT taxable income, computed
without regards to the dividends paid deduction and our net capital gains. As a REIT, we generally
will not be subject to federal income tax on our taxable income at the corporate level to the
extent such income is distributed to our shareholders annually. 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 year ended December 31,
2006, we designated dividends from 2007 to meet our dividend distribution requirements. If we fail
to qualify as a REIT in any taxable year, we will be subject to federal and state income taxes at
regular corporate rates, including any applicable alternative minimum tax. In addition, we may not
be able to requalify as a REIT for the four subsequent taxable years. Historically, we have
incurred only state and local income, franchise, excise and margin taxes. Taxable income from
non-REIT activities managed through taxable REIT subsidiaries is subject to applicable federal,
state, and local income taxes.
F-14
The following table reconciles net income to REIT taxable income for the years ended December
31, 2008, 2007, and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Net income |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
$ |
232,846 |
|
Net (income) loss of taxable REIT subsidiaries included above |
|
|
9,239 |
|
|
|
(3,449 |
) |
|
|
(6,540 |
) |
|
|
|
|
|
|
|
|
|
|
Net income from REIT operations |
|
|
80,212 |
|
|
|
145,008 |
|
|
|
226,306 |
|
Book depreciation and amortization, including discontinued operations |
|
|
175,162 |
|
|
|
164,978 |
|
|
|
163,673 |
|
Tax depreciation and amortization |
|
|
(164,327 |
) |
|
|
(155,173 |
) |
|
|
(177,153 |
) |
Book/tax difference on gains/losses from capital transactions |
|
|
826 |
|
|
|
(25,985 |
) |
|
|
(90,694 |
) |
Book/tax difference on impairment of loss on land |
|
|
51,323 |
|
|
|
1,447 |
|
|
|
|
|
Book/tax difference on merger costs |
|
|
(68 |
) |
|
|
(234 |
) |
|
|
(331 |
) |
Other book/tax differences, net |
|
|
(15,342 |
) |
|
|
7,843 |
|
|
|
(767 |
) |
|
|
|
|
|
|
|
|
|
|
REIT taxable income |
|
|
127,786 |
|
|
|
137,884 |
|
|
|
121,034 |
|
Dividends paid deduction |
|
|
(151,346 |
) |
|
|
(144,604 |
) |
|
|
(121,034 |
) |
|
|
|
|
|
|
|
|
|
|
Dividends paid in excess of taxable income |
|
$ |
(23,560 |
) |
|
$ |
(6,720 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
A schedule of per share distributions we paid and reported to our shareholders is set forth in
the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Common
Share Distributions |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Ordinary income |
|
$ |
1.34 |
|
|
$ |
1.20 |
|
|
$ |
0.26 |
|
Long-term capital gain |
|
|
0.91 |
|
|
|
1.18 |
|
|
|
1.85 |
|
Unrecaptured Sec. 1250 gain |
|
|
0.55 |
|
|
|
0.38 |
|
|
|
0.53 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2.80 |
|
|
$ |
2.76 |
|
|
$ |
2.64 |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of distributions representing tax preference items |
|
|
5.59 |
% |
|
|
7.15 |
% |
|
|
5.99 |
% |
We have taxable REIT subsidiaries which are subject to federal and state income taxes. At
December 31, 2008, our taxable REIT subsidiaries had net operating loss carryforwards (NOLs) of
approximately $15.8 million which expire in years 2020 to 2028. Because
NOLs are subject to certain change of ownership, continuity of
business, and separate return year limitations, and because it is
unlikely the available NOLs will be utilized, no benefits of these NOLs have been recognized in
our 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
approximately $1,073.3 million.
Income Tax Expense Current. For the tax year ended December 31, 2008, we had current income
tax expense of approximately $0.8 million, comprised mainly of state income taxes. Income tax
expense decreased $2.2 million for the year ended December 31, 2008 as compared to the same period
in 2007, primarily attributable to a $1.6 million decrease in state taxes for our operating
partnerships. This decrease was primarily attributable to less gains
on property dispositions in states with high income tax rates and
changes in state tax laws affecting one of our operating partnerships.
Income
Tax Expense Deferred. For the years ended
December 31, 2008, 2007, and 2006, our deferred tax accounts
were not material.
F-15
6. Property Acquisitions, Dispositions, Assets Held for Sale, and Impairments
Acquisitions. In April 2007, we acquired Camden South Congress, a 253-apartment home
community located in Austin, Texas for approximately $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. We did not acquire any
operating properties in 2008.
Discontinued Operations and Assets Held for Sale. For the years ended December 31, 2008, 2007,
and 2006, income from discontinued operations included the results of operations of one operating
property, containing 671 apartment homes, classified as held for sale at December 31, 2008 and the
results of operations of eight operating properties sold in 2008 through their sale dates. For the
years ended December 31, 2007 and 2006, income from discontinued operations also included the
results of operations of ten operating properties sold during 2007 and eight operating properties
sold during 2006 through their sale dates. As of December 31, 2008, the one operating property
held for sale had a net book value of approximately $11.1 million.
The following is a summary of income from discontinued operations for the years presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2008 |
|
|
2007 |
|
|
2006 |
|
Property revenues |
|
$ |
15,857 |
|
|
$ |
41,693 |
|
|
$ |
56,233 |
|
Property expenses |
|
|
8,149 |
|
|
|
20,526 |
|
|
|
28,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,708 |
|
|
|
21,167 |
|
|
|
27,608 |
|
Interest |
|
|
466 |
|
|
|
998 |
|
|
|
996 |
|
Depreciation and amortization |
|
|
2,762 |
|
|
|
6,955 |
|
|
|
10,685 |
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
$ |
4,480 |
|
|
$ |
13,214 |
|
|
$ |
15,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of discontinued operations |
|
$ |
80,198 |
|
|
$ |
107,039 |
|
|
$ |
99,273 |
|
|
|
|
|
|
|
|
|
|
|
Dispositions. During the year ended December 31, 2008, we received net proceeds of
approximately $121.7 million and recognized gains of approximately $80.2 million from the sale of
eight operating properties, containing 2,392 apartment homes, to unaffiliated third parties. During the year ended
December 31, 2007, we received net proceeds of approximately $166.4 million and recognized gains of
approximately $106.3 million from the sale of ten operating properties, containing 3,054 apartment
homes, to unaffiliated third parties. In addition, we sold 0.9 acres of undeveloped land to an
unrelated third party, receiving net proceeds of approximately $6.0 million and recognizing gains
totaling approximately $0.7 million. During the year ended December 31, 2006, we received net
proceeds of approximately $137.3 million and recognized a gain of approximately $78.8 million on
the sale of eight operating properties, containing 3,041 apartment homes, to unaffiliated third
parties. In addition, we sold 8.7 acres of undeveloped land to an unrelated third party, receiving
net proceeds of approximately $41.0 million and recognizing gains totaling approximately $20.5
million.
During
the year ended December 31, 2008, we recognized gains of
approximately $1.1 million from the sale of land adjacent to our
regional office in Las Vegas, Nevada. The gain on this sale was not
included in discontinued operations as the operations and cash flows
of this asset were not clearly distinguished, operationally or for
reporting purposes, from the adjacent assets.
Partial
Sales and Dispositions to Joint Ventures included in Continuing
Operations. In March 2008, we sold Camden Amber Oaks, a
development community in Austin, Texas, to the Camden Multifamily Value Add Fund, L.P., (the
Fund) for approximately $8.9 million. No gain or loss was recognized on the sale. Concurrent with
the transaction, we invested approximately $1.9 million in the Fund. In August 2008, we sold Camden
South Congress to the Fund for approximately $44.2 million and recognized a gain of approximately
$1.8 million on the sale. In conjunction with the transaction, we invested approximately $2.8
million in the Fund.
There were no partial sales or dispositions to joint ventures for the year ended December 31,
2007.
During the year ended December 31, 2006, we recognized gains of approximately $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. We also recognized gains of
approximately $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.
F-16
The gains recognized from the partial sales of these assets are included in continuing
operations as we retained a partial interest in the ventures which own these assets.
Upon our decision to abandon efforts to develop certain land parcels and to market these
parcels for sale, we reclassify the operating expenses associated with these assets to discontinued
operations. At December 31, 2008, we had 4.6 acres of undeveloped land parcels classified as held
for sale with a net book value of approximately $9.2 million.
Impairment. The impairment loss on land for the year ended December 31, 2008 of approximately
$51.3 million reflects impairments in the value of land holdings for several potential development
projects we no longer plan to pursue, including approximately $48.6 million related to land
holdings for five projects we no longer plan to develop, approximately $1.6 million in the value of
a land parcel held for future development, and approximately $1.1 million for costs capitalized for
a potential joint venture development we no longer plan to pursue. The impairment loss on land for
the year ended December 31, 2007 of approximately $1.4 million reflects impairment in the value of
one potential development project we no longer plan to pursue. These impairment charges are the
difference between each parcels estimated fair value and the carrying value, which includes
pursuit and other costs.
7. 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 in part with secured, third-party debt. We
have guaranteed no more than our proportionate interest on six loans totaling approximately $75.3
million utilized for construction and development activities for our joint ventures. Additionally,
we eliminate fee income from property management services provided to these joint ventures to the
extent of our ownership.
Our contributions of real estate assets to joint ventures at formation in which we receive
cash are treated as partial sales provided certain criteria are met. As a result, the amounts
recorded as gain on sale of assets to joint ventures represent the change in ownership of the
underlying assets. Our initial recorded investment is comprised of our historical carrying value
of the assets on the date of the respective transaction multiplied by our ownership percentage in
the joint venture. We have provided mezzanine loans to certain joint ventures, which are recorded
as Notes receivable affiliates as discussed in Note 8, Notes Receivable.
We earn fees for property management, construction, development, and other services related to
joint ventures in which we own an interest. Fees earned for these services amounted to
approximately $9.2 million, $8.3 million, and $14.0 million for the years ended December 31, 2008,
2007, and 2006, respectively.
As of December 31, 2008, our equity investments in unconsolidated joint ventures accounted for
utilizing the equity method of accounting consisted of 24 joint ventures, with our ownership
percentages ranging from 15% to 72%. As discussed above, we provide property management services to
the operating joint ventures and may provide construction and development services to the joint
ventures currently under development. The following table summarizes balance sheet and income
statement data for the unconsolidated joint ventures as of December 31 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
|
|
|
Total Assets |
|
$ |
1,234.4 |
|
|
$ |
1,099.2 |
|
|
|
|
|
Total Third-Party Debt |
|
|
984.2 |
|
|
|
883.9 |
|
|
|
|
|
Total Equity |
|
|
168.7 |
|
|
|
149.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
Total Revenues |
|
$ |
127.1 |
|
|
$ |
113.7 |
|
|
$ |
88.8 |
|
Net Income (Loss) |
|
|
(18.7 |
) |
|
|
(3.7 |
) |
|
|
13.4 |
|
Equity in Income (Loss) (1) |
|
|
(1.3 |
) |
|
|
1.5 |
|
|
|
5.2 |
|
|
|
|
(1) |
|
Equity in Income excludes our ownership interest in transactions with our
joint ventures. |
F-17
Variable Interest Entities. As discussed in Note 2, Summary of Significant Accounting
Policies and Recent Accounting Pronouncements, Principles of Consolidation, investments acquired
or created are evaluated based on FIN 46R to determine whether or not the investment qualifies as a
VIE. If the investment is determined to fall under the scope of FIN 46R, we then determine whether
we are the primary beneficiary by performing a combination of qualitative and quantitative
measures, including analyzing expected investment portfolios for the entities using various
investment assumptions including product mix, return rates, and revenue and expense growth. The
projected cash flow allocations are reviewed to determine whether or not we are in a primary
beneficiary position based on expected returns or losses each variable interest holder would
absorb. In addition, we consider factors such as voting rights and decision-making abilities of
each variable interest holder.
The
Fund is a VIE, but we do not consolidate the Fund as we are not considered to be the primary beneficiary. The
Fund is in the form of a joint venture and was created to make investments in multifamily and
mixed-use projects and own, develop, redevelop, manage, supervise, and dispose of such investments.
The Fund currently contains one development project and one 253-unit operating property, and
continues to evaluate potential acquisitions. The Fund is financed with third-party secured debt.
The following table compares the carrying amount of our investment in the Fund to the maximum
loss exposure as of December 31, 2008 (in thousands):
|
|
|
|
|
|
|
|
|
VIE |
|
Investment (1) |
|
|
Maximum Loss Exposure (2) |
|
Fund |
|
$ |
3,504 |
|
|
$ |
37,500 |
|
|
|
|
(1) |
|
Included in investments in joint ventures in the consolidated balance sheets. |
|
(2) |
|
Based on maximum capital
commitment to the Fund; however, given we are the general partner,
maximum loss exposure could be unlimited. |
8. Notes Receivable
Affiliates. We provided mezzanine construction financing with rates ranging from LIBOR plus
3% to 14% per year, in connection with certain of our joint venture transactions. As of December
31, 2008 and 2007, the balance of Notes receivable affiliates totaled $58.1 million and $50.4
million, respectively, on notes maturing through 2010. We eliminate the interest and other income
to the extent of our percentage ownership in the joint ventures. We have reviewed the terms and
conditions underlying these notes receivable and believe these notes are collectible, and no
impairment existed at December 31, 2008.
At December 31, 2008, we were committed to funding additional amounts under the mezzanine
loans in the amount of approximately $31.7 million.
Other. We have a mezzanine financing program under which we provide secured financing to
owners of real estate properties. As of December 31, 2008 and 2007, the balance of secured note
receivables due from unrelated third parties was approximately $8.7 million and $11.6 million,
respectively. During the first quarter of 2008, one of our notes receivable, totaling
approximately $2.9 million with an interest rate of Prime Rate plus 1%, was paid in full. The
remaining note, which matures in January 2010, accrues interest at LIBOR plus 2%, which is
recognized as earned. We have reviewed the terms and conditions underlying the outstanding notes
receivable and believe this note is collectible, and no impairment existed at December 31, 2008.
F-18
9. Notes Payable
The following is a summary of our indebtedness:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
(in millions) |
|
2008 |
|
|
2007 |
|
Commercial Banks |
|
|
|
|
|
|
|
|
Unsecured line of credit and short-term borrowings |
|
$ |
145.0 |
|
|
$ |
115.0 |
|
$500 million term loan, due 2012 |
|
|
500.0 |
|
|
|
500.0 |
|
|
|
|
|
|
|
|
|
|
|
645.0 |
|
|
|
615.0 |
|
|
|
|
|
|
|
|
|
|
Senior unsecured notes |
|
|
|
|
|
|
|
|
$100.0 million 4.74% Notes, due 2009 |
|
|
81.9 |
|
|
|
99.9 |
|
$250.0 million 4.39% Notes, due 2010 |
|
|
150.4 |
|
|
|
249.9 |
|
$100.0 million 6.77% Notes, due 2010 |
|
|
79.9 |
|
|
|
100.0 |
|
$150.0 million 7.69% Notes, due 2011 |
|
|
149.8 |
|
|
|
149.7 |
|
$200.0 million 5.93% Notes, due 2012 |
|
|
199.6 |
|
|
|
199.5 |
|
$200.0 million 5.45% Notes, due 2013 |
|
|
199.3 |
|
|
|
199.2 |
|
$250.0 million 5.08% Notes, due 2015 |
|
|
248.9 |
|
|
|
248.8 |
|
$300.0 million 5.75% Notes, due 2017 |
|
|
246.0 |
|
|
|
299.0 |
|
|
|
|
|
|
|
|
|
|
|
1,355.8 |
|
|
|
1,546.0 |
|
|
|
|
|
|
|
|
|
|
Medium-term notes |
|
|
|
|
|
|
|
|
$15.0 million 7.63% Notes, due 2009 |
|
|
15.0 |
|
|
|
15.0 |
|
$25.0 million 4.64% Notes, due 2009 |
|
|
25.2 |
|
|
|
25.9 |
|
$10.0 million 4.90% Notes, due 2010 |
|
|
10.5 |
|
|
|
10.9 |
|
$14.5 million 6.79% Notes, due 2010 |
|
|
14.5 |
|
|
|
14.5 |
|
$35.0 million 4.99% Notes, due 2011 |
|
|
37.2 |
|
|
|
38.0 |
|
|
|
|
|
|
|
|
|
|
|
102.4 |
|
|
|
104.3 |
|
|
|
|
|
|
|
|
Total unsecured notes payable |
|
|
2,103.2 |
|
|
|
2,265.3 |
|
|
Secured notes |
|
|
|
|
|
|
|
|
3.18% 8.50% Conventional Mortgage Notes, due 2009 2018 |
|
|
686.6 |
|
|
|
498.8 |
|
2.12% Tax-exempt Mortgage Note, due 2028 (1) |
|
|
42.6 |
|
|
|
57.6 |
|
7.29% Tax-exempt Mortgage Note due 2025 |
|
|
|
|
|
|
6.4 |
|
|
|
|
|
|
|
|
|
|
|
729.2 |
|
|
|
562.8 |
|
|
|
|
|
|
|
|
Total notes payable |
|
$ |
2,832.4 |
|
|
$ |
2,828.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating
rate debt included in commercial bank indebtedness (1.53%) |
|
$ |
145.0 |
|
|
$ |
115.0 |
|
Floating rate tax-exempt debt included in secured notes (2.12%) |
|
|
42.6 |
|
|
|
57.6 |
|
Floating rate debt included in secured notes (3.18% 4.20%) |
|
|
180.9 |
|
|
|
|
|
Value of real estate assets subject to secured notes |
|
|
1,193.5 |
|
|
|
1,018.1 |
|
|
|
|
(1) |
|
Approximately $14.0 million of which was paid off in connection with the sale of the related
property in the third quarter of 2008. |
We have a $600 million unsecured credit facility which matures in January 2010 and can be
extended at our option to January 2011. 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 believe 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 of credit, it does reduce the amount available. At December 31, 2008, we had outstanding
letters of credit totaling approximately $10.5 million, and had approximately $444.5 million
available under our unsecured line of credit.
F-19
As an alternative to our unsecured line of credit, from time to time we 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.
On August 18, 2008, we entered into a construction loan agreement for approximately $33.1
million to finance the development of a multifamily apartment community in Houston, Texas. The loan
has an annual interest rate of LIBOR plus 1.45% and matures in August 2011. We entered into an
interest rate swap, with a notional amount fluctuating up to a maximum of 50% of the projected
outstanding balance on the construction loan. The swap will fix the interest rate at approximately
3.82% per annum for three years. The swap became effective November 2008. 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.
On September 24, 2008, we and one of our subsidiaries, the Camden Summit Partnership, as
guarantors, and CPT Community Owner, LLC and CSP Community Owner, LLC, each a Delaware limited
liability company and our subsidiary, as borrowers (collectively, the Borrowers), entered into a
secured master credit facility agreement for a $380 million credit facility. The facility is
comprised of a $175 million variable rate loan funded with a Fannie Mae Discount Mortgage Backed
Security (DMBS) and a $205 million fixed rate loan. The variable rate loan is currently priced at
approximately 4.2% per annum and is for a ten-year term. The DMBS rate has typically approximated
three-month LIBOR. The fixed rate loan has a fixed annual interest rate of 5.625% for a ten-year
term and provides for an additional one-year term with a variable rate. We have entered into
standard nonrecourse carveout guarantees. The obligations of the Borrowers under the credit
agreement are secured by cross-collateralized first priority mortgages on 17 of our multifamily
properties. We used the proceeds from this credit facility for the repayment of maturing debt,
including approximately $173 million of secured notes payable, as well as pay down of amounts
outstanding under our revolving line of credit, with the remainder being used for general corporate
purposes. Concurrent with this transaction, we entered into an interest rate cap, with a notional
amount of $175 million, to cap the variable interest at approximately 7.17% for three-month LIBOR,
before the applicable spread, per annum for three years. Although the
hedge is expected to offset our exposure to interest rate movements
it did not meet the strict hedge accounting requirements of
SFAS 133 for cash flow hedges. As such, gains and losses will be
recognized in earnings for the period of change.
On December 12, 2008, we commenced a cash tender offer for certain series of notes maturing in
2009 and 2010. We repurchased and retired approximately $108.3 million of our outstanding debt for
approximately $100.6 million. We recorded a gain of approximately $7.2 million in relation to the
tender offer, which is included in gain on early retirement of debt in our Consolidated Statements
of Income and Comprehensive Income. These gains were partially offset by the proportionate share
of unamortized loan costs and other costs associated with the retirement of the debt.
We also repurchased and retired approximately $82.7 million of various other outstanding debt
from unrelated third parties for approximately $75.7 million during fiscal year 2008. We recorded
a gain of approximately $6.4 million related to these transactions, which is included in gain on
early retirement of debt in our Consolidated Statements of Income and Comprehensive Income. These
gains were partially offset by the proportionate share of unamortized loan costs and other costs
associated with the retirement of the debt.
As part of the 2005 Summit merger, we assumed certain debt and recorded approximately $33.9
million as a fair value adjustment which is being amortized over the respective debt terms. As of
December 31, 2008, approximately $6.0 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 approximately $5.4 million, $7.1 million, and $7.6 million during the years ended
December 31, 2008, 2007 and 2006, respectively.
During 2008 we repaid approximately $191 million of unsecured notes either as they matured or
as an early repurchase and retirement, excluding repayments on our line of credit, with an
effective interest rate of 5.1%.
At December 31, 2008 and 2007, the weighted average interest rate on our floating rate debt,
which includes our unsecured line of credit, was 2.7% and 5.0%, respectively.
F-20
Our indebtedness, excluding our unsecured line of credit, had a weighted average maturity of
5.0 years. Scheduled repayments on outstanding debt, including our line of credit and scheduled
principal amortizations, and the weighted average interest rate on maturing debt at
December 31, 2008 are as follows:
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
Weighted Average |
|
Year |
|
Amount |
|
|
Interest Rate |
|
2009 |
|
$ |
134.4 |
|
|
|
5.2 |
% |
2010 |
|
|
355.5 |
|
|
|
5.1 |
|
2011 |
|
|
421.7 |
|
|
|
4.5 |
|
2012 |
|
|
772.2 |
|
|
|
5.4 |
|
2013 |
|
|
227.2 |
|
|
|
5.4 |
|
2014 and thereafter |
|
|
921.4 |
|
|
|
5.1 |
|
|
|
|
|
|
|
|
Total |
|
$ |
2,832.4 |
|
|
|
5.1 |
% |
|
|
|
|
|
|
|
10. Derivative Instruments & Hedging Activities
We have entered into interest rate hedge agreements 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 tables summarize our interest rate hedge agreements at
December 31, 2008 (dollars in millions):
|
|
|
|
|
Notional balance |
|
$ |
500 |
|
Hedging instrument |
|
|
Interest rate swap |
|
Effective interest rate |
|
|
5.24 |
%(1) |
Maturity date |
|
|
10/4/2012 |
|
Estimated liability fair value |
|
$ |
50.3 |
|
|
|
|
(1) |
|
Includes our interest rate spread of 0.5% |
|
|
|
|
|
Notional balance |
|
$ |
175 |
|
Hedging instrument |
|
|
Interest rate cap |
|
Interest
rate cap LIBOR strike |
|
|
7.17 |
% |
Maturity date |
|
|
10/1/2011 |
|
Estimated
asset fair value |
|
$ |
0.1 |
|
|
|
|
|
|
Notional balance |
|
$ |
3.4 |
|
Hedging instrument |
|
|
Interest rate swap |
|
Effective interest rate |
|
|
3.82 |
% |
Maturity date |
|
|
8/18/2011 |
|
Estimated liability fair value |
|
$ |
0.8 |
|
We have determined our interest rate hedge agreements qualify as effective cash flow hedges
under SFAS 133, Accounting for Derivative Instruments and Hedging Activities, resulting in our
recording the effective portion of cumulative changes in the fair value of the interest rate hedge
agreements in other comprehensive income (loss). Amounts recorded in other comprehensive income
(loss) will be reclassified into earnings as adjustments to interest expense in the periods in
which earnings are affected by the hedged cash flows. To adjust the interest rate hedge agreements
to their fair value, we recorded unrealized losses in other comprehensive loss of approximately
$35.1 million and $16.1 million during the years ended December 31, 2008 and 2007, respectively.
These amounts will be reclassified into interest expense in conjunction with the periodic payment
of the cash flows being hedged. The change in net unrealized losses for the years ended December
31, 2008 and 2007 reflect a reclassification of unrealized losses from accumulated other
comprehensive loss to interest expense of approximately $9.3 million and $0.3 million,
respectively. We anticipate approximately $18.4 million of accumulated other comprehensive loss at
December 31, 2008 will be reclassified as a charge to interest expense over the next twelve months
to offset the variability of cash flows of the hedge transaction during this period.
We assess, both at inception and on an on-going basis, the effectiveness of the cash flow
hedging relationships and any hedge ineffectiveness is recognized directly in earnings. During the
years ended December 31, 2008 and 2007, no hedge ineffectiveness was recognized in earnings and we
expect the hedging relationships to continue to be highly effective. The fair value of the
interest rate hedge agreements is included in other liabilities.
F-21
Derivative financial instruments expose us to credit risk in the event of non-performance by
the counterparties under the terms of the interest rate hedge agreements. We believe we minimize
our credit risk on these transactions by dealing with major, creditworthy financial institutions.
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 realized losses from counterparty non-performance is remote.
11. 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.
Valuation Assumptions. The weighted average fair value of options granted was $5.06, $11.04,
and $7.88 in 2008, 2007, and 2006, respectively. We estimated 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 options granted during each respective period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
Expected volatility |
|
|
20.5 |
% |
|
|
17.1 |
% |
|
|
16.6 |
% |
Risk-free interest rate |
|
|
3.6 |
% |
|
|
4.6 |
% |
|
|
4.4 |
% |
Expected dividend yield |
|
|
5.8 |
% |
|
|
3.7 |
% |
|
|
4.1 |
% |
Expected life (in years) |
|
|
7 |
|
|
|
6 |
|
|
|
5 |
|
Our computation of expected volatility for 2008 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 the prior year. Our computation of
expected life for 2008 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 ranging from 20% to 33.33% per year on each of the 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 2008 were exercised at prices ranging from $24.88 to $43.90 per share. At
December 31, 2008, options outstanding were exercisable at prices ranging from $24.88 to $73.32 per
share and had a weighted average remaining contractual life of 5.8 years.
The total intrinsic value of options exercised was approximately $0.5 million during the year
ended December 31, 2008. As of December 31, 2008, there was approximately $1.8 million of total
unrecognized compensation cost related to unvested options, which is expected to be amortized over
the next five years.
F-22
The following table summarizes share options outstanding and exercisable at December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Options |
|
|
Exercisable Options |
|
Range of |
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
Remaining |
|
Exercise |
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
Contractual |
|
Prices |
|
Number |
|
|
Price |
|
|
Number |
|
|
Price |
|
|
Life |
|
$24.88-$41.91 |
|
|
285,371 |
|
|
$ |
35.37 |
|
|
|
285,371 |
|
|
$ |
35.37 |
|
|
|
3.4 |
|
$42.90-$43.90 |
|
|
353,486 |
|
|
|
42.98 |
|
|
|
353,486 |
|
|
|
42.98 |
|
|
|
4.9 |
|
$44.00-$73.32 |
|
|
897,670 |
|
|
|
48.78 |
|
|
|
466,360 |
|
|
|
49.49 |
|
|
|
6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total options |
|
|
1,536,527 |
|
|
$ |
44.96 |
|
|
|
1,105,217 |
|
|
$ |
43.76 |
|
|
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes activity under our Share Incentive Plans for the three years
ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options and Share awards |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
1993 Share Plan |
|
2008 |
|
|
2008 Price |
|
|
2007 |
|
|
2007 Price |
|
|
2006 |
|
|
2006 Price |
|
Balance at January 1 |
|
|
1,885,989 |
|
|
$ |
30.34 |
|
|
|
1,953,800 |
|
|
$ |
31.99 |
|
|
|
2,045,730 |
|
|
$ |
32.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(39,013 |
) |
|
|
38.26 |
|
|
|
(60,695 |
) |
|
|
33.37 |
|
|
|
(89,879 |
) |
|
|
32.24 |
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
(6,986 |
) |
|
|
33.98 |
|
|
|
(1,086 |
) |
|
|
29.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net options |
|
|
(39,013 |
) |
|
|
|
|
|
|
(67,681 |
) |
|
|
|
|
|
|
(90,965 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
(130 |
) |
|
|
34.72 |
|
|
|
(965 |
) |
|
|
34.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net share awards |
|
|
|
|
|
|
|
|
|
|
(130 |
) |
|
|
|
|
|
|
(965 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31 |
|
|
1,846,976 |
|
|
$ |
29.68 |
|
|
|
1,885,989 |
|
|
$ |
30.34 |
|
|
|
1,953,800 |
|
|
$ |
31.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable options at December 31 |
|
|
165,811 |
|
|
$ |
32.78 |
|
|
|
174,576 |
|
|
$ |
32.68 |
|
|
|
262,779 |
|
|
$ |
32.78 |
|
Vested share awards at December 31 |
|
|
1,337,273 |
|
|
$ |
28.95 |
|
|
|
1,337,273 |
|
|
$ |
28.95 |
|
|
|
1,317,733 |
|
|
$ |
28.85 |
|
F-23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
Available |
|
|
Options and Share awards |
|
|
|
for |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
Issuance |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
2002 Share Plan |
|
2008 |
|
|
2008 |
|
|
2008 Price |
|
|
2007 |
|
|
2007 Price |
|
|
2006 |
|
|
2006 Price |
|
Balance at January 1 |
|
|
3,032,625 |
|
|
|
1,621,958 |
|
|
$ |
51.21 |
|
|
|
1,498,911 |
|
|
$ |
46.40 |
|
|
|
1,334,332 |
|
|
$ |
42.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
(444,264 |
) |
|
|
444,264 |
|
|
|
48.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
|
|
|
|
(5,937 |
) |
|
|
37.89 |
|
|
|
(63,013 |
) |
|
|
41.71 |
|
|
|
(75,366 |
) |
|
|
35.50 |
|
Forfeited |
|
|
12,954 |
|
|
|
(12,954 |
) |
|
|
48.02 |
|
|
|
(2,836 |
) |
|
|
39.99 |
|
|
|
(1,534 |
) |
|
|
36.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net options |
|
|
(431,310 |
) |
|
|
425,373 |
|
|
|
|
|
|
|
(65,849 |
) |
|
|
|
|
|
|
(76,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|