Form 10-K
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, 2009
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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
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76-6088377 |
(State or other jurisdiction of
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(I.R.S. Employer |
incorporation or organization)
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Identification No.) |
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3 Greenway Plaza, Suite 1300 |
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Houston, Texas
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77046 |
(Address of principle executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (713) 354-2500
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered |
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Common Shares of Beneficial Interest, $.01 par value
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes
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Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the 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 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 o
No o Not applicable
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* As of February 25, 2010, the registrant has not been phased in to the interactive data
requirements.
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
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
(Do not check if a smaller reporting company)
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in the Rule 12b-2 of
the Act). Yes o No þ
The aggregate market value of voting and non-voting common equity held by non-affiliates of the
registrant was $1,739,721,564 based on a June 30, 2009 share price of $27.60.
On
February 19, 2010, 64,530,986 common shares of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrants Proxy Statement in connection with its Annual Meeting of Shareholders
to be held May 3, 2010 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. 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.
Our annual, quarterly, and current reports, proxy statements, and other information are
electronically filed with the SEC. You may read and copy any materials we file with the SEC at the
SECs Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please contact the SEC at
1-800-SEC-0330 for further information about the operation of the SECs Public Reference Room. The
SEC also maintains a website at www.sec.gov which contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC.
Financial Information about Segments
We are engaged in the ownership, development, construction, and management of multifamily
apartment communities. As each of our 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, 2009, we owned interests in, operated, or were developing 185 multifamily
properties comprising 63,658 apartment homes across the United States. We had 372 apartment homes
under development at two of our multifamily properties, including 119 apartment homes at one
multifamily property owned through a nonconsolidated joint venture and 253 apartment homes at one
multifamily property owned through a consolidated joint venture, in which we own an interest. In
addition, we own other land parcels we may develop into multifamily apartment communities.
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 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 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 historically evaluated acquisition opportunities as they arose,
some of which were consummated and contributed to our growth and profitability.
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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 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.
During 2008 and 2009, a number of factors adversely affecting demand for and rents received by
our multifamily communities were intense and pervasive across the United States, and the conditions
within the multifamily industry have become progressively more challenging. A prolonged recession,
high inventory levels of single-family homes and condominiums in the markets in which we operate,
overall weak consumer confidence, and high unemployment, among other factors, have persisted and,
in some cases, accelerated in 2009. We believe the effects of these factors on the multifamily
industry have been further magnified by high levels of home foreclosures, liquidity disruptions in
the financial markets, continued job losses, and a lack of job growth. Our average apartment lease
term is approximately twelve months. The impact of an economic downturn affects us quickly due to
the short-term nature of our leases because our rental revenues are impacted by declines in market
rents more quickly than if our leases were for longer terms.
Based on these market conditions and our belief these conditions will continue in the near
future, we are cautious regarding expected performance and expect a decline in property revenues
during 2010 as compared to 2009. 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. However, there can be no assurance any of these factors will develop, continue or
positively impact our operating results. We have noted a recent increase in issuances of debt and
equity by REITs at more attractive rates. While this may be a positive sign, we are uncertain if
this level of activity will increase or continue.
During the near term, we plan to continue to focus primarily on strengthening our capital and
liquidity position by generating positive cash flows from operations, reducing outstanding debt and
leverage ratios, and controlling and reducing overhead costs.
Subject to market conditions, we intend to continue to look for opportunities to acquire
existing communities through our investment in and management of our discretionary investment
funds, the Camden Multifamily Value Add Fund, L.P. and a related co-investment partnership (the
Funds). Until the earlier of (i) December 31, 2011 or (ii) such time as 90% of their committed
capital is invested, subject to two one-year extensions, the Funds will be our exclusive investment
vehicles for acquiring fully developed multifamily properties, subject to certain exceptions.
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 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 propertys seasonal rental patterns. We generally offer leases
ranging from six to fifteen months, with an average lease of twelve months, and 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 through which we own an indirect economic interest of less than 100% of the
community or communities owned directly by the joint venture. 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 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 on the rents charged.
Employees
At December 31, 2009, we had approximately 1,750 employees, including executive,
administrative, and community personnel.
Qualification as a Real Estate Investment Trust
As of December 31, 2009, 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.
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 volatility and disruption, which has
caused the spreads on prospective debt financings to fluctuate and potentially make 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 or guaranteeing 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 Federal Housing Finance Agency. In December 2009, the Obama
administration pledged to cover unlimited losses through 2012 for both companies, lifting an
earlier cap of $400 billion. Since that time, the chairman of the House Financial Services
Committee has called for a new system for providing money for mortgages and the elimination of
Fannie Mae and Freddie Mac. A decision by the government to eliminate Fannie Mae or Freddie Mac or
reduce their acquisitions or guarantees of apartment loans may 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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declines in the financial condition of our tenants, which may make it more difficult
for us to collect rents from some tenants; |
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changes in market rental rates; |
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declines in mortgage interest rates, making alternative housing more affordable; |
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government or builder incentives which enable first time have buyers to put little
or no money down, making alternative housing options more attractive; |
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a continued economic downturn which simultaneously affects 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 pay distributions to shareholders.
Short-term leases expose us to the effects of declining market rents.
Substantially all of our apartment leases are for a term of one year or less. Because 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 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 upon which we cannot build and develop a profitable multifamily community. Under current
market conditions, in 2009 we recorded impairment charges on land holdings for eight developments,
and a land development joint venture we have put on hold for the foreseeable future. We may have
future impairments of our land and related activities. 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 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 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 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 charged.
Risks Associated with Our Operations
Development and construction risks could impact our profitability.
Although we expect lower levels of development activity in 2010, as compared to prior years,
in the long term we intend to continue to develop and construct multifamily apartment communities
for our 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; |
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increased materials, labor, problems with subcontractors, or other costs due to
errors and omissions which occur in the design or construction process; |
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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; |
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incurring costs related to the abandonment of development opportunities which we
have pursued and subsequently 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 for 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 that 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 durations of up to ten years, during which we may be required to repair, replace, or rebuild a
project in the event of a material defect.
Our 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 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. 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 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, 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 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 partners 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
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.
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. We have committed to invest 20% of the total equity interest in each of the
Funds, up to $75 million in the aggregate. As of December 31, 2009, each of the Funds had total
capital commitments of $187.5 million or $375 million in the aggregate. 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 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 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; |
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we are permitted to acquire land and develop communities outside of the Funds, 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 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; |
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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 values at either the
corporate or individual property levels. Any additional tax expense incurred would decrease the
cash available for distribution to our shareholders.
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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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 communities; |
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competition from other available apartments and housing alternatives; and |
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changes in market rents. |
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Cash flow could be insufficient to meet required payments of principal and interest with
respect to debt financing. 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 flow available to meet required principal payments on our debt.
We have significant debt, which could have important adverse consequences.
As of December 31, 2009, we had outstanding debt of approximately $2.6 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 mortgaged property; |
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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 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.
We may incur losses on interest rate hedging arrangements.
Historically, 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 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.
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.
8
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, 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. 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.
Our share price will fluctuate.
Stock markets in general and our common shares have experienced continued 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 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. |
We may reduce dividends on our equity securities.
On December 7, 2009, we announced our Board of Trust Managers had declared a fourth quarter
dividend of $0.45 per common share, totaling $2.05 per share for the year ended December 31, 2009.
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. 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.
9
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, weight room facilities,
and controlled-access gates. Many of the apartment homes offer additional features such as
fireplaces, vaulted ceilings, microwave ovens, covered parking, icemakers, washers and dryers, and
ceiling fans.
Operating Properties (including properties held through joint ventures)
The 183 operating properties in which we owned interests and operated at December 31, 2009
averaged 918 square feet of living area per apartment home. For the year ended December 31, 2009,
no single operating property accounted for greater than 1.7% of our total revenues. Our operating
properties had a weighted average occupancy rate of 93.3% and 93.9% for 2009 and 2008,
respectively. Resident lease terms generally range from six to fifteen months with an average
lease term of twelve months. One hundred and fifty-nine of our operating properties have over 200
apartment homes, with the largest having 904 apartment homes. Our operating properties have an
average age of 10.4 years (calculated on the basis of investment dollars). Our operating
properties were constructed and placed in service as follows:
|
|
|
Year Placed in Service |
|
Number of Operating Properties |
2001-2009 |
|
49 |
1996-2000 |
|
57 |
1991-1995 |
|
19 |
1986-1990 |
|
39 |
1980-1985 |
|
14 |
Prior to 1980 |
|
5 |
Property Table
The following table sets forth information with respect to our operating properties at December 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROPERTIES |
|
Year Placed |
|
Average Apartment |
|
|
Number of |
|
|
2009 Average |
|
Property and Location |
|
In Service |
|
Size (Sq. Ft.) |
|
|
Apartments |
|
|
Occupancy (1) |
|
ARIZONA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phoenix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Copper Square |
|
2000 |
|
|
786 |
|
|
|
332 |
|
|
|
91.5 |
% |
Camden Fountain Palms (8) |
|
1986/1996 |
|
|
1,050 |
|
|
|
192 |
|
|
|
88.9 |
|
Camden Legacy |
|
1996 |
|
|
1,067 |
|
|
|
428 |
|
|
|
93.1 |
|
Camden Pecos Ranch (8) |
|
2001 |
|
|
924 |
|
|
|
272 |
|
|
|
93.7 |
|
Camden San Paloma |
|
1993/1994 |
|
|
1,042 |
|
|
|
324 |
|
|
|
92.2 |
|
Camden Sierra (8) |
|
1997 |
|
|
925 |
|
|
|
288 |
|
|
|
90.5 |
|
Camden Towne Center (8) |
|
1998 |
|
|
871 |
|
|
|
240 |
|
|
|
90.9 |
|
Camden Vista Valley |
|
1986 |
|
|
923 |
|
|
|
357 |
|
|
|
90.1 |
|
CALIFORNIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Los Angeles/Orange County |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Crown Valley |
|
2001 |
|
|
1,009 |
|
|
|
380 |
|
|
|
95.0 |
|
Camden Harbor View |
|
2004 |
|
|
975 |
|
|
|
538 |
|
|
|
94.3 |
|
Camden Main & Jamboree (3) (12) |
|
2008 |
|
|
1,011 |
|
|
|
290 |
|
|
|
92.3 |
|
Camden Martinique |
|
1986 |
|
|
794 |
|
|
|
714 |
|
|
|
92.6 |
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROPERTIES |
|
Year Placed |
|
Average Apartment |
|
|
Number of |
|
|
2009 Average |
|
Property and Location |
|
In Service |
|
Size (Sq. Ft.) |
|
|
Apartments |
|
|
Occupancy (1) |
|
Camden Parkside (8) |
|
1972 |
|
|
836 |
|
|
|
421 |
|
|
|
92.7 |
|
Camden Sea Palms |
|
1990 |
|
|
891 |
|
|
|
138 |
|
|
|
94.2 |
|
San Diego/Inland Empire |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Old Creek |
|
2007 |
|
|
1,037 |
|
|
|
350 |
|
|
|
93.9 |
|
Camden Sierra at Otay Ranch |
|
2003 |
|
|
962 |
|
|
|
422 |
|
|
|
94.0 |
|
Camden Tuscany |
|
2003 |
|
|
896 |
|
|
|
160 |
|
|
|
93.6 |
|
Camden Vineyards |
|
2002 |
|
|
1,053 |
|
|
|
264 |
|
|
|
89.6 |
|
COLORADO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denver |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Caley |
|
2000 |
|
|
925 |
|
|
|
218 |
|
|
|
94.8 |
|
Camden Centennial |
|
1985 |
|
|
744 |
|
|
|
276 |
|
|
|
93.2 |
|
Camden Denver West (9) |
|
1997 |
|
|
1,015 |
|
|
|
320 |
|
|
|
94.8 |
|
Camden Highlands Ridge |
|
1996 |
|
|
1,149 |
|
|
|
342 |
|
|
|
95.0 |
|
Camden Interlocken |
|
1999 |
|
|
1,022 |
|
|
|
340 |
|
|
|
96.1 |
|
Camden Lakeway |
|
1997 |
|
|
932 |
|
|
|
451 |
|
|
|
93.6 |
|
Camden Pinnacle |
|
1985 |
|
|
748 |
|
|
|
224 |
|
|
|
93.2 |
|
WASHINGTON DC METRO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Ashburn Farms |
|
2000 |
|
|
1,062 |
|
|
|
162 |
|
|
|
95.6 |
|
Camden Clearbrook |
|
2007 |
|
|
1,048 |
|
|
|
297 |
|
|
|
96.7 |
|
Camden College Park (3) (12) |
|
2008 |
|
|
942 |
|
|
|
508 |
|
|
|
79.8 |
|
Camden Dulles Station (2) |
|
2009 |
|
|
984 |
|
|
|
366 |
|
|
Lease-Up |
Camden Fair Lakes |
|
1999 |
|
|
1,056 |
|
|
|
530 |
|
|
|
95.4 |
|
Camden Fairfax Corner |
|
2006 |
|
|
934 |
|
|
|
488 |
|
|
|
95.2 |
|
Camden Fallsgrove |
|
2004 |
|
|
996 |
|
|
|
268 |
|
|
|
97.0 |
|
Camden Grand Parc |
|
2002 |
|
|
674 |
|
|
|
105 |
|
|
|
96.1 |
|
Camden Lansdowne |
|
2002 |
|
|
1,006 |
|
|
|
690 |
|
|
|
94.8 |
|
Camden Largo Town Center |
|
2000/2007 |
|
|
1,027 |
|
|
|
245 |
|
|
|
90.1 |
|
Camden Monument Place |
|
2007 |
|
|
856 |
|
|
|
368 |
|
|
|
93.8 |
|
Camden Potomac Yard (3) |
|
2008 |
|
|
835 |
|
|
|
378 |
|
|
|
84.2 |
|
Camden Roosevelt |
|
2003 |
|
|
856 |
|
|
|
198 |
|
|
|
96.3 |
|
Camden Russett |
|
2000 |
|
|
992 |
|
|
|
426 |
|
|
|
94.4 |
|
Camden Silo Creek |
|
2004 |
|
|
975 |
|
|
|
284 |
|
|
|
96.4 |
|
Camden Summerfield (3) |
|
2008 |
|
|
957 |
|
|
|
291 |
|
|
|
84.8 |
|
Camden Westwind |
|
2006 |
|
|
1,036 |
|
|
|
464 |
|
|
|
95.3 |
|
FLORIDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast Florida |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Aventura |
|
1995 |
|
|
1,108 |
|
|
|
379 |
|
|
|
93.9 |
|
Camden Brickell |
|
2003 |
|
|
937 |
|
|
|
405 |
|
|
|
94.4 |
|
Camden Doral |
|
1999 |
|
|
1,120 |
|
|
|
260 |
|
|
|
96.0 |
|
Camden Doral Villas |
|
2000 |
|
|
1,253 |
|
|
|
232 |
|
|
|
96.7 |
|
Camden Las Olas |
|
2004 |
|
|
1,043 |
|
|
|
420 |
|
|
|
94.5 |
|
Camden Plantation |
|
1997 |
|
|
1,201 |
|
|
|
502 |
|
|
|
94.4 |
|
Camden Portofino |
|
1995 |
|
|
1,112 |
|
|
|
322 |
|
|
|
95.1 |
|
Orlando |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Club |
|
1986 |
|
|
1,077 |
|
|
|
436 |
|
|
|
94.1 |
|
Camden Hunters Creek |
|
2000 |
|
|
1,075 |
|
|
|
270 |
|
|
|
94.8 |
|
Camden Lago Vista |
|
2005 |
|
|
955 |
|
|
|
366 |
|
|
|
93.8 |
|
Camden Landings |
|
1983 |
|
|
748 |
|
|
|
220 |
|
|
|
93.9 |
|
Camden Lee Vista |
|
2000 |
|
|
937 |
|
|
|
492 |
|
|
|
92.9 |
|
Camden Orange Court |
|
2008 |
|
|
812 |
|
|
|
261 |
|
|
|
78.9 |
|
Camden Renaissance |
|
1996/1998 |
|
|
899 |
|
|
|
578 |
|
|
|
92.9 |
|
Camden Reserve |
|
1990/1991 |
|
|
824 |
|
|
|
526 |
|
|
|
93.6 |
|
Camden World Gateway |
|
2000 |
|
|
979 |
|
|
|
408 |
|
|
|
93.1 |
|
Tampa/St. Petersburg |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Bay |
|
1997/2001 |
|
|
943 |
|
|
|
760 |
|
|
|
93.8 |
|
Camden Bay Pointe |
|
1984 |
|
|
771 |
|
|
|
368 |
|
|
|
91.7 |
|
Camden Bayside |
|
1987/1989 |
|
|
748 |
|
|
|
832 |
|
|
|
93.6 |
|
Camden Citrus Park |
|
1985 |
|
|
704 |
|
|
|
247 |
|
|
|
92.1 |
|
Camden Lakes |
|
1982/1983 |
|
|
732 |
|
|
|
688 |
|
|
|
91.7 |
|
Camden Lakeside |
|
1986 |
|
|
729 |
|
|
|
228 |
|
|
|
92.1 |
|
Camden Live Oaks |
|
1990 |
|
|
1,093 |
|
|
|
770 |
|
|
|
94.7 |
|
Camden Preserve |
|
1996 |
|
|
942 |
|
|
|
276 |
|
|
|
93.8 |
|
Camden Providence Lakes |
|
1996 |
|
|
1,024 |
|
|
|
260 |
|
|
|
93.3 |
|
Camden Royal Palms |
|
2006 |
|
|
1,017 |
|
|
|
352 |
|
|
|
92.0 |
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROPERTIES |
|
Year Placed |
|
Average Apartment |
|
|
Number of |
|
|
2009 Average |
|
Property and Location |
|
In Service |
|
Size (Sq. Ft.) |
|
|
Apartments |
|
|
Occupancy (1) |
|
Camden Westshore |
|
1986 |
|
|
728 |
|
|
|
278 |
|
|
|
93.6 |
|
Camden Woods |
|
1986 |
|
|
1,223 |
|
|
|
444 |
|
|
|
92.5 |
|
GEORGIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlanta |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Brookwood |
|
2002 |
|
|
912 |
|
|
|
359 |
|
|
|
93.2 |
|
Camden Dunwoody |
|
1997 |
|
|
1,007 |
|
|
|
324 |
|
|
|
93.8 |
|
Camden Deerfield |
|
2000 |
|
|
1,187 |
|
|
|
292 |
|
|
|
94.5 |
|
Camden Midtown Atlanta |
|
2001 |
|
|
935 |
|
|
|
296 |
|
|
|
93.1 |
|
Camden Peachtree City |
|
2001 |
|
|
1,027 |
|
|
|
399 |
|
|
|
94.2 |
|
Camden River |
|
1997 |
|
|
1,103 |
|
|
|
352 |
|
|
|
93.2 |
|
Camden Shiloh |
|
1999/2002 |
|
|
1,143 |
|
|
|
232 |
|
|
|
93.5 |
|
Camden St. Clair |
|
1997 |
|
|
999 |
|
|
|
336 |
|
|
|
93.2 |
|
Camden Stockbridge |
|
2003 |
|
|
1,009 |
|
|
|
304 |
|
|
|
91.7 |
|
Camden Sweetwater |
|
2000 |
|
|
1,151 |
|
|
|
308 |
|
|
|
92.1 |
|
KENTUCKY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louisville |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Brookside (10) |
|
1987 |
|
|
732 |
|
|
|
224 |
|
|
|
92.8 |
|
Camden Meadows (10) |
|
1987/1990 |
|
|
746 |
|
|
|
400 |
|
|
|
95.3 |
|
Camden Oxmoor (10) |
|
2000 |
|
|
903 |
|
|
|
432 |
|
|
|
96.0 |
|
Camden Prospect Park (10) |
|
1990 |
|
|
916 |
|
|
|
138 |
|
|
|
94.7 |
|
MISSOURI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kansas City |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Passage (10) |
|
1989/1997 |
|
|
834 |
|
|
|
596 |
|
|
|
95.2 |
|
St. Louis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Cedar Lakes (10) |
|
1986 |
|
|
852 |
|
|
|
420 |
|
|
|
92.3 |
|
Camden Cove West (10) |
|
1990 |
|
|
828 |
|
|
|
276 |
|
|
|
95.8 |
|
Camden Cross Creek (10) |
|
1973/1980 |
|
|
947 |
|
|
|
591 |
|
|
|
95.2 |
|
Camden Westchase (10) |
|
1986 |
|
|
945 |
|
|
|
160 |
|
|
|
95.7 |
|
NEVADA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Bel Air |
|
1988/1995 |
|
|
943 |
|
|
|
528 |
|
|
|
92.7 |
|
Camden Breeze |
|
1989 |
|
|
846 |
|
|
|
320 |
|
|
|
93.2 |
|
Camden Canyon |
|
1995 |
|
|
987 |
|
|
|
200 |
|
|
|
95.6 |
|
Camden Commons |
|
1988 |
|
|
936 |
|
|
|
376 |
|
|
|
91.0 |
|
Camden Cove |
|
1990 |
|
|
898 |
|
|
|
124 |
|
|
|
93.1 |
|
Camden Del Mar |
|
1995 |
|
|
986 |
|
|
|
560 |
|
|
|
93.2 |
|
Camden Fairways |
|
1989 |
|
|
896 |
|
|
|
320 |
|
|
|
94.4 |
|
Camden Hills |
|
1991 |
|
|
439 |
|
|
|
184 |
|
|
|
90.8 |
|
Camden Legends |
|
1994 |
|
|
792 |
|
|
|
113 |
|
|
|
93.4 |
|
Camden Palisades |
|
1991 |
|
|
905 |
|
|
|
624 |
|
|
|
92.2 |
|
Camden Pines (8) |
|
1997 |
|
|
982 |
|
|
|
315 |
|
|
|
93.8 |
|
Camden Pointe |
|
1996 |
|
|
983 |
|
|
|
252 |
|
|
|
93.0 |
|
Camden Summit (8) |
|
1995 |
|
|
1,187 |
|
|
|
234 |
|
|
|
94.7 |
|
Camden Tiara (8) |
|
1996 |
|
|
1,043 |
|
|
|
400 |
|
|
|
93.7 |
|
Camden Vintage |
|
1994 |
|
|
978 |
|
|
|
368 |
|
|
|
92.3 |
|
Oasis Bay (11) |
|
1990 |
|
|
876 |
|
|
|
128 |
|
|
|
92.5 |
|
Oasis Crossings (11) |
|
1996 |
|
|
983 |
|
|
|
72 |
|
|
|
94.4 |
|
Oasis Emerald (11) |
|
1988 |
|
|
873 |
|
|
|
132 |
|
|
|
91.2 |
|
Oasis Gateway (11) |
|
1997 |
|
|
1,146 |
|
|
|
360 |
|
|
|
91.9 |
|
Oasis Island (11) |
|
1990 |
|
|
901 |
|
|
|
118 |
|
|
|
92.1 |
|
Oasis Landing (11) |
|
1990 |
|
|
938 |
|
|
|
144 |
|
|
|
92.7 |
|
Oasis Meadows (11) |
|
1996 |
|
|
1,031 |
|
|
|
383 |
|
|
|
90.7 |
|
Oasis Palms (11) |
|
1989 |
|
|
880 |
|
|
|
208 |
|
|
|
90.7 |
|
Oasis Pearl (11) |
|
1989 |
|
|
930 |
|
|
|
90 |
|
|
|
94.7 |
|
Oasis Place (11) |
|
1992 |
|
|
440 |
|
|
|
240 |
|
|
|
89.9 |
|
Oasis Ridge (11) |
|
1984 |
|
|
391 |
|
|
|
477 |
|
|
|
85.3 |
|
Oasis Sierra (11) |
|
1998 |
|
|
923 |
|
|
|
208 |
|
|
|
94.0 |
|
Oasis Springs (11) |
|
1988 |
|
|
838 |
|
|
|
304 |
|
|
|
89.5 |
|
Oasis Vinings (11) |
|
1994 |
|
|
1,152 |
|
|
|
234 |
|
|
|
90.7 |
|
NORTH CAROLINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charlotte |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Ballantyne |
|
1998 |
|
|
1,045 |
|
|
|
400 |
|
|
|
93.2 |
|
Camden Cotton Mills |
|
2002 |
|
|
905 |
|
|
|
180 |
|
|
|
95.3 |
|
Camden Dilworth |
|
2006 |
|
|
857 |
|
|
|
145 |
|
|
|
95.4 |
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROPERTIES |
|
Year Placed |
|
Average Apartment |
|
|
Number of |
|
|
2009 Average |
|
Property and Location |
|
In Service |
|
Size (Sq. Ft.) |
|
|
Apartments |
|
|
Occupancy (1) |
|
Camden Fairview |
|
1983 |
|
|
1,036 |
|
|
|
135 |
|
|
|
96.1 |
|
Camden Forest |
|
1989 |
|
|
703 |
|
|
|
208 |
|
|
|
89.3 |
|
Camden Foxcroft (4) |
|
1979 |
|
|
940 |
|
|
|
156 |
|
|
|
92.0 |
|
Camden Grandview |
|
2000 |
|
|
1,057 |
|
|
|
266 |
|
|
|
95.4 |
|
Camden Habersham |
|
1986 |
|
|
773 |
|
|
|
240 |
|
|
|
93.0 |
|
Camden Park Commons |
|
1997 |
|
|
861 |
|
|
|
232 |
|
|
|
92.4 |
|
Camden Pinehurst |
|
1967 |
|
|
1,147 |
|
|
|
407 |
|
|
|
93.1 |
|
Camden Sedgebrook |
|
1999 |
|
|
972 |
|
|
|
368 |
|
|
|
93.3 |
|
Camden Simsbury |
|
1985 |
|
|
874 |
|
|
|
100 |
|
|
|
93.9 |
|
Camden South End Square |
|
2003 |
|
|
882 |
|
|
|
299 |
|
|
|
93.1 |
|
Camden Stonecrest |
|
2001 |
|
|
1,098 |
|
|
|
306 |
|
|
|
93.2 |
|
Camden Touchstone |
|
1986 |
|
|
899 |
|
|
|
132 |
|
|
|
94.9 |
|
Raleigh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Crest |
|
2001 |
|
|
1,013 |
|
|
|
438 |
|
|
|
93.9 |
|
Camden Governors Village |
|
1999 |
|
|
1,046 |
|
|
|
242 |
|
|
|
92.4 |
|
Camden Lake Pine |
|
1999 |
|
|
1,066 |
|
|
|
446 |
|
|
|
93.9 |
|
Camden Manor Park |
|
2006 |
|
|
966 |
|
|
|
484 |
|
|
|
94.5 |
|
Camden Overlook |
|
2001 |
|
|
1,060 |
|
|
|
320 |
|
|
|
94.7 |
|
Camden Reunion Park |
|
2000/2004 |
|
|
972 |
|
|
|
420 |
|
|
|
92.9 |
|
Camden Westwood |
|
1999 |
|
|
1,027 |
|
|
|
354 |
|
|
|
94.5 |
|
PENNSYLVANIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Valleybrook |
|
2002 |
|
|
992 |
|
|
|
352 |
|
|
|
94.7 |
|
TEXAS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Austin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Amber Oaks (2) (7) |
|
2009 |
|
|
862 |
|
|
|
348 |
|
|
Lease-Up |
Camden Cedar Hills (3) |
|
2008 |
|
|
911 |
|
|
|
208 |
|
|
|
91.1 |
|
Camden Gaines Ranch |
|
1997 |
|
|
955 |
|
|
|
390 |
|
|
|
92.6 |
|
Camden Huntingdon |
|
1995 |
|
|
903 |
|
|
|
398 |
|
|
|
93.7 |
|
Camden Laurel Ridge |
|
1986 |
|
|
702 |
|
|
|
183 |
|
|
|
92.9 |
|
Camden Ridgecrest |
|
1995 |
|
|
855 |
|
|
|
284 |
|
|
|
93.7 |
|
Camden South Congress (7) |
|
2001 |
|
|
975 |
|
|
|
253 |
|
|
|
93.8 |
|
Camden Stoneleigh |
|
2001 |
|
|
908 |
|
|
|
390 |
|
|
|
94.2 |
|
Corpus Christi |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Breakers |
|
1996 |
|
|
868 |
|
|
|
288 |
|
|
|
94.2 |
|
Camden Copper Ridge |
|
1986 |
|
|
775 |
|
|
|
344 |
|
|
|
94.4 |
|
Camden Miramar (6) |
|
1994-2004 |
|
|
482 |
|
|
|
778 |
|
|
|
84.4 |
|
Dallas/Fort Worth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Addison (8) |
|
1996 |
|
|
942 |
|
|
|
456 |
|
|
|
93.5 |
|
Camden Buckingham |
|
1997 |
|
|
919 |
|
|
|
464 |
|
|
|
94.8 |
|
Camden Centreport |
|
1997 |
|
|
911 |
|
|
|
268 |
|
|
|
93.3 |
|
Camden Cimarron |
|
1992 |
|
|
772 |
|
|
|
286 |
|
|
|
94.5 |
|
Camden Farmers Market |
|
2001/2005 |
|
|
932 |
|
|
|
904 |
|
|
|
93.9 |
|
Camden Gardens |
|
1983 |
|
|
652 |
|
|
|
256 |
|
|
|
93.8 |
|
Camden Glen Lakes |
|
1979 |
|
|
877 |
|
|
|
424 |
|
|
|
93.9 |
|
Camden Legacy Creek |
|
1995 |
|
|
831 |
|
|
|
240 |
|
|
|
95.5 |
|
Camden Legacy Park |
|
1996 |
|
|
871 |
|
|
|
276 |
|
|
|
94.4 |
|
Camden Oasis |
|
1986 |
|
|
548 |
|
|
|
602 |
|
|
|
86.6 |
|
Camden Springs |
|
1987 |
|
|
713 |
|
|
|
304 |
|
|
|
92.1 |
|
Camden Valley Creek |
|
1984 |
|
|
855 |
|
|
|
380 |
|
|
|
93.4 |
|
Camden Valley Park (5) |
|
1986 |
|
|
743 |
|
|
|
516 |
|
|
Redevelopment |
Camden Valley Ridge |
|
1987 |
|
|
773 |
|
|
|
408 |
|
|
|
93.1 |
|
Camden Westview |
|
1983 |
|
|
697 |
|
|
|
335 |
|
|
|
91.4 |
|
Houston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Braeswood Place (2) (13) |
|
2009 |
|
|
1,042 |
|
|
|
340 |
|
|
Lease-Up |
Camden Baytown |
|
1999 |
|
|
844 |
|
|
|
272 |
|
|
|
93.3 |
|
Camden City Centre |
|
2007 |
|
|
932 |
|
|
|
379 |
|
|
|
94.3 |
|
Camden Creek |
|
1984 |
|
|
639 |
|
|
|
456 |
|
|
|
93.5 |
|
Camden Greenway |
|
1999 |
|
|
861 |
|
|
|
756 |
|
|
|
95.4 |
|
Camden Holly Springs (8) |
|
1999 |
|
|
934 |
|
|
|
548 |
|
|
|
94.4 |
|
Camden Midtown |
|
1999 |
|
|
844 |
|
|
|
337 |
|
|
|
96.3 |
|
Camden Oak Crest |
|
2003 |
|
|
870 |
|
|
|
364 |
|
|
|
95.5 |
|
Camden Park (8) |
|
1995 |
|
|
866 |
|
|
|
288 |
|
|
|
96.9 |
|
Camden Plaza (12) |
|
2007 |
|
|
915 |
|
|
|
271 |
|
|
|
92.5 |
|
Camden Royal Oaks |
|
2006 |
|
|
923 |
|
|
|
236 |
|
|
|
91.0 |
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROPERTIES |
|
Year Placed |
|
Average Apartment |
|
|
Number of |
|
|
2009 Average |
|
Property and Location |
|
In Service |
|
Size (Sq. Ft.) |
|
|
Apartments |
|
|
Occupancy (1) |
|
Camden Steeplechase |
|
1982 |
|
|
748 |
|
|
|
290 |
|
|
|
92.7 |
|
Camden Stonebridge |
|
1993 |
|
|
845 |
|
|
|
204 |
|
|
|
96.7 |
|
Camden Sugar Grove (8) |
|
1997 |
|
|
921 |
|
|
|
380 |
|
|
|
94.0 |
|
Camden Vanderbilt |
|
1996/1997 |
|
|
863 |
|
|
|
894 |
|
|
|
95.8 |
|
Camden Whispering Oaks (3) |
|
2008 |
|
|
934 |
|
|
|
274 |
|
|
|
87.5 |
|
|
|
|
(1) |
|
Represents average physical occupancy for the year except as noted below. |
|
(2) |
|
Properties under lease-up at December 31, 2009. |
|
(3) |
|
Development property stabilized during 2009 average occupancy calculated
from date at which occupancy exceeded 90% through year-end. |
|
(4) |
|
Redevelopment completed during 2009 average occupancy calculated from date
at which occupancy exceeded 90% through year-end. |
|
(5) |
|
Properties under redevelopment at December 31, 2009. |
|
(6) |
|
Miramar is a student housing project for Texas A&M at Corpus Christi. Average
occupancy includes summer which is normally subject to high vacancies. |
|
(7) |
|
Properties owned through a joint venture in which we own a 20% interest. The
remaining interest is owned by an unaffiliated private pension fund. |
|
(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 72% interest. The
remaining interest is owned by an unaffiliated private investor. |
Item 3. Legal Proceedings
For discussion regarding legal proceedings, see Note 14, Commitments and Contingencies, of
the Notes to Consolidated Financial Statements.
Item 4.
Reserved
14
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 under the symbol CPT, and distributions per share declared for the
quarters indicated are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
Low |
|
|
Distributions |
|
2009 Quarters: |
|
|
|
|
|
|
|
|
|
|
|
|
First |
|
$ |
30.63 |
|
|
$ |
17.56 |
|
|
$ |
0.70 |
|
Second |
|
|
30.99 |
|
|
|
21.71 |
|
|
|
0.45 |
|
Third |
|
|
42.73 |
|
|
|
25.10 |
|
|
|
0.45 |
|
Fourth |
|
|
44.01 |
|
|
|
35.24 |
|
|
|
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
Index |
|
2005 |
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
2009 |
|
Camden Property Trust |
|
|
119.1 |
|
|
|
157.5 |
|
|
|
107.5 |
|
|
|
75.1 |
|
|
|
108.9 |
|
FTSE NAREIT Equity |
|
|
112.2 |
|
|
|
151.5 |
|
|
|
127.7 |
|
|
|
79.5 |
|
|
|
101.8 |
|
S&P 500 |
|
|
104.9 |
|
|
|
121.5 |
|
|
|
128.2 |
|
|
|
80.7 |
|
|
|
102.1 |
|
Russell 2000 |
|
|
104.6 |
|
|
|
123.8 |
|
|
|
121.8 |
|
|
|
80.7 |
|
|
|
102.6 |
|
15
As
of February 19, 2010, there were 723 shareholders of record and
approximately 18,835 beneficial owners of our common shares.
In April 2007, our Board of Trust Managers approved a program to repurchase up to $500
million of our common equity securities through open market purchases, block purchases, and
privately negotiated transactions. Under this program, we repurchased 4.3 million shares for a
total of approximately $230.2 million
through December 31, 2009. 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,
2009. There were no repurchases of our equity securities during the quarter ended December 31,
2009.
See Part III, Item 12, for a description of securities authorized for issuance under equity
compensation plans.
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, 2005 through
2009. 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 and adoption
of new accounting standards.
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands, except per share amounts and property data) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
2005(e) |
|
|
Operating Data (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
$ |
623,926 |
|
|
$ |
624,016 |
|
|
$ |
588,319 |
|
|
$ |
561,029 |
|
|
$ |
485,696 |
|
Total property expenses |
|
|
246,867 |
|
|
|
239,282 |
|
|
|
217,694 |
|
|
|
211,336 |
|
|
|
184,862 |
|
Total non-property income (loss) |
|
|
25,443 |
|
|
|
(19,540 |
) |
|
|
25,002 |
|
|
|
35,530 |
|
|
|
50,912 |
|
Total other expenses |
|
|
376,497 |
|
|
|
331,278 |
|
|
|
339,548 |
|
|
|
345,908 |
|
|
|
338,520 |
|
Income (loss) from continuing operations attributable
to common shareholders |
|
|
(69,028 |
) |
|
|
(14,072 |
) |
|
|
41,377 |
|
|
|
119,238 |
|
|
|
146,726 |
|
Net income (loss) attributable to common shareholders |
|
|
(50,800 |
) |
|
|
70,973 |
|
|
|
148,457 |
|
|
|
232,846 |
|
|
|
199,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable
to common shareholders per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.09 |
) |
|
$ |
(0.26 |
) |
|
$ |
0.70 |
|
|
$ |
2.07 |
|
|
$ |
2.79 |
|
Diluted |
|
|
(1.09 |
) |
|
|
(0.26 |
) |
|
|
0.68 |
|
|
|
2.01 |
|
|
|
2.61 |
|
Net income attributable to common shareholders per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.80 |
) |
|
$ |
1.28 |
|
|
$ |
2.54 |
|
|
$ |
4.08 |
|
|
$ |
3.80 |
|
Diluted |
|
|
(0.80 |
) |
|
|
1.28 |
|
|
|
2.50 |
|
|
|
3.93 |
|
|
|
3.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared per common share |
|
$ |
2.05 |
|
|
$ |
2.80 |
|
|
$ |
2.76 |
|
|
$ |
2.64 |
|
|
$ |
2.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data (at end of year) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate assets, at cost |
|
$ |
5,505,168 |
|
|
$ |
5,491,593 |
|
|
$ |
5,527,403 |
|
|
$ |
5,141,467 |
|
|
$ |
5,039,007 |
|
Total assets |
|
|
4,607,999 |
|
|
|
4,730,342 |
|
|
|
4,890,760 |
|
|
|
4,586,050 |
|
|
|
4,487,799 |
|
Notes payable |
|
|
2,625,199 |
|
|
|
2,832,396 |
|
|
|
2,828,095 |
|
|
|
2,330,976 |
|
|
|
2,633,091 |
|
Perpetual preferred units |
|
|
97,925 |
|
|
|
97,925 |
|
|
|
97,925 |
|
|
|
97,925 |
|
|
|
97,925 |
|
Equity |
|
|
1,609,013 |
|
|
|
1,501,356 |
|
|
|
1,653,340 |
|
|
|
1,859,942 |
|
|
|
1,494,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
217,688 |
|
|
$ |
216,958 |
|
|
$ |
223,106 |
|
|
$ |
231,569 |
|
|
$ |
200,845 |
|
Investing activities |
|
|
(69,516 |
) |
|
|
(37,374 |
) |
|
|
(346,798 |
) |
|
|
(52,067 |
) |
|
|
(207,561 |
) |
Financing activities |
|
|
(91,423 |
) |
|
|
(173,074 |
) |
|
|
123,555 |
|
|
|
(180,044 |
) |
|
|
6,039 |
|
Funds from operations diluted (b) |
|
|
109,947 |
|
|
|
169,585 |
|
|
|
227,153 |
|
|
|
237,790 |
|
|
|
195,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of operating properties (at the end of year) (c) |
|
|
183 |
|
|
|
181 |
|
|
|
182 |
|
|
|
186 |
|
|
|
191 |
|
Number of operating apartment homes (at end of year) (c) |
|
|
63,286 |
|
|
|
62,903 |
|
|
|
63,085 |
|
|
|
63,843 |
|
|
|
65,580 |
|
Number of operating apartment homes (weighted average)
(c)(d) |
|
|
50,608 |
|
|
|
51,277 |
|
|
|
53,132 |
|
|
|
55,850 |
|
|
|
55,056 |
|
Weighted average monthly total property revenue per
apartment home |
|
$ |
1,034 |
|
|
$ |
1,055 |
|
|
$ |
1,025 |
|
|
$ |
970 |
|
|
$ |
888 |
|
Properties under development (at end of period) |
|
|
2 |
|
|
|
5 |
|
|
|
11 |
|
|
|
11 |
|
|
|
9 |
|
|
|
|
(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 certain noncontrolling 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. |
17
Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion should be read in conjunction with the consolidated financial
statements and notes appearing elsewhere in this report. Historical results and trends which might
appear in the consolidated financial statements should not be interpreted as being indicative of
future operations.
We consider portions of this report to be forward-looking within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as
amended, with respect to our expectations for future periods. Forward-looking statements do not
discuss historical fact, but instead include statements related to expectations, projections,
intentions, or other items relating to the future; 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; |
|
|
|
short-term leases expose us to the effects of declining market rents; |
|
|
|
we face risks associated with land holdings and related activities; |
|
|
|
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 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 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; |
|
|
|
our share price will fluctuate; and |
|
|
|
we may reduce dividends on our equity securities. |
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.
18
Executive Summary
During 2008 and 2009, a number of factors adversely affecting the demand for and rents
received by our multifamily communities were intense and pervasive across the United States, and
the conditions within the multifamily industry have become progressively more challenging. A
prolonged recession, high inventory levels of single-family homes and condominiums in the markets
in which we operate, overall weak consumer confidence, and high unemployment, among other factors,
have persisted and, in some cases, accelerated in 2009. We believe the effects of these factors on
the multifamily industry have been further magnified by high levels of home foreclosures, liquidity
disruptions in the financial markets, continued job losses, and lack of job growth. Our average
apartment lease term is approximately twelve months. The impact of an economic downturn affects us
quickly due to the short-term nature of our leases because our rental revenues are impacted by
declines in market rents more quickly than if our leases were for longer terms.
Based on these market conditions and our belief these conditions will continue in the near
future, we are cautious regarding expected performance and expect a decline in property revenues
during 2010 as compared to 2009. 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 develop, continue or
positively impact our operating results. We have noted a recent increase in issuances of debt and
equity by REITs at more attractive rates. While this may be a positive sign, we are uncertain if
this level of activity will increase or continue.
During the near term, we plan to continue to primarily focus on strengthening our capital and
liquidity position by generating positive cash flows from operations, reducing outstanding debt and
leverage ratios, and controlling and reducing overhead costs.
We review our long-lived assets 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 take into consideration the current and anticipated economic climate. Based on our
evaluations, we recorded significant impairment charges in the fourth quarter of 2009 for land
holdings for eight future projects and a land development joint venture we have put on hold for the
foreseeable future.
We currently have five wholly-owned land parcels held for future development we plan to
develop. However, the commencement of future developments may continue to be impacted by
macroeconomic issues, multifamily market conditions, and other factors. We will continue to
evaluate future development starts based on market, economic and capital market conditions.
However, if current conditions persist, there can be no assurance we will not have further
impairments in the future.
Subject to market conditions, we intend to continue to look for opportunities to acquire
existing communities through our investment in and management of our Funds. Until the earlier of
(i) December 31, 2011 or (ii) such time as 90% of their committed capital is invested, subject to
two one-year extensions, the Funds will be our exclusive investment vehicles for acquiring fully
developed multifamily properties, subject to certain exceptions.
19
Property Portfolio
Our multifamily property portfolio, excluding land and joint venture properties which we do
not manage, is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
Apartment |
|
|
|
|
|
|
Apartment |
|
|
|
|
|
|
Homes |
|
|
Properties |
|
|
Homes |
|
|
Properties |
|
Operating Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas, Nevada |
|
|
8,016 |
|
|
|
29 |
|
|
|
8,016 |
|
|
|
29 |
|
Houston, Texas |
|
|
6,289 |
|
|
|
16 |
|
|
|
6,620 |
|
|
|
16 |
|
Dallas, Texas |
|
|
6,119 |
|
|
|
15 |
|
|
|
6,119 |
|
|
|
15 |
|
Washington, D.C. Metro |
|
|
6,068 |
|
|
|
17 |
|
|
|
5,702 |
|
|
|
16 |
|
Tampa, Florida |
|
|
5,503 |
|
|
|
12 |
|
|
|
5,503 |
|
|
|
12 |
|
Charlotte, North Carolina |
|
|
3,574 |
|
|
|
15 |
|
|
|
3,574 |
|
|
|
15 |
|
Orlando, Florida |
|
|
3,557 |
|
|
|
9 |
|
|
|
3,557 |
|
|
|
9 |
|
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 |
|
|
|
2,481 |
|
|
|
6 |
|
Austin, Texas |
|
|
2,454 |
|
|
|
8 |
|
|
|
2,106 |
|
|
|
7 |
|
Phoenix, Arizona |
|
|
2,433 |
|
|
|
8 |
|
|
|
2,433 |
|
|
|
8 |
|
Denver, Colorado |
|
|
2,171 |
|
|
|
7 |
|
|
|
2,171 |
|
|
|
7 |
|
San Diego/Inland Empire, California |
|
|
1,196 |
|
|
|
4 |
|
|
|
1,196 |
|
|
|
4 |
|
Other |
|
|
4,999 |
|
|
|
13 |
|
|
|
4,999 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Properties |
|
|
63,286 |
|
|
|
183 |
|
|
|
62,903 |
|
|
|
181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Properties Under Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston, Texas |
|
|
372 |
|
|
|
2 |
|
|
|
712 |
|
|
|
3 |
|
Washington, D.C. Metro |
|
|
|
|
|
|
|
|
|
|
366 |
|
|
|
1 |
|
Austin, Texas |
|
|
|
|
|
|
|
|
|
|
348 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties Under Development |
|
|
372 |
|
|
|
2 |
|
|
|
1,426 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties |
|
|
63,658 |
|
|
|
185 |
|
|
|
64,329 |
|
|
|
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Joint Venture Properties (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas, Nevada |
|
|
4,047 |
|
|
|
17 |
|
|
|
4,047 |
|
|
|
17 |
|
Houston, Texas (2) |
|
|
2,199 |
|
|
|
7 |
|
|
|
2,199 |
|
|
|
7 |
|
Phoenix, Arizona |
|
|
992 |
|
|
|
4 |
|
|
|
992 |
|
|
|
4 |
|
Los Angeles/Orange County, California |
|
|
711 |
|
|
|
2 |
|
|
|
711 |
|
|
|
2 |
|
Austin, Texas |
|
|
601 |
|
|
|
2 |
|
|
|
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 |
|
|
|
13,071 |
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties Owned 100% |
|
|
50,587 |
|
|
|
141 |
|
|
|
51,258 |
|
|
|
142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Refer to Note 7, Investments in Joint Ventures, of the Notes to Consolidated Financial
Statements for further discussion of our joint venture investments.
|
|
(2) |
|
Includes Camden Travis Street, a fully-consolidated joint venture, of which we retain a 25%
ownership. |
20
Stabilized Communities
We generally consider a property stabilized when 90% occupancy is achieved at the beginning of
a period. During the year ended December 31, 2009, stabilization was achieved at seven recently
completed development properties as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Date of |
|
|
|
|
|
|
Apartment |
|
|
Construction |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Completion |
|
|
Stabilization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Main & Jamboree joint venture |
|
|
|
|
|
|
|
|
|
|
|
|
Irvine, CA |
|
|
290 |
|
|
|
3Q08 |
|
|
|
1Q09 |
|
|
Camden Cedar Hills |
|
|
|
|
|
|
|
|
|
|
|
|
Austin, TX |
|
|
208 |
|
|
|
4Q08 |
|
|
|
2Q09 |
|
|
Camden Potomac Yard |
|
|
|
|
|
|
|
|
|
|
|
|
Arlington, VA |
|
|
378 |
|
|
|
2Q08 |
|
|
|
3Q09 |
|
|
Camden Summerfield |
|
|
|
|
|
|
|
|
|
|
|
|
Landover, MD |
|
|
291 |
|
|
|
2Q08 |
|
|
|
3Q09 |
|
|
Camden Whispering Oaks |
|
|
|
|
|
|
|
|
|
|
|
|
Houston, TX |
|
|
274 |
|
|
|
4Q08 |
|
|
|
3Q09 |
|
|
Camden College Park joint venture |
|
|
|
|
|
|
|
|
|
|
|
|
College Park, MD |
|
|
508 |
|
|
|
3Q08 |
|
|
|
3Q09 |
|
|
Camden Orange Court |
|
|
|
|
|
|
|
|
|
|
|
|
Orlando, FL |
|
|
261 |
|
|
|
2Q08 |
|
|
|
4Q09 |
|
Partial Sales and Dispositions to Joint Ventures Included in Continuing Operations
There were no partial sales or dispositions to joint ventures for the years ended December 31,
2009 or 2007.
In March 2008, we sold Camden Amber Oaks, a development community in Austin, Texas, to one of
the Funds 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 same 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.
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, 2009. The components of
earnings classified as discontinued operations include separately identifiable property-specific
revenues, expenses, depreciation, and interest expense, if any. Any gain or loss on the disposal
of the properties held for sale is also classified as discontinued operations.
During the year ended December 31, 2009, we received net proceeds of approximately $28.0
million and recognized a gain of approximately $16.9 million from the sale to an unaffiliated third
party of one operating property with a net book value of approximately $11.3 million, containing
671 apartment homes. 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 sales 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 sales of ten
operating properties, containing 3,054 apartment homes, to unaffiliated third parties.
21
During the year ended December 31, 2008, we recognized a gain 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.
There were no sales of undeveloped land during the years ended December 31, 2009 or 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 totaling
approximately $6.0 million and recognized gains totaling approximately $0.7 million.
We reclassified the undeveloped land parcels previously included in discontinued operations to
continuing operations during December 31, 2009 as management made the decision not to sell these
assets after an existing sales contract was terminated. As a result, we adjusted the current and
prior period consolidated financial statements to reflect the necessary reclassifications.
Development and Lease-Up Properties
At December 31, 2009, we had one completed consolidated property in lease-up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Date of |
|
|
Estimated |
|
($ in millions) |
|
Apartment |
|
|
|
|
|
|
% Leased at |
|
|
Construction |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Cost Incurred |
|
|
1/31/10 |
|
|
Completion |
|
|
Stabilization |
|
|
Camden Dulles Station |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oak Hill, VA |
|
|
366 |
|
|
$ |
72.3 |
|
|
|
85 |
% |
|
|
1Q09 |
|
|
|
2Q10 |
|
At December 31, 2009, we had one consolidated property under construction as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in |
|
|
|
|
|
|
Estimated |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Properties |
|
|
|
|
|
|
Date of |
|
|
Estimated |
|
($ in millions) |
|
Apartment |
|
|
Estimated |
|
|
Cost |
|
|
Under |
|
|
% Leased at |
|
|
Construction |
|
|
Date of |
|
Property and Location |
|
Homes |
|
|
Cost |
|
|
Incurred |
|
|
Development |
|
|
1/31/10 |
|
|
Completion |
|
|
Stabilization |
|
|
Camden Travis Street (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston, TX |
|
|
253 |
|
|
$ |
39.0 |
|
|
$ |
29.5 |
|
|
$ |
8.6 |
|
|
|
31% |
|
|
|
1Q10 |
|
|
|
1Q11 |
|
|
|
|
(a) |
|
Camden Travis Street is owned by a consolidated joint venture, of which we
retain a 25% ownership |
Our consolidated balance sheet at December 31, 2009 included approximately $201.6 million
related to properties under development and land. Of this amount, approximately $8.6 million
related to Camden Travis Street. Approximately $89.6 million was invested in land for projects we
plan to develop, and approximately $103.4 million was invested primarily in land tracts for which
future development activities have been put on hold for the foreseeable future.
22
At December 31, 2009, we had investments in non-consolidated joint ventures which were
developing the following multifamily communities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Total |
|
|
% Leased |
|
($ in millions) |
|
|
|
|
|
Apartment |
|
|
Cost |
|
|
At |
|
Property and Location |
|
Ownership % |
|
|
Homes |
|
|
Incurred |
|
|
1/31/10 |
|
|
Completed Communities (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camden Amber Oaks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Austin, TX |
|
|
20 |
% |
|
|
348 |
|
|
$ |
35.2 |
|
|
|
80 |
% |
Braeswood Place (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston, TX |
|
|
72 |
% |
|
|
340 |
|
|
|
50.3 |
|
|
|
64 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Completed
Communities |
|
|
|
|
|
|
688 |
|
|
$ |
85.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Construction (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Belle Meade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston, TX |
|
|
30 |
% |
|
|
119 |
|
|
$ |
36.7 |
|
|
|
32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Under Construction |
|
|
|
|
|
|
119 |
|
|
$ |
36.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Acres |
|
|
|
|
|
|
|
|
Pre-Development (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lakes at 610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston, TX |
|
|
30 |
% |
|
|
6.1 |
|
|
$ |
7.1 |
|
|
|
N/A |
|
Town Lake (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Austin, TX |
|
|
72 |
% |
|
|
25.9 |
|
|
|
40.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pre-Development |
|
|
|
|
|
|
32.0 |
|
|
$ |
48.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Properties in lease-up as of December 31, 2009. |
|
(2) |
|
Properties being developed by joint venture partner. |
|
(3) |
|
Properties in pre-development by joint venture partner. |
|
(4) |
|
We have discontinued development activities on this project. An impairment of $13.4 million
has been recorded for the year ended December 31, 2009. |
Refer to Note 7, Investments in Joint Ventures of the Notes to Consolidated Financial
Statements for further discussion of our joint venture investments.
23
Geographic Diversification
At December 31, 2009 and 2008, our investments in various geographic areas, excluding
depreciation, investments in joint ventures, and properties held for sale, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2009 |
|
|
2008 |
|
|
Washington, D.C. Metro |
|
$ |
1,193,269 |
|
|
|
21.9 |
% |
|
$ |
1,219,866 |
|
|
|
22.4 |
% |
Southeast Florida |
|
|
453,021 |
|
|
|
8.3 |
|
|
|
446,629 |
|
|
|
8.2 |
|
Tampa, Florida |
|
|
393,377 |
|
|
|
7.2 |
|
|
|
386,816 |
|
|
|
7.1 |
|
Houston, Texas |
|
|
389,848 |
|
|
|
7.1 |
|
|
|
377,041 |
|
|
|
6.9 |
|
Orlando, Florida |
|
|
371,862 |
|
|
|
6.8 |
|
|
|
364,379 |
|
|
|
6.7 |
|
Dallas, Texas |
|
|
345,814 |
|
|
|
6.3 |
|
|
|
337,890 |
|
|
|
6.2 |
|
Los Angeles/Orange County, California |
|
|
332,414 |
|
|
|
6.1 |
|
|
|
330,849 |
|
|
|
6.1 |
|
Atlanta, Georgia |
|
|
320,748 |
|
|
|
5.9 |
|
|
|
319,047 |
|
|
|
5.8 |
|
Charlotte, North Carolina |
|
|
318,493 |
|
|
|
5.8 |
|
|
|
316,387 |
|
|
|
5.8 |
|
Las Vegas, Nevada |
|
|
308,054 |
|
|
|
5.6 |
|
|
|
321,782 |
|
|
|
5.9 |
|
Raleigh, North Carolina |
|
|
237,284 |
|
|
|
4.4 |
|
|
|
237,023 |
|
|
|
4.3 |
|
San Diego/Inland Empire, California |
|
|
227,108 |
|
|
|
4.2 |
|
|
|
226,556 |
|
|
|
4.1 |
|
Denver, Colorado |
|
|
187,544 |
|
|
|
3.4 |
|
|
|
186,292 |
|
|
|
3.4 |
|
Austin, Texas |
|
|
154,473 |
|
|
|
2.8 |
|
|
|
159,897 |
|
|
|
2.9 |
|
Phoenix, Arizona |
|
|
118,828 |
|
|
|
2.2 |
|
|
|
118,003 |
|
|
|
2.2 |
|
Other |
|
|
109,489 |
|
|
|
2.0 |
|
|
|
107,377 |
|
|
|
2.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
5,461,626 |
|
|
|
100.0 |
% |
|
$ |
5,455,834 |
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Average monthly property revenue per apartment home |
|
$ |
1,034 |
|
|
$ |
1,055 |
|
|
$ |
1,025 |
|
Annualized total property expenses per apartment home |
|
$ |
4,911 |
|
|
$ |
4,852 |
|
|
$ |
4,551 |
|
Weighted average number of operating apartment homes owned 100% |
|
|
50,272 |
|
|
|
49,312 |
|
|
|
47,832 |
|
Weighted average occupancy of operating apartment homes owned 100% |
|
|
94.5 |
% |
|
|
93.8 |
% |
|
|
93.7 |
% |
24
Property-level operating results
The following tables present the property-level revenues and property-level expenses,
excluding discontinued operations, for the year ended December 31, 2009 as compared to 2008 and for
the year ended December 31, 2008 as compared to 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Year Ended |
|
|
|
|
|
|
Homes |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
at 12/31/09 |
|
|
2009 |
|
|
2008 |
|
|
$ |
|
|
% |
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
42,670 |
|
|
$ |
517,823 |
|
|
$ |
534,356 |
|
|
$ |
(16,533 |
) |
|
|
(3.1 |
)% |
Non-same store communities |
|
|
7,551 |
|
|
|
96,840 |
|
|
|
81,034 |
|
|
|
15,806 |
|
|
|
19.5 |
|
Development and lease-up communities |
|
|
619 |
|
|
|
4,527 |
|
|
|
1,213 |
|
|
|
3,314 |
|
|
|
273.2 |
|
Dispositions/other |
|
|
|
|
|
|
4,736 |
|
|
|
7,413 |
|
|
|
(2,677 |
) |
|
|
(36.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
|
50,840 |
|
|
$ |
623,926 |
|
|
$ |
624,016 |
|
|
$ |
(90 |
) |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities |
|
|
42,670 |
|
|
$ |
203,481 |
|
|
$ |
199,930 |
|
|
$ |
3,551 |
|
|
|
1.8 |
% |
Non-same store communities |
|
|
7,551 |
|
|
|
37,985 |
|
|
|
34,201 |
|
|
|
3,784 |
|
|
|
11.1 |
|
Development and lease-up communities |
|
|
619 |
|
|
|
2,028 |
|
|
|
515 |
|
|
|
1,513 |
|
|
|
293.8 |
|
Dispositions/other |
|
|
|
|
|
|
3,373 |
|
|
|
4,636 |
|
|
|
(1,263 |
) |
|
|
(27.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
50,840 |
|
|
$ |
246,867 |
|
|
$ |
239,282 |
|
|
$ |
7,585 |
|
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities are communities we owned and which were stabilized as of January 1, 2008.
Non-same store communities are stabilized communities we have acquired, developed, or re-developed
after January 1, 2008. Development and lease-up communities are non-stabilized communities we have
acquired or developed after January 1, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apartment |
|
|
Year Ended |
|
|
|
|
|
|
Homes |
|
|
December 31, |
|
|
Change |
|
|
|
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 |
|
|
|
|
|
|
4,549 |
|
|
|
3,833 |
|
|
|
716 |
|
|
|
18.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
50,840 |
|
|
$ |
239,282 |
|
|
$ |
217,694 |
|
|
$ |
21,588 |
|
|
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store communities are communities we owned and which 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
developed or acquired after January 1, 2007.
Same store analysis:
Same store property revenues for the year ended December 31, 2009 decreased approximately
$16.5 million, or 3.1%, from 2008. Same store rental revenues decreased approximately $23.9
million, or 5.1%, due to a slight decline in average occupancy and a 4.9% decline in average rental
rates for our same store portfolio due to, among other factors, the challenges within the
multifamily industry as discussed in the Executive Summary. This decrease was partially offset by
an approximate $7.4 million increase in other property revenue primarily due to the continued
rollout of Perfect Connection, which provides cable services to our residents, and other utility
rebilling programs.
25
Same store property revenues for the year ended December 31, 2008 increased approximately $7.1
million, or 1.5%, from 2007. Same store property revenues were positively impacted by an
approximate $9.0 million in
other property revenue primarily due to the continued rollout of Perfect Connection, and other
utility rebilling programs. This increase was partially offset by approximately $1.9 million, or
0.4%, due to slight declines in average occupancy and average rental rates for our same store
portfolio due to, among other factors, the challenges within the multifamily industry.
Property expenses from our same store communities increased approximately $3.6 million, or
1.8%, for the year ended December 31, 2009, as compared to 2008. This increase in same store
property expenses of approximately $83 per apartment home was primarily due to expenses related to
our utility rebilling programs discussed above and increases in property insurance costs. These
increases were partially offset by lower property taxes resulting from declining rates and
valuations at a number of our communities, and lower repairs and maintenance, and marketing and
leasing expenses. Excluding the expenses associated with our utility rebilling programs, same
store property expenses declined approximately $0.2 million, or 0.1% from 2008.
Property expenses from our same store communities increased approximately $8.4 million, or
4.6%, for the year ended December 31, 2008, as compared to 2007. The increases in same store
property expenses were primarily due to real estate taxes and expenses related to our utility
rebilling programs discussed above. Real estate taxes increased primarily due to increases in
appraisals and taxation rates. Excluding the expenses associated with our utility rebilling
programs, same store property expenses for this period increased approximately $2.4 million, or
1.3%.
Non-same store and development and lease-up analysis:
Property revenues from non-same store and development and lease-up communities increased
approximately $19.1 million for the year ended December 31, 2009 as compared to 2008 and increased
approximately $28.6 million for the year ended December 31, 2008 as compared to 2007. 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. 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 $5.3 million for the year ended December 31, 2009 as compared to 2008 and
approximately $12.5 million for 2008 as compared to 2007. 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.
Dispositions/other property analysis:
Property revenues from dispositions/other decreased approximately $2.7 million and $0.1
million for the year ended December 31, 2009 as compared to 2008 and for the year ended December
31, 2008 as compared to 2007, respectively. The decrease for 2009 as compared to 2008 primarily
related to not having any dispositions in 2009 as compared to the sale of one of our communities to
one of the Funds in 2008.
Property expenses from dispositions/other decreased approximately $1.3 million and increased
approximately $0.7 million for the year ended December 31, 2009 as compared to 2008 and for the
year ended December 31, 2008 as compared to 2007, respectively. The decrease in 2009 as compared
to 2008 and the increase in 2008 as compared to 2007 were primarily due to insurance costs related
to Hurricane Ike in September 2008.
Non-property income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2009 |
|
|
2008 |
|
|
$ |
|
|
% |
|
|
2008 |
|
|
2007 |
|
|
$ |
|
|
% |
|
Fee and asset management |
|
$ |
8,008 |
|
|
$ |
9,167 |
|
|
$ |
(1,159 |
) |
|
|
(12.6 |
)% |
|
$ |
9,167 |
|
|
$ |
8,293 |
|
|
$ |
874 |
|
|
|
10.5 |
% |
Interest and other income |
|
|
2,826 |
|
|
|
4,736 |
|
|
|
(1,910 |
) |
|
|
(40.3 |
) |
|
|
4,736 |
|
|
|
9,427 |
|
|
|
(4,691 |
) |
|
|
(49.8 |
) |
Income
(loss) on deferred compensation plans |
|
|
14,609 |
|
|
|
(33,443 |
) |
|
|
48,052 |
|
|
|
|
|
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
(40,725 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-property
income (loss) |
|
$ |
25,443 |
|
|
$ |
(19,540 |
) |
|
$ |
44,983 |
|
|
|
|
% |
|
$ |
(19,540 |
) |
|
$ |
25,002 |
|
|
$ |
(44,542 |
) |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
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, 2009 decreased
approximately $1.2 million as compared to 2008 and increased approximately $0.9 million for the
year ended December 31, 2008 as compared to 2007. The decrease for 2009 was primarily related to
overall declines in development and construction fees earned on our development joint ventures in
2009 as compared to 2008 due to the completion of the associated construction activities at several
joint venture communities in 2008 and 2009. The decrease in 2009 was partially offset by an
increase in third-party construction activities in 2009. The increase in 2008 as compared to 2007
was due to increases in management fees earned from one of the Funds partially offset by decreased
third-party construction activities in 2008.
Interest and other income decreased approximately $1.9 million for 2009 as compared to 2008
and decreased approximately $4.7 million for 2008 as compared to 2007. Interest income, which
primarily relates to interest earned on notes receivable outstanding under our mezzanine financing
program, decreased approximately $1.9 million for 2009 as compared to 2008 and decreased
approximately $0.8 million for 2008 as compared to 2007. The decreases were primarily due to
declines in interest income on our mezzanine loan portfolio related to contractual reductions in
interest rates on mezzanine loans for development communities which have reached stabilization,
reductions in interest earned on certain variable rate mezzanine notes due to declines in LIBOR,
and lower balances of outstanding mezzanine loans. Other income decreased approximately $3.9
million for 2008 as compared to 2007. 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 and a gain on sale
of technology investments of $0.6 million.
Our deferred compensation plans earned income of approximately $14.6 million in 2009, incurred
losses of approximately $33.4 million in 2008, and earned income of approximately $7.3 million in
2007. The changes were related to the performance of the investments held in the deferred
compensation plans for plan participants and were directly offset by the expense (benefit) related
to these plans, as set forth in the table below.
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
($ in thousands) |
|
2009 |
|
|
2008 |
|
|
$ |
|
|
% |
|
|
2008 |
|
|
2007 |
|
|
$ |
|
|
% |
|
Property management |
|
$ |
18,864 |
|
|
$ |
19,910 |
|
|
$ |
(1,046 |
) |
|
|
(5.3 |
)% |
|
$ |
19,910 |
|
|
$ |
18,413 |
|
|
$ |
1,497 |
|
|
|
8.1 |
% |
Fee and asset management |
|
|
4,878 |
|
|
|
6,054 |
|
|
|
(1,176 |
) |
|
|
(19.4 |
) |
|
|
6,054 |
|
|
|
4,552 |
|
|
|
1,502 |
|
|
|
33.0 |
|
General and administrative |
|
|
31,243 |
|
|
|
31,586 |
|
|
|
(343 |
) |
|
|
(1.1 |
) |
|
|
31,586 |
|
|
|
32,590 |
|
|
|
(1,004 |
) |
|
|
(3.1 |
) |
Interest |
|
|
128,296 |
|
|
|
132,399 |
|
|
|
(4,103 |
) |
|
|
(3.1 |
) |
|
|
132,399 |
|
|
|
115,753 |
|
|
|
16,646 |
|
|
|
14.4 |
|
Depreciation and amortization |
|
|
174,682 |
|
|
|
171,814 |
|
|
|
2,868 |
|
|
|
1.7 |
|
|
|
171,814 |
|
|
|
157,297 |
|
|
|
14,517 |
|
|
|
9.2 |
|
Amortization of deferred
financing costs |
|
|
3,925 |
|
|
|
2,958 |
|
|
|
967 |
|
|
|
32.7 |
|
|
|
2,958 |
|
|
|
3,661 |
|
|
|
(703 |
) |
|
|
(19.2 |
) |
Expense (benefit) on deferred
compensation plans |
|
|
14,609 |
|
|
|
(33,443 |
) |
|
|
48,052 |
|
|
|
|
|
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
(40,725 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-property
expenses |
|
$ |
376,497 |
|
|
$ |
331,278 |
|
|
$ |
45,219 |
|
|
|
13.6 |
% |
|
$ |
331,278 |
|
|
$ |
339,548 |
|
|
$ |
(8,270 |
) |
|
|
(2.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property management expense, which represents regional supervision and accounting costs
related to property operations, decreased approximately $1.0 million for the year ended December
31, 2009 as compared to 2008 and increased approximately $1.5 million for 2008 as compared to 2007.
Property management expenses were 3.0%, 3.2%, and 3.1% of total property revenues for the years
ended December 31, 2009, 2008, and 2007, respectively.
Fee and asset management expense, which represents expenses related to third-party
construction and development projects and property management, decreased approximately $1.2 million
for 2009 as compared to 2008 and increased approximately $1.5 million for 2008 as compared to 2007.
The decrease for 2009 as compared to 2008 was primarily due to overall declines in development and
construction activities related to our development joint ventures in 2009 as compared to 2008 due
to the completion of the associated construction activities at several joint venture communities in
2008 and 2009. The increase for 2008 as compared to 2007 was primarily attributable to increased
costs associated with one of the Funds partially offset by decreases in our third-party
construction activities.
27
General and administrative expenses decreased approximately $0.3 million during the year ended
December 31, 2009 as compared to 2008 and decreased approximately $1.0 million during the year
ended December 31, 2008 as compared to 2007, and were 4.9%, 5.0%, and 5.4% of total revenues,
excluding income or loss on deferred compensation plans, for the years ended December 31, 2009,
2008, and 2007, respectively. The decrease for 2009 as compared to 2008 was primarily due to
various cost-saving initiatives implemented in 2009, and increased expenses in 2008 which did not
recur in 2009 associated with the abandonment of potential acquisitions. The decrease was
partially offset by $1.6 million in severance payments made in connection with the reduction in
force of certain construction and development staff in 2009, and separation costs relating to the
retirement of one executive officer during the fourth quarter of 2009. The decrease in general and
administrative expenses for the year ended December 31, 2008 as compared to 2007 was primarily due
to decreases in salaries, incentive compensation, and legal expenses.
Interest expense decreased approximately $4.1 million during the year ended December 31, 2009
as compared to 2008 and increased approximately $16.6 million during the year ended December 31,
2008 as compared to 2007. The decrease for 2009 as compared to 2008 was primarily due to decreases
in indebtedness as a result of early retirement of outstanding debt of approximately $325.0 million
during the first six months of 2009. Refer to Note 9, Notes Payable, in the Notes to
Consolidated Financial Statements for further discussion of our early retirements of outstanding
debt. This decrease in interest expense was partially offset by a decrease in capitalized interest
of approximately $7.4 million during the year ended December 31, 2009 as compared to 2008 as a
result of the completion of units in our development pipeline and our decision in fiscal year 2008
not to continue with five future development projects. The decrease was further offset by higher
interest rates on existing indebtedness resulting from paying down amounts outstanding under our
unsecured line of credit with proceeds from our $420 million credit facility entered into in April
2009 and our $380 million credit facility entered into in September 2008. The increase for 2008 as
compared to 2007 was primarily due to the higher interest rates relating to the $380 million credit
facility entered into in September 2008, decreased capitalized interest of approximately $4.9
million, and increased amounts outstanding on our line of credit, partially offset by our
repurchases and early retirement of outstanding debt, and a decline in interest rates on our
floating rate debt.
Depreciation and amortization expense increased approximately $2.9 million during the year
ended December 31, 2009 as compared to 2008 and increased approximately $14.5 million during the
year ended December 31, 2008 as compared to 2007. The increases were primarily due to completion of
new development and capital improvements placed in service each year as compared to the previous
year.
Amortization of deferred financing costs increased approximately $1.0 million during the year
ended December 31, 2009 as compared to 2008 and decreased approximately $0.7 million during the
year ended December 31, 2008 as compared to 2007. The increase for 2009 was primarily due to the
amortization of our financing costs incurred upon the extension of our unsecured credit facility in
October 2009, and financing costs related to our $380 million credit facility completed in
September 2008 and our $420 million credit facility completed in April 2009. This increase was
partially offset by the repurchase and retirement of certain series of notes during 2009. The
decrease for 2008 was primarily due to certain deferred financing costs becoming fully amortized
partially offset by the financing costs incurred on entering into our $380 million credit facility
in September 2008.
Our deferred compensation plans incurred expenses of approximately $14.6 million in 2009,
earned a benefit of approximately $33.4 million in 2008, and incurred expenses of approximately
$7.3 million in 2007. The changes were related to the performance of the investments held in the
deferred compensation plans for plan participants and were directly offset by the income (loss)
related to these plans, as discussed above.
28
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
December 31, |
|
|
Change |
|
|
December 31, |
|
|
Change |
|
(in thousands) |
|
2009 |
|
|
2008 |
|
|
$ |
|
|
% |
|
|
2008 |
|
|
2007 |
|
|
$ |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of properties,
including land |
|
$ |
|
|
|
$ |
2,929 |
|
|
$ |
(2,929 |
) |
|
|
(100.0 |
)% |
|
$ |
2,929 |
|
|
$ |
|
|
|
$ |
2,929 |
|
|
|
100.0 |
% |
Gain (loss) on early
retirement of debt |
|
|
(2,550 |
) |
|
|
13,566 |
|
|
|
(16,116 |
) |
|
|
(118.8 |
) |
|
|
13,566 |
|
|
|
|
|
|
|
13,566 |
|
|
|
100.0 |
|
Impairment associated with
land development activities |
|
|
(85,614 |
) |
|
|
(51,323 |
) |
|
|
(34,291 |
) |
|
|
(66.8 |
) |
|
|
(51,323 |
) |
|
|
(1,447 |
) |
|
|
(49,876 |
) |
|
|
|
|
Equity in income (loss) of
joint ventures |
|
|
695 |
|
|
|
(1,265 |
) |
|
|
1,960 |
|
|
|
(154.9 |
) |
|
|
(1,265 |
) |
|
|
1,526 |
|
|
|
(2,791 |
) |
|
|
(182.9 |
) |
Income tax expense current |
|
|
(967 |
) |
|
|
(843 |
) |
|
|
(124 |
) |
|
|
(14.7 |
) |
|
|
(843 |
) |
|
|
(3,052 |
) |
|
|
2,209 |
|
|
|
72.4 |
|
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 one of the Funds 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 years ended December 31, 2009 or 2007.
Loss on early retirement of debt was approximately $2.6 million for the year ended December
31, 2009 due to the repurchase and retirement of approximately $325.0 million of various unsecured
and secured notes from unrelated third parties for approximately $327.5 million during the first
two quarters of 2009. Gain on early retirement of debt was approximately $13.6 million for the
year ended December 31, 2008 due to the repurchases and retirements of debt, including 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,
and the repurchases and retirements of approximately $82.7 million of various series of other
outstanding debt from unrelated third parties for approximately $75.7 million. The gain (loss) on
early retirement of debt for these transactions also includes reductions for the write-off of
applicable loan costs. There was no gain (loss) on early retirement of debt for the year ended
December 31, 2007.
The impairment associated with land development activities for the year ended December 31,
2009 of approximately $85.6 million includes approximately $72.2 million related to land holdings
for eight projects, and approximately $13.4 million related to a land development joint venture we
have put on hold for the foreseeable future. The impairment associated with land development
activities 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 associated with land development
activities 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 for land 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 increased approximately $2.0 million for the year
ended December 31, 2009 as compared to 2008, and decreased approximately $2.8 million for the year
ended December 31, 2008 as compared to 2007. The increase for 2009 as compared to 2008 was
primarily the result of certain properties owned by development joint ventures reaching or nearing
stabilization in 2009 partially offset by declining earnings at our stabilized operating joint
ventures due to declines in rental income. The decrease in 2008 as compared to 2007 was primarily
due to the increase in joint ventures under development in 2008 as compared to the prior period.
Additionally, in 2008 we incurred expenses of approximately $0.4 million associated with the
abandonment of potential joint venture acquisitions, which were not incurred in 2009 or 2007.
We had current income tax expense of approximately $1.0 million, $0.8 million, and $3.1
million for the tax years ended December 31, 2009, 2008, and 2007, respectively. The increase in
taxes in 2009 as compared to 2008 primarily relate to an increase in state income taxes. Income
tax expense decreased $2.2 million for the year ended December 31, 2008 as compared to 2007,
primarily attributable to lower gains on property dispositions in states with high income tax rates
and changes in state tax laws affecting one of our operating partnerships.
29
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 certain noncontrolling 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 depreciation, FFO can help one compare the operating performance of a companys real
estate between periods or as compared to different companies.
To facilitate a clear understanding of our consolidated historical operating results, we
believe FFO should be examined in conjunction with net income attributable to common shareholders
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 attributable to common shareholders 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 attributable to common shareholders to diluted FFO for the years
ended December 31 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
Funds
from operations |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to common shareholders (1) |
|
$ |
(50,800 |
) |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
Real estate depreciation and amortization,
including discontinued operations |
|
|
170,480 |
|
|
|
171,009 |
|
|
|
161,064 |
|
Adjustments for unconsolidated joint ventures |
|
|
7,800 |
|
|
|
7,103 |
|
|
|
4,934 |
|
Gain on sale of properties, including land and
discontinued operations, net of taxes |
|
|
(16,887 |
) |
|
|
(83,117 |
) |
|
|
(105,098 |
) |
Income (loss) allocated to noncontrolling interests |
|
|
(646 |
) |
|
|
3,617 |
|
|
|
17,796 |
|
|
|
|
|
|
|
|
|
|
|
Funds from operations diluted |
|
$ |
109,947 |
|
|
$ |
169,585 |
|
|
$ |
227,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares basic |
|
|
62,359 |
|
|
|
55,272 |
|
|
|
58,135 |
|
Incremental shares issuable from assumed
conversion of: |
|
|
|
|
|
|
|
|
|
|
|
|
Common share options and share awards granted |
|
|
55 |
|
|
|
114 |
|
|
|
482 |
|
Common units |
|
|
2,852 |
|
|
|
3,142 |
|
|
|
3,503 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares diluted |
|
|
65,266 |
|
|
|
58,528 |
|
|
|
62,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes an $85.6 million, $51.3 million and $1.4 million impairment associated with
land development activities for the years ended December 31, 2009, 2008 and 2007,
respectively. |
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 practicable; |
|
|
|
managing interest rate exposure using what management believes to be prudent levels
of fixed and floating rate debt; |
|
|
|
maintaining what management believes to be conservative coverage ratios; and |
|
|
|
using what management believes to be a prudent combination of debt and common and
preferred equity. |
30
Our interest expense coverage ratio, net of capitalized interest, was approximately 2.6, 2.6,
and 3.0 times for the years ended December 31, 2009, 2008, and 2007, 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, 2009, 2008, and 2007, approximately 72.8%,
78.3%, and 81.6%, respectively, of our properties (based on invested capital) were unencumbered.
Our weighted average maturity of debt, including our line of credit, was 5.6 years at December 31,
2009.
Due to the instability experienced during the current economic downturn, we believe the timing
and strength of an economic recovery is unclear and these conditions may not improve quickly. We
plan to continue to primarily focus on strengthening our capital and liquidity position by
generating positive cash flows from operations, reducing outstanding debt and leverage ratios,
selectively disposing of properties when feasible, and controlling and reducing construction and
overhead costs.
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, secured
mortgage debt, 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 needs during 2010 including:
|
|
|
normal recurring operating expenses; |
|
|
|
current debt service requirements; |
|
|
|
recurring capital expenditures; |
|
|
|
initial funding of property developments, acquisitions, joint venture investments,
and notes receivable; and |
|
|
|
the minimum dividend payments required to maintain our REIT qualification under the
Code. |
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, our ability to complete
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, all of which could adversely impact occupancy and rental rates and our liquidity.
Cash Flows
Certain sources and uses of cash, such as the level of discretionary capital expenditures, and
repurchases of debt and common shares are within our control and are adjusted as necessary based
upon, among other factors, market conditions. The following is a discussion of our cash flows
for the years ended December 31, 2009 and 2008.
Net cash provided by operating activities was approximately $217.7 million during the year
ended December 31, 2009 as compared to approximately $217.0 during the year ended December 31,
2008. The slight increase was primarily due to lower interest expense offset by lower net
operating income in 2009 as compared to 2008, and the timing of payments relating to accounts
payable and accrued expenses.
Net cash used in investing activities during the year ended December 31, 2009 totaled
approximately $69.5 million as compared to approximately $37.4 million during the year ended
December 31, 2008. Cash outflows for property development, acquisition, and capital improvements
were approximately $72.8 million during 2009 as compared to approximately $199.3 million during
2008. This decrease was due to the timing of completions of communities in our development
pipeline and a reduction in construction and development activity in 2009 as compared to 2008.
Cash inflows from sales of properties and partial sales of assets to joint ventures were
approximately $28.1 million for the year ended December 31, 2009 as compared to approximately
$176.0 million for the year ended December 31, 2008. Additionally, cash outflows for investments
in joint ventures were $23.2 million for the year ended December 31, 2009 as compared to $10.4
million in 2008; this increase in cash outflows was primarily a result of our $22.2 million equity
investment in one of our joint ventures during the third quarter 2009.
31
Net cash used in financing activities totaled approximately $91.4 million during the year
ended December 31, 2009 as compared to approximately $173.1 million during 2008. During the year
ended December 31, 2009, we used a total of approximately $648.7 million of cash to repay
outstanding notes payable consisting of approximately $169.9 million of outstanding notes payable
stemming from our April 2009 tender offer, the early retirement of outstanding debt consisting of
approximately $139.1 million of secured notes, and approximately $18.2 million of
senior unsecured notes. The remaining outstanding notes payable payments were primarily for
maturing secured and unsecured notes payable of approximately $176.5 million, and payments of all
remaining amounts outstanding on our unsecured line of credit. Also in 2009, $152.7 million was
used for distributions paid to common shareholders, perpetual preferred unit holders, and
noncontrolling interest holders. The cash outflows were offset by cash receipts of $420 million
from a secured credit facility entered into during the second quarter, approximately $20.8 million
from secured notes payable relating to a construction loan for a consolidated joint venture and net
proceeds of approximately $272.1 million from the completion of our equity offering in May 2009.
In 2008, we used $173.1 million of cash in financing activities primarily to repay approximately
$379.2 million of outstanding notes payable consisting of approximately $100.6 million of
outstanding notes payable in our December 2008 tender offer, approximately $75.7 million of various
series of other outstanding debt, and approximately $201.9 million of maturing secured notes
payable. Net cash used in financing activities for 2008 was also attributable to distributions
paid to common shareholders, perpetual preferred unit holders, and noncontrolling 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.
Financial Flexibility
We have a $600 million unsecured credit facility which matures in 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 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, 2009, we had outstanding letters of
credit totaling approximately $9.2 million, and had approximately $590.8 million available under
our unsecured line of credit.
As an alternative to our unsecured line of credit, from time to time we may 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. We expect such borrowings, if any, will vary in term and
pricing and will typically be priced at interest rates below those available from the unsecured
line of credit.
During the quarter ended June 30, 2009, we filed a shelf registration statement with the SEC
which became automatically effective upon filing and allows us to offer, from time to time, an
unlimited amount of common shares, preferred shares, debt securities, or warrants. Our declaration
of trust provides we may issue up to 110 million shares of beneficial interest, consisting of 100
million common shares and 10 million preferred shares. During the quarter ended June 30, 2009, we
issued approximately 10.4 million common shares at $27.50 per share in a public equity offering,
resulting in net proceeds of approximately $272.1 million. As of December 31, 2009, we had
approximately 77.0 million 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, with
stable outlooks, as well as by our 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 continued volatility and disruption. We have noted a recent increase in issuances of
debt and equity by REITs at more attractive rates. While this may be a positive sign, we are
uncertain if this level of activity will increase or continue. 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.
32
On April 17, 2009, we, as guarantor, and five separate subsidiaries as borrowers entered into
a $420 million secured credit facility agreement. The facility has a ten-year term with a fixed
annual interest rate of 5.12% and monthly payments of interest only and matures on May 1, 2019. 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 11 of our
multifamily communities. We used the proceeds from this credit
facility to repurchase outstanding debt, repay maturing debt, prepay mortgage debt, pay down
amounts outstanding under our revolving line of credit, and general corporate purposes.
Future Cash Requirements and Contractual Obligations
One of our principal long-term liquidity requirements includes the repayment of maturing debt,
including any future borrowings under our unsecured line of credit. During 2010, approximately
$141.6 million of unsecured debt, including scheduled principal amortizations, are scheduled to
mature. See Note 9, Notes Payable, of the Notes to Consolidated Financial Statements for further
discussion of scheduled maturities. Additionally, approximately $9.5 million remains to be funded
for one development project owned by a consolidated joint venture and we expect substantially all
of the remaining expenditures to be funded from an existing construction loan. We intend to meet
our long-term liquidity requirements through cash flows generated from operations, draws on our
unsecured credit facility, proceeds from property dispositions and secured mortgage notes, and the
use of 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 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. In December 2009, we
announced our Board of Trust Managers had declared a dividend distribution of $0.45 per share to
our common shareholders of record as of December 21, 2009. The dividend was subsequently paid on
January 18, 2010. We paid equivalent amounts per unit to holders of the common operating
partnership units. When aggregated with previous 2009 dividends, this distribution to common
shareholders and holders of common operating partnership units equates to an annual dividend rate
of $2.05 per share or unit for the year ended December 31, 2009.
The following table summarizes our known contractual cash obligations as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Total |
|
|
2010 |
|
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
Thereafter |
|
Debt maturities (1) |
|
$ |
2,625.2 |
|
|
$ |
141.6 |
|
|
$ |
153.2 |
|
|
$ |
761.9 |
|
|
$ |
227.2 |
|
|
$ |
10.1 |
|
|
$ |
1,331.2 |
|
Interest payments (2) |
|
|
692.3 |
|
|
|
130.6 |
|
|
|
119.3 |
|
|
|
108.4 |
|
|
|
74.4 |
|
|
|
63.4 |
|
|
|
196.2 |
|
Non-cancelable lease payments |
|
|
12.3 |
|
|
|
2.5 |
|
|
|
2.4 |
|
|
|
2.0 |
|
|
|
1.9 |
|
|
|
1.8 |
|
|
|
1.7 |
|
Postretirement benefit obligations |
|
|
2.9 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
1.9 |
|
Construction contracts |
|
|
9.5 |
|
|
|
9.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,342.2 |
|
|
$ |
284.4 |
|
|
$ |
275.1 |
|
|
$ |
872.5 |
|
|
$ |
303.7 |
|
|
$ |
75.5 |
|
|
$ |
1,531.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2009 or the most recent practicable date. |
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 also committed to additional funding under mezzanine loans provided to
joint ventures. We have guaranteed no more than our proportionate interest, totaling approximately
$57.0 million, of five loans utilized for construction and development activities for our joint
ventures and our commitment to fund additional amounts under the mezzanine loans was an aggregate
of approximately $7.3 million at December 31, 2009.
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. We believe the short-term nature of our leases
generally minimizes our risk from the adverse effects of inflation.
33
Critical Accounting Policies
The preparation of our financial statements in conformity with GAAP requires management to
make certain estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and
liabilities, the disclosures of contingent assets and liabilities at the balance sheet date,
and the amounts of revenues and expenses recognized during the reporting period. These estimates
are based on historical experience and other assumptions believed to be reasonable under the
circumstances. The following is a discussion of our critical accounting estimates. For a
discussion of all of our significant accounting policies, see Note 2 to the accompanying
consolidated financial statements.
Use of Estimates. In the application of GAAP, management is required to make estimates and
assumptions which 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 include estimates supporting our impairment analysis related to the
carrying values of our real estate assets, estimates of the useful lives of our assets, estimates
related to the valuation of our investments in joint ventures and mezzanine financing, and
estimates of expected losses of variable interest entities. These estimates are based on
historical experience and other assumptions believed to be reasonable under the circumstances.
Future events rarely develop exactly as forecasted, and the best estimates routinely require
adjustment.
Principles of Consolidation. We may enter into various joint venture agreements with
unrelated third parties to hold or develop real estate assets. We must determine for each of these
joint ventures whether to consolidate the entity or account for our investment under the equity or
cost basis of accounting. Investments acquired or created are evaluated based on the accounting
guidance relating to variable interest entities (VIEs), which requires the consolidation of VIEs
in which we are considered to be the primary beneficiary. If the investment is determined not to be
a VIE, then the investment is evaluated for consolidation (primarily using a voting interest model)
under the remaining consolidation guidance relating to real estate. If we are the general partner
in a limited partnership, or manager of a limited liability company, we also consider the
consolidation guidance relating to the rights of limited partners or non-managing members, as the
case may be, to assess whether any rights held by the limited partners, or non-managing members, as
the case may be, overcome the presumption of control by us. We evaluate our accounting for
investments on a quarterly basis or when a reconsideration event (as defined in GAAP) with respect
to our investments occurs. The analysis required to identify VIEs and primary beneficiaries is
complex and requires substantial management judgment. Accordingly, we believe the decisions made
to choose an appropriate accounting framework are critical.
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. We consider projected future
discounted cash flows, trends, strategic decisions regarding future development plans, and other
factors in our assessment of whether impairment conditions exist. When impairment exists, the
long-lived asset is adjusted to its fair value. While we believe our estimates of future cash
flows are reasonable, different assumptions regarding a number of factors, including market rents,
economic conditions, and occupancies could significantly affect these estimates. In estimating
fair value, management uses appraisals, management estimates, and discounted cash flow calculations
that maximize inputs from a marketplace participants perspective. During the quarter ended
December 31, 2009, we recognized a $72.2 million impairment charge to the previous carrying value
of $109.9 million for land holdings for eight future projects we have put on hold for the
foreseeable future. Additionally, we recognized a $13.4 million impairment charge relating to a
land development joint venture we have put on hold for the foreseeable future. This development
joint venture had a previous carrying value of approximately $8.9 million. The impairment also
included exit costs associated with this joint venture. The estimates of fair value are based on
what we believe to be marketplace participant expectations, and consider, among other things, the
highest and best use of the land (for example, as a multifamily development, or single-family
townhome construction), estimated timeframe and current estimates of construction and development
costs, estimates of expected market rents and expenses upon completion of development, expected
lease-up periods, and expected net operating income (or yield) that a marketplace participant would
expect to receive from the developed project. We utilized opinions of value from third-parties to
supplement our estimates. There were no significant market-based transactions that have occurred
during the previous twelve months for the land parcels that were analyzed.
In addition, we evaluate our investments in joint ventures and mezzanine construction
financing and if, with respect to investments, we believe there is an other than temporary decline
in market value, or if, with respect to mezzanine loans, it is probable we will not collect all
scheduled amounts due in accordance with the terms, 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 amounts due with respect to these mezzanine loans, current market conditions
with respect to credit markets and real estate market fundamentals inject a significant amount of
uncertainty into the environment and any
further adverse economic or market development may cause us to re-evaluate our conclusions,
and could result in material impairment charges with respect to our mezzanine loans.
34
The value of our properties under development depends on market conditions, including
estimates of the project start date as well as estimates of demand for multifamily communities. We
have reviewed market trends and other marketplace information and have incorporated this
information as well as our current outlook into the assumptions we use in our impairment analyses.
Due to, among other factors, the judgment and assumptions applied in the impairment analyses and
the fact 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 deteriorate 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 material charges in future
periods for impairments related to existing assets. Any such material non-cash charges would have
an adverse effect on our consolidated financial position and results of operations.
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. Capitalized interest is generally based on our weighted
average unsecured interest rate. Most transaction and restructuring costs associated with the
acquisition of real estate assets are expensed. Expenditures directly related to the development
and improvement of real estate assets 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. Included in capitalized costs are managements
estimates of indirect costs associated with our development and redevelopment activities. The
estimates used by management require judgment, and accordingly we believe cost capitalization to be
a critical accounting estimate.
Recent Accounting Pronouncements
Recent Accounting Pronouncements. In June 2009, the Financial Accounting Standards Board
(FASB) issued the Codification. Effective July 1, 2009, the Codification is the single source of
authoritative accounting principles recognized by the FASB to be applied by non-governmental
entities in the preparation of financial statements in conformity with GAAP. We adopted the
Codification during the third quarter of 2009 and the adoption did not materially impact our
financial statements, however our references to accounting literature within our notes to the
consolidated financial statements have been revised to conform to the Codification classification.
In August 2009, the FASB issued Accounting Standards Update (ASU) 2009-05, which provides
alternatives to measuring the fair value of liabilities when a quoted price for an identical
liability traded in an active market does not exist. The alternatives include using the quoted
price for the identical liability when traded as an asset or the quoted price of a similar
liability or of a similar liability when traded as an asset, in addition to valuation techniques
based on the amount an entity would pay to transfer the identical liability (or receive to enter
into an identical liability). We adopted ASU 2009-05 effective October 1, 2009 and the adoption did
not have a material impact on our financial statements.
In December 2009, the FASB issued ASU 2009-16, Transfers and Servicing (Topic 860)
Accounting for Transfers of Financial Assets, which codified the previously issued Statement of
Financial Accounting Standards (SFAS) 166, Accounting for Transfers of Financial Assets, an
Amendment of FASB Statement No. 140. ASU 2009-16 modifies the financial components approach,
removes the concept of a qualifying special purpose entity, and clarifies and amends the
derecognition criteria for determining whether a transfer of a financial asset or portion of a
financial asset qualifies for sale accounting. The ASU also requires expanded disclosures
regarding transferred assets and how they affect the reporting entity. ASU 2009-16 is effective
for us beginning January 1, 2010. Our adoption of ASU 2009-16 will not have a material effect on
our financial statements.
35
In December 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities, which codified the
previously issued SFAS 167, Amendments to FASB Interpretation No. 46R. ASU 2009-17 changes the
consolidation analysis for VIEs and requires a qualitative analysis to determine the primary
beneficiary of the VIE. The determination of the
primary beneficiary of a VIE is based on whether the entity has the power to direct matters
which most significantly impact the activities of the VIE and has the obligation to absorb losses,
or the right to receive benefits, of the VIE which could potentially be significant to the VIE.
The ASU requires an ongoing reconsideration of the primary beneficiary and also amends the events
triggering a reassessment of whether an entity is a VIE. ASU 2009-17 requires additional
disclosures for VIEs, including disclosures about a reporting entitys involvement with VIEs, how a
reporting entitys involvement with a VIE affects the reporting entitys financial statements, and
significant judgments and assumptions made by the reporting entity to determine whether it must
consolidate the VIE. ASU 2009-17 is effective for us beginning January 1, 2010. Our adoption of
ASU 2009-17 will not have a material effect on our financial statements.
In January 2010, the FASB issued ASU 2010-01, Equity (Topic 505): Accounting for
Distributions to Shareholders with Components of Stock and Cash. The ASU clarifies when the stock
portion of a distribution allows shareholders to elect to receive cash or stock, with a potential
limitation on the total amount of cash which all shareholders could elect to receive in the
aggregate, the distribution would be considered a share issuance as opposed to a stock dividend and
the share issuance would be reflected in earnings per share prospectively. We adopted ASU 2010-01
effective October 1, 2009 and the adoption did not have an impact on our financial statements.
In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810): Accounting and
Reporting for Decreases in Ownership of a Subsidiary a Scope Clarification. The ASU clarifies
the scope of Subtopic 810-10 applies to a subsidiary or group of assets considered to be a business
or nonprofit activity, a subsidiary considered to be a business or nonprofit activity which is
transferred to an equity method investee or joint venture, and an exchange of a group of assets
considered to be a business or nonprofit activity for a noncontrolling interest in an entity
(including an equity method investee or joint venture). ASU 2010-02 further clarifies the scope of
Subtopic 810-10 does not apply to sales of in substance real estate or conveyances of oil and gas
mineral rights, even if these transfers involve businesses. The ASU also expands the disclosure
requirements about deconsolidation of a subsidiary or derecognition of a group of assets. For
entities who have previously adopted the noncontrolling interests guidance included in Subtopic
810-10, ASU 2010 is effective for interim or annual periods ending on or after December 15, 2009
and should be applied retrospectively to the first period in which the noncontrolling interests
guidance was adopted. As we adopted the noncontrolling interests guidance on January 1, 2009, we
also adopted ASU 2010-02 effective January 1, 2009 and the adoption did not have an impact on our
financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks inherent in our operations. These risks generally
arise from transactions entered into in the normal course of business. We believe our primary
market risk exposure relates to interest rate risk. We do not enter into derivatives or other
financial instruments for trading or speculative purposes.
The table below provides information about our assets and our liabilities sensitive to changes
in interest rates as of December 31, 2009 and 2008:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
Average |
|
|
|
|
|
|
Amount |
|
|
(in years) |
|
|
Interest |
|
|
% Of |
|
|
Amount |
|
|
(in years) |
|
|
Interest |
|
|
% Of |
|
|
|
(in millions) |
|
|
(1) |
|
|
Rate |
|
|
Total |
|
|
(in millions) |
|
|
(1) |
|
|
Rate |
|
|
Total |
|
Fixed rate debt (2) |
|
$ |
2,396.8 |
|
|
|
5.2 |
|
|
|
5.5 |
% |
|
|
91.3 |
% |
|
$ |
2,467.3 |
|
|
|
4.4 |
|
|
|
5.5 |
% |
|
|
87.1 |
% |
Variable rate debt |
|
|
228.4 |
|
|
|
10.1 |
|
|
|
1.2 |
|
|
|
8.7 |
|
|
|
365.1 |
|
|
|
11.5 |
|
|
|
2.7 |
|
|
|
12.9 |
|
|
|
|
(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 $14.9 million of a
construction loan entered into in 2008 which are effectively fixed by the use of an
interest rate swap (see discussion below). |
We have historically used variable rate indebtedness available under our revolving credit
facility to initially fund acquisitions and our development pipeline. To the extent we utilize our
revolving credit facility thereby increasing our variable rate indebtedness, our exposure to
increases in interest rates will also increase.
36
For fixed rate debt, interest rate changes affect the fair market value but do not impact net
income attributable 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 attributable 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 $100.7 million. The net income attributable 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 $2.2 million, holding all other variables
constant. We currently use interest rate hedges to reduce the impact of interest rate fluctuations
on certain variable indebtedness, not for trading or speculative purposes. Under the hedge
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, 2009, the effect of our hedge agreements was to fix the interest rate on
approximately $514.9 million of our variable rate debt. Had the hedge agreements not been in place
during 2009, our annual interest costs would have been approximately $22.6 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 hedge agreements. Additionally, if the variable
interest rates on this debt had been 100 basis points higher through 2009 and the hedge agreements
not been in place, our annual interest cost would have been approximately $5.4 million higher.
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.
Item 8. Financial Statements and Supplementary Data
Our response to this item is included in a separate section at the end of this report
beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures. We carried out an evaluation, under the
supervision and with the participation of our management, including the Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report pursuant to Securities Exchange Act (Exchange Act) Rules
13a-15(e) and 15d-15(e). Based on the 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 which have materially
affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
37
Managements Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and
15d-15(f) promulgated under the Securities Exchange Act of 1934 as follows:
A process designed by, or under the supervision of, the companys principal executive and
principal financial officers, or persons performing similar functions, and effected by the
companys board of directors, management, and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles 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 that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and |
|
|
|
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, 2009. 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, 2009.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an
attestation report regarding the effectiveness of our internal controls over financial reporting,
which is included herein.
38
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trust Managers and Shareholders of
Camden Property Trust
Houston, Texas
We have audited the internal control over financial reporting of Camden Property Trust and
subsidiaries (the Company) as of December 31, 2009, 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, 2009, 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 of
the Company as of and for the year ended December 31, 2009 and
our report dated February 25, 2010
expressed an unqualified opinion on those financial statements and financial statement schedules
and included an explanatory paragraph regarding the Companys adoption of a new accounting
standard.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 25, 2010
39
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Information with respect to this Item 10 is incorporated by reference from our Proxy
Statement, which we expect to file on or before March 23, 2010 in connection with the Annual
Meeting of Shareholders to be held May 3, 2010.
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, 2010 in connection with the Annual
Meeting of Shareholders to be held May 3, 2010.
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, 2010 in connection with the Annual
Meeting of Shareholders to be held May 3, 2010.
Equity Compensation Plan Information
|
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|
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|
|
|
|
|
|
Number of securities |
|
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|
|
|
|
|
|
|
|
|
remaining available for |
|
|
|
Number of securities to be |
|
|
Weighted-average |
|
|
future issuance under |
|
|
|
issued upon exercise of |
|
|
exercise price of |
|
|
equity compensation plans |
|
|
|
outstanding options, |
|
|
outstanding options, |
|
|
(excluding securities |
|
|
|
warrants and rights |
|
|
warrants and rights |
|
|
reflected in column (a)) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation
plans approved by
security holders |
|
|
4,826,757 |
|
|
$ |
39.00 |
|
|
|
1,640,099 |
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,826,757 |
|
|
$ |
39.00 |
|
|
|
1,640,099 |
|
|
|
|
|
|
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|
|
|
|
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, 2010 in connection with the Annual
Meeting of Shareholders to be held May 3, 2010.
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, 2010 in connection with the Annual
Meeting of Shareholders to be held May 3, 2010.
40
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-7 |
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F-9 |
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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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|
|
Filed Herewith or |
Exhibit No. |
|
Description |
|
Incorporated Herein by Reference (1) |
|
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|
|
|
2.1 |
|
|
Agreement and Plan of Merger, dated October 4, 2004, among
Camden Property Trust, Camden Summit, Inc. and Summit
Properties Inc.
|
|
Current Report on Form 8-K
filed on October 5, 2004 |
|
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|
|
|
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|
|
2.2 |
|
|
Amendment No. 1 to Agreement and Plan of Merger, dated
October 6, 2004, among Camden Property Trust, Camden Summit,
Inc. and Summit Properties Inc.
|
|
Exhibit 2.1 to Form 8-K
filed on October 6, 2004 |
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|
2.3 |
|
|
Amendment No. 2 to Agreement and Plan of Merger, dated
January 24, 2005, among Camden Property Trust, Camden
Summit, Inc. and Summit Properties Inc.
|
|
Exhibit 2.1 to Form 8-K
filed on January 25, 2005 |
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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 |
41
|
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|
Filed Herewith or |
Exhibit No. |
|
Description |
|
Incorporated Herein by Reference (1) |
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3.3 |
|
|
Second Amended and Restated Bylaws of Camden Property Trust
|
|
Exhibit 3.3 to Form 10-K for
the year ended December 31,
1997 |
|
|
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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 |
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|
4.1 |
|
|
Specimen certificate for Common Shares of Beneficial Interest
|
|
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 |
|
|
First Supplemental Indenture dated as of February 15, 1996
between Camden Property Trust and U.S. Trust Company of
Texas, N.A., as Trustee
|
|
Exhibit 4.2 to Form 8-K
filed on February 15, 1996 |
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|
4.4 |
|
|
Form of Indenture for Senior Debt Securities dated as of
February 11, 2003 between Camden Property Trust and SunTrust
Bank, as Trustee
|
|
Exhibit 4.1 to Form S-3
filed on February 12, 2003
(Registration No.
333-103119) |
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|
|
4.5 |
|
|
First Supplemental Indenture dates as of May 4, 2007 between
the Company and U.S. Bank National Association, as successor
to SunTrust Bank, as trustee
|
|
Exhibit 4.2 to Form 8-K
filed on May 7, 2007 |
|
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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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4.8 |
|
|
Form of Amendment to Registration Rights Agreement, dated as
of December 1, 2003, between Camden Property Trust and the
unitholders named therein
|
|
Exhibit 4.8 to Form 10-K for
the year ended December 31,
2003 |
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|
4.9 |
|
|
Form of Registration Rights Agreement between Camden
Property Trust and the holders named therein
|
|
Form S-4 filed on November
24, 2004 (Registration No.
333-120733) |
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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 |
|
|
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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|
|
|
|
4.13 |
|
|
Form of Camden Property Trust 6.75% Note due 2010
|
|
Exhibit 4.3 to Form 8-K
filed on September 17, 2001 |
|
|
|
|
|
|
|
|
4.14 |
|
|
Form of Camden Property Trust 5.875% Note due 2012
|
|
Exhibit 4.3 to Form 8-K
filed on November 25, 2002 |
|
|
|
|
|
|
|
|
4.15 |
|
|
Form of Camden Property Trust 5.375% Note due 2013
|
|
Exhibit 4.2 to Form 8-K
filed on December 9, 2003 |
|
|
|
|
|
|
|
|
4.16 |
|
|
Form of Camden Property Trust 4.375% Note due 2010
|
|
Exhibit 4.2 to Form 8-K
filed on December 20, 2004 |
|
|
|
|
|
|
|
|
4.17 |
|
|
Form of Camden Property Trust 5.00% Note due 2015
|
|
Exhibit 4.2 to Form 8-K
filed on June 7, 2005 |
42
|
|
|
|
|
|
|
|
|
|
|
|
|
Filed Herewith or |
Exhibit No. |
|
Description |
|
Incorporated Herein by Reference (1) |
|
|
|
|
|
|
|
|
4.18 |
|
|
Form of Camden Property Trust 5.700% Notes due 2017
|
|
Exhibit 4.3 to Form 8-K
filed on May 7, 2007 |
|
|
|
|
|
|
|
|
4.19 |
|
|
Indenture dated as of August 7, 1997 between Camden Summit
Partnership, L.P. (f/k/a Summit Properties Partnership,
L.P.) and First Union National Bank
|
|
Exhibit 4.1 to Camden Summit
Partnership, L.P.s Form 8-K
filed on August 11, 1997
(File No. 000-22411) |
|
|
|
|
|
|
|
|
4.20 |
|
|
Supplemental Indenture No. 1, dated as of August 12, 1997,
between Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) and First Union National Bank
|
|
Exhibit 4.1 to Camden Summit
Partnership, L.P.s Form
8-K/A-1 filed on August 18,
1997 (File No. 000-22411) |
|
|
|
|
|
|
|
|
4.21 |
|
|
Supplemental Indenture No. 2, dated as of December 17, 1997,
between Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) and First Union National Bank
|
|
Exhibit 4.1 to Camden Summit
Partnership, L.P.s Form
8-K/A-1 filed on December
17, 1997 (File No.
000-22411) |
|
|
|
|
|
|
|
|
4.22 |
|
|
Supplemental Indenture No. 3, dated as of May 29, 1998,
between Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) and First Union National Bank
|
|
Exhibit 4.2 to Camden Summit
Partnership, L.P.s Form 8-K
filed on June 2, 1998 (File
No. 000-22411) |
|
|
|
|
|
|
|
|
4.23 |
|
|
Supplemental Indenture No. 4, dated as of April 20, 2000,
between Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) and First Union National Bank
|
|
Exhibit 4.2 to Camden Summit
Partnership, L.P.s Form 8-K
filed on April 28, 2000
(File No. 000-22411) |
|
|
|
|
|
|
|
|
4.24 |
|
|
Supplemental Indenture No. 5, dated as of June 21, 2005,
among Camden Summit Partnership, L.P., Camden Property Trust
and Wachovia Bank, N.A.
|
|
Exhibit 99.1 to Form 8-K
filed on June 23, 2005 |
|
|
|
|
|
|
|
|
4.25 |
|
|
Form of Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) 8.50% Medium-Term Note due
2010
|
|
Exhibit 10.2 to Summit
Property Inc.s Form 10-Q
for the quarter ended
September 30, 2000 (File No.
001-12792) |
|
|
|
|
|
|
|
|
4.26 |
|
|
Form of Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) 7.703% Medium-Term Note due
2011
|
|
Exhibit 10.3 to Summit
Property Inc.s Form 10-Q
for the quarter ended June
30, 2001 (File No.
001-12792) |
|
|
|
|
|
|
|
|
10.1 |
|
|
Form of Indemnification Agreement between Camden Property
Trust and certain of its trust managers and executive
officers
|
|
Form S-11 filed on July 9,
1993 (Registration No.
33-63588) |
|
|
|
|
|
|
|
|
10.2 |
|
|
Second Amended and Restated Employment Agreement dated July
11, 2003 between Camden Property Trust and Richard J. Campo
|
|
Exhibit 10.1 to Form 10-Q
for the quarter ended June
30, 2003 |
|
|
|
|
|
|
|
|
10.3 |
|
|
Second Amended and Restated Employment Agreement dated July
11, 2003 between Camden Property Trust and D. Keith Oden
|
|
Exhibit 10.2 to Form 10-Q
for the quarter ended June
30, 2003 |
|
|
|
|
|
|
|
|
10.4 |
|
|
Form of First Amendment to Second Amended and Restated
Employment Agreements, effective as of January 1, 2008,
between Camden Property Trust and each of Richard J. Campo
and D. Keith Oden.
|
|
Exhibit 99.1 to Form 8-K
filed on November 30, 2007 |
|
|
|
|
|
|
|
|
10.5 |
|
|
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 |
43
|
|
|
|
|
|
|
|
|
|
|
|
|
Filed Herewith or |
Exhibit No. |
|
Description |
|
Incorporated Herein by Reference (1) |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
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 |
44
|
|
|
|
|
|
|
|
|
|
|
|
|
Filed Herewith or |
Exhibit No. |
|
Description |
|
Incorporated Herein by Reference (1) |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
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 |
45
|
|
|
|
|
|
|
|
|
|
|
|
|
Filed Herewith or |
Exhibit No. |
|
Description |
|
Incorporated Herein by Reference (1) |
|
|
|
|
|
|
|
|
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 |
|
|
Agreement and General Release, executed on December 28,
2009, between Camden Property Trust and Steven Eddington
|
|
Exhibit 99.1 to Form 8-K
filed on December 28, 2009 |
|
|
|
|
|
|
|
|
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 (File
No. 000-22411) |
|
|
|
|
|
|
|
|
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 (File No.
000-22411) |
|
|
|
|
|
|
|
|
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 (File No.
000-22411) |
|
|
|
|
|
|
|
|
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 |
46
|
|
|
|
|
|
|
|
|
|
|
|
|
Filed Herewith or |
Exhibit No. |
|
Description |
|
Incorporated Herein by Reference (1) |
|
|
|
|
|
|
|
|
10.55 |
|
|
Form of Master Credit Facility Agreement, dated as of April
17, 2009, among Summit Russett, LLC, 2009 CPT Community
Owner, LLC, 2009 CUSA Community Owner, LLC, 2009 CSP
Community Owner LLC, and 2009 COLP Community Owner, LLC, as
borrowers, Camden Property Trust, as guarantor, and Red
Mortgage Capital, Inc., as lender. (2)
|
|
Exhibit 10.1 to Form 10-Q
for the quarter ended March
31, 2009 |
|
|
|
|
|
|
|
|
12.1 |
|
|
Statement Regarding Computation of Ratios
|
|
Filed Herewith |
|
|
|
|
|
|
|
|
21.1 |
|
|
List of Significant 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. |
47
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.
|
|
|
|
|
|
CAMDEN PROPERTY TRUST
|
|
February 25, 2010 |
By: |
/s/ Michael P. Gallagher
|
|
|
|
Michael P. Gallagher |
|
|
|
Vice President - Chief Accounting Officer |
|
48
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 25, 2010 |
|
|
|
|
|
/s/ D. Keith Oden
D. Keith Oden
|
|
President and Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
/s/ Dennis M. Steen
Dennis M. Steen
|
|
Senior Vice President-Finance and
Chief Financial Officer
(Principal Financial
Officer)
|
|
February 25, 2010 |
|
|
|
|
|
/s/ Michael P. Gallagher
Michael P. Gallagher
|
|
Vice President Chief
Accounting Officer
(Principal Accounting
Officer)
|
|
February 25, 2010 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
*
William B. McGuire, Jr.
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
|
|
Trust Manager
|
|
February 25, 2010 |
|
|
|
|
|
*By:
|
|
/s/ Dennis M. Steen |
|
|
|
|
Dennis M. Steen
|
|
|
|
|
Attorney-in-fact |
|
|
49
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, 2009 and 2008, and the related consolidated
statements of income and comprehensive income, equity, and cash flows for each of the three years
in the period ended December 31, 2009. 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, 2009 and 2008,
and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2009, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, on January 1, 2009, the Company
changed its method of accounting for noncontrolling interests and retrospectively adjusted all
periods presented in the consolidated financial statements.
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,
2009, 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 25, 2010 expressed an unqualified opinion on the Companys internal control over financial
reporting.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 25, 2010
F-1
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
(in thousands, except per share amounts) |
|
2009 |
|
|
2008 |
|
Assets |
|
|
|
|
|
|
|
|
Real estate assets, at cost |
|
|
|
|
|
|
|
|
Land |
|
$ |
747,921 |
|
|
$ |
744,059 |
|
Buildings and improvements |
|
|
4,512,124 |
|
|
|
4,447,587 |
|
|
|
|
|
|
|
|
|
|
|
5,260,045 |
|
|
|
5,191,646 |
|
Accumulated depreciation |
|
|
(1,149,056 |
) |
|
|
(981,049 |
) |
|
|
|
|
|
|
|
Net operating real estate assets |
|
|
4,110,989 |
|
|
|
4,210,597 |
|
Properties under development, including land |
|
|
201,581 |
|
|
|
264,188 |
|
Investments in joint ventures |
|
|
43,542 |
|
|
|
15,106 |
|
Properties held for sale, including land |
|
|
|
|
|
|
20,653 |
|
|
|
|
|
|
|
|
Total real estate assets |
|
|
4,356,112 |
|
|
|
4,510,544 |
|
|
|
|
|
|
|
|
|
|
Accounts receivable affiliates |
|
|
36,112 |
|
|
|
37,000 |
|
Notes receivable |
|
|
|
|
|
|
|
|
Affiliates |
|
|
45,847 |
|
|
|
58,109 |
|
Other |
|
|
|
|
|
|
8,710 |
|
Other assets, net |
|
|
102,114 |
|
|
|
103,013 |
|
Cash and cash equivalents |
|
|
64,156 |
|
|
|
7,407 |
|
Restricted cash |
|
|
3,658 |
|
|
|
5,559 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
4,607,999 |
|
|
$ |
4,730,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Notes payable |
|
|
|
|
|
|
|
|
Unsecured |
|
$ |
1,645,926 |
|
|
$ |
2,103,187 |
|
Secured |
|
|
979,273 |
|
|
|
729,209 |
|
Accounts payable and accrued expenses |
|
|
74,420 |
|
|
|
82,575 |
|
Accrued real estate taxes |
|
|
23,241 |
|
|
|
23,600 |
|
Distributions payable |
|
|
33,025 |
|
|
|
42,936 |
|
Other liabilities |
|
|
145,176 |
|
|
|
149,554 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,901,061 |
|
|
|
3,131,061 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetual preferred units |
|
|
97,925 |
|
|
|
97,925 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Common shares of beneficial interest; $0.01 par value per share; 100,000 shares authorized; 79,543 and 68,770 issued; 76,996 and 66,028 outstanding at December 31, 2009 and 2008, respectively |
|
|
770 |
|
|
|
660 |
|
Additional paid-in capital |
|
|
2,525,656 |
|
|
|
2,237,703 |
|
Distributions in excess of net income attributable to common shareholders |
|
|
(492,571 |
) |
|
|
(312,309 |
) |
Notes receivable secured by common shares |
|
|
(101 |
) |
|
|
(295 |
) |
Treasury shares, at cost (12,897 and 12,925 shares, respectively) |
|
|
(462,188 |
) |
|
|
(463,209 |
) |
Accumulated other comprehensive loss |
|
|
(41,155 |
) |
|
|
(51,056 |
) |
|
|
|
|
|
|
|
Total common equity |
|
|
1,530,411 |
|
|
|
1,411,494 |
|
Noncontrolling interests |
|
|
78,602 |
|
|
|
89,862 |
|
|
|
|
|
|
|
|
Total equity |
|
|
1,609,013 |
|
|
|
1,501,356 |
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
4,607,999 |
|
|
$ |
4,730,342 |
|
|
|
|
|
|
|
|
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) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
|
$ |
537,422 |
|
|
$ |
547,718 |
|
|
$ |
525,497 |
|
Other property revenues |
|
|
86,504 |
|
|
|
76,298 |
|
|
|
62,822 |
|
|
|
|
|
|
|
|
|
|
|
Total property revenues |
|
|
623,926 |
|
|
|
624,016 |
|
|
|
588,319 |
|
Property expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Property operating and maintenance |
|
|
175,788 |
|
|
|
168,981 |
|
|
|
155,276 |
|
Real estate taxes |
|
|
71,079 |
|
|
|
70,301 |
|
|
|
62,418 |
|
|
|
|
|
|
|
|
|
|
|
Total property expenses |
|
|
246,867 |
|
|
|
239,282 |
|
|
|
217,694 |
|
Non-property income |
|
|
|
|
|
|
|
|
|
|
|
|
Fee and asset management |
|
|
8,008 |
|
|
|
9,167 |
|
|
|
8,293 |
|
Interest and other income |
|
|
2,826 |
|
|
|
4,736 |
|
|
|
9,427 |
|
Income (loss) on deferred compensation plans |
|
|
14,609 |
|
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
|
|
|
|
|
|
|
|
Total non-property income (loss) |
|
|
25,443 |
|
|
|
(19,540 |
) |
|
|
25,002 |
|
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Property management |
|
|
18,864 |
|
|
|
19,910 |
|
|
|
18,413 |
|
Fee and asset management |
|
|
4,878 |
|
|
|
6,054 |
|
|
|
4,552 |
|
General and administrative |
|
|
31,243 |
|
|
|
31,586 |
|
|
|
32,590 |
|
Interest |
|
|
128,296 |
|
|
|
132,399 |
|
|
|
115,753 |
|
Depreciation and amortization |
|
|
174,682 |
|
|
|
171,814 |
|
|
|
157,297 |
|
Amortization of deferred financing costs |
|
|
3,925 |
|
|
|
2,958 |
|
|
|
3,661 |
|
Expense (benefit) on deferred compensation plans |
|
|
14,609 |
|
|
|
(33,443 |
) |
|
|
7,282 |
|
|
|
|
|
|
|
|
|
|
|
Total other expenses |
|
|
376,497 |
|
|
|
331,278 |
|
|
|
339,548 |
|
Income from continuing operations before gain on sale of properties, including land, gain (loss) on early retirement of debt, impairment associated with land development activities, and equity in income (loss) of joint ventures |
|
|
26,005 |
|
|
|
33,916 |
|
|
|
56,079 |
|
Gain on sale of properties, including land |
|
|
|
|
|
|
2,929 |
|
|
|
|
|
Gain (loss) on early retirement of debt |
|
|
(2,550 |
) |
|
|
13,566 |
|
|
|
|
|
Impairment associated with land development activities |
|
|
(85,614 |
) |
|
|
(51,323 |
) |
|
|
(1,447 |
) |
Equity in income (loss) of joint ventures |
|
|
695 |
|
|
|
(1,265 |
) |
|
|
1,526 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes |
|
|
(61,464 |
) |
|
|
(2,177 |
) |
|
|
56,158 |
|
Income tax expense current |
|
|
(967 |
) |
|
|
(843 |
) |
|
|
(3,052 |
) |
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(62,431 |
) |
|
|
(3,020 |
) |
|
|
53,106 |
|
Income from discontinued operations |
|
|
1,341 |
|
|
|
4,847 |
|
|
|
13,558 |
|
Gain on sale of discontinued operations, including land, net of tax |
|
|
16,887 |
|
|
|
80,198 |
|
|
|
107,039 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(44,203 |
) |
|
|
82,025 |
|
|
|
173,703 |
|
Less (income) loss allocated to noncontrolling interests from continuing operations |
|
|
403 |
|
|
|
(4,052 |
) |
|
|
(4,729 |
) |
Less income allocated to noncontrolling interests from discontinued operations |
|
|
|
|
|
|
|
|
|
|
(13,517 |
) |
Less income allocated to perpetual preferred units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders |
|
$ |
(50,800 |
) |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
|
|
|
|
|
|
|
|
|
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) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
Earnings per share basic |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common shareholders |
|
$ |
(1.09 |
) |
|
$ |
(0.26 |
) |
|
$ |
0.70 |
|
Income from discontinued operations, including gain on sale, attributable to common shareholders |
|
|
0.29 |
|
|
|
1.54 |
|
|
|
1.84 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders |
|
$ |
(0.80 |
) |
|
$ |
1.28 |
|
|
$ |
2.54 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common shareholders |
|
$ |
(1.09 |
) |
|
$ |
(0.26 |
) |
|
$ |
0.68 |
|
Income from discontinued operations, including gain on sale, attributable to common shareholders |
|
|
0.29 |
|
|
|
1.54 |
|
|
|
1.82 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders |
|
$ |
(0.80 |
) |
|
$ |
1.28 |
|
|
$ |
2.50 |
|
|
|
|
|
|
|
|
|
|
|
Distributions declared per common share |
|
$ |
2.05 |
|
|
$ |
2.80 |
|
|
$ |
2.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
62,359 |
|
|
|
55,272 |
|
|
|
58,135 |
|
Weighted average number of common shares and dilutive equivalent common shares outstanding |
|
|
62,359 |
|
|
|
55,272 |
|
|
|
59,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(62,431 |
) |
|
$ |
(3,020 |
) |
|
$ |
53,106 |
|
Less (income)loss allocated to noncontrolling interests from continuing operations |
|
|
403 |
|
|
|
(4,052 |
) |
|
|
(4,729 |
) |
Less income allocated to perpetual preferred units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common shareholders |
|
|
(69,028 |
) |
|
|
(14,072 |
) |
|
|
41,377 |
|
Income from discontinued operations, including gain on sale |
|
|
18,228 |
|
|
|
85,045 |
|
|
|
120,597 |
|
Less income allocated to noncontrolling interests from discontinued operations |
|
|
|
|
|
|
|
|
|
|
(13,517 |
) |
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations attributable to common shareholders |
|
|
18,228 |
|
|
|
85,045 |
|
|
|
107,080 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders |
|
$ |
(50,800 |
) |
|
$ |
70,973 |
|
|
$ |
148,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(44,203 |
) |
|
$ |
82,025 |
|
|
$ |
173,703 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on cash flow hedging activities |
|
|
(12,291 |
) |
|
|
(44,386 |
) |
|
|
(15,781 |
) |
Reclassification of net (gains) losses on cash flow hedging activities |
|
|
22,192 |
|
|
|
9,317 |
|
|
|
(342 |
) |
Gain on postretirement obligations |
|
|
|
|
|
|
136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
(34,302 |
) |
|
|
47,092 |
|
|
|
157,580 |
|
Less (income) loss allocated to noncontrolling interests from continuing operations |
|
|
403 |
|
|
|
(4,052 |
) |
|
|
(4,729 |
) |
Less income allocated to noncontrolling interests from discontinued operations |
|
|
|
|
|
|
|
|
|
|
(13,517 |
) |
Less income allocated to perpetual preferred units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to common shareholders |
|
$ |
(40,899 |
) |
|
$ |
36,040 |
|
|
$ |
132,334 |
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-4
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
|
|
|
receivable |
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
shares of |
|
|
|
|
|
|
Distributions |
|
|
secured by |
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
beneficial |
|
|
Additional |
|
|
in excess of |
|
|
common |
|
|
Treasury |
|
|
comprehensive |
|
|
Noncontrolling |
|
|
|
|
|
|
Perpetual |
|
(in thousands, except per share amounts) |
|
interest |
|
|
paid-in capital |
|
|
net income |
|
|
shares |
|
|
shares, at cost |
|
|
loss |
|
|
interests |
|
|
Total equity |
|
|
preferred units |
|
Equity, January 1, 2007 |
|
$ |
650 |
|
|
$ |
2,183,622 |
|
|
$ |
(213,665 |
) |
|
$ |
(2,036 |
) |
|
$ |
(234,215 |
) |
|
$ |
|
|
|
$ |
125,586 |
|
|
$ |
1,859,942 |
|
|
$ |
97,925 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
148,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,246 |
|
|
|
166,703 |
|
|
|
7,000 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,123 |
) |
|
|
|
|
|
|
(16,123 |
) |
|
|
|
|
Common shares issued under dividend reinvestment plan |
|
|
|
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38 |
|
|
|
|
|
Net share awards |
|
|
2 |
|
|
|
9,346 |
|
|
|
|
|
|
|
|
|
|
|
(64 |
) |
|
|
|
|
|
|
|
|
|
|
9,284 |
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,785 |
) |
|
|
(309 |
) |
|
|
|
|
Common shares repurchased (3,604 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(200,157 |
) |
|
|
|
|
|
|
|
|
|
|
(200,157 |
) |
|
|
|
|
Cumulative effect of a change in accounting principle |
|
|
|
|
|
|
|
|
|
|
(2,496 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,496 |
) |
|
|
|
|
Noncontrolling interests issued in connection with real estate contribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
282 |
|
|
|
282 |
|
|
|
|
|
Distributions on perpetual preferred units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,000 |
) |
Cash distributions ($2.76 per share) |
|
|
|
|
|
|
|
|
|
|
(159,321 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,302 |
) |
|
|
(169,623 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity, December 31, 2007 |
|
$ |
654 |
|
|
$ |
2,209,631 |
|
|
$ |
(227,025 |
) |
|
$ |
(1,950 |
) |
|
$ |
(433,874 |
) |
|
$ |
(16,123 |
) |
|
$ |
122,027 |
|
|
$ |
1,653,340 |
|
|
$ |
97,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
70,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,052 |
|
|
|
75,025 |
|
|
|
7,000 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,933 |
) |
|
|
|
|
|
|
(34,933 |
) |
|
|
|
|
Common shares issued under dividend reinvestment plan |
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 |
|
|
|
|
|
Net share awards |
|
|
3 |
|
|
|
10,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,610 |
) |
|
|
(3,057 |
) |
|
|
|
|
Common shares repurchased (695 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,075 |
) |
|
|
|
|
|
|
|
|
|
|
(30,075 |
) |
|
|
|
|
Purchase of noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,573 |
) |
|
|
(8,573 |
) |
|
|
|
|
Distributions on perpetual preferred units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,000 |
) |
Cash distributions ($2.80 per share) |
|
|
|
|
|
|
|
|
|
|
(156,257 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,034 |
) |
|
|
(165,291 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity, December 31, 2008 |
|
$ |
660 |
|
|
$ |
2,237,703 |
|
|
$ |
(312,309 |
) |
|
$ |
(295 |
) |
|
$ |
(463,209 |
) |
|
$ |
(51,056 |
) |
|
$ |
89,862 |
|
|
$ |
1,501,356 |
|
|
$ |
97,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements
F-5
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
|
|
|
receivable |
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
shares of |
|
|
|
|
|
|
Distributions |
|
|
secured by |
|
|
|
|
|
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
beneficial |
|
|
Additional |
|
|
in excess of |
|
|
common |
|
|
Treasury |
|
|
comprehensive |
|
|
Noncontrolling |
|
|
|
|
|
|
Perpetual |
|
(in thousands, except per share amounts) |
|
interest |
|
|
paid-in capital |
|
|
net income |
|
|
shares |
|
|
shares, at cost |
|
|
loss |
|
|
interests |
|
|
Total equity |
|
|
preferred units |
|
Equity, December 31, 2008 |
|
$ |
660 |
|
|
$ |
2,237,703 |
|
|
$ |
(312,309 |
) |
|
$ |
(295 |
) |
|
$ |
(463,209 |
) |
|
$ |
(51,056 |
) |
|
$ |
89,862 |
|
|
$ |
1,501,356 |
|
|
$ |
97,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
(50,800 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(403 |
) |
|
|
(51,203 |
) |
|
|
7,000 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,901 |
|
|
|
|
|
|
|
9,901 |
|
|
|
|
|
Common shares issued (10,350 shares) |
|
|
104 |
|
|
|
272,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
272,112 |
|
|
|
|
|
Common shares issued under dividend reinvestment plan |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
Net share awards |
|
|
2 |
|
|
|
10,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,159 |
|
|
|
|
|
Employee share purchase plan |
|
|
|
|
|
|
105 |
|
|
|
|
|
|
|
|
|
|
|
1,027 |
|
|
|
|
|
|
|
|
|
|
|
1,132 |
|
|
|
|
|
Repayment of employee notes receivable, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194 |
|
|
|
|
|
Share awards placed into deferred plans (195 shares) |
|
|
2 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share options exercised (19 shares) |
|
|
|
|
|
|
1,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,275 |
|
|
|
|
|
Conversions and redemptions of operating partnership units (139 shares) |
|
|
2 |
|
|
|
3,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,777 |
) |
|
|
(16 |
) |
|
|
|
|
Common shares repurchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
(6 |
) |
|
|
|
|
Purchase of noncontrolling interests |
|
|
|
|
|
|
647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(748 |
) |
|
|
(101 |
) |
|
|
|
|
Distributions on perpetual preferred units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,000 |
) |
Cash distributions ($2.05 per share) |
|
|
|
|
|
|
|
|
|
|
(129,462 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,332 |
) |
|
|
(135,794 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity, December 31, 2009 |
|
$ |
770 |
|
|
$ |
2,525,656 |
|
|
$ |
(492,571 |
) |
|
$ |
(101 |
) |
|
$ |
(462,188 |
) |
|
$ |
(41,155 |
) |
|
$ |
78,602 |
|
|
$ |
1,609,013 |
|
|
$ |
97,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-6
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(44,203 |
) |
|
$ |
82,025 |
|
|
$ |
173,703 |
|
Adjustments to reconcile net income (loss) to net cash from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization, including discontinued operations |
|
|
172,415 |
|
|
|
169,151 |
|
|
|
157,137 |
|
Gain on sale of discontinued operations |
|
|
(16,887 |
) |
|
|
(80,198 |
) |
|
|
(107,039 |
) |
Impairment associated with land development activities |
|
|
85,614 |
|
|
|
51,323 |
|
|
|
1,447 |
|
Loss (gain) on early retirement of debt |
|
|
2,550 |
|
|
|
(13,566 |
) |
|
|
|
|
Share-based compensation |
|
|
9,053 |
|
|
|
7,663 |
|
|
|
7,547 |
|
Distributions of income from joint ventures |
|
|
5,664 |
|
|
|
5,392 |
|
|
|
5,406 |
|
Amortization of deferred financing costs |
|
|
3,925 |
|
|
|
2,975 |
|
|
|
3,689 |
|
Equity in (income) loss of joint ventures |
|
|
(695 |
) |
|
|
1,265 |
|
|
|
(1,526 |
) |
Accretion of discount on unsecured notes payable |
|
|
628 |
|
|
|
571 |
|
|
|
590 |
|
Gain on sale of technology investments |
|
|
|
|
|
|
|
|
|
|
(623 |
) |
Gain on sale of properties, including land |
|
|
|
|
|
|
(2,929 |
) |
|
|
|
|
Interest on notes receivable affiliates |
|
|
(437 |
) |
|
|
(3,688 |
) |
|
|
(4,112 |
) |
Net change in operating accounts |
|
|
61 |
|
|
|
(3,026 |
) |
|
|
(13,113 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities |
|
$ |
217,688 |
|
|
$ |
216,958 |
|
|
$ |
223,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of operating properties |
|
$ |
|
|
|
$ |
|
|
|
$ |
(83,031 |
) |
Development and capital improvements |
|
|
(72,779 |
) |
|
|
(199,269 |
) |
|
|
(417,789 |
) |
Proceeds from sales of properties, including land and discontinued operations |
|
|
28,078 |
|
|
|
123,513 |
|
|
|
171,757 |
|
Proceeds from partial sales of assets to joint ventures |
|
|
|
|
|
|
52,509 |
|
|
|
|
|
Investments in joint ventures |
|
|
(23,159 |
) |
|
|
(10,444 |
) |
|
|
(6,015 |
) |
Distributions of investments from joint ventures |
|
|
162 |
|
|
|
1,058 |
|
|
|
6,525 |
|
Issuance of notes receivable other |
|
|
|
|
|
|
|
|
|
|
(8,710 |
) |
Payments received on notes receivable other |
|
|
8,710 |
|
|
|
2,855 |
|
|
|
1,000 |
|
Increase in notes receivable affiliates |
|
|
(7,332 |
) |
|
|
(3,487 |
) |
|
|
(3,154 |
) |
Other |
|
|
(3,196 |
) |
|
|
(4,109 |
) |
|
|
(7,381 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash from investing activities |
|
$ |
(69,516 |
) |
|
$ |
(37,374 |
) |
|
$ |
(346,798 |
) |
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-7
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common shares |
|
$ |
272,112 |
|
|
$ |
|
|
|
$ |
|
|
Proceeds from notes payable |
|
|
440,840 |
|
|
|
385,927 |
|
|
|
807,990 |
|
Repayment of notes payable |
|
|
(503,705 |
) |
|
|
(379,213 |
) |
|
|
(213,376 |
) |
Net (decrease) increase in unsecured line of credit and short-term borrowings |
|
|
(145,000 |
) |
|
|
30,000 |
|
|
|
(91,000 |
) |
Distributions to common shareholders, perpetual preferred units, and noncontrolling
interests |
|
|
(152,687 |
) |
|
|
(172,332 |
) |
|
|
(178,142 |
) |
Common share options exercised |
|
|
619 |
|
|
|
1,729 |
|
|
|
3,795 |
|
Repurchase of common shares and units |
|
|
(21 |
) |
|
|
(33,133 |
) |
|
|
(200,467 |
) |
Payment of deferred financing costs |
|
|
(5,124 |
) |
|
|
(4,321 |
) |
|
|
(5,113 |
) |
Repayment of notes receivable secured by common shares |
|
|
208 |
|
|
|
1,679 |
|
|
|
190 |
|
Net decrease (increase) in accounts receivable affiliates |
|
|
909 |
|
|
|
(929 |
) |
|
|
(1,452 |
) |
Other |
|
|
426 |
|
|
|
(2,481 |
) |
|
|
1,130 |
|
|
|
|
|
|
|
|
|
|
|
Net cash from financing activities |
|
$ |
(91,423 |
) |
|
$ |
(173,074 |
) |
|
$ |
123,555 |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
56,749 |
|
|
|
6,510 |
|
|
|
(137 |
) |
Cash and cash equivalents, beginning of year |
|
|
7,407 |
|
|
|
897 |
|
|
|
1,034 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year |
|
$ |
64,156 |
|
|
$ |
7,407 |
|
|
$ |
897 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental information |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of interest capitalized |
|
$ |
134,266 |
|
|
$ |
136,172 |
|
|
$ |
114,531 |
|
Cash paid for income taxes |
|
|
1,654 |
|
|
|
1,651 |
|
|
|
2,555 |
|
Supplemental schedule of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared but not paid |
|
$ |
33,025 |
|
|
$ |
42,937 |
|
|
$ |
42,693 |
|
Accrual associated with construction and capital expenditures |
|
|
5,189 |
|
|
|
24,167 |
|
|
|
40 |
|
Conversion of operating partnership units to common shares |
|
|
3,753 |
|
|
|
15,793 |
|
|
|
11,638 |
|
Debt disposed of through disposition |
|
|
|
|
|
|
14,010 |
|
|
|
|
|
Value of shares issued under benefit plans, net of cancellations |
|
|
6,653 |
|
|
|
10,766 |
|
|
|
15,381 |
|
Contribution of real estate assets to joint ventures |
|
|
|
|
|
|
10,523 |
|
|
|
|
|
Noncontrolling interests issued in connection with real estate contribution |
|
|
|
|
|
|
|
|
|
|
532 |
|
Conversion of mezzanine notes to joint venture equity |
|
|
18,496 |
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
F-8
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, 2009, we owned interests in, operated, or were developing 185 multifamily properties
comprising 63,658 apartment homes across the United States. We had 372 apartment homes under
development at two of our multifamily properties, including 119 apartment homes at one multifamily
property owned through a nonconsolidated joint venture and 253 apartment homes at one multifamily
property owned through a consolidated joint venture, in which we own an interest. In addition, we
own other land parcels we may develop into multifamily apartment communities.
2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Principles of Consolidation. Our consolidated financial statements include our accounts and
the accounts of other subsidiaries and joint ventures (including partnerships and limited liability
companies) over which we have control. All intercompany transactions, balances, and profits have
been eliminated in consolidation. Investments acquired or created are evaluated based on the
accounting guidance relating to variable interest entities (VIEs), which requires the
consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment
is determined not to be a VIE, then the investment is evaluated for consolidation (primarily using
a voting interest model) under the remaining consolidation guidance relating to real estate. If we
are the general partner in a limited partnership, or manager of a limited liability company, we
also consider the consolidation guidance relating to the rights of limited partners or non-managing
members, as the case may be, to assess whether any rights held by the limited partners, or
non-managing members, as the case may be, overcome the presumption of control by us.
Upon the January 1, 2009 adoption of revised provisions regarding classification of
noncontrolling interests within the Consolidation Topic of the Accounting Standards Codification
(the Codification), we reclassified minority interest balances relating to (i) the common units
in Camden Operating, L.P., Oasis Martinique, LLC, and Camden Summit Partnership, L.P. and (ii)
other minority interests in a consolidated real estate joint venture into our consolidated equity
accounts and these are now classified as noncontrolling interests. The noncontrolling interests
totaled approximately $78.6 million and $89.9 million at December 31, 2009 and 2008, respectively.
Additionally, income allocated to noncontrolling interests and perpetual preferred units are now
reflected below the caption net income (loss) in the consolidated statements of income and
comprehensive income. The balance relating to cumulative redeemable perpetual preferred units in
Camden Operating, L.P. of approximately $97.9 million remains classified between liability and
equity pursuant to guidance in the Distinguishing Liabilities from Equity Topic of the
Codification. See Note 16, Noncontrolling Interests, for further disclosure requirements of
noncontrolling interests.
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.
F-9
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. We consider projected future
discounted cash flows, trends, strategic decisions regarding future development plans, and other
factors in our assessment of whether impairment conditions exist. When impairment exists, the
long-lived asset is adjusted to its fair value. While we believe our estimates of future cash
flows are reasonable, different assumptions regarding a number of factors, including market rents,
economic conditions, and occupancies could significantly affect these estimates. In estimating
fair value, management uses appraisals, management estimates, and discounted cash flow calculations
that maximize inputs from a marketplace participants
perspective. In addition, we evaluate our investments in joint ventures and mezzanine
construction financing and if, with respect to investments, we believe there is an other than
temporary decline in market value, or if, with respect to mezzanine loans, it is probable we will
not collect all scheduled amounts due in accordance with the terms, 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 amounts due with respect to these mezzanine loans, current market
conditions with respect to credit markets and real estate market fundamentals inject a significant
amount of uncertainty into the environment and any further adverse economic or market development
may 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 under development depends on market conditions, including
estimates of the project start date as well as estimates of demand for multifamily communities. We
have reviewed market trends and other marketplace information and have incorporated this
information as well as our current outlook into the assumptions we use in our impairment analyses.
Due to, among other factors, the judgment and assumptions applied in the impairment analyses and
the fact 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 deteriorate 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 material charges in future
periods for impairments related to existing assets. Any such material 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. The majority of cash and cash equivalents are maintained with
several major financial institutions in the United States. Deposits with these financial
institutions may exceed the amount of insurance provided on such deposits; however, the Company
regularly monitors the financial stability of these financial institutions and believes that we are
not exposed to any significant default 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. Capitalized interest is generally based on our weighted
average unsecured interest rate. Most transaction and restructuring costs associated with the
acquisition of real estate assets are expensed. Expenditures directly related to the development
and improvement of real estate assets 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 $10.3 million, $17.7 million, and $22.6 million for the years ended
December 31, 2009, 2008, and 2007, respectively. Capitalized real estate taxes were approximately
$1.9 million, $3.4 million, and $3.5 million for the years ended December 31, 2009, 2008, and 2007,
respectively.
F-10
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 to expense all operating expenses associated with completed apartment homes. 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 Financial Instruments. Derivative financial instruments are recorded in the
balance sheet at fair value and we do not apply master netting; as such all derivatives are
reflected at gross value in the balance sheet. Accounting for changes in the fair value of
derivatives depends on the intended use of the derivative, whether we have elected to designate a
derivative in a hedging relationship and apply hedge accounting, and whether the hedging
relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated
and qualifying as a hedge of the exposure to variability in expected future cash flows or other
types of forecasted transactions are cash flow hedges. Hedge accounting generally provides for the
matching of the timing of gain or loss recognition on the hedging instrument with the recognition
of the changes attributable to the earnings effect of the hedged transactions. We may enter into
derivative contracts which are intended to economically hedge certain of our risks, even though
hedge accounting does not apply or we elect not to apply hedge accounting.
Discontinued Operations. A property is classified as a discontinued operation when (i) the
operations and cash flows of the property can be clearly distinguished and have been or will be
eliminated from our ongoing operations; (ii) the property has either been disposed of or is
classified as held for sale; and (iii) we will not have any significant continuing involvement in
the operations of the property after the disposal transactions. Significant judgments are involved
in determining whether a property meets the criteria for discontinued operations reporting and the
period in which these criteria are met. A property is classified as held for sale when (i)
management commits to a plan to sell and it is actively marketed; (ii) it is available for
immediate sale and the sale is expected to be completed within one year; and (iii) it is unlikely
significant changes to the plan will be made or the plan will be withdrawn. In isolated instances,
assets held for sale may exceed one year due to events or circumstances beyond our control. Upon
being classified as held for sale, the recoverability of the carrying value is assessed.
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 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 (loss) of joint ventures.
Gains on sale of real estate are recognized using the full accrual or partial sale methods, as
applicable, in accordance with accounting principles generally accepted in the United States of
America (GAAP), 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. All sources of income, including from interest and
fee and asset management, are recognized as earned. Seven of our properties are subject to rent
control. Operations of multifamily properties acquired are recorded from the date of acquisition
in accordance with the acquisition 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.
F-11
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.
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 multifamily communities has similar economic characteristics, residents, amenities,
and services, our multifamily 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 approximately 98%, 98%, and 97% of our total property revenues and total
non-property income, excluding income (loss) on deferred compensation plans, for the years ended
December 31, 2009, 2008, and 2007, 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 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. The fair value of stock option grants is
estimated using the Black-Scholes valuation model. Valuation models require the input of
assumptions, including judgments to estimate the expected stock price volatility, expected life,
and forfeiture rate. The compensation cost for share-based awards is based on the market value of
the shares on the date of grant.
Use of Estimates. In the application of GAAP, management is required to make estimates and
assumptions which 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 include estimates supporting our impairment analysis related to the
carrying values of our real estate assets, estimates of the useful lives of our assets, estimates
related to the valuation of our investments in joint ventures and mezzanine financing, and
estimates of expected losses of variable interest entities. These estimates are based on
historical experience and 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 June 2009, the Financial Accounting Standards Board
(FASB) issued the Codification. Effective July 1, 2009, the Codification is the single source of
authoritative accounting principles recognized by the FASB to be applied by non-governmental
entities in the preparation of financial statements in conformity with GAAP. We adopted the
Codification during the third quarter of 2009 and the adoption did not materially impact our
financial statements, however our references to accounting literature within our notes to the
consolidated financial statements have been revised to conform to the Codification classification.
In August 2009, the FASB issued Accounting Standards Update (ASU) 2009-05, which provides
alternatives to measuring the fair value of liabilities when a quoted price for an identical
liability traded in an active market does not exist. The alternatives include using the quoted
price for the identical liability when traded as an asset or the quoted price of a similar
liability or of a similar liability when traded as an asset, in addition to valuation techniques
based on the amount an entity would pay to transfer the identical liability (or receive to enter
into an identical liability). We adopted ASU 2009-05 effective October 1, 2009 and the adoption did
not have a material impact on our financial statements.
F-12
In
December 2009, the FASB issued ASU 2009-16, Transfers
and Servicing (Topic 860)
Accounting for Transfers of Financial Assets, which codified the previously issued Statement of
Financial Accounting Standards (SFAS) 166, Accounting for Transfers of Financial Assets, an
Amendment of FASB Statement No. 140. ASU 2009-16 modifies the financial components approach,
removes the concept of a qualifying special purpose entity, and clarifies and amends the
derecognition criteria for determining whether a transfer of a financial asset or portion of a
financial asset qualifies for sale accounting. The ASU also requires expanded disclosures
regarding transferred
assets and how they affect the reporting entity. ASU 2009-16 is effective for us beginning
January 1, 2010. Our adoption of ASU 2009-16 will not have a material effect on our financial
statements.
In December 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities, which codified the
previously issued SFAS 167, Amendments to FASB Interpretation No. 46R. ASU 2009-17 changes the
consolidation analysis for VIEs and requires a qualitative analysis to determine the primary
beneficiary of the VIE. The determination of the primary beneficiary of a VIE is based on whether
the entity has the power to direct matters which most significantly impact the activities of the
VIE and has the obligation to absorb losses, or the right to receive benefits, of the VIE which
could potentially be significant to the VIE. The ASU requires an ongoing reconsideration of the
primary beneficiary and also amends the events triggering a reassessment of whether an entity is a
VIE. ASU 2009-17 requires additional disclosures for VIEs, including disclosures about a reporting
entitys involvement with VIEs, how a reporting entitys involvement with a VIE affects the
reporting entitys financial statements, and significant judgments and assumptions made by the
reporting entity to determine whether it must consolidate the VIE. ASU 2009-17 is effective for us
beginning January 1, 2010. Our adoption of ASU 2009-17 will not have a material effect on our
financial statements.
In January 2010, the FASB issued ASU 2010-01, Equity (Topic 505): Accounting for
Distributions to Shareholders with Components of Stock and Cash. The ASU clarifies when the stock
portion of a distribution allows shareholders to elect to receive cash or stock, with a potential
limitation on the total amount of cash which all shareholders could elect to receive in the
aggregate, the distribution would be considered a share issuance as opposed to a stock dividend and
the share issuance would be reflected in earnings per share prospectively. We adopted ASU 2010-01
effective October 1, 2009 and the adoption did not have an impact on our financial statements.
In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810): Accounting and
Reporting for Decreases in Ownership of a Subsidiary a Scope Clarification. The ASU clarifies
the scope of Subtopic 810-10 applies to a subsidiary or group of assets considered to be a business
or nonprofit activity, a subsidiary considered to be a business or nonprofit activity which is
transferred to an equity method investee or joint venture, and an exchange of a group of assets
considered to be a business or nonprofit activity for a noncontrolling interest in an entity
(including an equity method investee or joint venture). ASU 2010-02 further clarifies the scope of
Subtopic 810-10 does not apply to sales of in substance real estate or conveyances of oil and gas
mineral rights, even if these transfers involve businesses. The ASU also expands the disclosure
requirements about deconsolidation of a subsidiary or derecognition of a group of assets. For
entities who have previously adopted the noncontrolling interests guidance included in Subtopic
810-10, ASU 2010 is effective for interim or annual periods ending on or after December 15, 2009
and should be applied retrospectively to the first period in which the noncontrolling interests
guidance was adopted. As we adopted the noncontrolling interests guidance on January 1, 2009, we
also adopted ASU 2010-02 effective January 1, 2009 and the adoption did not have an impact on our
financial statements.
3. Share Data
Basic earnings per share are computed using net income (loss) attributable to common
shareholders 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 share
awards granted and units convertible into common shares. Only those items having a dilutive impact
on our basic earnings per share are included in diluted earnings per share. On January 1, 2009, we
adopted newly issued guidance in the Earnings Per Share Topic of the Codification relating to
share-based payment transactions and participating securities and, as a result, our unvested
share-based payment transactions are considered participating securities and are reflected in the
calculation of basic and diluted earnings per share using the two-class method. The number of
common share equivalent securities excluded from the diluted earnings per share calculation for the
years ended December 31, 2009, 2008, and 2007, was approximately 4.9 million, 5.2 million, and 4.3
million, respectively. These securities, which include common share options and share awards
granted and units convertible into common shares, were excluded from the diluted earnings per share
calculation as they were determined to be anti-dilutive.
F-13
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) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
Basic earnings per share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common shareholders |
|
$ |
(69,028 |
) |
|
$ |
(14,072 |
) |
|
$ |
41,377 |
|
Amount allocated to participating securities |
|
|
637 |
|
|
|
(329 |
) |
|
|
(934 |
) |
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common shareholders, net of amount allocated to participating securities |
|
|
(68,391 |
) |
|
$ |
(14,401 |
) |
|
$ |
40,443 |
|
Income from discontinued operations, including gain on sale, attributable to common shareholders |
|
|
18,228 |
|
|
|
85,045 |
|
|
|
107,080 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders, as adjusted basic |
|
$ |
(50,163 |
) |
|
$ |
70,644 |
|
|
$ |
147,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common shareholders, as adjusted per share |
|
$ |
(1.09 |
) |
|
$ |
(0.26 |
) |
|
$ |
0.70 |
|
Income from discontinued operations, including gain on sale, attributable to common shareholders per share |
|
|
0.29 |
|
|
|
1.54 |
|
|
|
1.84 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders, as adjusted per share |
|
$ |
(0.80 |
) |
|
$ |
1.28 |
|
|
$ |
2.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
62,359 |
|
|
|
55,272 |
|
|
|
58,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common shareholders, net of amount allocated to participating securities |
|
$ |
(68,391 |
) |
|
$ |
(14,401 |
) |
|
$ |
40,443 |
|
Income allocated to common units |
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common shareholders, as adjusted |
|
|
(68,391 |
) |
|
|
(14,401 |
) |
|
|
40,470 |
|
Income from discontinued operations, including gain on sale, attributable to common shareholders |
|
|
18,228 |
|
|
|
85,045 |
|
|
|
107,080 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders, as adjusted |
|
$ |
(50,163 |
) |
|
$ |
70,644 |
|
|
$ |
147,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to common shareholders, as adjusted per share |
|
$ |
(1.09 |
) |
|
$ |
(0.26 |
) |
|
$ |
0.68 |
|
Income from discontinued operations, including gain on sale, attributable to common shareholders per share |
|
|
0.29 |
|
|
|
1.54 |
|
|
|
1.82 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders, as adjusted per share |
|
$ |
(0.80 |
) |
|
$ |
1.28 |
|
|
$ |
2.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
62,359 |
|
|
|
55,272 |
|
|
|
58,135 |
|
Incremental shares issuable from assumed conversion of: |
|
|
|
|
|
|
|
|
|
|
|
|
Common share options and share awards granted |
|
|
|
|
|
|
|
|
|
|
482 |
|
Common units |
|
|
|
|
|
|
|
|
|
|
508 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, as adjusted |
|
|
62,359 |
|
|
|
55,272 |
|
|
|
59,125 |
|
|
|
|
|
|
|
|
|
|
|
In April 2007, our Board of Trust Managers approved a program to repurchase up to $500
million of our common equity securities through open market purchases, block purchases, and
privately negotiated transactions. Under this program, we repurchased 4.3 million shares for a
total of approximately $230.2 million through December 31, 2009. 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, 2009.
In May 2009, we issued approximately 10.4 million common shares at $27.50 per share in a
public equity offering.
We filed a shelf registration statement with the Securities and Exchange Commission during the
three months ended June 30, 2009 which became automatically effective upon filing. We may use the
shelf registration statement to offer, from time to time, an unlimited amount of common shares,
preferred shares, debt securities, or warrants. Our declaration of trust provides we may issue up
to 110 million shares of beneficial interest, consisting of 100 million common shares and 10
million preferred shares. As of December 31, 2009, we had approximately 77.0 million common shares
and no preferred shares outstanding under our declaration of trust.
F-14
4. Operating Partnerships
At December 31, 2009, 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, 2009, we held 89.5% of the
common limited partnership units and the sole 1% general partnership interest of the operating
partnership. The remaining common limited partnership units, comprising 1,125,565 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 which are recorded in the consolidated balance sheet at fair value less issuance
costs. Distributions on the preferred units are payable quarterly in arrears. The Series B
preferred units were 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, 2009. 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.
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 621,258 units, are exchangeable into 471,535 of our common
shares. Subsequent to December 31, 2009, 236,960 units were converted into 179,852 of our common
shares.
At December 31, 2009, approximately 24% of our multifamily apartment homes were held in Camden
Summit Partnership, L.P. (the Camden Summit Partnership). The Camden Summit Partnership has
issued common limited partnership units. As of December 31, 2009, we held 93.7% 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 1,207,944 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.
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 regard 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. 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 and excise taxes. Taxable income from non-REIT activities
managed through taxable REIT subsidiaries is subject to applicable federal, state, and local income
taxes. Our operating partnerships are flow-through entities and are not subject to federal income
taxes at the entity level. We have provided for income, franchise, and state income taxes in the
consolidated statements of income and comprehensive income for the years ended December 31, 2009,
2008 and 2007. These taxes are primarily for entity level taxes on certain ventures, state income
taxes, and federal and state taxes on certain of our taxable REIT subsidiaries. We have no
significant temporary differences or tax credits associated with our taxable REIT subsidiaries. We
do not believe we have any uncertain tax positions or unrecognized tax benefits requiring
disclosure.
F-15
The following table reconciles net income to REIT taxable income for the years ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
Net income (loss) |
|
$ |
(44,203 |
) |
|
$ |
82,025 |
|
|
$ |
173,703 |
|
Less (income) loss attributable to noncontrolling interests |
|
|
403 |
|
|
|
(4,052 |
) |
|
|
(18,246 |
) |
Less income allocated to perpetual preferred units |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders |
|
|
(50,800 |
) |
|
|
70,973 |
|
|
|
148,457 |
|
Net (income) loss of taxable REIT subsidiaries included above |
|
|
25,124 |
|
|
|
9,239 |
|
|
|
(3,449 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) from REIT operations |
|
|
(25,676 |
) |
|
|
80,212 |
|
|
|
145,008 |
|
Book depreciation and amortization, including discontinued operations |
|
|
178,607 |
|
|
|
175,162 |
|
|
|
164,978 |
|
Tax depreciation and amortization |
|
|
(164,639 |
) |
|
|
(164,327 |
) |
|
|
(155,173 |
) |
Book/tax difference on gains/losses from capital transactions |
|
|
(7,059 |
) |
|
|
826 |
|
|
|
(25,985 |
) |
Book/tax difference on impairment associated with land development
activities |
|
|
62,397 |
|
|
|
51,323 |
|
|
|
1,447 |
|
Book/tax difference on merger costs |
|
|
(52 |
) |
|
|
(68 |
) |
|
|
(234 |
) |
Other book/tax differences, net |
|
|
(24,136 |
) |
|
|
(15,342 |
) |
|
|
7,843 |
|
|
|
|
|
|
|
|
|
|
|
REIT taxable income |
|
|
19,442 |
|
|
|
127,786 |
|
|
|
137,884 |
|
Dividends paid deduction |
|
|
(128,507 |
) |
|
|
(151,346 |
) |
|
|
(144,604 |
) |
|
|
|
|
|
|
|
|
|
|
Dividends paid in excess of taxable income |
|
$ |
(109,065 |
) |
|
$ |
(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, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Common Share Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income |
|
$ |
1.74 |
|
|
$ |
1.34 |
|
|
$ |
1.20 |
|
Long-term capital gain |
|
|
0.25 |
|
|
|
0.91 |
|
|
|
1.18 |
|
Unrecaptured Sec. 1250 gain |
|
|
0.06 |
|
|
|
0.55 |
|
|
|
0.38 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2.05 |
|
|
$ |
2.80 |
|
|
$ |
2.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of distributions representing tax preference items |
|
|
3.94 |
% |
|
|
5.59 |
% |
|
|
7.15 |
% |
We have taxable REIT subsidiaries which are subject to federal and state income taxes. At
December 31, 2009, our taxable REIT subsidiaries had net operating loss carryforwards (NOLs) of
approximately $16.0 million which expire in years 2019 to 2029. 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.
The carrying value of net assets reported in our consolidated financial statements exceeded
the tax basis by approximately $964.5 million.
Income Tax Expense Current. For the tax years ended December 31, 2009, 2008, and 2007, we
had current income tax expense of approximately $1.0 million, $0.8 million, and $3.1 million,
respectively, comprised mainly of state income taxes.
Income Tax Expense Deferred. For the years ended December 31, 2009, 2008, and 2007, our
deferred tax accounts were not significant.
F-16
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 or 2009.
Discontinued Operations. For the years ended December 31, 2009, 2008, and 2007, income from
discontinued operations included the results of operations of one operating property sold in 2009
through its sale date. For the years ended December 31, 2008 and 2007, income from discontinued
operations also included the results of operations of eight operating properties sold during 2008
and ten operating properties sold during 2007 through their sale dates.
The following is a summary of income from discontinued operations for the years presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
|
$ |
2,408 |
|
|
$ |
15,857 |
|
|
$ |
41,693 |
|
Property expenses |
|
|
1,067 |
|
|
|
7,782 |
|
|
|
20,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,341 |
|
|
|
8,075 |
|
|
|
21,511 |
|
Interest |
|
|
|
|
|
|
466 |
|
|
|
998 |
|
Depreciation and amortization |
|
|
|
|
|
|
2,762 |
|
|
|
6,955 |
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
$ |
1,341 |
|
|
$ |
4,847 |
|
|
$ |
13,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of discontinued operations |
|
$ |
16,887 |
|
|
$ |
80,198 |
|
|
$ |
107,039 |
|
|
|
|
|
|
|
|
|
|
|
Dispositions. During the year ended December 31, 2009, we received net proceeds of
approximately $28.0 million and recognized a gain of approximately $16.9 million from the sale to
an unaffiliated third party of one operating property with a net book value of approximately $11.3
million, containing 671 apartment homes. 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 sales 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 sales of ten operating
properties, containing 3,054 apartment homes, to unaffiliated third parties; additionally, 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, 2008, we recognized a gain 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. The gain recognized from the
partial sale is included in continuing operations as we retained a partial interest in the venture
which owns the community.
There were no partial sales or dispositions to joint ventures for the years ended December 31,
2009 or 2007.
Assets held for Sale. We reclassified the undeveloped land parcels previously included in
discontinued operations to continuing operations during December 31, 2009 as management made the
decision not to sell these assets after an existing sales contract was terminated. As a result, we
reclassified approximately $0.4 million and $0.3 million from discontinued operations to total
property expenses for the years ended December 31, 2008 and 2007, respectively, in the
consolidated statements of income and comprehensive income.
Impairment. The impairment associated with land development activities for the year ended
December 31, 2009 includes approximately $72.2 million related to land holdings for eight projects
we have put on hold for the foreseeable future. The impairment associated with land development
activities for the year ended December 31, 2008 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, and
approximately $1.6 million in the value of a land parcel held for future development. The
impairment associated with land development activities 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 for land are the difference between each
parcels estimated fair value and the carrying value, which includes pursuit and other costs.
F-17
7. Investments in Joint Ventures
As of December 31, 2009, our equity investments in unconsolidated joint ventures, which we
account for utilizing the equity method of accounting, consisted of 25 joint ventures, with our
ownership percentages ranging from 15% to 72%. We provide property management services to the joint
ventures which own operating properties and may provide construction and development services to
the joint ventures which own properties under development. The following table summarizes
aggregate balance sheet and statement of income data for the unconsolidated joint ventures as of
December 31 (in millions):
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
Total assets |
|
$ |
1,202.0 |
|
|
$ |
1,210.7 |
|
Total third-party debt |
|
|
980.9 |
|
|
|
984.2 |
|
Total equity |
|
|
151.9 |
|
|
|
145.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Total revenues |
|
$ |
137.3 |
|
|
$ |
127.1 |
|
|
$ |
113.7 |
|
Net income (loss) |
|
|
(18.0 |
) |
|
|
(18.7 |
) |
|
|
(3.7 |
) |
Equity in income (loss) (1) |
|
|
0.7 |
|
|
|
(1.3 |
) |
|
|
1.5 |
|
|
|
|
(1) |
|
Equity in income (loss) excludes our ownership interest in
transactions with our joint ventures. |
The joint ventures listed above 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, totaling approximately $57.0 million, of five
loans 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.
In May 2009, a maturing $31.7 million construction loan was refinanced from a construction
loan to a secured ten-year note in the principal amount of approximately $23.0 million by one of
our joint ventures located in Houston, Texas. The note has a fixed annual interest rate of 5.325%
with monthly payments of principal and interest due beginning on July 1, 2009. Concurrent with
this transaction, each of the two joint venture partners made a mezzanine loan to the joint venture
in the amount of $4.6 million, or $9.2 million in the aggregate, each of which has a 10% annual
interest rate and matures on June 3, 2019. We had previously made a mezzanine loan to this joint
venture of $9.2 million, which was converted into an additional equity interest (with a preference
on distribution of cash flows over previously contributed equity) in the joint venture concurrently
with the refinancing.
In August 2009, an $82.5 million third-party secured construction note, originally scheduled
to mature in August 2009, was extended (as contractually allowed for in the loan agreement) to June
2010 by one of our joint ventures located in Orange County, California. Concurrent with this
extension, the joint venture paid $29.3 million to reduce the note balance to $53.2 million. The
payment was funded in two parts: (i) approximately $7.1 million was funded by capital from the
joint venture partners contributed pro rata in accordance with their respective ownership
percentages; and (ii) approximately $22.2 million was funded by us in exchange for an additional
equity interest (with a preference on distribution of cash flows over previously contributed
equity) in the joint venture.
In December 2009, a $35.9 million third-party secured construction note, originally scheduled
to mature in December 2009, was extended (as contractually allowed for in the loan agreement) to
December 2010 by one of our joint ventures located in Houston, Texas for a nominal extension fee.
We had previously made a mezzanine loan to this joint venture of $9.3 million. Concurrent with the
construction note extension, the mezzanine loan was converted into an additional common equity
interest in the amount of $7.9 million (with a preference on distribution of cash flows over
previously contributed equity) and the remaining $1.4 million was converted into an additional
equity interest in the joint venture.
F-18
In the fourth quarter of 2009, we recognized an impairment of approximately $13.4 million of
costs capitalized and exit costs associated with a land development joint venture we have put on
hold for the foreseeable future. The impairment associated with land development activities for
the year ended December 31, 2008 included approximately $1.1 million for costs capitalized for a
potential joint venture development. There were not any impairments relating to joint venture land
development activities for the year ended December 31, 2007.
Mezzanine loans we have made to affiliated joint ventures are recorded as Notes receivable
affiliates as discussed in Note 8, Notes Receivable.
We earn fees for property management, construction, development, and other services provided
primarily to joint ventures in which we own an interest. Fees earned for these services amounted
to approximately $8.0 million, $9.2 million, and $8.3 million for the years ended December 31,
2009, 2008, and 2007, respectively.
8. Notes Receivable
Notes receivable affiliates. We have provided mezzanine construction financing, with rates
ranging from the London Interbank Offered Rate (LIBOR) plus 3%, to a fixed maximum rate of 12%
per year, to certain of our joint ventures. During the year ended December 31, 2009, two mezzanine
notes were converted into additional equity interests in the respective related joint ventures.
Concurrent with one of the conversions to an equity interest, the joint venture received two
separate mezzanine notes which were provided by each of its two joint venture partners. See
further discussion of these transactions in Note 7, Investments in Joint Ventures. As of
December 31, 2009 and 2008, the balance of Notes receivable affiliates totaled $45.8 million
and $58.1 million, respectively, on notes maturing through 2019. 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, 2009.
At December 31, 2009, our commitment to fund additional amounts under the mezzanine loans was
an aggregate of approximately $7.3 million.
Notes receivable other. We have a mezzanine financing program under which from time to time
we provide secured financing to third party owners of real estate properties. At December 31,
2008, an aggregate of approximately $8.7 million was outstanding on these loans. This amount,
together with accrued interest, was paid in full during the three months ended March 31, 2009.
Notes receivable secured by common shares. In conjunction with our merger with Summit, we
acquired employee notes receivable from former employees of Summit. At December 31, 2009 and 2008,
the employee notes receivable had an outstanding balance of approximately $0.1 million and $0.3
million, respectively. As of December 31, 2009, there was one remaining employee note receivable
which was 100% secured by our common shares and reported as a component of equity in our
consolidated balance sheet.
F-19
9. Notes Payable
The following is a summary of our indebtedness:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
(in millions) |
|
2009 |
|
|
2008 |
|
Commercial Banks |
|
|
|
|
|
|
|
|
Unsecured line of credit and short-term borrowings |
|
$ |
|
|
|
$ |
145.0 |
|
$500 million term loan, due 2012 |
|
|
500.0 |
|
|
|
500.0 |
|
|
|
|
|
|
|
|
|
|
|
500.0 |
|
|
|
645.0 |
|
Senior unsecured notes |
|
|
|
|
|
|
|
|
$100.0 million 4.74% Notes, due 2009 |
|
|
|
|
|
|
81.9 |
|
$250.0 million 4.39% Notes, due 2010 |
|
|
55.3 |
|
|
|
150.4 |
|
$100.0 million 6.75% Notes, due 2010 |
|
|
57.8 |
|
|
|
79.9 |
|
$150.0 million 7.69% Notes, due 2011 |
|
|
87.9 |
|
|
|
149.8 |
|
$200.0 million 5.93% Notes, due 2012 |
|
|
189.4 |
|
|
|
199.6 |
|
$200.0 million 5.45% Notes, due 2013 |
|
|
199.4 |
|
|
|
199.3 |
|
$250.0 million 5.08% Notes, due 2015 |
|
|
249.0 |
|
|
|
248.9 |
|
$300.0 million 5.75% Notes, due 2017 |
|
|
246.1 |
|
|
|
246.0 |
|
|
|
|
|
|
|
|
|
|
|
1,084.9 |
|
|
|
1,355.8 |
|
Medium-term notes |
|
|
|
|
|
|
|
|
$15.0 million 7.63% Notes, due 2009 |
|
|
|
|
|
|
15.0 |
|
$25.0 million 4.64% Notes, due 2009 |
|
|
|
|
|
|
25.2 |
|
$10.0 million 4.90% Notes, due 2010 |
|
|
10.2 |
|
|
|
10.5 |
|
$14.5 million 6.79% Notes, due 2010 |
|
|
14.5 |
|
|
|
14.5 |
|
$35.0 million 4.99% Notes, due 2011 |
|
|
36.3 |
|
|
|
37.2 |
|
|
|
|
|
|
|
|
|
|
|
61.0 |
|
|
|
102.4 |
|
|
|
|
|
|
|
|
Total unsecured notes payable |
|
|
1,645.9 |
|
|
|
2,103.2 |
|
|
|
|
|
|
|
|
|
|
Secured notes |
|
|
|
|
|
|
|
|
1.09% - 6.00% Conventional Mortgage Notes, due 2011 - 2019 |
|
|
937.8 |
|
|
|
686.6 |
|
1.71% Tax-exempt Mortgage Note, due 2028 |
|
|
41.5 |
|
|
|
42.6 |
|
|
|
|
|
|
|
|
|
|
|
979.3 |
|
|
|
729.2 |
|
|
|
|
|
|
|
|
Total notes payable |
|
$ |
2,625.2 |
|
|
$ |
2,832.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating rate debt included in commercial bank indebtedness (0%) |
|
$ |
|
|
|
$ |
145.0 |
|
Floating rate tax-exempt debt included in secured notes (1.71%) |
|
|
41.5 |
|
|
|
42.6 |
|
Floating rate debt included in secured notes (1.09% - 3.50%) |
|
|
186.9 |
|
|
|
180.9 |
|
Value of real estate assets, at cost, subject to secured notes |
|
|
1,487.1 |
|
|
|
1,193.5 |
|
We have a $600 million unsecured credit facility which matures in January 2011. The scheduled
interest rate spreads are subject to change as our credit ratings change. Advances under the line
of credit may be priced at the scheduled rates, or we may enter into bid rate loans with
participating banks at rates below the scheduled rates. These bid rate loans have terms of six
months or less and may not exceed the lesser of $300 million or the remaining amount available
under the line of credit. The line of credit is subject to customary financial covenants and
limitations, all of which we are in compliance.
Our line of credit provides us with the ability to issue up to $100 million in letters of
credit. While our issuance of letters of credit does not increase our borrowings outstanding under
our line of credit, it does reduce the amount available. At December 31, 2009, we had outstanding
letters of credit totaling approximately $9.2 million, and had approximately $590.8 million
available under our unsecured line of credit.
As an alternative to our unsecured line of credit, from time to time we may 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. We expect such borrowings will vary in term and pricing and
will typically be priced at interest rates below those available under the unsecured line of
credit.
F-20
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, 2009, approximately $1.5 million of the fair value adjustment remained unamortized,
and substantially all of the remaining will be recorded as an adjustment to interest expense in
2010 and 2011. We recorded amortization of the fair value adjustment, which resulted in a decrease
of interest expense, of approximately $2.3 million, $5.4 million, and $7.1 million during the years
ended December 31, 2009, 2008, and 2007, respectively.
During the first quarter of 2009, we repurchased and retired $7.4 million of the principal
amount of our $250 million 4.375% senior unsecured notes due 2010 from unrelated third parties for
approximately $7.2 million.
On April 17, 2009, we, as guarantor, and five separate subsidiaries as borrowers entered into
a $420 million secured credit facility agreement. The facility has a ten-year term with a fixed
annual interest rate of 5.12% and monthly payments of interest only and matures on May 1, 2019. 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 11 of our
multifamily communities.
During the second quarter of 2009, we repurchased and retired approximately $317.6 million of
certain series of unsecured and secured notes maturing between 2010 and 2012 from unrelated third
parties for approximately $320.3 million. These transactions resulted in a net loss on early
retirement of debt of approximately $2.7 million which includes a reduction for the write-off of
applicable loan costs.
During the third quarter of 2009, we repaid the remaining amount of our $100 million, 4.74%
senior unsecured notes maturing in 2009 for a total of approximately $81.9 million.
At December 31, 2009 and 2008, the weighted average interest rate on our floating rate debt,
which includes our unsecured line of credit, was approximately 1.2% and 2.7%, respectively.
Our indebtedness, including our unsecured line of credit, had a weighted average maturity of
approximately 5.6 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, 2009 are as follows:
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
Weighted Average |
|
Year |
|
Amount |
|
|
Interest Rate |
|
2010 |
|
$ |
141.6 |
|
|
|
5.7 |
% |
2011 |
|
|
153.2 |
|
|
|
6.3 |
|
2012 |
|
|
761.9 |
|
|
|
5.4 |
|
2013 |
|
|
227.2 |
|
|
|
5.4 |
|
2014 |
|
|
10.1 |
|
|
|
6.0 |
|
2015 and thereafter |
|
|
1,331.2 |
|
|
|
4.6 |
|
|
|
|
|
|
|
|
Total |
|
$ |
2,625.2 |
|
|
|
5.1 |
% |
|
|
|
|
|
|
|
In January 2010, we repaid the remaining principal amount of our $250 million, 4.39% senior
unsecured notes for a total of approximately $55.3 million.
10. Derivative Instruments & Hedging Activities
Risk Management Objective of Using Derivatives. We are exposed to certain risks arising from
both our business operations and economic conditions. We principally manage our exposures to a
wide variety of business and operational risks through management of our core business activities.
We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing
the amount, sources, and duration of our debt funding and the use of derivative financial
instruments. Specifically, we enter into derivative financial instruments to manage exposures
arising from business activities resulting in differences in the amount, timing, and duration of
our known or expected cash payments principally related to our borrowings.
Cash Flow Hedges of Interest Rate Risk. Our objectives in using interest rate derivatives are
to add stability to interest expense and to manage our exposure to interest rate movements. To
accomplish this objective, we primarily use interest rate swaps and caps as part of our interest
rate risk management strategy. Interest rate swaps involve the receipt of variable rate amounts
from a counterparty in exchange for us making fixed-rate payments over the life of the agreements
without exchange of the underlying notional amount. Interest rate caps involve the receipt of
variable rate amounts from a counterparty if interest rates rise above the strike rate on the
contract in exchange for an up front premium.
F-21
Designated Hedges. The effective portion of changes in the fair value of derivatives
designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive loss
and is subsequently reclassified into earnings in the period the hedged forecasted transaction
affects earnings. Over the next twelve months, we estimate an additional $21.7 million will be
reclassified to interest expense. During the years ended December 31, 2009 and 2008, derivatives
were used to hedge the variable cash flows associated with existing variable rate debt. The
ineffective portion of the change in fair value of the derivatives is recognized directly in
earnings. No portion was ineffective during the years ended December 31, 2009, 2008, and 2007.
As of December 31, 2009, we had the following outstanding interest rate derivatives designated
as cash flow hedges of interest rate risk:
|
|
|
|
|
Interest Rate Derivative |
|
Number of Instruments |
|
Notional Amount |
|
|
|
|
|
Interest Rate Swaps |
|
2 |
|
$514.9 million |
Non-designated Hedges. Derivatives not designated as hedges are not speculative and are used
to manage our exposure to interest rate movements and other identified risks. Non-designated
hedges are either specifically non-designated by management or do not meet strict hedge accounting
requirements. Changes in the fair value of derivatives not designated in hedging relationships are
recorded directly in earnings in other income or other expense.
As of December 31, 2009, we had the following outstanding interest rate derivative which was
not designated as a hedge of interest rate risk:
|
|
|
|
|
Interest Rate Derivative |
|
Number of Instruments |
|
Notional Amount |
|
|
|
|
|
Interest Rate Cap |
|
1 |
|
$175.0 million |
The table below presents the fair value of our derivative financial instruments as well as
their classification in the consolidated balance sheets at December 31 (in millions):
Fair Values of Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
|
Balance |
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
Sheet |
|
|
Fair |
|
|
Sheet |
|
|
Fair |
|
|
Sheet |
|
|
Fair |
|
|
Sheet |
|
|
Fair |
|
|
|
Location |
|
|
Value |
|
|
Location |
|
|
Value |
|
|
Location |
|
|
Value |
|
|
Location |
|
|
Value |
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swaps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities |
|
$ |
41.1 |
|
|
Other Liabilities |
|
$ |
51.1 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Cap |
|
Other Assets |
|
|
$ |
0.1 |
|
|
Other Assets |
|
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-22
The tables below present the effect of our derivative financial instruments on the
consolidated statements of income and comprehensive income for the years ended December 31 (in
millions).
Effect of Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Gain or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Recognized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Income on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative |
|
|
|
Amount of Loss Recognized in |
|
|
Location of Loss |
|
|
Amount of (Gain) Loss |
|
|
(Ineffective Portion |
|
|
|
Other Comprehensive Income |
|
|
Reclassified from |
|
|
Reclassified from Accumulated |
|
|
and Amount |
|
Derivatives in Cash |
|
(OCI) on Derivative |
|
|
Accumulated OCI |
|
|
OCI into Income (Effective |
|
|
Excluded from |
|
Flow |
|
(Effective Portion) |
|
|
into Income |
|
|
Portion) |
|
|
Effectiveness |
|
Hedging Relationships |
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
(Effective
Portion) |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
Testing) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swaps |
|
$ |
12.3 |
|
|
$ |
44.4 |
|
|
$ |
15.8 |
|
|
Interest Expense |
|
$ |
22.2 |
|
|
$ |
9.3 |
|
|
$ |
(0.3 |
) |
|
Not applicable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not |
|
Location of Gain |
|
|
Amount of Gain Recognized in |
|
Designated as Hedging |
|
Recognized in Income |
|
|
Income on Derivative |
|
Instruments |
|
on Derivative |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Cap |
|
Other income |
|
$ |
|
|
|
$ |
0.1 |
|
|
$ |
|
|
Credit-risk-related Contingent Features. 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 transacting 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, which we believe
minimizes credit risk concentration. We believe the likelihood of realized losses from
counterparty non-performance is remote.
Our agreements with each of our derivative counterparties contain a provision pursuant to
which a default under any of our indebtedness, including a default where repayment of the
indebtedness has not been accelerated by the lender, the counterparty has the right to declare a
default on our derivative obligations. Our agreements with each of our derivative counterparties
also provide if we consolidate with, merge with or into, or transfer all or substantially all our
assets to another entity and the creditworthiness of the resulting, surviving, or transferee entity
is materially weaker than ours, the counterparty has the right to terminate the derivative
obligations.
At December 31, 2009, the fair value of derivatives in a net liability position, which
includes accrued interest but excludes any adjustment for nonperformance risk (the termination
value), related to these agreements was approximately $43.1 million. As of December 31, 2009, we
had not posted any collateral related to these agreements. If we were in breach of any of these
provisions at December 31, 2009, or terminated these agreements, we would have been required to
settle our obligations at their termination value of approximately $43.1 million.
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
eligible to 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 which 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.
F-23
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 2009 were exercised at prices ranging from $25.88 to $36.87 per option. At
December 31, 2009, options outstanding were exercisable at prices ranging from $25.88 to $73.32 per
share and had a weighted average remaining contractual life of approximately 5.8 years.
The total intrinsic value of options exercised was approximately $0.1 million, $0.5 million,
and $2.8 million during the years ended December 31, 2009, 2008 and 2007, respectively. As of
December 31, 2009, there was approximately $2.4 million of total unrecognized compensation cost
related to unvested options, which is expected to be amortized over the next five years.
The following table summarizes share options outstanding and exercisable at December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Options (1) |
|
|
Exercisable Options (1) |
|
Range of |
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
Remaining |
|
Exercise |
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
Contractual |
|
Prices |
|
Number |
|
|
Price |
|
|
Number |
|
|
Price |
|
|
Life |
|
$25.88-$41.91 |
|
|
742,017 |
|
|
$ |
31.88 |
|
|
|
252,508 |
|
|
$ |
35.40 |
|
|
|
6.9 |
|
$42.90-$44.00 |
|
|
472,200 |
|
|
|
43.23 |
|
|
|
472,200 |
|
|
|
43.23 |
|
|
|
3.6 |
|
$45.53-$73.32 |
|
|
736,398 |
|
|
|
49.60 |
|
|
|
430,116 |
|
|
|
50.72 |
|
|
|
6.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total options |
|
|
1,950,615 |
|
|
$ |
41.32 |
|
|
|
1,154,824 |
|
|
$ |
44.31 |
|
|
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The aggregate intrinsic value of outstanding options and exercisable options at
December 31, 2009 are $7.8 million and $1.8 million, respectively. The aggregate intrinsic
values were both calculated as the excess, if any, between the Companys closing share
price of $42.37 per share on December 31, 2009 and the strike price of the underlying
award. |
Valuation Assumptions. Options generally have a vesting period of three to five years. The
weighted average fair value of options granted was $3.06, $5.06, and $11.04 per option in 2009,
2008, and 2007, 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, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected volatility |
|
|
33.0 |
% |
|
|
20.5 |
% |
|
|
17.1 |
% |
Risk-free interest rate |
|
|
2.6 |
% |
|
|
3.6 |
% |
|
|
4.6 |
% |
Expected dividend yield |
|
|
9.3 |
% |
|
|
5.8 |
% |
|
|
3.7 |
% |
Expected life (in years) |
|
|
7 |
|
|
|
7 |
|
|
|
6 |
|
Our computation of expected volatility for 2009 is based on the historical volatility of our
common shares over a time period equal to the expected life 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 estimated using the annual dividends paid in the prior year and the market price on the
date of grant. Our computation of expected life for 2009 is estimated based on historical
experience of similar awards, giving consideration to the contractual terms of the share-based
awards.
Share Awards and Vesting. Share awards generally have a vesting period of five years. The
compensation cost for share awards is based on the market value of the shares on the date of grant
and is amortized over the vesting period. To estimate forfeitures, we use actual forfeiture
history. At December 31, 2009, the unamortized value of previously issued unvested share awards
was approximately $19.3 million. This amount will be amortized into earnings over the next five
years. The total fair value of shares vested during the years ended December 31, 2009, 2008, and
2007 was approximately $10.2 million, $8.8 million, and $8.1 million, respectively.
Total compensation cost for option and share awards charged against income was approximately
$8.7 million, $7.3 million, and $6.5 million for 2009, 2008, and 2007, respectively. Total
capitalized compensation cost for option and share awards was approximately $1.7 million, $2.6
million, and $2.3 million for 2009, 2008 and 2007, respectively.
F-24
The following table summarizes activity under our Share Incentive Plans for the three years
ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options and Share Awards |
|
|
|
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
for |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
Issuance |
|
|
2009 |
|
|
2009 Price |
|
|
2008 |
|
|
2008 Price |
|
|
2007 |
|
|
2007 Price |
|
Balance at January 1 |
|
|
2,370,310 |
|
|
|
4,125,312 |
|
|
$ |
41.37 |
|
|
|
3,507,947 |
|
|
$ |
39.99 |
|
|
|
3,452,711 |
|
|
$ |
38.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
(489,509 |
) |
|
|
489,509 |
|
|
|
30.06 |
|
|
|
444,264 |
|
|
|
48.02 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
|
|
|
|
(18,521 |
) |
|
|
33.45 |
|
|
|
(44,950 |
) |
|
|
38.21 |
|
|
|
(123,708 |
) |
|
|
37.62 |
|
Forfeited |
|
|
23,058 |
|
|
|
(33,303 |
) |
|
|
43.37 |
|
|
|
(12,954 |
) |
|
|
48.02 |
|
|
|
(9,822 |
)< |