UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2013
OR
¨ | 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)
Texas | 76-6088377 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
11 Greenway Plaza, Suite 2400 Houston, Texas | 77046 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (713) 354-2500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Name of each exchange on which registered | |
Common Shares of Beneficial Interest, $.01 par value | 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 ý No ¨
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 ¨ No ý
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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's 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. ý
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):
Large accelerated filer | ý | Accelerated filer | ¨ | ||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Indicate by check mark whether the registrant is a shell company (as defined in the Rule 12b-2 of the Act). Yes ¨ No ý
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $5,825,629,302 based on a June 30, 2013 share price of $69.14.
On February 14, 2014, 85,420,966 common shares of the registrant were outstanding, net of treasury shares and shares held in our deferred compensation arrangements.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement in connection with its Annual Meeting of Shareholders to be held May 9, 2014 are incorporated by reference in Part III.
TABLE OF CONTENTS
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Item 1A. | ||
Item 1B. | ||
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Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
Item 15. | ||
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PART I
Item 1. Business
General
Formed on May 25, 1993, Camden Property Trust, a Texas real estate investment trust (“REIT”), is primarily engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. Unless the context requires otherwise, “we,” “our,” “us,” and the “Company” refer to Camden Property Trust and its consolidated subsidiaries. Our multifamily apartment communities are referred to as “communities,” “multifamily communities,” “properties,” or “multifamily properties” in the following discussion.
Our corporate offices are located at 11 Greenway Plaza, Suite 2400, 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, and Nominating and Corporate Governance Committees. Copies are also available, without charge, from Investor Relations, 11 Greenway Plaza, Suite 2400, Houston, Texas 77046. References to our website in this report are provided as a convenience and do not constitute, and should not be viewed as, an incorporation by reference of the information contained on, or available through our website, therefore such information should not be considered part of this report.
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 SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please contact the SEC at 1-800-SEC-0330 for further information about the operation of the SEC’s 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 primarily engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. As each of our communities has similar economic characteristics, residents, amenities, 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, 2013, we owned interests in, operated, or were developing 184 multifamily properties comprised of 64,328 apartment homes across the United States. Of the 184 properties, 14 properties were under construction and when completed will consist of a total of 4,354 apartment homes. Additionally, we are adding a subsequent phase to a stabilized community which will consist of 75 apartment homes and we own land holdings we may develop into multifamily apartment communities in the future.
Operating and Business 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 maximize the earnings potential of our communities.
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.
We continue to operate in our core markets which we believe provides an advantage due to economies of scale. We believe, 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 multiple 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.
We try to maximize capital appreciation of our properties by investing in markets characterized by conditions favorable to multifamily property appreciation. These markets generally feature one or more of the following:
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• | Strong economic growth leading to household formation and job growth, which in turn should lead to high demand for our apartments; |
• | An attractive quality of life, which may lead to high demand and retention for our apartments and allow us to more readily increase rents; and |
• | High single family home prices making our apartments a more economical housing choice. |
Subject to market conditions, we intend to continue to look for opportunities to develop and acquire existing communities. We continually evaluate our operating property and land development portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities develop.
We intend to continue to focus on strengthening our capital and liquidity positions by generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our liquidity requirements through cash flow generated from operations, availability under our unsecured credit facility and other short-term borrowings, proceeds from property dispositions, the use of debt and equity offerings under our automatic shelf registration statement, equity issued from our at-the-market share offering program, other unsecured borrowings and secured mortgages.
Sophisticated Property Management. We believe the depth of our organization enables us to deliver quality services, promote resident satisfaction, and retain residents, thereby increasing our operating revenues and reducing our 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, and we strive to motivate our on-site employees through incentive compensation arrangements based upon property operational results, rental rate increases, occupancy levels, 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 financial results. 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 property's 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 help ensure timely response to residents' changing needs and a high level of satisfaction.
Investments in Joint Ventures. We have entered into, and may continue in the future to enter into, joint ventures through which we own an indirect economic interest of less than 100% of the community or land owned directly by the joint venture. We currently have two discretionary investment funds (the “funds”), both of which were closed to future investment as of December 31, 2013. See Note 8, “Investments in Joint Ventures,” and Note 14, “Commitments and Contingencies,” in 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 communities in attracting residents. Our properties compete directly with other multifamily properties as well as with condominiums and single-family homes which are available for rent or purchase in the markets in which our communities are located. This competitive environment could have a material adverse effect on our ability to lease apartment homes at our present communities or any newly developed or acquired community, as well as in the rents charged.
Employees
At December 31, 2013, we had approximately 1,780 employees, including executive, administrative, and community personnel. Our employee headcount has historically not varied significantly throughout the year.
Qualification as a Real Estate Investment Trust
As of December 31, 2013, 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 continue to meet certain requirements of the Code.
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Item 1A. Risk Factors
In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition, or results of operations could be materially adversely affected by any of these risks. Additional risks not presently known to us, or which we currently consider immaterial, may also impair our business and operations.
Risks Associated with Capital Markets, Credit Markets, and Real Estate
Volatility in capital and credit markets, or other unfavorable changes in economic conditions, could adversely impact us.
The capital and credit markets are subject to volatility and disruption, as particularly experienced in recent years. Although the economy has been gradually improving, there can be no assurance capital and credit markets will continue to improve in the near future. In the event of renewed market disruption or volatility, 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, our ability to make distributions to shareholders, acquire and dispose of assets and continue our development activities. Other weakened economic conditions, including job losses, high unemployment levels, stock market volatility, and uncertainty about the future, could adversely affect rental rates and occupancy levels. Unfavorable changes in economic conditions may have a material adverse impact on our cash flows and operating results.
Additional key economic risks which may adversely affect conditions in the markets in which we operate include the following:
• | local conditions, such as an oversupply of apartments or other housing available for rent, or a reduction in demand for apartments in the area; |
• | declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants; |
• | declines in market rental rates; |
• | low mortgage interest rates and home pricing, making alternative housing more affordable; |
• | government or builder incentives which enable home buyers to put little or no money down, making alternative housing options more attractive; |
• | regional economic downturns which affect one or more of our geographical markets; and |
• | increased operating costs, if these costs cannot be passed through to residents. |
Short-term leases expose us to the effects of declining market rents.
Our apartment leases are for a term of fifteen months or less. As these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.
We face risks associated with land holdings and related activities.
We hold land for future development and may in the future acquire additional land holdings. The risks inherent in purchasing, owning, 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. In addition, carrying costs can be significant and can result in losses or reduced profitability. 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 fully recover or at a cost which precludes our developing a profitable multifamily community. If there are subsequent changes in the fair value of our land holdings which we determine is less than the carrying basis of our land holdings reflected in our financial statements plus estimated costs to sell, we may be required to take future impairment charges which would reduce our net income.
We could be negatively impacted by the elimination of Fannie Mae or Freddie Mac.
Fannie Mae and Freddie Mac are a major source of financing for secured multifamily real estate. We and other multifamily companies have utilized Fannie Mae and Freddie Mac to finance growth by purchasing or guaranteeing apartment loans. In June 2013, a bipartisan group of senators proposed an overhaul of the housing finance system which would wind down Fannie Mae and Freddie Mac within five years; in August 2013, President Obama announced his support for this legislation. A final decision by the government to eliminate Fannie Mae or Freddie Mac, or reduce their role in the mortgage market, may adversely affect interest rates, capital availability, and the development of multifamily communities.
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Compliance or failure to comply with laws, including those 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, rules, and regulations, generally require public accommodations and apartment homes 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 costs and obligations 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 the government or 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 realized.
Risks Associated with Our Operations
Development, redevelopment and construction risks could impact our profitability.
We intend to continue to develop, redevelop and construct multifamily apartment communities for our portfolio, with 2014 development starts expected in the range of $150 to $300 million and 2014 redevelopment expenditures in the range of $55 to $75 million. Our development, redevelopment and construction activities may be exposed to a number of risks which may increase our construction costs and decrease our profitability, including the following:
• | inability to obtain, or delays in obtaining, necessary zoning, land-use, building, occupancy, and other required permits and authorizations; |
• | increased materials and/or labor costs, problems with subcontractors, or other costs including those costs due to errors and omissions which occur in the design or construction process; |
• | inability to obtain financing with favorable terms; |
• | inability to complete construction and lease-up of a community on schedule; |
• | forecasted occupancy and rental rates may differ from the actual results; and |
• | the incurrence of costs related to the abandonment of development opportunities which we have pursued and subsequently deemed unfeasible. |
Our inability to successfully implement our development, redevelopment and construction strategy could adversely affect our results of operations and our ability to satisfy our financial obligations and pay distributions to shareholders.
One of our wholly-owned subsidiaries is engaged in the business of providing general contracting services under construction contracts entered into between it and third-parties (including nonconsolidated subsidiaries). The terms of those construction contracts generally require this subsidiary to estimate the time and costs to complete a project, and to assume the risk these estimates may be greater than anticipated. As a result, profitability on those contracts is dependent on the ability to accurately predict such factors. The time and costs necessary to complete a project may be affected by a variety of factors, including those listed above, many of which are beyond this subsidiary’s control. In addition, the terms of those contracts generally require this subsidiary to warrant its work for a period of time during which it may be required to repair, replace, or rebuild non-conforming work. Further, trailing liabilities, based on various legal theories such as claims of negligent construction, may result from such projects, and these trailing liabilities may go on for a number of years depending on the length of the statute of repose in various jurisdictions.
Our acquisition strategy may not produce the cash flows expected.
We may acquire additional operating properties on a selective basis. Our acquisition activities are subject to a number of risks, including the following:
• | we may not be able to successfully integrate acquired properties into our existing operations; |
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• | our estimates of the costs, if any, of repositioning or redeveloping the acquired property may prove inaccurate; |
• | the expected occupancy, rental rates and operating expenses may differ from the actual results; |
• | we may not be able to obtain adequate financing; and |
• | we may not be able to identify suitable candidates on terms acceptable to us and may not achieve expected returns or 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 multifamily REITs, will compete with us to acquire additional operating 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 by similar types of owners. 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 catastrophic 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 discretionary funds involve risks not present in investments in which we are the sole investor.
We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including the possibility the other joint venture partner may have business goals which are inconsistent with ours, possess the ability to take action or withhold consent contrary to our requests, or become insolvent and require us to assume and fulfill the joint venture’s financial obligations. We and our joint venture partner may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire our joint venture partner’s interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate, finance, and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement.
The risks associated with our discretionary funds, which we manage as the general partner and advisor and which as of December 31, 2013 were closed for future investments, include the following:
• | one of our wholly-owned subsidiaries is the general partner of the funds and has unlimited liability for the third-party debts, obligations, and liabilities of the funds pursuant to partnership law; |
• | 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; |
• | while we have broad discretion to manage the funds and make investment decisions on behalf of the funds, the investors or the advisory boards 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; |
• | our ability to dispose of all or a portion of our investments in the funds is subject to significant restrictions; and |
• | we may be liable if the funds fail to comply with various tax or other regulatory matters. |
Tax matters, including failure to qualify as a REIT, could have adverse consequences.
We may not continue to qualify as a REIT in the future. 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; |
• | 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 income, including any distributions to shareholders, as we would be required to pay significant income taxes for the year or years involved; and |
• | 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 values at either the corporate or individual property levels. Any additional tax expense incurred would decrease the cash available for cash distributions to our common shareholders, and non-controlling interest holders.
A cybersecurity incident and other technology disruptions could negatively impact our business and our relationships with residents.
We use technology in substantially all aspects of our business operations. We also use mobile devices, social networking and other online activities to connect with our employees, suppliers and our residents. Such uses give rise to potential cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of information. Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including residents' and suppliers' personal information, private information about employees, and financial and strategic information about us. Further, as we pursue our strategy to grow through acquisitions and developments and to pursue new initiatives to improve our operations, we are also expanding our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with our operations, we may become increasingly vulnerable to such risks. Additionally, the measures we have implemented to prevent security breaches and cyber incidents may not be effective. The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third-parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of residents, potential liability and competitive disadvantage, any of which could result in a material effect on our financial condition or results of operations.
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.
Litigation risks could affect our business.
As a large publicly-traded owner of multifamily properties, we are at risk of becoming involved in legal proceedings, including consumer, employment, tort, or commercial litigation, which if decided adversely to or settled by us, could result in liability which is material to our financial condition or results of operations.
Risks Associated with Our Indebtedness and Financing
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:
• | delay in resident lease commencements; |
• | decline in occupancy; |
• | failure of residents to make rental payments when due; |
• | the attractiveness of our properties to residents and potential residents; |
• | our ability to adequately manage and maintain our communities; |
• | competition from other available apartments and housing alternatives; |
• | changes in market rents; and |
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• | increases in operating expenses. |
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 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 regard to the dividends paid deduction and our net capital gains. This requirement limits the cash available to meet required principal payments on our debt.
We have significant debt, which could have adverse consequences.
As of December 31, 2013, we had outstanding debt of approximately $2.5 billion. This indebtedness could have adverse consequences, including:
• | 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 mortgaged property; |
• | our vulnerability to general adverse economic and industry conditions is increased; and |
• | our flexibility in planning for, or reacting to, changes in business and industry conditions is limited. |
The mortgages on our properties subject to secured debt, our unsecured credit facility, and the indenture 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 before the scheduled maturity date, which could adversely 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 our unsecured indebtedness will not 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 on 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 Code.
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.
Issuances of additional debt may adversely impact our financial condition.
Our capital requirements depend on numerous factors, including the rental and occupancy rates of our multifamily properties, dividend payment rates to our equity holders, development, redevelopment and other 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. If we issue more debt, 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.
Moody’s, Standard & Poor's and Fitch, the major debt rating agencies, routinely evaluate our debt and have given us ratings of Baa1, BBB+, and BBB+, respectively, each with stable outlooks, 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. Due to changes in market conditions, 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.
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Risks Associated with Our Shares
Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders.
For us to maintain our qualification as a REIT, we must have 100 or more shareholders during the year and not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term “individuals” includes a number of specified entities. To minimize the possibility 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.
Our share price will fluctuate.
The market price and trading volume of our common shares are subject to fluctuation due to general market conditions, the risks discussed in this report and other matters, including 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 interest 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. |
The form, timing and/or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.
The form, timing and/or amount of dividend distributions will be declared at the discretion of our Board of Trust Managers and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the Board of Trust Managers may consider relevant. The Board of Trust Managers may modify the form, timing and/or amount of dividends from time to time.
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 exercise room facilities, and controlled-access gates. Many of the apartment homes offer additional amenities common to multifamily rental properties.
Operating Properties (including properties held through unconsolidated joint ventures)
The 170 operating properties in which we owned interests and operated at December 31, 2013 averaged 948 square feet of living area per apartment home. For the year ended December 31, 2013, no single operating property accounted for greater than 1.6% of our total revenues. Our operating properties had a weighted average occupancy rate of approximately 95% for each of the years ended December 31, 2013 and 2012, and an average annual rental revenue per apartment home of $1,157 and $1,045 for the years ended December 31, 2013 and 2012, respectively. Resident lease terms generally range from six to fifteen months. 151 of our operating properties have over 200 apartment homes, with the largest having 930 apartment homes. Our operating properties have an average age of 12 years (calculated on the basis of investment dollars). Our operating properties were constructed and placed in service as follows:
8
Year Placed in Service | Number of Operating Properties |
2006-2013 | 49 |
2001-2005 | 32 |
1996-2000 | 49 |
1991-1995 | 18 |
1986-1990 | 15 |
Prior to 1986 | 7 |
Property Table
The following table sets forth information with respect to our 170 operating properties at December 31, 2013:
OPERATING PROPERTIES | |||||||||||||
Property and Location | Year Placed In Service | Average Apartment Size (Sq. Ft.) | Number of Apartments | 2013 Average Occupancy (1) | 2013 Average Monthly Rental Rate per Apartment (2) | ||||||||
ARIZONA | |||||||||||||
Phoenix | |||||||||||||
Camden Copper Square | 2000 | 786 | 332 | 93.3 | % | $ | 939 | ||||||
Camden Legacy | 1996 | 1,067 | 428 | 93.6 | 1,006 | ||||||||
Camden Montierra | 1999 | 1,071 | 249 | 93.1 | 1,182 | ||||||||
Camden Pecos Ranch | 2001 | 924 | 272 | 93.7 | 886 | ||||||||
Camden San Marcos | 1995 | 984 | 320 | 92.7 | 1,004 | ||||||||
Camden San Paloma | 1993/1994 | 1,042 | 324 | 94.0 | 1,012 | ||||||||
Camden Sotelo (3) | 2008/2012 | 1,303 | 170 | 92.2 | 1,205 | ||||||||
CALIFORNIA | |||||||||||||
Los Angeles/Orange County | |||||||||||||
Camden Crown Valley | 2001 | 1,009 | 380 | 95.6 | 1,663 | ||||||||
Camden Harbor View | 2004 | 975 | 538 | 95.3 | 2,044 | ||||||||
Camden Main & Jamboree (4) | 2008 | 1,011 | 290 | 96.1 | 1,868 | ||||||||
Camden Martinique | 1986 | 794 | 714 | 95.9 | 1,409 | ||||||||
Camden Parkside | 1972 | 836 | 421 | 94.5 | 1,291 | ||||||||
Camden Sea Palms | 1990 | 891 | 138 | 96.1 | 1,567 | ||||||||
San Diego/Inland Empire | |||||||||||||
Camden Landmark | 2006 | 982 | 469 | 93.3 | 1,335 | ||||||||
Camden Old Creek | 2007 | 1,037 | 350 | 95.4 | 1,660 | ||||||||
Camden Sierra at Otay Ranch | 2003 | 962 | 422 | 94.3 | 1,536 | ||||||||
Camden Tuscany | 2003 | 896 | 160 | 94.8 | 2,109 | ||||||||
Camden Vineyards | 2002 | 1,053 | 264 | 94.7 | 1,254 | ||||||||
COLORADO | |||||||||||||
Denver | |||||||||||||
Camden Belleview Station | 2009 | 888 | 270 | 93.3 | 1,224 | ||||||||
Camden Caley | 2000 | 925 | 218 | 96.0 | 1,078 | ||||||||
Camden Denver West | 1997 | 1,015 | 320 | 95.8 | 1,243 | ||||||||
Camden Highlands Ridge | 1996 | 1,149 | 342 | 92.9 | 1,334 | ||||||||
Camden Interlocken | 1999 | 1,010 | 340 | 95.5 | 1,282 | ||||||||
Camden Lakeway | 1997 | 932 | 451 | 94.9 | 1,082 | ||||||||
9
OPERATING PROPERTIES | |||||||||||||
Property and Location | Year Placed In Service | Average Apartment Size (Sq. Ft.) | Number of Apartments | 2013 Average Occupancy (1) | 2013 Average Monthly Rental Rate per Apartment (2) | ||||||||
WASHINGTON DC METRO | |||||||||||||
Camden Ashburn Farm | 2000 | 1,062 | 162 | 96.1 | % | $ | 1,507 | ||||||
Camden Clearbrook | 2007 | 1,048 | 297 | 95.7 | 1,364 | ||||||||
Camden College Park (4) | 2008 | 942 | 508 | 95.6 | 1,592 | ||||||||
Camden Dulles Station | 2009 | 978 | 382 | 94.6 | 1,619 | ||||||||
Camden Fair Lakes | 1999 | 1,056 | 530 | 95.6 | 1,684 | ||||||||
Camden Fairfax Corner | 2006 | 934 | 488 | 95.8 | 1,716 | ||||||||
Camden Fallsgrove | 2004 | 996 | 268 | 95.3 | 1,694 | ||||||||
Camden Grand Parc | 2002 | 674 | 105 | 94.1 | 2,440 | ||||||||
Camden Lansdowne | 2002 | 1,006 | 690 | 95.9 | 1,451 | ||||||||
Camden Largo Town Center | 2000/2007 | 1,027 | 245 | 94.6 | 1,610 | ||||||||
Camden Monument Place | 2007 | 856 | 368 | 95.8 | 1,532 | ||||||||
Camden Potomac Yard | 2008 | 835 | 378 | 96.1 | 2,042 | ||||||||
Camden Roosevelt | 2003 | 856 | 198 | 94.2 | 2,545 | ||||||||
Camden Russett | 2000 | 992 | 426 | 94.4 | 1,402 | ||||||||
Camden Silo Creek | 2004 | 975 | 284 | 96.5 | 1,465 | ||||||||
Camden South Capitol (5) (6) | 2013 | 821 | 276 | Lease-up | 1,670 | ||||||||
Camden Summerfield | 2008 | 957 | 291 | 93.8 | 1,587 | ||||||||
Camden Summerfield II | 2012 | 936 | 187 | 93.5 | 1,587 | ||||||||
FLORIDA | |||||||||||||
Southeast Florida | |||||||||||||
Camden Aventura | 1995 | 1,108 | 379 | 94.7 | 1,645 | ||||||||
Camden Brickell | 2003 | 937 | 405 | 95.9 | 1,775 | ||||||||
Camden Doral | 1999 | 1,120 | 260 | 95.8 | 1,606 | ||||||||
Camden Doral Villas | 2000 | 1,253 | 232 | 94.1 | 1,722 | ||||||||
Camden Las Olas | 2004 | 1,043 | 420 | 94.4 | 1,859 | ||||||||
Camden Plantation | 1997 | 1,201 | 502 | 96.1 | 1,368 | ||||||||
Camden Portofino | 1995 | 1,112 | 322 | 96.6 | 1,412 | ||||||||
Orlando | |||||||||||||
Camden Club | 1986 | 1,077 | 436 | 95.7 | 907 | ||||||||
Camden Hunter’s Creek | 2000 | 1,075 | 270 | 95.4 | 1,060 | ||||||||
Camden Lago Vista | 2005 | 955 | 366 | 96.1 | 933 | ||||||||
Camden LaVina | 2012 | 970 | 420 | 94.3 | 1,096 | ||||||||
Camden Lee Vista | 2000 | 937 | 492 | 97.0 | 897 | ||||||||
Camden Orange Court | 2008 | 817 | 268 | 96.4 | 1,155 | ||||||||
Camden Renaissance | 1996/1998 | 899 | 578 | 95.9 | 836 | ||||||||
Camden Town Square (7) | 2012 | 986 | 438 | 93.8 | 1,124 | ||||||||
Camden World Gateway | 2000 | 979 | 408 | 95.0 | 1,007 | ||||||||
Tampa/St. Petersburg | |||||||||||||
Camden Bay | 1997/2001 | 943 | 760 | 95.1 | 905 | ||||||||
Camden Bayside | 1987/1989 | 748 | 832 | 96.0 | 806 | ||||||||
Camden Lakes | 1982/1983 | 732 | 688 | 95.1 | 752 | ||||||||
Camden Lakeside | 1986 | 729 | 228 | 94.9 | 772 | ||||||||
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OPERATING PROPERTIES | |||||||||||||
Property and Location | Year Placed In Service | Average Apartment Size (Sq. Ft.) | Number of Apartments | 2013 Average Occupancy (1) | 2013 Average Monthly Rental Rate per Apartment (2) | ||||||||
Camden Montague | 2012 | 975 | 192 | 95.8 | % | $ | 1,140 | ||||||
Camden Preserve | 1996 | 942 | 276 | 93.8 | 1,134 | ||||||||
Camden Providence Lakes | 1996 | 1,024 | 260 | 95.1 | 917 | ||||||||
Camden Royal Palms | 2006 | 1,017 | 352 | 95.6 | 965 | ||||||||
Camden Visconti (6) | 2007 | 1,125 | 450 | 95.4 | 1,150 | ||||||||
Camden Westchase Park | 2012 | 993 | 348 | 95.2 | 1,223 | ||||||||
Camden Westshore | 1986 | 728 | 278 | 96.0 | 889 | ||||||||
Camden Woods | 1986 | 1,223 | 444 | 95.3 | 885 | ||||||||
GEORGIA | |||||||||||||
Atlanta | |||||||||||||
Camden Brookwood | 2002 | 912 | 359 | 95.9 | 1,070 | ||||||||
Camden Creekstone | 2002 | 990 | 223 | 95.8 | 1,003 | ||||||||
Camden Deerfield | 2000 | 1,187 | 292 | 94.3 | 1,068 | ||||||||
Camden Dunwoody | 1997 | 1,007 | 324 | 94.1 | 997 | ||||||||
Camden Midtown Atlanta | 2001 | 935 | 296 | 95.5 | 1,104 | ||||||||
Camden Peachtree City | 2001 | 1,027 | 399 | 96.9 | 989 | ||||||||
Camden Phipps (6) | 1996 | 1,018 | 234 | 96.0 | 1,296 | ||||||||
Camden River | 1997 | 1,103 | 352 | 95.7 | 931 | ||||||||
Camden Shiloh | 1999/2002 | 1,143 | 232 | 95.1 | 927 | ||||||||
Camden St. Clair | 1997 | 999 | 336 | 94.8 | 1,021 | ||||||||
Camden Stockbridge | 2003 | 1,009 | 304 | 94.7 | 774 | ||||||||
Camden Vantage (3) | 2010 | 901 | 592 | 94.3 | 966 | ||||||||
NEVADA | |||||||||||||
Las Vegas | |||||||||||||
Camden Bel Air | 1988/1995 | 943 | 528 | 93.4 | 716 | ||||||||
Camden Breeze | 1989 | 846 | 320 | 93.7 | 720 | ||||||||
Camden Canyon | 1995 | 987 | 200 | 95.8 | 866 | ||||||||
Camden Commons | 1988 | 936 | 376 | 94.4 | 751 | ||||||||
Camden Cove | 1990 | 898 | 124 | 95.4 | 717 | ||||||||
Camden Del Mar | 1995 | 986 | 560 | 95.3 | 904 | ||||||||
Camden Fairways | 1989 | 896 | 320 | 95.8 | 874 | ||||||||
Camden Hills | 1991 | 439 | 184 | 93.1 | 489 | ||||||||
Camden Legends | 1994 | 792 | 113 | 95.7 | 822 | ||||||||
Camden Palisades | 1991 | 905 | 624 | 95.0 | 719 | ||||||||
Camden Pines | 1997 | 982 | 315 | 94.2 | 790 | ||||||||
Camden Pointe | 1996 | 983 | 252 | 95.1 | 731 | ||||||||
Camden Summit | 1995 | 1,187 | 234 | 94.1 | 1,097 | ||||||||
Camden Tiara | 1996 | 1,043 | 400 | 95.1 | 856 | ||||||||
Camden Vintage | 1994 | 978 | 368 | 94.1 | 696 | ||||||||
NORTH CAROLINA | |||||||||||||
Charlotte | |||||||||||||
Camden Ballantyne | 1998 | 1,045 | 400 | 95.8 | 1,090 | ||||||||
Camden Cotton Mills | 2002 | 905 | 180 | 96.7 | 1,351 | ||||||||
11
OPERATING PROPERTIES | |||||||||||||
Property and Location | Year Placed In Service | Average Apartment Size (Sq. Ft.) | Number of Apartments | 2013 Average Occupancy (1) | 2013 Average Monthly Rental Rate per Apartment (2) | ||||||||
Camden Dilworth | 2006 | 857 | 145 | 96.8 | % | $ | 1,310 | ||||||
Camden Fairview | 1983 | 1,036 | 135 | 96.4 | 1,001 | ||||||||
Camden Foxcroft | 1979 | 940 | 156 | 97.6 | 880 | ||||||||
Camden Grandview | 2000 | 1,057 | 266 | 97.7 | 1,471 | ||||||||
Camden Pinehurst | 1967 | 1,147 | 407 | 96.1 | 886 | ||||||||
Camden Sedgebrook | 1999 | 972 | 368 | 96.4 | 947 | ||||||||
Camden Simsbury | 1985 | 874 | 100 | 96.9 | 981 | ||||||||
Camden South End Square | 2003 | 882 | 299 | 96.7 | 1,227 | ||||||||
Camden Stonecrest | 2001 | 1,098 | 306 | 95.5 | 1,117 | ||||||||
Camden Touchstone | 1986 | 899 | 132 | 97.7 | 832 | ||||||||
Raleigh | |||||||||||||
Camden Asbury Village (6) | 2009 | 1,009 | 350 | 95.8 | 1,030 | ||||||||
Camden Crest | 2001 | 1,013 | 438 | 96.3 | 852 | ||||||||
Camden Governor’s Village | 1999 | 1,046 | 242 | 95.5 | 935 | ||||||||
Camden Lake Pine | 1999 | 1,066 | 446 | 94.8 | 910 | ||||||||
Camden Manor Park | 2006 | 966 | 484 | 97.0 | 935 | ||||||||
Camden Overlook | 2001 | 1,060 | 320 | 95.8 | 1,013 | ||||||||
Camden Reunion Park | 2000/2004 | 972 | 420 | 94.3 | 803 | ||||||||
Camden Westwood | 1999 | 1,027 | 354 | 94.2 | 862 | ||||||||
TEXAS | |||||||||||||
Austin | |||||||||||||
Camden Amber Oaks (6) | 2009 | 862 | 348 | 96.3 | 903 | ||||||||
Camden Amber Oaks II (6) | 2012 | 910 | 244 | 95.3 | 1,003 | ||||||||
Camden Brushy Creek (6) | 2008 | 882 | 272 | 96.0 | 914 | ||||||||
Camden Cedar Hills | 2008 | 911 | 208 | 95.8 | 1,060 | ||||||||
Camden Gaines Ranch | 1997 | 955 | 390 | 94.6 | 1,201 | ||||||||
Camden Huntingdon | 1995 | 903 | 398 | 95.2 | 872 | ||||||||
Camden Ridgecrest | 1995 | 855 | 284 | 94.6 | 800 | ||||||||
Camden Shadow Brook (6) | 2009 | 909 | 496 | 96.0 | 946 | ||||||||
Camden Stoneleigh | 2001 | 908 | 390 | 95.0 | 1,045 | ||||||||
Corpus Christi | |||||||||||||
Camden Breakers | 1996 | 868 | 288 | 95.7 | 1,097 | ||||||||
Camden Copper Ridge | 1986 | 775 | 344 | 96.1 | 809 | ||||||||
Camden Miramar (8) | 1994-2013 | 492 | 930 | 72.5 | 999 | ||||||||
Camden South Bay (6) | 2007 | 1,055 | 270 | 95.6 | 1,218 | ||||||||
Dallas/Fort Worth | |||||||||||||
Camden Addison | 1996 | 942 | 456 | 94.9 | 915 | ||||||||
Camden Belmont | 2010/2012 | 945 | 477 | 95.0 | 1,353 | ||||||||
Camden Buckingham | 1997 | 919 | 464 | 95.8 | 966 | ||||||||
Camden Centreport | 1997 | 911 | 268 | 95.0 | 900 | ||||||||
Camden Cimarron | 1992 | 772 | 286 | 95.6 | 936 | ||||||||
Camden Design District (6) | 2009 | 939 | 355 | 94.7 | 1,246 | ||||||||
Camden Farmers Market | 2001/2005 | 932 | 904 | 94.5 | 1,073 | ||||||||
12
OPERATING PROPERTIES | |||||||||||||
Property and Location | Year Placed In Service | Average Apartment Size (Sq. Ft.) | Number of Apartments | 2013 Average Occupancy (1) | 2013 Average Monthly Rental Rate per Apartment (2) | ||||||||
Camden Glen Lakes | 1979 | 877 | 424 | 95.1 | % | $ | 871 | ||||||
Camden Henderson | 2012 | 967 | 106 | 93.1 | 1,469 | ||||||||
Camden Legacy Creek | 1995 | 831 | 240 | 95.9 | 964 | ||||||||
Camden Legacy Park | 1996 | 871 | 276 | 95.3 | 991 | ||||||||
Camden Panther Creek (6) | 2009 | 946 | 295 | 95.3 | 1,042 | ||||||||
Camden Riverwalk (6) | 2008 | 982 | 600 | 95.2 | 1,247 | ||||||||
Camden Valley Park | 1986 | 743 | 516 | 96.7 | 853 | ||||||||
Houston | |||||||||||||
Camden City Centre | 2007 | 932 | 379 | 96.6 | 1,536 | ||||||||
Camden City Centre II (7) | 2013 | 868 | 268 | 96.2 | 1,479 | ||||||||
Camden Cypress Creek (6) | 2009 | 993 | 310 | 96.1 | 1,163 | ||||||||
Camden Downs at Cinco Ranch (6) | 2004 | 1,075 | 318 | 96.3 | 1,173 | ||||||||
Camden Grand Harbor (6) | 2008 | 959 | 300 | 96.4 | 1,076 | ||||||||
Camden Greenway | 1999 | 861 | 756 | 94.8 | 1,302 | ||||||||
Camden Heights (6) | 2004 | 927 | 352 | 97.0 | 1,426 | ||||||||
Camden Holly Springs | 1999 | 934 | 548 | 94.4 | 1,105 | ||||||||
Camden Midtown | 1999 | 844 | 337 | 96.5 | 1,602 | ||||||||
Camden Northpointe (6) | 2008 | 940 | 384 | 96.5 | 1,008 | ||||||||
Camden Oak Crest | 2003 | 870 | 364 | 95.9 | 969 | ||||||||
Camden Park | 1995 | 866 | 288 | 96.6 | 924 | ||||||||
Camden Piney Point (6) | 2004 | 919 | 318 | 96.2 | 1,181 | ||||||||
Camden Plaza | 2007 | 915 | 271 | 96.8 | 1,485 | ||||||||
Camden Post Oak (3) | 2003 | 1,200 | 356 | 95.8 | 2,484 | ||||||||
Camden Royal Oaks | 2006 | 923 | 236 | 95.6 | 1,175 | ||||||||
Camden Royal Oaks II (7) | 2012 | 1,054 | 104 | 98.2 | 1,340 | ||||||||
Camden Spring Creek (6) | 2004 | 1,080 | 304 | 96.6 | 1,079 | ||||||||
Camden Stonebridge | 1993 | 845 | 204 | 97.2 | 964 | ||||||||
Camden Sugar Grove | 1997 | 921 | 380 | 96.6 | 972 | ||||||||
Camden Travis Street | 2010 | 819 | 253 | 97.5 | 1,548 | ||||||||
Camden Vanderbilt | 1996/1997 | 863 | 894 | 97.0 | 1,338 | ||||||||
Camden Whispering Oaks | 2008 | 934 | 274 | 96.6 | 1,138 | ||||||||
Camden Woodson Park (6) | 2008 | 916 | 248 | 96.1 | 1,040 | ||||||||
Camden Yorktown (6) | 2008 | 995 | 306 | 96.2 | 1,065 | ||||||||
San Antonio | |||||||||||||
Camden Braun Station (6) | 2006 | 827 | 240 | 96.5 | 858 | ||||||||
(1) | Represents average physical occupancy for the year except as noted. |
(2) | The average monthly rental rate per apartment incorporates tenant concessions calculated on a straight-line basis over the life of the lease. |
(3) | Property acquired during 2013—average occupancy calculated from date property was acquired. |
(4) | Property owned through a fully consolidated joint venture in which we own a 99.99% interest. The remaining interest is owned by an unaffiliated third party. |
(5) | Property under lease-up at December 31, 2013. |
(6) | Property owned through an unconsolidated joint venture in which we own a 20% interest. The remaining interest is owned by an unaffiliated third party. |
13
(7) | Development property stabilized during 2013—average occupancy calculated from date at which occupancy exceeded 90% through December 31, 2013. |
(8) | Miramar is a student housing project for Texas A&M at Corpus Christi. Average occupancy includes summer months which are normally subject to high vacancies. Phase IX-A was completed during 2013 and is comprised of 75 apartments. |
Item 3. Legal Proceedings
None.
Item 4. Mine Safety Disclosures
None.
PART II
Item 5. Market for Registrant’s 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 under the symbol “CPT,” and distributions per share declared for the quarters indicated are as follows:
High | Low | Distributions | |||||||||
2013 Quarters: | |||||||||||
First | $ | 71.47 | $ | 68.14 | $ | 0.63 | |||||
Second | 75.46 | 62.98 | 0.63 | ||||||||
Third | 73.74 | 60.65 | 0.63 | ||||||||
Fourth | 66.51 | 56.79 | 0.63 | ||||||||
2012 Quarters: | |||||||||||
First | $ | 65.75 | $ | 59.61 | $ | 0.56 | |||||
Second | 68.84 | 63.09 | 0.56 | ||||||||
Third | 71.59 | 64.49 | 0.56 | ||||||||
Fourth | 68.21 | 62.70 | 0.56 | ||||||||
In the first quarter of 2014, the Company's Board of Trust Managers increased the quarterly dividend rate from $0.63 to $0.66 per common share. Future dividend payments are paid at the discretion of the Board of Trust Managers and depend on cash flows generated from operations, the Company's financial condition and capital requirements, distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, and other factors which may be deemed relevant by our Board of Trust Managers. Assuming dividend distributions for the remainder of 2014 are similar to those declared for the first quarter 2014, the annualized dividend rate for 2014 would be $2.64.
14
This graph assumes the investment of $100 on December 31, 2008 and quarterly reinvestment of dividends. (Source: SNL Financial LC)
Years Ended December 31, | |||||||||||||||||||
Index | 2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||
Camden Property Trust | $ | 144.96 | $ | 192.05 | $ | 229.03 | $ | 259.75 | $ | 225.26 | |||||||||
FTSE NAREIT Equity | 127.99 | 163.78 | 177.36 | 209.39 | 214.56 | ||||||||||||||
S&P 500 | 126.46 | 145.51 | 148.59 | 172.37 | 228.19 | ||||||||||||||
Russell 2000 | 127.17 | 161.32 | 154.59 | 179.86 | 249.69 | ||||||||||||||
MSCI US REIT (RMS) Index | 128.61 | 165.23 | 179.60 | 211.50 | 216.73 | ||||||||||||||
As of February 14, 2014, there were approximately 483 shareholders of record and approximately 26,283 beneficial owners of our common shares.
In March 2010, we announced the creation of an at-the-market (“ATM”) share offering program through which we could, but had no obligation to, sell common shares having an aggregate offering price of up to $250 million (the “2010 ATM program”), in amounts and at times as we determined, into the existing trading market at current market prices as well as through negotiated transactions. The net proceeds resulting from the 2010 ATM program were used for general corporate purposes, which included repayment of notes payable, the repayment of borrowings under our unsecured line of credit, and funding for development activities. During the year ended December 31, 2011, we issued approximately 0.3 million common shares at an average price of $55.81 per share for total net consideration of approximately $13.8 million which were used for general corporate purposes. The 2010 ATM program was terminated in the second quarter of 2011, and no further common shares are available for sale under this program.
15
In May 2011, we created an ATM share offering program through which we could, but had no obligation to, sell common shares having an aggregate offering price of up to $300 million (the “2011 ATM program”), in amounts and at times as we determined, into the existing trading market at current market prices as well as through negotiated transactions. The net proceeds resulting from the 2011 ATM program were used to redeem all of our outstanding redeemable perpetual preferred units as further discussed in Note 5, "Operating Partnerships," and for other general corporate purposes, which included funding for development activities, financing of acquisitions, repayment of notes payable and borrowings under our $500 million unsecured line of credit. During the year ended December 31, 2011, we issued approximately 1.5 million common shares at an average price of $62.98 per share for total net consideration of approximately $92.8 million. During the year ended December 31, 2012, we issued approximately 2.0 million common shares at an average price of $66.01 per share for total net consideration of approximately $128.1 million which were used for general corporate purposes, which included funding for development activities, financing of acquisitions, repayment of notes payable and borrowings under our $500 million unsecured line of credit. The 2011 ATM program was terminated in the second quarter of 2012, and no further common shares are available for sale under this program.
In May 2012, we created an ATM share offering program through which we can, but have no obligation to, sell common shares having an aggregate offering price of up to $300 million (the "2012 ATM program"), in amounts and at times as we determine, into the existing trading market at current market prices as well as through negotiated transactions. Actual sales from time to time may depend on a variety of factors including, among others, market conditions, the trading price of our common shares, and determinations by management of the appropriate sources of funding for us. We intend to use the net proceeds from the 2012 ATM program for general corporate purposes, which may include funding for development activities, financing for acquisitions, the redemption or other repurchase of outstanding debt or equity securities, reducing future borrowings under our $500 million unsecured line of credit, and the repayment of other indebtedness. During the year ended December 31, 2012, we issued approximately 2.6 million common shares at an average price of $67.63 per share for total net consideration of approximately $173.6 million. During the year ended December 31, 2013, we issued approximately 0.6 million common shares at an average price of $73.73 per share for total net consideration of approximately $40.0 million which were used for general corporate purposes, which included funding for development and capital improvement projects. As of the date of this filing, we had common shares having an aggregate offering price of up to $82.7 million remaining available for sale under the 2012 ATM program.
See Part III, Item 12, for a description of securities authorized for issuance under equity compensation plans.
In January 2008, our Board of Trust Managers approved an increase of 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. Under this program, we have repurchased 4.3 million shares for a total of approximately $230.2 million from April 2007 through December 31, 2013. 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, 2013. There were no repurchases of our equity securities during the years ended December 31, 2013, 2012 and 2011.
16
Item 6. Selected Financial Data
The following table provides selected financial data relating to our historical financial condition and results of operations as of and for each of the years ended December 31, 2009 through 2013. This data should be read in conjunction with Item 7, “Management’s 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) | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||
Operating Data (a) | |||||||||||||||||||
Total property revenues | $ | 788,851 | $ | 698,318 | $ | 599,401 | $ | 547,756 | $ | 547,047 | |||||||||
Total property expenses | 285,691 | 256,430 | 230,212 | 217,309 | 212,005 | ||||||||||||||
Total non-property income | 21,197 | 16,407 | 21,395 | 28,337 | 25,443 | ||||||||||||||
Total other expenses | 392,478 | 373,254 | 352,627 | 353,427 | 356,533 | ||||||||||||||
Income (loss) from continuing operations attributable to common shareholders | 151,594 | 154,116 | 7,383 | (5,357 | ) | (90,621 | ) | ||||||||||||
Net income (loss) attributable to common shareholders | 336,364 | 283,390 | 49,379 | 23,216 | (50,800 | ) | |||||||||||||
Income (loss) from continuing operations attributable to common shareholders per share: | |||||||||||||||||||
Basic | $ | 1.70 | $ | 1.81 | $ | 0.09 | $ | (0.08 | ) | $ | (1.44 | ) | |||||||
Diluted | 1.69 | 1.79 | 0.09 | (0.08 | ) | (1.44 | ) | ||||||||||||
Net income (loss) attributable to common shareholders per share: | |||||||||||||||||||
Basic | $ | 3.82 | $ | 3.35 | $ | 0.67 | $ | 0.33 | $ | (0.80 | ) | ||||||||
Diluted | 3.78 | 3.30 | 0.66 | 0.33 | (0.80 | ) | |||||||||||||
Distributions declared per common share | $ | 2.52 | $ | 2.24 | $ | 1.96 | $ | 1.80 | $ | 2.05 | |||||||||
Balance Sheet Data (at end of year) | |||||||||||||||||||
Total real estate assets, at cost (b) | $ | 7,114,336 | $ | 6,749,523 | $ | 5,875,515 | $ | 5,675,309 | $ | 5,505,168 | |||||||||
Total assets | 5,632,141 | 5,385,172 | 4,622,075 | 4,699,737 | 4,607,999 | ||||||||||||||
Notes payable | 2,530,766 | 2,510,468 | 2,432,112 | 2,563,754 | 2,625,199 | ||||||||||||||
Non-Qualified deferred compensation share awards | 47,180 | — | — | — | — | ||||||||||||||
Perpetual preferred units | — | — | 97,925 | 97,925 | 97,925 | ||||||||||||||
Equity | 2,760,181 | 2,626,708 | 1,827,768 | 1,757,373 | 1,609,013 | ||||||||||||||
Other Data | |||||||||||||||||||
Cash flows provided by (used in): | |||||||||||||||||||
Operating activities | $ | 404,291 | $ | 324,267 | $ | 244,834 | $ | 224,036 | $ | 217,688 | |||||||||
Investing activities | (258,985 | ) | (527,685 | ) | (187,364 | ) | 35,150 | (69,516 | ) | ||||||||||
Financing activities | (154,181 | ) | 174,928 | (172,886 | ) | (152,767 | ) | (91,423 | ) | ||||||||||
Funds from operations – diluted (c) | 368,321 | 313,337 | 207,535 | 194,309 | 109,947 | ||||||||||||||
Property Data | |||||||||||||||||||
Number of operating properties (at the end of year) (d) | 170 | 193 | 196 | 186 | 183 | ||||||||||||||
Number of operating apartment homes (at end of year) (d) | 59,899 | 65,775 | 66,997 | 63,316 | 63,286 | ||||||||||||||
Number of operating apartment homes (weighted average) (e) | 54,181 | 54,194 | 50,905 | 50,794 | 50,608 | ||||||||||||||
Weighted average monthly total property revenue per apartment home | $ | 1,270 | $ | 1,207 | $ | 1,142 | $ | 1,072 | $ | 1,086 | |||||||||
Properties under development (at end of period) | 14 | 9 | 10 | 2 | 2 | ||||||||||||||
(a) | Excludes discontinued operations. |
(b) | Includes properties held for sale at book value. |
(c) | 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 |
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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, impairments of depreciable assets, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling 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 company’s real estate between periods or as compared to different companies.
(d) | Includes properties held for sale at December 31, 2012 and 2011. |
(e) | Excludes apartment homes owned in joint ventures. |
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Item 7. Management’s 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 these statements 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 which 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, or other unfavorable changes in economic conditions, could adversely impact us; |
• | short-term leases expose us to the effects of declining market rents; |
• | we face risks associated with land holdings and related activities; |
• | we could be negatively impacted by the elimination of Fannie Mae or Freddie Mac; |
• | compliance or failure to comply with laws, including those 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, redevelopment 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 discretionary funds involve risks not present in investments in which we are the sole investor; |
• | tax matters, including failure to qualify as a REIT, could have adverse consequences; |
• | a cybersecurity incident and other technology disruptions could negatively impact our business and our relationships with residents; |
• | we depend on our key personnel; |
• | litigation risks could affect our business; |
• | 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 adverse consequences; |
• | we may be unable to renew, repay, or refinance our outstanding debt; |
• | variable rate debt is subject to interest rate risk; |
• | issuances of additional debt may adversely impact our financial condition; |
• | failure to maintain our 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; |
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• | our share price will fluctuate; and |
• | the form, timing and/or amount of dividend distributions in future periods may vary and be impacted by economic or other considerations. |
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.
Executive Summary
We are primarily engaged in the ownership, management, development, redevelopment, acquisition and construction of multifamily apartment communities. As of December 31, 2013, we owned interests in, operated, or were developing 184 multifamily properties comprising 64,328 apartment homes across the United States as detailed in the following Property Portfolio table. In addition, we own other land parcels we may develop into multifamily apartment communities.
Property Operations
Our results for the year ended December 31, 2013 reflect an increase in rental revenue as compared to 2012. We believe this increase was primarily due to the continuation of improving economic conditions, including with respect to job growth, favorable demographics, and a manageable supply of new multifamily housing, which have resulted in increases in realized rental rates and stable average occupancy levels. Same store revenues increased 5.1% in 2013 and 6.5% in 2012. We believe U.S. economic and employment growth is likely to continue during 2014 and the supply of new multifamily homes, although increasing, will likely remain at manageable levels. However, we believe significant risks to the economy remain and while there have been increases in employment levels in the majority of our markets, the unemployment rate remains at higher than historical levels. If economic conditions were to worsen, our operating results could be adversely affected.
Construction Activity
During the year ended December 31, 2013, we completed construction of three development projects, including one community containing 276 units owned by one of our discretionary funds in which we have a 20% ownership interest, and 75 units at one of our consolidated operating properties. As of December 31, 2013, two of these projects reached stabilization. At December 31, 2013, we had a total of 14 projects under construction comprised of 4,354 units, including two development projects comprised of 566 units owned by one of our discretionary funds in which we have a 20% interest, with initial occupancy scheduled to occur within the next 24 months. Additionally, we are adding a subsequent phase to a stabilized community which will consist of 75 apartment homes. Excluding the projects owned by our discretionary funds, as of December 31, 2013, we estimate the additional costs to complete the construction of 13 consolidated projects to be approximately $541.2 million.
Acquisitions
During the year ended December 31, 2013, we acquired three operating properties comprised of 1,118 apartment homes located in Houston, Texas, Tempe, Arizona, and Atlanta, Georgia for approximately $225.0 million. We also acquired three land parcels comprised of approximately 38.8 acres of land located in Scottsdale, Chandler, and Tempe, Arizona for approximately $25.8 million. In January 2014, we acquired approximately 2.9 acres of land located in Houston, Texas for approximately $15.6 million.
Dispositions
During the year ended December 31, 2013, we sold 12 operating properties comprised of 3,931 apartment homes located in Tampa and Orlando, Florida, Littleton and Westminster, Colorado, Dallas, Texas, Peoria and Glendale, Arizona and Charlotte, North Carolina for approximately $329.3 million and we recognized a gain of approximately $182.2 million relating to these property sales. We also sold two land holdings comprised of an aggregate of approximately 3.7 acres located adjacent to current construction communities in Atlanta, Georgia and Houston, Texas for approximately $6.6 million. We recognized a gain of approximately $0.7 million relating to these land sales.
In May 2013, one of our unconsolidated joint ventures sold its 14 operating properties comprised of 3,098 apartment homes located in Las Vegas, Nevada. Our proportionate share of the gain was approximately $13.1 million. Additionally, as a result of achieving certain performance measures as set forth in the joint venture agreement, we recognized a promoted equity interest of approximately $5.1 million in 2013. In December 2013, one of our funds sold two operating properties comprised of a total of 600 apartment homes for approximately $68.7 million. Our proportionate share of the gains on these transactions was approximately $3.2 million. At December 31, 2013, one of our funds had an operating property held for sale comprised of 240 apartment homes located in San Antonio, Texas. This property sold in February 2014.
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Future Outlook
Subject to market conditions, we intend to continue to seek opportunities to develop and acquire existing communities. We continually evaluate our operating property and land development portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities develop. We also intend to continue to strengthen our capital and liquidity positions by continuing to focus on our core fundamentals which we believe are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our near-term liquidity requirements through a combination of cash flows generated from operations, draws on our unsecured credit facility or other short-term borrowings, proceeds from property dispositions, the use of debt and equity offerings under our automatic shelf registration statement, equity issued from our ATM program, other unsecured borrowings and secured mortgages.
As of December 31, 2013, we had approximately $17.8 million in cash and cash equivalents and no balances outstanding on our $500 million unsecured line of credit. As of the date of this filing, we had common shares having an aggregate offering price of up to $82.7 million remaining available for sale under our ATM program. We believe payments on debt maturing in 2014 are manageable at $35.4 million, which represents approximately 1% of our total outstanding debt and includes scheduled principal amortizations of approximately $3.1 million. We believe we are well-positioned with a strong balance sheet and sufficient liquidity to cover near-term debt maturities and new development, redevelopment, and other capital funding requirements. We will, however, continue to assess and take further actions we believe are prudent to meet our objectives and capital requirements.
Property Portfolio
Our multifamily property portfolio is summarized as follows:
December 31, 2013 | December 31, 2012 | ||||||||||
Apartment Homes | Properties | Apartment Homes | Properties | ||||||||
Operating Properties | |||||||||||
Houston, Texas | 8,752 | 25 | 8,440 | 24 | |||||||
Washington, D.C. Metro | 6,083 | 18 | 5,791 | 17 | |||||||
Dallas, Texas | 5,667 | 14 | 6,227 | 16 | |||||||
Tampa, Florida | 5,108 | 12 | 6,493 | 15 | |||||||
Las Vegas, Nevada | 4,918 | 15 | 8,016 | 29 | |||||||
Atlanta, Georgia | 3,943 | 12 | 3,351 | 11 | |||||||
Orlando, Florida | 3,676 | 9 | 4,202 | 10 | |||||||
Raleigh, North Carolina | 3,054 | 8 | 3,054 | 8 | |||||||
Austin, Texas | 3,030 | 9 | 3,030 | 9 | |||||||
Charlotte, North Carolina | 2,894 | 12 | 3,134 | 13 | |||||||
Southeast Florida | 2,520 | 7 | 2,520 | 7 | |||||||
Los Angeles/Orange County, California | 2,481 | 6 | 2,481 | 6 | |||||||
Phoenix, Arizona | 2,095 | 7 | 2,645 | 9 | |||||||
Denver, Colorado | 1,941 | 6 | 2,441 | 8 | |||||||
San Diego/Inland Empire, California | 1,665 | 5 | 1,665 | 5 | |||||||
Other | 2,072 | 5 | 2,285 | 6 | |||||||
Total Operating Properties | 59,899 | 170 | 65,775 | 193 | |||||||
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December 31, 2013 | December 31, 2012 | ||||||||||
Apartment Homes | Properties | Apartment Homes | Properties | ||||||||
Properties Under Development | |||||||||||
Austin, Texas | 614 | 2 | 314 | 1 | |||||||
Los Angeles/Orange County, California | 590 | 2 | 303 | 1 | |||||||
Charlotte, North Carolina | 589 | 2 | — | — | |||||||
Phoenix, Arizona | 454 | 2 | — | — | |||||||
Denver, Colorado | 424 | 1 | 424 | 1 | |||||||
Dallas, Texas | 423 | 1 | — | — | |||||||
Atlanta, Georgia | 379 | 1 | 379 | 1 | |||||||
Washington, D.C. Metro | 320 | 1 | 596 | 2 | |||||||
Orlando, Florida | 300 | 1 | 300 | 1 | |||||||
Southeast Florida | 261 | 1 | 261 | 1 | |||||||
Houston, Texas | — | — | 268 | 1 | |||||||
Other (1) | 75 | — | — | — | |||||||