Business description of CAMDEN-PROPERTY-TRUST from last 10-k form
ii
PART I
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, management, development, acquisition, and construction of multifamily
apartment communities. Unless the context requires otherwise, “we,” “our,” “us,” and the “Company”
refer to Camden Property Trust and its consolidated subsidiaries. Our multifamily apartment
communities are referred to as “communities,” “multifamily communities,” “properties,” or
“multifamily properties” in the following discussion.
Our 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
SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please contact the SEC at
1-800-SEC-0330 for further information about the operation of the SEC’s Public Reference Room. The
SEC also maintains a website at www.sec.gov which contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC.
Financial Information about Segments
We are primarily engaged in the ownership, management, development, acquisition, and
construction of multifamily apartment communities. As each of our communities has similar economic
characteristics, residents, amenities, and services, our operations have been aggregated into one
reportable segment. See our consolidated financial statements and notes included thereto in Item
15 of this Annual Report on Form 10-K for certain information required by Item 1.
Narrative Description of Business
As of December 31, 2010, we owned interests in, operated, or were developing 188 multifamily
properties comprising 63,923 apartment homes across the United States. Of these 188 properties,
two properties were under development and when completed will consist of a total of 607 apartment
homes. In addition, we own 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 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.
Subject to market conditions, we intend to continue to look for opportunities to develop and
acquire existing communities through our discretionary investment funds (the “Funds”), expand our
development pipeline, and complete selective dispositions.
We intend to continue to focus on strengthening our capital and liquidity positions by
generating positive cash flows from operations, reducing outstanding debt and leverage ratios, and
controlling overhead costs. We intend to meet our liquidity requirements through available cash
balances, 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.
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 property’s seasonal rental patterns. We generally offer leases
ranging from six to fifteen months with individual property marketing plans structured to respond
to local market conditions. In addition, we conduct ongoing customer service surveys to ensure
timely response to residents’ changing needs and a high level of satisfaction.
Investments in Joint Ventures. We have entered into, and may continue in the future to enter
into, joint ventures through which we own an indirect economic interest of less than 100% of the
community or communities owned directly by the joint venture. See Note 8, “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, 2010, we had approximately 1,750 employees, including executive,
administrative, and community personnel.
Qualification as a Real Estate Investment Trust
As of December 31, 2010, 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.
Risk Factors
In addition to the other information contained in this Form 10-K, the following risk factors
should be considered carefully in evaluating our business. Our business, financial condition, or
results of operations could be materially adversely affected by any of these risks. Additional
risks not presently known to us, or which we currently consider immaterial, may also impair our
business and operations.
Risks Associated with Real Estate, Real Estate Capital, and Credit Markets
Volatility in capital and credit markets, or other unfavorable changes in economic conditions could
adversely impact us.
The capital and credit markets experienced volatility and disruption particularly in the
latter half of 2008 through the first quarter of 2010. This caused the spreads on prospective debt
financings to fluctuate and made it more difficult to borrow money. In the event of renewed market
disruption and volatility, we may not be able to obtain new debt financing or refinance our
existing debt on favorable terms or at all, which would adversely affect our liquidity, our ability
to make distributions to shareholders, acquire and dispose of assets and continue our development
pipeline. Other weakened economic conditions, including job losses and high unemployment rates
have adversely affected rental rates and occupancy levels. Unfavorable changes in economic
conditions may have a material adverse impact on our cash flows and operating results.
Additional key economic risks which may affect conditions in the markets in which we operate
include the following:
local conditions, such as an oversupply of apartments or other housing available for
rent, or a reduction in demand for apartments in the area;
declines in the financial condition of our tenants, which may make it more difficult
for us to collect rents from some tenants;
changes in market rental rates;
declines in mortgage interest rates and home pricing, making alternative housing
more affordable;
government or builder incentives which enable home buyers to put little or no money
down, making alternative housing options more attractive;
regional economic downturns which simultaneously affect one or more of our
geographical markets; and
increased operating costs, if these costs cannot be passed through to residents.
Short-term leases expose us to the effects of declining market rents.
Substantially all of our apartment leases are for a term of fifteen months or less. As these
leases generally permit the residents to leave at the end of the lease term without penalty, our
rental revenues are impacted by declines in market rents more quickly than if our leases were for
longer terms.
We face risks associated with land holdings and related activities.
We hold land for future development and may in the future acquire additional land holdings.
The risks inherent in purchasing, owning, and developing land increase as demand for apartments, or
rental rates, decrease. Real estate markets are highly uncertain and, as a result, the value of
undeveloped land has fluctuated significantly and may continue to fluctuate. In addition, carrying
costs can be significant and can result in losses or reduced profitability. As a result, we hold
certain land, and may in the future acquire additional land, in our development pipeline at a cost
we may not be able to fully recover or at a cost which precludes our developing a profitable
multifamily community. Given the uncertainty and volatility of the current economic environment,
there is less market information available to us to utilize in estimating the fair value of our
holdings; if additional market information becomes available in future periods which impacts our estimates of fair value, we
may be required to take future impairment charges.
Difficulties of selling real estate could limit our flexibility.
We intend to continue to evaluate the potential disposition of assets which may no longer 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 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, the provisions of the Code relating to REITs limit our
ability to earn a gain on the sale of property (unless we own the property through a subsidiary
which will incur a taxable gain upon sale) if we have held the property less than two years,
and this limitation may affect our ability to sell properties without adversely affecting returns
to shareholders.
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 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 February 2011, the Obama administration
released a report proposing Fannie Mae and Freddie Mac be gradually eliminated. The report
proposed three possible courses for long-term reform of housing finance. A final 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.
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, rules, and regulations generally require public accommodations and apartment
homes be made accessible to disabled persons. Noncompliance could result in the imposition of
fines by the government or the award of damages to private litigants. These laws may require us to
modify our existing properties. These laws may also restrict renovations by requiring improved
access to such buildings by disabled persons or may require us to add other structural features
which increase our construction costs. Legislation or regulations adopted in the future may impose
further costs and obligations or restrictions on us with respect to improved access by disabled
persons. We may incur unanticipated expenses which may be material to our financial condition or
results of operations to comply with ADA, FHAA, and other federal, state, and local laws, or in
connection with lawsuits brought by the government or private litigants.
Competition could limit our ability to lease apartments or increase or maintain rental income.
There are numerous housing alternatives which compete with our properties in attracting
residents. Our properties compete directly with other multifamily properties as well as
condominiums and single family homes which are available for rent or purchase in the markets in
which our properties are located. This competitive environment could have a material adverse
effect on our ability to lease apartment homes at our present properties or any newly developed or
acquired property, as well as on the rents charged.
Risks Associated with Our Operations
Development and construction risks could impact our profitability.
We intend to continue to develop and construct multifamily apartment communities for our
portfolio, and expect higher levels of development activity in 2011 as compared to recent years.
Our development and construction activities may be exposed to a number of risks which may increase
our construction costs and decrease our profitability including the following:
inability to obtain, or delays in obtaining, necessary zoning, land-use,
building, occupancy, and other required permits and authorizations;
increased materials, labor, problems with subcontractors, or other costs due to
errors and omissions which occur in the design or construction process;
inability to obtain financing with favorable terms for the development of a
community;
inability to complete construction and lease-up of a community on schedule;
the expected occupancy and rental rates may differ from the actual results;
incurring costs related to the abandonment of development opportunities which we
have pursued and subsequently deemed unfeasible; and
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.
One of our wholly-owned subsidiaries is engaged in the business of providing general
contracting services under construction contracts entered into between it and third-parties
(including nonconsolidated subsidiaries). The terms of those construction contracts generally
require this subsidiary to estimate the time and costs to complete a project, and to assume the
risk the time and costs associated with its performance may be greater than anticipated. As a
result, profitability on those contracts is dependent on the ability to accurately predict such
factors. The time and costs necessary to complete a project may be affected by a variety of
factors, including those listed above, many of which are beyond this subsidiary’s control. In
addition, the terms of those contracts generally require this subsidiary to warrant its work for a
period of time during which it may be required to repair, replace, or rebuild defective work. Further,
additional trailing liabilities, based on various legal theories such as claims of negligent
construction, may result from such projects, and these trailing liabilities may go on for a number
of years depending on the length of the statutes of repose in various jurisdictions.
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:
we may not be able to successfully integrate acquired properties into our existing
operations;
our estimates of the costs, if any, of repositioning or redeveloping the acquired
property may prove inaccurate;
the expected occupancy and rental rates may differ from the actual results; and
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 by similar types of
owners. We intend to obtain similar coverage for properties we acquire or develop in the future.
However, some losses, generally of a catastrophic nature such as losses from floods, hurricanes, or
earthquakes, may be subject to coverage limitations.
We exercise our discretion in determining amounts, coverage limits, and deductible provisions
of insurance to maintain appropriate insurance on our investments at a reasonable cost and on
suitable terms. If we suffer a 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 venture’s financial obligations. We and our joint venture partner may each have the right to
initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire our joint
venture partner’s interest, at a time when we otherwise would not have entered into such a
transaction. Each joint venture agreement is individually negotiated, and our ability to operate,
finance, and/or dispose of a community in our sole discretion may be limited to varying degrees
depending on the terms of the joint venture agreement.
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; each of the Funds has 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:
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;
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;
investors in the Funds (other than us), by majority vote, may remove our subsidiary
as the general partner of the Funds with or without cause and the Funds’ advisory
boards, by a majority vote of their members, may remove our subsidiary as the general
partner of the Funds at any time for cause;
while we have broad discretion to manage the Funds and make investment decisions on
behalf of the Funds, the investors or the advisory boards must approve certain matters,
and as a result we may be unable to cause the Funds to make certain investments or
implement certain decisions we consider beneficial;
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) April 8, 2012, or (ii) such time as 90% of the
Funds’ committed capital is invested, subject to certain exceptions;
our ability to redeem all or a portion of our investments in the Funds is subject to
significant restrictions; and
we may be liable if the Funds fail to comply with various tax or other regulatory
matters.
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 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:
we would be subject to federal income tax on our taxable income at regular corporate
rates, including any applicable alternative minimum tax;
we would be disqualified from treatment as a REIT for the four taxable years
following the year in which we failed to qualify, thereby reducing our net 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
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:
delay in resident lease commencements;
decline in occupancy;
failure of residents to make rental payments when due;
the attractiveness of our properties to residents and potential residents;
our ability to adequately manage and maintain our communities;
competition from other available apartments and housing alternatives; and
changes in market rents.
Cash flow could be insufficient to meet required payments of principal and interest with
respect to debt financing. In order for us to continue to qualify as a REIT we 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, 2010, we had outstanding debt of approximately $2.6 billion. This
indebtedness could have important consequences, including:
if a property is mortgaged to secure payment of indebtedness, and if we are unable
to meet our mortgage obligations, we could sustain a loss as a result of foreclosure on
the mortgaged property;
our vulnerability to general adverse economic and industry conditions is increased;
and
our flexibility in planning for, or reacting to, changes in business and industry
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 before the scheduled maturity date, which could adversely affect our liquidity and
increase our financing costs.
We may be unable to renew, repay, or refinance our outstanding debt.
We are subject to the risk that indebtedness on our properties or our unsecured indebtedness
will not be renewed, repaid, or refinanced when due or the terms of any renewal or refinancing will
not be as favorable as the existing terms of such indebtedness. If we are unable to refinance our
indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of the
properties on disadvantageous terms, which might result in losses to us. Such losses could have a
material adverse effect on us and our ability to make distributions to our shareholders and pay
amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness
and we are unable to meet mortgage payments, the mortgagee could foreclose on the property, appoint
a receiver and exercise rights under an assignment of rents and leases, or pursue other remedies,
all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable
income without accompanying cash proceeds, thereby hindering our ability to meet the REIT
distribution requirements of the Code.
Variable rate debt is subject to interest rate risk.
We have mortgage debt with varying interest rates dependent upon various market indexes. In
addition, we have a revolving credit facility bearing interest at a variable rate on all amounts
drawn on the facility. We may incur additional variable rate debt in the future. Increases in
interest rates on variable rate debt would increase our interest expense, unless we make
arrangements which hedge the risk of rising interest rates, which would adversely affect net income
and cash available for payment of our debt obligations and distributions to shareholders.
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 rental and 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.
Failure to maintain our current credit ratings could adversely affect our cost of funds, related
margins, liquidity, and access to capital markets.
Moody’s and Standard & Poor’s, 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. Due to changes in market conditions, we may not be able to maintain our current
credit ratings, which could adversely affect our cost of funds and related margins, liquidity, and
access to capital markets.
Risks Associated with Our Shares
Share ownership limits and our ability to issue additional equity securities may prevent takeovers
beneficial to shareholders.
For us to maintain our qualification as a REIT, we must have 100 or more shareholders during
the year and not more than 50% in value of our outstanding shares may be owned, directly or
indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term
“individuals” includes a number of specified entities. To minimize the possibility of us failing
to qualify as a REIT under this test, our declaration of trust includes restrictions on transfers
of our shares and ownership limits. The ownership limits, as well as our ability to issue other
classes of equity securities, may delay, defer, or prevent a change in control. These provisions
may also deter tender offers for our common shares which may be attractive to you or limit your
opportunity to receive a premium for your shares which might otherwise exist if a third party were
attempting to effect a change in control transaction.
Our share price will fluctuate.
The market price and trading volume of our common shares are subject to fluctuation due to
general market conditions, the risks discussed in this report and other matters, including the
following:
operating results which vary from the expectations of securities analysts and
investors;
investor interest in our property portfolio;
the reputation and performance of REITs;
the attractiveness of REITs as compared to other investment vehicles;
the results of our financial condition and operations;
the perception of our growth and earnings potential;
dividend payment rates;
increases in market interest rates, which may lead purchasers of our common shares
to demand a higher yield; and
changes in financial markets and national economic and general market conditions.
The form, timing and/or amount of dividend distributions in future periods may vary and be impacted
by economic and other considerations.
The form, timing and/or amount of dividend distributions will be declared at the discretion of
our Board of Trust Managers and will depend on actual cash from operations, our financial
condition, capital requirements, the annual distribution requirements under the REIT provisions of
the Code and other factors as the Board of Trust Managers may consider relevant. The Board of
Trust Managers may modify the form, timing and/or amount of dividends from time to time.
Unresolved Staff Comments
None.
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 unconsolidated joint ventures)
The 186 operating properties in which we owned interests and operated at December 31, 2010
averaged 922 square feet of living area per apartment home. For the year ended December 31, 2010,
no single operating property accounted for greater than 1.6% of our total revenues. Our operating
properties had a weighted average occupancy rate of approximately 93.3% for each of the years ended
December 31, 2010 and 2009, and an average annual rental revenue per apartment home of $928 and
$946 for the years ended December 31, 2010 and 2009, respectively. Resident lease terms generally
range from six to fifteen 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 11 years (calculated on the basis of investment dollars). Our operating properties
were constructed and placed in service as follows:
2006-2010
2001-2005
1996-2000
1991-1995
1986-1990
Prior to 1985
Property Table
The following table sets forth information with respect to our 186 operating properties at December
31, 2010:
ARIZONA
Phoenix
Camden Copper Square
Camden Fountain Palms (7)
Camden Legacy
Camden Pecos Ranch (7)
Camden San Paloma
Camden Sierra (7)
Camden Towne Center (7)
Camden Vista Valley
CALIFORNIA
Los Angeles/Orange County
Camden Crown Valley
Camden Harbor View
Camden Main & Jamboree (12)
Camden Martinique
Camden Parkside (7)
Camden Sea Palms
San Diego/Inland Empire
Camden Old Creek
Camden Sierra at Otay Ranch
Camden Tuscany
Camden Vineyards
COLORADO
Denver
Camden Caley
Camden Centennial
Camden Denver West (8)
Camden Highlands Ridge
Camden Interlocken
Camden Lakeway
Camden Pinnacle
WASHINGTON DC METRO
Camden Ashburn Farms
Camden Clearbrook
Camden College Park (12)
Camden Dulles Station (3)
Camden Fair Lakes
Camden Fairfax Corner
Camden Fallsgrove
Camden Grand Parc
Camden Lansdowne
Camden Largo Town Center
Camden Monument Place
Camden Potomac Yard
Camden Roosevelt
Camden Russett
Camden Silo Creek
Camden Summerfield
FLORIDA
Southeast Florida
Camden Aventura
Camden Brickell
Camden Doral
Camden Doral Villas
Camden Las Olas
Camden Plantation
Camden Portofino
Orlando
Camden Club
Camden Hunter’s Creek
Camden Lago Vista
Camden Landings
Camden Lee Vista
Camden Orange Court
Camden Renaissance
Camden Reserve
Camden World Gateway
Tampa/St. Petersburg
Camden Bay
Camden Bay Pointe
Camden Bayside
Camden Citrus Park
Camden Lakes
Camden Lakeside
Camden Live Oaks
Camden Preserve
Camden Providence Lakes
Camden Royal Palms
Camden Westshore
Camden Woods
GEORGIA
Atlanta
Camden Brookwood
Camden Dunwoody
Camden Deerfield
Camden Ivy Hall (2) (6) (14)
Camden Midtown Atlanta
Camden Peachtree City
Camden River
Camden Shiloh
Camden St. Clair
Camden Stockbridge
Camden Sweetwater
KENTUCKY
Louisville
Camden Brookside (9)
Camden Meadows (9)
Camden Oxmoor (9)
Camden Prospect Park (9)
MISSOURI
Kansas City
Camden Passage (9)
St. Louis
Camden Cedar Lakes (9)
Camden Cove West (9)
Camden Cross Creek (9)
Camden Westchase (9)
NEVADA
Las Vegas
Camden Bel Air
Camden Breeze
Camden Canyon
Camden Commons
Camden Cove
Camden Del Mar
Camden Fairways
Camden Hills
Camden Legends
Camden Palisades
Camden Pines (7)
Camden Pointe
Camden Summit (7)
Camden Tiara (7)
Camden Vintage
Oasis Bay (10)
Oasis Crossings (10)
Oasis Emerald (10)
Oasis Gateway (10)
Oasis Island (10)
Oasis Landing (10)
Oasis Meadows (10)
Oasis Palms (10)
Oasis Pearl (10)
Oasis Place (10)
Oasis Ridge (10)
Oasis Sierra (10)
Oasis Springs (10)
Oasis Vinings (10)
NORTH CAROLINA
Charlotte
Camden Ballantyne
Camden Cotton Mills
Camden Dilworth
Camden Fairview
Camden Forest
Camden Foxcroft
Camden Grandview
Camden Habersham
Camden Park Commons
Camden Pinehurst
Camden Sedgebrook
Camden Simsbury
Camden South End Square
Camden Stonecrest
Camden Touchstone
Raleigh
Camden Crest
Camden Governor’s Village
Camden Lake Pine
Camden Manor Park
Camden Overlook
Camden Reunion Park
Camden Westwood
PENNSYLVANIA
Camden Valleybrook
TEXAS
Austin
Camden Amber Oaks (3) (6)
Camden Cedar Hills
Camden Gaines Ranch
Camden Huntingdon
Camden Laurel Ridge
Camden Ridgecrest
Camden South Congress (6)
Camden Stoneleigh
Corpus Christi
Camden Breakers
Camden Copper Ridge
Camden Miramar (5)
Camden South Bay (6) (14)
Dallas/Fort Worth
Camden Addison (7)
Camden Buckingham
Camden Centreport
Camden Cimarron
Camden Farmers Market
Camden Gardens
Camden Glen Lakes
Camden Legacy Creek
Camden Legacy Park
Camden Springs
Camden Valley Creek
Camden Valley Park (4)
Camden Valley Ridge
Camden Westview
Houston
Camden Baytown
Belle Meade (3) (11)
Braeswood Place (2) (11)
Camden City Centre
Camden Creek
Camden Greenway
Camden Holly Springs (7)
Camden Midtown
Camden Oak Crest
Camden Park (7)
Camden Plaza (12)
Camden Royal Oaks
Camden Steeplechase
Camden Stonebridge
Camden Sugar Grove (7)
Camden Travis Street (3) (13)
Camden Vanderbilt
Camden Whispering Oaks
Camden Yorktown (6) (14)
Represents average physical occupancy for the year except as noted below.
Properties under lease-up at December 31, 2010.
Development property stabilized during 2010 — average occupancy calculated
from date at which occupancy exceeded 90% through year-end.
Redevelopment completed during 2010 — average occupancy calculated from date
at which occupancy exceeded 90% through year-end.
Miramar is a student housing project for Texas A&M at Corpus Christi. Average
occupancy includes summer which is normally subject to high vacancies.
Properties owned through a joint venture in which we own a 20% interest. The
remaining interest is owned by an unaffiliated private pension fund.
Properties owned through a joint venture in which we own a 20% interest. The
remaining interest is owned by an unaffiliated private investor.
Property owned through a joint venture in which we own a 50% interest. The
remaining interest is owned by an unaffiliated private investor.
Properties owned through a joint venture in which we own a 15% interest. The
remaining interest is owned by an unaffiliated private investor.
Property owned through a joint venture in which we own a 72% interest. The
remaining interest is owned by an unaffiliated private investor.
Property owned through a fully-consolidated joint venture in which we own a
99.99% interest. The remaining interest is owned by an unaffiliated private investor.
Property owned through a fully-consolidated joint venture in which we own a 25%
interest. The remaining interest is owned by an unaffiliated private investor.
Property acquired during 2010 — average occupancy calculated from date at
which property was acquired, unless otherwise noted.
Legal Proceedings
For discussion regarding legal proceedings, see Note 14, “Commitments and Contingencies,” of
the Notes to Consolidated Financial Statements.
Reserved
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
The high and low closing prices per share of our common shares, as reported on the New York
Stock Exchange composite tape under the symbol “CPT,” and distributions per share declared for the
quarters indicated are as follows:
2010 Quarters:
First
Second
Third
Fourth
2009 Quarters:
This graph assumes the investment of $100 on December 31, 2005 and quarterly reinvestment of
dividends. (Source: SNL Financial LC)
Camden Property Trust
FTSE NAREIT Equity
S&P 500
Russell 2000
MSCI US REIT (RMS) Index
As
of February 17, 2011, there were 585 shareholders of record and approximately 19,335 beneficial owners of our common shares.
In January 2008, our Board of Trust Managers approved an increase of the April 2007 repurchase
plan to allow for the repurchase of up to $500 million of our common equity securities through open
market purchases, block purchases, and privately negotiated transactions. Under this program, we
have repurchased 4.3 million shares for a total of approximately $230.2 million from April 2007
through December 31, 2010. 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, 2010.
There were no repurchases of our equity securities during the year ended December 31, 2010.
In March 2010, we announced the creation of an at-the-market (“ATM”) share offering program
through which we may, but have no obligation to, sell common shares having an aggregate offering
price of up to $250 million, in amounts and at times as we determine, into the existing trading
market at current market prices as well as through negotiated transactions. Actual sales from time
to time may depend on a variety of factors including, among others, market conditions, the trading
price of our common shares, and determinations of the appropriate sources of funding for us.
During the year ended December 31, 2010, we issued approximately 4.9 million common shares at an
average price of $48.37 per share for total net consideration of approximately $231.7 million. In
January 2011, we issued 0.1 million common shares at an average price of $54.06 per share for total
net consideration of approximately $3.8 million. As of the date of this filing, we had common
shares having an aggregate offering price of up to $10.7 million remaining available for sale under
the ATM program.
See Part III, Item 12, for a description of securities authorized for issuance
under equity compensation plans.
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, 2006 through
2010. This data should be read in conjunction with Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and the consolidated financial statements and
related notes. Prior year amounts have been reclassified for discontinued operations.
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
Operating Data (a)
Total property revenues
Total property expenses
Total non-property income (loss)
Total other expenses
Income (loss) from continuing operations attributable to
common shareholders
Net income (loss) attributable to common shareholders
Income (loss) from continuing operations attributable to
common shareholders per share:
Basic
Diluted
Net income (loss) attributable to common shareholders per share
Distributions declared per common share
Balance Sheet Data (at end of year)
Total real estate assets, at cost
Total assets
Notes payable
Perpetual preferred units
Equity
Other Data
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
Funds from operations — diluted (b)
Property Data
Number of operating properties (at the end of year) (c)
Number of operating apartment homes (at end of year) (c)
Number of operating apartment homes (weighted average) (c)(d)
Weighted average monthly total property revenue per apartment
home
Properties under development (at end of period)
Excludes discontinued operations.
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 company’s real estate
between periods or as compared to different companies.
Includes discontinued operations.
Excludes apartment homes owned in joint ventures.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the consolidated financial
statements and notes appearing elsewhere in this report. Historical results and trends which might
appear in the consolidated financial statements should not be interpreted as being indicative of
future operations.
We consider portions of this report to be “forward-looking” within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as
amended, with respect to our expectations for future periods. Forward-looking statements do not
discuss historical fact, but instead include statements related to expectations, projections,
intentions, or other items relating to the future; forward-looking statements are not guarantees of
future performances, results, or events. Although we believe the expectations reflected in our
forward-looking statements are based upon reasonable assumptions, we can give no assurance our
expectations will be achieved. Any statements contained herein which are not statements of
historical fact should be deemed forward-looking statements. Reliance should not be placed on
these forward-looking statements as 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, or other unfavorable changes in economic
conditions could adversely impact us;
short-term leases expose us to the effects of declining market rents;
we face risks associated with land holdings and related activities;
difficulties of selling real estate could limit our flexibility;
we could be negatively impacted by the condition of Fannie Mae or Freddie Mac;
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 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
the form, timing and/or amount of dividend distributions in future periods may vary
and be impacted by economic or other considerations.
These forward-looking statements represent our estimates and assumptions as of the date of
this report, and we assume no obligation to update or supplement forward-looking statements because
of subsequent events.
Executive Summary
We are primarily engaged in the ownership, management, development, acquisition and
construction of multifamily apartment communities. As of December 31, 2010, we owned interests in,
operated, or were developing 188 multifamily properties comprising 63,923 apartment homes across
the United States as detailed in the following Property Portfolio table. In addition, we own other
land parcels we may develop into multifamily apartment communities.
The U.S. economy has experienced a significant recession. Record levels of job losses and
higher unemployment rates negatively impacted our business, particularly in the latter half of 2008
through the first quarter of 2010, when we experienced declines in both rental rates and occupancy
levels. Despite unemployment rates remaining at high levels, our results for the most recent three
quarters reflect sequential rental revenue growth as well as an increase in rental revenue growth
for the three months ended December 31, 2010 as compared to the same period in 2009, primarily due
to improvements in rental rates and slight improvements in average occupancy levels. We believe
these improvements may be due in part to the continued decline in home ownership rates and the
limited supply of new rental housing. We expect improvements in rental rates and occupancy to
continue in 2011 and believe sustained revenue growth will depend on, among other things, the
timing and extent of employment growth, supply levels of new multifamily housing, and the
continuation of the decline in home ownership rates.
In 2010, we acquired three multifamily properties, totaling 686 units, for an aggregate of
approximately $63.0 million on behalf of one of our discretionary investment funds in which we have
a 20% ownership interest. Additionally, we restructured three of our joint ventures, which
collectively own an aggregate of 1,069 units, resulting in our acquiring a controlling ownership
interest in each joint venture.
During the second half of 2010, we began construction on two development projects, comprised
of approximately 607 units; initial occupancy is expected in the last half of 2011. As of December
31, 2010, we intend to incur approximately $57.2 million of additional costs on these projects. We
expect to fund these amounts through available cash balances and draws upon our unsecured line of
credit. We expect to start several additional development projects currently held in our
development pipeline in 2011 and are evaluating additional development projects to commence during
fiscal year 2011 and beyond.
During the fourth quarter of 2010, we received net proceeds of approximately $101.9 million
and recognized a gain of approximately $9.6 million from the sale of two operating properties,
containing 1,066 apartment homes to unaffiliated third parties.
Subject to market conditions, we intend to continue to look for opportunities to develop and
acquire existing communities through the Funds, expand our development pipeline, and complete
selective dispositions. We also intend to continue to focus on strengthening our capital and
liquidity positions by generating positive cash flows from operations, reducing outstanding debt
and leverage ratios, and controlling overhead costs. We intend to meet our liquidity requirements
through available cash balances, 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.
As of December 31, 2010, we had approximately $170.6 million in cash and cash equivalents and
no balances outstanding on our $500 million unsecured line of credit. We have approximately $154.4
million of debt maturities in 2011, excluding scheduled principal amortizations. We believe we are
well-positioned with a strong balance sheet and sufficient liquidity to cover near-term debt
maturities and new development funding requirements. We will, however, continue to assess and take
further actions where prudent to meet our objectives and capital requirements.
Property Portfolio
Our multifamily property portfolio, excluding land held for future development, is summarized
as follows:
Operating Properties
Las Vegas, Nevada
Houston, Texas (1)
Washington, D.C. Metro (2)
Dallas, Texas
Tampa, Florida
Charlotte, North Carolina
Orlando, Florida
Atlanta, Georgia
Raleigh, North Carolina
Southeast Florida
Los Angeles/Orange County, California (3)
Austin, Texas
Phoenix, Arizona
Denver, Colorado
San Diego/Inland Empire, California
Other
Total Operating Properties
Properties Under Development
Washington, D.C. Metro
Houston, Texas
Total Properties Under Development
Total Properties
Less: Unconsolidated Joint Venture Properties (4)
Los Angeles/Orange County, California
Washington, D. C. Metro
Total Joint Venture Properties
Total
Properties Fully-Consolidated
Includes two fully-consolidated joint ventures Camden Travis Street, a fully-consolidated
joint venture, of which we retain a 25% ownership, and Camden Plaza of which we retain a 99.99%
ownership.
Includes Camden College
Park, a fully-consolidated joint venture, of which we retain a 99.99%
ownership.
Includes Camden Main and Jamboree, a fully-consolidated joint venture, of which we retain a
99.99% ownership.
Refer to Note 8, “Investments in Joint Ventures,” of the Notes to Consolidated Financial
Statements for further discussion of our unconsolidated joint venture investments.
Stabilized Communities
We generally consider a property stabilized once it reaches 90% occupancy at the
beginning of a period. During the year ended December 31, 2010, stabilization was achieved at four
recently completed development properties as follows:
Camden Dulles Station
Oak Hill, VA
Oak Hill, VA
Camden Amber Oaks — joint venture
Austin, TX
Austin, TX
Camden Travis Street (1)
Houston, TX
Houston, TX
Belle Meade — joint venture
Houston, TX
Houston, TX
Camden Travis Street is a fully-consolidated joint venture, of which we retain a 25% ownership
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, 2010 or 2009.
In March 2008, we sold 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. In August 2008, we sold a
stabilized community to the same Fund for approximately $44.2 million and recognized a gain of
approximately $1.8 million on the sale.
Discontinued Operations
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 sold during the year
ended December 31, 2010. 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.
A summary of our 2010 dispositions is as follows:
Camden Westwind
Ashburn, VA
Ashburn, VA
Camden Oasis
Euless, TX
Euless, TX
During the fourth quarter of 2010, we received net proceeds of approximately $101.9 million
and recognized a gain of approximately $9.6 million from the sale of the two operating properties
above, containing 1,066 apartment homes, to unaffiliated third parties. 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 of one operating property containing 671 apartment homes to an unaffiliated third party. 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, 2010, we recognized a gain of approximately $0.2 million
from the sale of land in Houston, Texas. 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 gains on these sales were not included in discontinued operations as the
operations and cash flows of these assets were not clearly distinguished, operationally or for
reporting purposes, from the adjacent assets.
Development and Lease-Up Properties
We did not have any consolidated properties in lease-up at December 31, 2010.
At December 31, 2010, we had two consolidated properties under construction as follows:
Camden Lake Nona
Orlando, FL
Orlando, FL
Camden Summerfield II
Landover, MD
Landover, MD
Total
Our consolidated balance sheet at December 31, 2010 included approximately $206.9 million
related to properties under development and land. Of this amount, approximately $35.8 million
related to our projects currently under development. In addition, we had approximately $171.1
million primarily invested in land held for future development, which includes approximately $95.6
million related to projects we expect to begin constructing during the next two years, and
approximately $75.5 million invested in land tracts for which we may begin developing in the
future.
At December 31, 2010, we had investments in unconsolidated joint ventures which were
developing the following multifamily communities:
Completed Communities (1)
Braeswood Place
Houston, TX
Houston, TX
Camden Ivy Hall
Atlanta, GA
Atlanta, GA
Pre-Development (2)
Lakes at 610
Houston, TX
Houston, TX
Total Pre-Development
Properties in lease-up as of December 31, 2010.
Properties in pre-development by joint venture partner.
Refer to Note 8, “Investments in Joint Ventures” of the Notes to Consolidated Financial
Statements for further discussion of our unconsolidated joint venture investments.
Geographic Diversification
At December 31, 2010 and 2009, our investments in various geographic areas, excluding both
depreciation and investments in joint ventures were as follows:
Washington, D.C. Metro
Southeast Florida
Houston, Texas
Los Angeles/Orange County, California
Tampa, Florida
Orlando, Florida
Dallas, Texas
Atlanta, Georgia
Charlotte, North Carolina
Las Vegas, Nevada
Raleigh, North Carolina
San Diego/Inland Empire, California
Denver, Colorado
Austin, Texas
Phoenix, Arizona
Other
Total
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:
Average monthly property revenue per apartment home
Annualized total property expenses per apartment home
Weighted average number of consolidated operating apartment homes
Weighted average occupancy of consolidated operating apartment
homes
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, 2010 as compared to 2009 and for
the year ended December 31, 2009 as compared to 2008:
Property revenues:
Same store communities
Non-same store communities
Development and lease-up
communities
Total property revenues
Property expenses:
Total property expenses
Same store communities are communities we owned and which were stabilized as of January 1,
2009. Non-same store communities are stabilized communities we have acquired, developed, or
re-developed after January 1, 2009. Development and lease-up communities are non-stabilized
communities we have acquired or developed after January 1, 2009. Other includes results from
non-multifamily rental properties and expenses relating to land holdings no longer under active
development.
Development and lease-up communities
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 developed or acquired after January 1, 2008. Other includes results from
non-multifamily rental properties and expenses relating to land holdings no longer under active
development.
Same store analysis:
Same store property revenues for the year ended December 31, 2010 decreased approximately
$11.4 million, or 2.0%, from 2009. Same store rental revenues decreased approximately $11.8
million for the year ended December 31, 2010 as compared to 2009, primarily due to a 2.3% decline
in average rental rates from 2009 for our same store portfolio during 2010, partially offset by a
slight increase in average occupancy. The decline in average rental rates was due to the
continuation of the recession through the first quarter of 2010, offset by improving rental rates
and slight improvements in average occupancy levels for the most recent three quarters which we
believe is due in part to the continued decline in home ownership rates and the limited supply of
new rental housing. The decrease was also partially offset by a $0.4 million increase in other
property revenue primarily due to increases from our utility rebilling programs.
Same store property revenues for the year ended December 31, 2009 decreased approximately
$16.8 million, or 3.2%, from 2008. Same store rental revenues decreased approximately $23.9
million, or 5.2%, from 2008 due to a slight decline in average occupancy and a 5.0% decline in
average rental rates for our same store portfolio due to, among other factors, the challenges within the multifamily industry
resulting from a significant recession experienced within the U.S. This decrease was partially
offset by an approximate $7.1 million increase in other property revenue primarily due to the
continued rollout of our utility rebilling programs.
Property expenses from our same store communities increased approximately $0.8 million, or
0.4%, for the year ended December 31, 2010, as compared to 2009. The increase was primarily due to
expenses related to our utility rebilling programs discussed above, higher salaries, and increases
in property insurance and repair and maintenance costs. These increases were partially offset by
lower real estate taxes as a result of declining rates and valuations at a number our communities.
Excluding the expenses associated with our utility rebilling programs, same store property expenses
for 2010 decreased approximately $0.8 million, or 0.4%, from 2009.
Property expenses from our same store communities increased approximately $3.4 million, or
1.8%, for the year ended December 31, 2009, as compared to 2008. This increase was primarily due
to expenses related to our utility rebilling programs discussed above and increases in property
insurance costs. This increase was partially offset by lower property taxes resulting from
declining rates and valuations at a number of our communities, and lower repair and maintenance,
and marketing and leasing, expenses. Excluding the expenses associated with our utility rebilling
programs, same store property expenses for 2009 declined approximately $0.2 million, or 0.1% from
2008.
Non-same store and development and lease-up analysis:
Property revenues from non-same store and development and lease-up communities increased
approximately $10.3 million for the year ended December 31, 2010 as compared to 2009 and increased
approximately $19.1 million for the year ended December 31, 2009 as compared to 2008. The increase
in 2010 as compared to 2009 was primarily due to seven consolidated properties in our development
and re-development pipelines reaching stabilization during 2009 and 2010, in addition to
approximately $2.6 million of revenues recognized in the second half of 2010 related to three newly
consolidated joint ventures as more fully described in Note 7, “Property Acquisitions, Discontinued
Operations, and Impairments.” The increase in 2009 as compared to 2008 was primarily due to nine
consolidated properties in our development and re-development pipelines reaching stabilization
during 2008 and 2009.
Property expenses from non-same store and development and lease-up communities increased
approximately $3.0 million for the year ended December 31, 2010 as compared to 2009 and increased
approximately $5.3 million for 2009 as compared to 2008. The increases in both periods were due to
a number of consolidated properties in our development and re-development pipelines reaching
stabilization as discussed above. The increase in 2010 was also due to approximately $1.1 million
of expenses recognized in the second half of 2010 related to three newly consolidated joint
ventures as more fully described in Note 7, “Property Acquisitions, Discontinued Operations, and
Impairments.”
Other property analysis:
Other property revenues decreased approximately $0.6 million and $2.7 million for the
year ended December 31, 2010 as compared to 2009 and for the year ended December 31, 2009 as
compared to 2008, respectively. The decrease for 2009 as compared to 2008 was primarily due to the
sale of one of our communities to one of the Funds in 2008.
Other property expenses increased approximately $1.6 million for the year ended December 31,
2010 as compared to 2009 and decreased $1.3 million for the year ended December 31, 2009 as
compared to 2008, respectively. The increases in 2010 as compared to 2009 primarily related to
increases in property taxes expensed on land holdings for eight projects for which we decided in
2009 to postpone development. As a result, we ceased capitalization of expenses, including
property taxes. The decrease in 2009 as compared to 2008 was primarily due to costs we incurred
related to Hurricane Ike in September 2008.
Non-property income
Fee and asset management
Interest and other income
Income (loss) on
deferred compensation plans
Total non-property income (loss)
Not a meaningful percentage.
Fee and asset management income, which represents income related to asset management,
third-party construction and development projects and property management, increased approximately
$0.2 million for the year ended December 31, 2010 as compared to 2009 and decreased approximately
$1.2 million for the year ended December 31, 2009 as compared to 2008. The increase for 2010 was
primarily related to an increase in third-party construction activities, offset by decreases in
development and construction fees earned on our development joint ventures as compared to 2009 due
to the completion of construction activities during 2009 and 2010. The increase was further offset
by decreases in fees earned on our stabilized joint ventures due to declines in property revenues.
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.
Interest and other income increased approximately $5.8 million for 2010 as compared to 2009
and decreased approximately $1.9 million for 2009 as compared to 2008. The increase for 2010 was
primarily due to the recognition of approximately $2.7 million of other income resulting from
indemnification provisions in an operating joint venture agreement which expired in January 2010,
and recognition of approximately $4.2 million of other income as a result of the dissolution of a
joint venture and purchase by our joint venture partner of the third-party debt made by this joint
venture from the note holder, which relieved us from our guarantee of our proportionate interest of
this debt; we had previously recorded a charge for this indemnification. These increases were
partially offset by an approximate $0.9 million decrease in interest income due to declines in
interest income on our mezzanine loan portfolio related primarily to the lower balances of
outstanding mezzanine loans due in part to conversion of mezzanine loans into additional equity
interests in certain of our joint ventures in 2009 and 2010.
The $1.9 million decrease in 2009 as compared to 2008 was primarily due to declines in
interest income on our mezzanine loan portfolio related to contractual reductions in interest
rates, reductions in interest earned on certain variable rate mezzanine notes due to declines in
LIBOR, and lower balances of outstanding mezzanine loans due in part to the conversion of mezzanine
loans into additional equity interests in certain of our joint ventures in 2009.
Our deferred compensation plans earned income of approximately $11.6 million and $14.6 million
in 2010 and 2009, respectively, and incurred losses of $33.4 million in 2008. 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
Property management
General and administrative
Interest
Depreciation and amortization
Amortization of deferred
financing costs
Expense (benefit) on deferred
compensation plans
Total other expenses
Property management expense, which represents regional supervision and accounting costs
related to property operations, increased approximately $1.1 million for the year ended December
31, 2010 as compared to 2009 and decreased approximately $1.0 million for 2009 as compared to 2008.
Property management expenses were 3.3%, 3.1%, and 3.3% of total property revenues for the years
ended December 31, 2010, 2009, and 2008, respectively. The $1.1 million increase in 2010 was
primarily due to increases in salary and benefits, rental, marketing, and travel expenses as
compared to 2009. The decrease in 2009 as compared to 2008 was due primarily to lower travel and
legal expenses.
Fee and asset management expense, which represents expenses related to asset management,
third-party construction and development projects and property management, was relatively flat in
2010 as compared to 2009 due in part to an increase in third-party construction activities, offset
by decreases in development and construction on our development joint ventures as compared to 2009
due to the completion of construction activities during 2009 and 2010. The $1.2 million decrease
for 2009 as compared to 2008 was primarily due to 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.
General and administrative expenses decreased approximately $0.5 million during the year ended
December 31, 2010 as compared to 2009 and decreased approximately $0.3 million during the year
ended December 31, 2009 as compared to 2008. General and administrative expenses were 4.9% of
total revenues, excluding income or loss on deferred compensation plans, for the year ended
December 31, 2010, and 5.0% for each of the years ended December 31, 2009, and 2008. The decrease
in 2010 as compared to 2009 was primarily due to a decrease in legal costs and other discretionary
expenses, $1.6 million in severance payments made in connection with a reduction in force of
certain construction and development staff in January 2009, and separation costs relating to the
retirement of one executive officer during the fourth quarter of 2009. These decreases were
partially offset by an increase in long-term incentive compensation of approximately $1.6 million
during 2010 as compared to 2009. 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.
Interest expense decreased approximately $2.4 million during the year ended December 31, 2010
as compared to 2009 and decreased approximately $4.1 million during the year ended December 31,
2009 as compared to 2008. The decrease in 2010 was primarily due to using the net proceeds of
$272.1 million from the equity offering completed during the second quarter of 2009 and
approximately $231.7 million in net proceeds from our ATM program during 2010 to retire outstanding
debt, prior to its maturity, of approximately $325.0 million during the first six months of 2009
and repay maturing secured and unsecured notes during 2009 and 2010, as well as reduce the balances
outstanding on our unsecured line of credit. This decrease was partially offset by the increased
interest expense incurred on our $420 million credit facility entered into during the second
quarter of 2009 and lower capitalized interest of approximately $4.6 million in 2010 as compared to
2009 primarily due to the completion of communities in our development pipeline and our decision in
fiscal year 2009 to postpone the development of land holdings for eight future projects.
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. 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.
Depreciation and amortization expense increased approximately $1.5 million during the year
ended December 31, 2010 as compared to 2009 and increased approximately $2.8 million during the
year ended December 31, 2009 as compared to 2008. The increase in 2010 as compared to 2009 was
primarily due to new development and capital improvements placed in service during 2009 and 2010
and the consolidation of three joint ventures during the second half of 2010, which were previously
accounted for under the equity method of accounting. These increases were partially offset by an
increase in the number of assets being fully depreciated in 2010 as compared to 2009. The increase
in 2009 as compared to 2008 was primarily due to completion of new development and capital
improvements placed in service in 2009 as compared to the previous year.
Amortization of deferred financing costs increased approximately $0.2 million during the year
ended December 31, 2010 as compared to 2009 and increased approximately $1.0 million during the
year ended December 31, 2009 as compared to 2008. The increase for 2010 as compared to 2009 was
primarily due to additional financing costs incurred on our $500 million unsecured credit facility,
entered into in August 2010, and on our $420 million credit facility, entered into the second
quarter of 2009. These increases were partially offset by lower amortization of deferred financing
costs related to the repurchase and retirement of certain series of notes during 2010 and 2009.
The increase for 2009 as compared to 2008 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.
Our deferred compensation plans incurred expenses of approximately $11.6 million and $14.6
million in 2010 and 2009, respectively, and earned a benefit of approximately $33.4 million in
2008. 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.
Other
Gain on sale of properties,
including land
Gain (loss) on early
retirement of debt
Impairment associated with
land development activities
Impairment provision for
technology investment
Equity in income (loss) of
joint ventures
Income tax expense — current
Gain on sale of properties, including land, totaled approximately $0.2 million and $2.9
million for the years ended December 31, 2010 and December 31, 2008, respectively. The gain in
2008 was due to 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 year ended December 31, 2009.
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, 2010.
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
put on hold. 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, including approximately $48.6 million related to land
holdings for five projects, 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 did not develop. These impairment charges for land are the difference
between each parcel’s estimated fair value and the carrying value. There were no impairments
associated with land development activities for the year ended December 31, 2010.
During the fourth quarter of 2010, we wrote-off a $1.0 million investment associated with a
technology investment which we determined was no longer recoverable.
Equity in income (loss) of joint ventures decreased approximately $1.5 million for the year
ended December 31, 2010 as compared to 2009, and increased approximately $2.0 million for the year
ended December 31, 2009 as compared to 2008. The decrease for 2010 as compared to 2009 was
primarily the result of decreases in earnings by our stabilized operating joint ventures due to
declines in rental income, and the recognition of net operating losses by certain development joint
ventures during the lease-up phase of operations. The decreases were further impacted by the
consolidation of three operating joint ventures during the second half of 2010, which were
previously accounted for in accordance with the equity method of accounting. These decreases were
partially offset by increases in earnings in development joint ventures reaching or nearing
stabilization during 2009 and 2010. 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.
We had current income tax expense of approximately $1.6 million, $1.0 million, and $0.8
million for the tax years ended December 31, 2010, 2009, and 2008, respectively. The increase in
taxes in 2010 as compared to 2009 primarily related to an increase in federal income taxes
resulting from increased profitability in our construction activities conducted in a taxable REIT
subsidiary. The increase in taxes in 2009 as compared to 2008 primarily related to an increase in
state income taxes.
Noncontrolling interests
(Income) loss
allocated to
noncontrolling
interests from
continuing
operations
Income allocated to
perpetual preferred
units
Income allocated to noncontrolling interests from continuing operations increased
approximately $1.3 million in 2010 as compared to 2009, and decreased $4.5 million in 2009 as
compared to 2008. During 2009, we recognized an approximately $72.2 million impairment associated
with land holdings for eight projects we had put on hold, of which $3.6 million represented certain
operating partnerships’ interests of the impairment. Excluding this impairment charge, income
allocated to noncontrolling interests from continuing operations decreased approximately $2.3
million and $0.8 million in 2010 as compared to 2009, and 2009 as compared to 2008, respectively.
The $2.3 million decrease in 2010 as compared to 2009 was primarily due to the completion during
the three months ended March 31, 2010 and subsequent lease-up of a property by a fully consolidated
joint venture of which we retain a 25% ownership, which resulted in our recording depreciation and
interest expense on the property, upon completion of construction, in excess of income recognized during the lease-up
period. The decrease was also due to lower earnings associated with properties held by operating
partnerships during 2010 as compared to 2009. The $0.8 million decrease in 2009 was primarily due
to lower earnings associated with properties held by operating partnerships during 2009 as compared
to 2008.
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 company’s 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:
Funds from operations
Net income (loss) attributable to common
shareholders (1)
Real estate depreciation and amortization,
including discontinued operations
Adjustments for unconsolidated joint ventures
Gain on sale of properties and discontinued
operations, net of taxes
Income (loss) allocated to noncontrolling
interests
Funds from operations — diluted
Weighted average shares — basic
Incremental shares issuable from assumed
conversion of:
Common share options and share awards granted
Common units
Weighted average shares — diluted
Includes an $85.6 million and $51.3 million impairment associated with land development
activities for the years ended December 31, 2009 and 2008, 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.
Our interest expense coverage ratio, net of capitalized interest, was approximately 2.6 times
for each of the years ended December 31, 2010, 2009, and 2008. 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, after adding
back depreciation, amortization, and interest expense from both continuing and discontinued
operations. This ratio is a method for calculating the amount of operating cash flows available to
cover interest expense. At December 31, 2010, 2009, and 2008, approximately 71.1%, 72.8%, and
78.3%, respectively, of our properties (based on invested capital) were unencumbered. Our weighted
average maturity of debt, including our line of credit, was 5.5 years at December 31, 2010.
For the longer term, we intend to continue to focus on strengthening our capital and liquidity
position by generating positive cash flows from operations, reducing outstanding debt and leverage
ratios, and controlling overhead costs.
Our primary source of liquidity is cash flow generated from operations. Other sources include
available cash balances, the availability under our unsecured credit facility and other short-term
borrowings, proceeds from dispositions of properties and other investments, secured mortgage debt,
and the use of debt and equity offerings under our automatic shelf registration statement. We
believe our liquidity and financial condition are sufficient to meet all of our reasonably
anticipated cash needs during 2011 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
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.
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, 2010 and 2009.
Net cash provided by operating activities was approximately $224.0 million during the year
ended December 31, 2010 as compared to approximately $217.7 million during the year ended December
31, 2009. The increase was primarily due to lower interest expense and changes in operating
accounts. The increase was partially offset by declines in property net operating income in 2010
as compared to 2009.
Net cash provided by investing activities during the year ended December 31, 2010 totaled
approximately $35.2 million as compared to net cash used by investing activities of approximately
$69.5 million during the year ended December 31, 2009. Cash outflows for property development,
acquisition, and capital improvements were approximately $63.7 million during 2010 as compared to
approximately $72.8 million during 2009. This decrease was due to the timing of completions of
communities in our development pipeline and a reduction in construction and development activity in
2010 as compared to 2009. Cash inflows from sales of properties including land and discontinued
operations were approximately $102.8 million for the year ended December 31, 2010 as compared to
approximately $28.1 million for the year ended December 31, 2009. Additionally, cash outflows for
investments in joint ventures were $6.5 million for the year ended December 31, 2010 as compared to
$23.2 million in 2009. The decrease in cash outflows for investments in joint ventures in 2010 as
compared to 2009 was primarily a result of our $22.2 million equity investment in one of our joint
ventures during the third quarter 2009.
Net cash used in financing activities totaled approximately $152.8 million during the year
ended December 31, 2010 primarily as a result of the repayment of maturing outstanding unsecured
notes payable of approximately $137.6 million, repayment of approximately $165.6 million of secured
notes assumed in connection with obtaining controlling interests in three joint ventures and
distributions paid to common shareholders, perpetual preferred unit holders, and noncontrolling
interest holders of approximately $135.6 million. The cash outflows were partially offset by cash
receipts of approximately $231.7 million relating to proceeds received from the sale of
approximately 4.9 million common shares throughout fiscal year 2010 under our ATM share offering
program. Cash outflows were further offset by decreases in accounts receivable from affiliates of
approximately $4.2 million relating to proceeds received from participant withdrawals from our
deferred compensation plans and approximately $53.0 million for proceeds received from secured
notes payable relating to a secured credit agreement for a newly consolidated joint venture and
$4.7 million for advances under a construction loan for one of our communities completing
construction during 2010. Net cash provided by financing activities totaled approximately $91.4
million during the year ended December 31, 2009. 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 of cash receipts from secured notes 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.
Financial Flexibility
In August 2010, we entered into a $500 million unsecured credit facility, with the option to
increase this credit facility to $600 million, which matures in August 2012 and may be extended at
our option to August 2013. This facility replaces our $600 million unsecured credit facility which
was scheduled to mature in January 2011. Interest rate spreads float on a margin based on LIBOR
and 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 180 days or less and may not
exceed the lesser of $250 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, 2010, we had outstanding
letters of credit totaling approximately $10.2 million, leaving approximately $489.8 million
available under our unsecured line of credit.
We currently have an automatic shelf registration statement on file with the SEC which 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.
As of December 31, 2010, we had approximately 69.6 million common shares outstanding, net of
treasury shares and shares held in our deferred compensation arrangements, and no preferred shares
outstanding.
In March 2010, we announced the creation of our ATM share offering program through which we
may, but have no obligation to, sell common shares having an aggregate offering price of up to $250
million, in amounts and at times as we determine, into the existing trading market at current
market prices as well as through negotiated transactions. Actual sales from time to time may
depend on a variety of factors including, among others, market conditions, the trading price of our
common shares, and determinations of the appropriate sources of funding for us. As of the day of
this filing, we had common shares having an aggregate offering price of up to $10.7 million
remaining under the ATM program.
We believe our ability to access capital markets is enhanced by our senior unsecured debt
ratings by Moody’s and Standard and Poor’s, which are currently Baa1 and BBB, respectively, with
stable outlooks, as well as by our ability to borrow on a secured basis from various institutions
including banks, Fannie Mae, Freddie Mac, or life insurance companies. 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.
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 2011, approximately
$154.4 million of unsecured debt, excluding 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, we intend to incur approximately $57.2 million
of additional capital expenditures on our current development projects and we expect to fund these
amounts through available cash balances and draws on our unsecured line of credit. We intend to
meet our near-term liquidity requirements through available cash balances, 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 2010, 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 20, 2010. The dividend was subsequently paid on
January 18, 2011. We paid equivalent amounts per unit to holders of common operating partnership
units. When aggregated with previous 2010 dividends, this distribution to common shareholders and
holders of common operating partnership units equates to an annual dividend rate of $1.80 per share
or unit for the year ended December 31, 2010.
The following table summarizes our known contractual cash obligations as of December 31, 2010:
Debt maturities (1)
Interest payments (2)
Non-cancelable lease payments
Postretirement benefit obligations
Includes scheduled principal amortizations.
Includes contractual interest payments for our 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 were calculated based on the interest rates in effect as of December 31, 2010 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 have guaranteed no more than our proportionate interest, totaling
approximately $11.0 million, of two loans utilized for construction and development activities for
our joint ventures. We are also committed to additional funding under a mezzanine loan provided to
one joint venture and our commitment to fund additional amounts under this mezzanine loan was an
aggregate of approximately $6.0 million at December 31, 2010.
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.
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 related to the valuation of our investments in
joint ventures, and estimates and assumptions used to determine the entity with the power to direct
activities that most significantly impacts economic performance 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 continuously 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
entities. 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 (non-managing members) to assess whether any rights held by the limited partners 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 and undiscounted 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 participant’s perspective.
In addition, we evaluate our investments in joint ventures and if we believe there is an other
than temporary decline in market value of our investment, we will record an impairment charge.
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 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 interest rate of our unsecured debt. Transaction 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 management’s 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.
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, 2010 and 2009:
Fixed rate debt (1)
Variable rate debt
Includes a $500 million term loan entered into in 2007 and $16.6 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.
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 $94.6 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 $2.3 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, 2010, the effect of our hedge agreements was to fix the interest rate on
approximately $516.6 million of our variable rate debt. Had the hedge agreements not been in place
during 2010, our annual interest costs would have been approximately $23.3 million lower, based on
balances and reported interest rates through the year as the variable interest rates were less than
the effective interest rates on the associated hedge agreements. Additionally, if the variable
interest rates on this debt had been 100 basis points higher through 2010 and the hedge agreements
not been in place, our annual interest cost would have been approximately $5.8 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.
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.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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 Commission’s 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.
Management’s 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 company’s principal executive and
principal financial officers, or persons performing similar functions, and effected by the
company’s board of trustees, 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 company’s 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, 2010. 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, 2010.
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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trust Managers and Shareholders of
Camden Property Trust
Houston, Texas
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, 2010, based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company’s 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 Management’s Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company’s 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 company’s internal control over financial reporting is a process designed by, or under the
supervision of, the company’s principal executive and principal financial officers, or persons
performing similar functions, and effected by the company’s 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 company’s 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 company’s 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, 2010, 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 schedule of the Company as of
and for the year ended December 31, 2010 and our report dated February 24, 2011 expressed an
unqualified opinion on those financial statements and financial statement schedule.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 24, 2011
February 24, 2011
Other Information
PART III
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 about March 22, 2011 in connection with the Annual
Meeting of Shareholders to be held May 11, 2011.
Executive Compensation
Information with respect to this Item 11 is incorporated by reference from our Proxy
Statement, which we expect to file on or about March 22, 2011 in connection with the Annual
Meeting of Shareholders to be held May 11, 2011.
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 about March 22, 2011 in connection with the Annual
Meeting of Shareholders to be held May 11, 2011.
Equity Compensation Plan Information
Equity compensation
plans approved by
security holders
Equity compensation
plans not approved
by security holders
Total
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 about March 22, 2011 in connection with the Annual
Meeting of Shareholders to be held May 11, 2011.
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 about March 22, 2011 in connection with the Annual
Meeting of Shareholders to be held May 11, 2011.
PART IV
Exhibits and Financial Statement Schedules
The following documents are filed as part of this report:
(1) Financial Statements:
(2) Financial Statement Schedules:
All other schedules have been omitted since the required information is presented in the
financial statements and the related notes or is not applicable.
(3) Index to Exhibits:
The following exhibits are filed as part of or incorporated by reference into this
report:
Amended and Restated Declaration of Trust of Camden Property
Trust
Amendment to the Amended and Restated Declaration of Trust
of Camden Property Trust
Second Amended and Restated Bylaws of Camden Property Trust
Amendment to Second Amended and Restated Bylaws of Camden
Property Trust
Specimen certificate for Common Shares of Beneficial Interest
Indenture dated as of February 15, 1996 between Camden
Property Trust and the U.S. Trust Company of Texas, N.A., as
Trustee
First Supplemental Indenture dated as of February 15, 1996
between Camden Property Trust and U.S. Trust Company of
Texas, N.A., as Trustee
Form of Indenture for Senior Debt Securities dated as of
February 11, 2003 between Camden Property Trust and SunTrust
Bank, as Trustee
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
Indenture dated as of February 11, 2003 between the Company
and U.S. Bank National Association, as successor to SunTrust
Bank, as trustee.
Registration Rights Agreement, dated as of February 23,
1999, between Camden Property Trust and the unitholders
named therein
Form of Amendment to Registration Rights Agreement, dated as
of December 1, 2003, between Camden Property Trust and the
unitholders named therein
Form of Registration Rights Agreement between Camden
Property Trust and the holders named therein
Form of Statement of Designation of Series B Cumulative
Redeemable Preferred Shares of Beneficial Interest
Form of Amendment to Statement of Designation of Series B
Cumulative Redeemable Preferred Shares of Beneficial
Interest, effective as of December 31, 2003
Form of Camden Property Trust 7.625% Note due 2011
Form of Camden Property Trust 5.875% Note due 2012
Form of Camden Property Trust 5.375% Note due 2013
Form of Camden Property Trust 5.00% Note due 2015
Form of Camden Property Trust 5.700% Notes due 2017
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
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
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
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
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
Supplemental Indenture No. 5, dated as of June 21, 2005,
among Camden Summit Partnership, L.P., Camden Property Trust
and Wachovia Bank, N.A.
Form of Camden Summit Partnership, L.P. (f/k/a Summit
Properties Partnership, L.P.) 7.703% Medium-Term Note due
2011
Form of Indemnification Agreement between Camden Property
Trust and certain of its trust managers and executive
officers
Second Amended and Restated Employment Agreement dated July
11, 2003 between Camden Property Trust and Richard J. Campo
Second Amended and Restated Employment Agreement dated July
11, 2003 between Camden Property Trust and D. Keith Oden
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.
Second Amendment to Second Amended and Restated Employment
Agreement, dated as of March 14, 2008 between Camden
Property Trust and D. Keith Oden.
Form of Employment Agreement by and between Camden Property
Trust and certain senior executive officers
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.
Second Amended and Restated Employment Agreement, dated
November 3, 2008, between Camden Property Trust and H.
Malcolm Stewart
Second Amended and Restated Camden Property Trust Key
Employee Share Option Plan (KEYSOPTM), effective
as of January 1, 2008
Amendment No. 1 to Second Amended and Restated Camden
Property Trust Key Employee Share Option Plan, effective as
of January 1, 2008
Form of Amended and Restated Master Exchange Agreement
between Camden Property Trust and certain key employees
Form of Amended and Restated Master Exchange Agreement
between Camden Property Trust and certain trust managers
Form of Master Exchange Agreement between Camden Property
Trust and certain trust managers
Form of Amendment No. 1 to Amended and Restated Master
Exchange Agreement (Trust Managers) effective November 27,
2007
Form of Amendment No. 1 to Amended and Restated Master
Exchange Agreement (Key Employees) effective November 27,
2007
Form of Third Amended and Restated Agreement of Limited
Partnership of Camden Operating, L.P.
First Amendment to Third Amended and Restated Agreement of
Limited Partnership of Camden Operating, L.P., dated as of
February 23, 1999
Form of Second Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating, L.P.,
dated as of August 13, 1999
Form of Third Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating, L.P.,
dated as of September 7, 1999
Form of Fourth Amendment to Third Amended and Restated
Agreement of Limited Partnership of Camden Operating, L.P.,
dated as of January 7, 2000
Form of Amendment to Third Amended and Restated Agreement of
Limited Partnership of Camden Operating, L.P., dated as of
December 1, 2003
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.
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
Exchange Agreement, dated as of October 23, 1998, by and
among Oasis Residential, Inc., Oasis Martinique, LLC and the
holders listed therein
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
Amended and Restated 1993 Share Incentive Plan of Camden
Property Trust
Camden Property Trust 1999 Employee Share Purchase Plan
Amended and Restated 2002 Share Incentive Plan of Camden
Property Trust
Amendment to Amended and Restated 2002 Share Incentive Plan
of Camden Property Trust
Amendment to Amended and Restated 2002 Share Incentive Plan
of Camden Property Trust, effective as of January 1, 2008
Camden Property Trust Short Term Incentive Plan
Amended and Restated Camden Property Trust Non-Qualified
Deferred Compensation Plan, effective as of January 1, 2008
Amendment No. 1 to Amended and Restated Camden Property
Trust Non-Qualified Deferred Compensation Plan, effective as
of January 1, 2008
Amendment No. 2 to Amended and Restated Camden Property
Trust Non-Qualified Deferred Compensation Plan, effective as
of January 1, 2008
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
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
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.
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
Amendment Agreement, dated as of June 19, 2004, among
William B. McGuire, Jr., Summit Properties Inc. and Summit
Management Company
Amendment Agreement, dated as of June 19, 2004, among
William F. Paulsen, Summit Properties Inc. and Summit
Management Company
Separation Agreement, dated as of February 28, 2005, between
Camden Property Trust and William B. McGuire, Jr.
Separation Agreement, dated as of February 28, 2005, between
Camden Property Trust and William F. Paulsen
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
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
Master Credit Agreement, dated as of September 24, 2008,
among CSP Community Owner, LLC, CPT Community Owner, LLC,
and Red Mortgage Capital, Inc. (2)
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)
Form of Amended and Restated Distribution Agency Agreement
dated May 10, 2010 between Camden Property Trust and
Deutsche Bank Securities Inc.
Form of Amended and Restated Distribution Agency Agreement
dated May 10, 2010 between Camden Property Trust and Credit
Suisse Securities (USA) LLC
Form of Distribution Agency Agreement dated May 10, 2010
between Camden Property Trust and Morgan Stanley & Co.
Incorporated
Form of Amended and Restated Distribution Agency Agreement
dated May 10, 2010 between Camden Property Trust and Wells
Fargo Securities, LLC
Form of Credit Agreement dated as of August 18, 2010 among
Camden Property Trust, each lender from time to time party
thereto, Bank of America, N.A., as administrative agent,
swing line lender and letter of credit issuer, and JPMorgan
Chase Bank, N.A., as syndication agent
Statement Regarding Computation of Ratios
List of Significant Subsidiaries
Consent of Deloitte & Touche LLP
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
Certification of Chief Executive Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act
Certification of Chief Financial Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
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).
Portions of the exhibit have been omitted pursuant to a request for confidential
treatment.
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.
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.
/s/ Richard J. Campo
Richard J. Campo
/s/ D. Keith Oden
D. Keith Oden
/s/ Dennis M. Steen
Dennis M. Steen
/s/ Michael P. Gallagher
Michael P. Gallagher
*
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*
*
*
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*
*
*By:
We have audited the accompanying consolidated balance sheets of Camden Property Trust and
subsidiaries (the “Company”) as of December 31, 2010 and 2009, 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, 2010. Our audits also included the financial statement schedule
listed in the Index at Item 15. These financial statements and financial statement schedule are
the responsibility of the Company’s management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule 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, 2010 and 2009,
and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2010, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Company’s internal control over financial reporting as of December 31,
2010, based on the criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24,
2011 expressed an unqualified opinion on the Company’s internal control over financial reporting.
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
Assets
Real estate assets, at cost
Land
Buildings and improvements
Accumulated depreciation
Net operating real estate assets
Properties under development, including land
Investments in joint ventures
Total real estate assets
Accounts receivable — affiliates
Notes receivable — affiliates
Other assets, net
Cash and cash equivalents
Restricted cash
Total assets
Liabilities and equity
Liabilities
Notes payable
Unsecured
Secured
Accounts payable and accrued expenses
Accrued real estate taxes
Distributions payable
Other liabilities
Total liabilities
Commitments and contingencies
Common shares of beneficial interest; $0.01
par value per share; 100,000 shares
authorized; 85,130 and 79,543 issued;
82,386 and 76,996 outstanding at December
31, 2010 and 2009, respectively
Additional paid-in capital
Distributions in excess of net income
attributable to common shareholders
Notes receivable secured by common shares
Treasury shares, at cost (12,766 and 12,792
common shares, at December 31, 2010 and
2009, respectively)
Accumulated other comprehensive loss
Total common equity
Noncontrolling interests
Total equity
Total liabilities and equity
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Property revenues
Rental revenues
Other property revenues
Total property revenues
Property expenses
Property operating and maintenance
Real estate taxes
Total property expenses
Non-property income
Fee and asset management
Interest and other income
Income (loss) on deferred compensation plans
Total non-property income (loss)
Other expenses
Property management
General and administrative
Interest
Depreciation and amortization
Amortization of deferred financing costs
Expense (benefit) on deferred compensation plans
Total other expenses
Gain on sale of properties, including land
Gain (loss) on early retirement of debt
Impairment associated with land development activities
Impairment provision on a technology investment
Equity in income (loss) of joint ventures
Income (loss) from continuing operations before income taxes
Income tax expense — current
Income (loss) from continuing operations
Income from discontinued operations
Gain on sale of discontinued operations, net of tax
Net income (loss)
Less (income) loss allocated to noncontrolling interests from continuing operations
Less income allocated to perpetual preferred units
Net income (loss) attributable to common shareholders
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Continued)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Continued)
Earnings per share — basic
Income (loss) from continuing operations attributable to common shareholders
Income from discontinued operations, including gain on sale, attributable to
common shareholders
Net income (loss) attributable to common shareholders
Earnings per share — diluted
Weighted average number of common shares outstanding
Weighted average number of common shares and dilutive equivalent common shares
outstanding
Income (loss) from continuing operations
Less (income)loss allocated to noncontrolling interests from continuing operations
Income (loss) from continuing operations attributable to common shareholders
Income from discontinued operations, including gain on sale, attributable to common
shareholders
Consolidated Statements of Comprehensive Income (Loss)
Other comprehensive income (loss)
Unrealized loss on cash flow hedging activities
Reclassification of net loss on cash flow hedging activities
Unrealized gain on available-for-sale investments, net of tax
Unrealized gain on postretirement obligations
Comprehensive income (loss)
Comprehensive income (loss) attributable to common shareholders
CONSOLIDATED STATEMENTS OF EQUITY
Equity, December 31. 2007
Net income
Other comprehensive loss
Net share awards
Employee share purchase plan
Repayment of employee notes receivable, net
Common share options exercised (45 shares)
Conversions and redemptions of operating
partnership units (464 shares)
Common shares repurchased (695 shares)
Purchase of noncontrolling interests
Distributions on perpetual preferred units
Cash distributions ($2.80 per share)
Equity, December 31, 2008
Net income (loss)
Other comprehensive income
Common shares issued (10,350 shares)
Common share options exercised (19 shares)
Conversions and redemptions of operating
partnership units (139 shares)
Common shares repurchased
Cash distributions ($2.05 per share)
Equity, December 31, 2009
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
Common shares issued (4,868 shares)
Common share options exercised (41 shares)
Conversions and redemptions of operating
partnership units (279 shares)
Cash distributions ($1.80 per share)
Equity, December 31, 2010
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Adjustments to reconcile net income (loss) to net cash from operating activities
Depreciation and amortization, including discontinued operations
Gain on sale of discontinued operations
Gain on sale of properties, including land
Loss (gain) on early retirement of debt
Impairment associated with land development activities
Impairment provision on a technology investment
Equity in (income) loss of joint ventures
Share-based compensation
Distributions of income from joint ventures
Amortization of deferred financing costs
Accretion of discount on unsecured notes payable
Interest on notes receivable — affiliates
Net change in operating accounts
Net cash from operating activities
Cash flows from investing activities
Development and capital improvements
Proceeds from sales of properties, including land and discontinued operations
Proceeds from partial sales of assets to joint ventures
Investments in joint ventures
Payments received on notes receivable — other
Increase in notes receivable — affiliates
Other
Net cash from investing activities
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Cash flows from financing activities
Proceeds from issuance of common shares
Proceeds from notes payable
Repayment of notes payable
Borrowings on unsecured line of credit and short-term borrowings
Repayments on unsecured line of credit and short-term borrowings
Distributions to common shareholders, perpetual preferred units,
and noncontrolling interests
Repurchase of common shares and units
Payment of deferred financing costs
Net decrease (increase) in accounts receivable — affiliates
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental information
Cash paid for interest, net of interest capitalized
Cash paid for income taxes
Supplemental schedule of non-cash investing and financing activities
Distributions declared but not paid
Value of shares issued under benefit plans, net of cancellations
Conversion of operating partnership units to common shares
Accrual associated with construction and capital expenditures
Conversion of mezzanine notes to joint venture equity
Change of fair value of available-for-sale investments, net of tax
Debt disposed of through disposition
Contribution of real estate assets to joint ventures
Consolidation of joint venture at fair value, net of cash
Real estate assets
In-place leases
Other assets
Mortgage debt assumed
Other liabilities
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, management, development, acquisition, and construction 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, 2010, we owned interests in, operated, or were developing 188 multifamily
properties comprising 63,923 apartment homes across the United States. Of these 188 properties,
two properties were under development and when completed will consist of a total of 607 apartment
homes. In addition, we own 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 continuously 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
entities. If we are the general partner of a limited partnership, or manager of a limited
liability company, we also consider the consolidation guidance relating to the rights of limited
partners (non-managing members) to assess whether any rights held by the limited partners overcome
the presumption of control by us.
Allocations of Purchase Price. Upon the acquisition of real estate, we allocate the purchase
price between tangible and intangible assets, which includes land, buildings, furniture and
fixtures, the value of in-place leases, including above and below market leases, and acquired
liabilities. When allocating the purchase price to acquired properties, we allocate costs to the
estimated intangible value of in-place leases and above or below market leases and to the estimated
fair value of furniture and fixtures, land, and buildings on a value determined by assuming the
property was vacant by applying methods similar to those used by independent appraisers of
income-producing property. Depreciation is computed on a straight-line basis over the remaining
useful lives of the related tangible 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. The unamortized value of in-place leases at December 31, 2010, was approximately
$3.9 million. Amortization expense will be recognized over the remaining life of these in-place
leases in 2011. Estimates of fair value of acquired debt are based upon interest rates available
for the issuance of debt with similar terms and remaining maturities.
Asset Impairment. Long-lived assets are reviewed for impairment annually or whenever events
or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
Impairment exists if estimated future undiscounted cash flows associated with long-lived assets are
not sufficient to recover the carrying value of such assets. We consider projected future
discounted and undiscounted 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 which maximize inputs from a marketplace participant’s perspective.
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. We maintain the majority of our cash and cash equivalents at major
financial institutions in the United States and deposits with these financial institutions may
exceed the amount of insurance provided on such deposits; however, we regularly monitor the
financial stability of these financial institutions and believe we are not currently exposed to any
significant default risk with respect to these deposits.
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 the weighted
average interest rate of our unsecured debt. Transaction 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 $5.7 million, $10.3 million, and $17.7 million for the years ended
December 31, 2010, 2009, and 2008, respectively. Capitalized real estate taxes were approximately
$0.8 million, $1.9 million, and $3.4 million for the years ended December 31, 2010, 2009, and 2008,
respectively.
Where possible, we stage our construction to allow leasing and occupancy during the
construction period, which we believe minimizes the duration of the lease-up period following
completion of construction. Our accounting policy related to properties in the development and
leasing phase is 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.
Depreciation and amortization is computed over the expected useful lives of depreciable
property on a straight-line basis with lives generally as follows:
Buildings and improvements
Furniture, fixtures, equipment and other
Intangible assets (in-place leases and above and below market leases)
Derivative Financial Instruments. Derivative financial instruments are recorded in the
consolidated balance sheets at fair value and we do not apply master netting for financial
reporting purposes. 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 in its present
condition 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.
The results of operations for properties sold during the period or classified as held for sale
at the end of the current period are 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 within 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 other sources of income, including from interest
and fee and asset management income, are recognized as earned. Eight 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 management’s opinion, due
to the number of residents, the types and diversity of submarkets in which our properties operate,
and the collection terms, there is no significant concentration of credit risk.
Insurance. Our primary lines of insurance coverage are property, general liability, and
health and workers’ compensation. We believe our insurance coverage adequately insures our
properties against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood,
and other perils and adequately insures us against other risks. Losses are accrued based upon our
estimates of the aggregate liability for claims incurred using certain actuarial assumptions
followed in the insurance industry and based on our experience.
Other Assets, Net. Other assets in our consolidated financial statements include investments
under deferred compensation plans, deferred financing costs, non-real estate leasehold improvements
and equipment, prepaid expenses, the value of in-place leases net of related accumulated
amortization, available-for-sale investments, 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 no longer than 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. Our available-for-sale investments are carried at
fair value with unrealized gains and losses included in accumulated other comprehensive income
(loss), a separate component of shareholders’ equity.
Reportable Segments. Our multifamily communities are geographically diversified throughout
the United States, and management evaluates operating performance on an individual property level.
As each of our apartment communities has similar economic characteristics, residents, and products
and services, our apartment communities have been aggregated into one reportable segment. Our
multifamily communities generate rental revenue and other income through the leasing of apartment
homes, which comprised approximately 97% of our total property revenues and total non-property
income, excluding income (loss) on deferred compensation plans for the year ended December 31,
2010, and approximately 98% for each of the years ended December 31, 2009, and 2008.
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 and acquisition
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 related to the valuation of our investments in
joint ventures, and estimates and assumptions used to determine the entity with the power to direct
activities that most significantly impacts economic performance of potential 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.
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. Our unvested
share-based awards 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 was approximately
4.8 million, 4.9 million, and 5.2 million for the years ended December 31, 2010, 2009, and 2008,
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 are anti-dilutive.
The following table presents information necessary to calculate basic and diluted earnings per
share for the periods indicated:
Basic earnings per share calculation
Amount allocated to participating securities
Income (loss) from continuing operations attributable to common shareholders,
net of amount allocated to participating securities
Income from discontinued operations, including gain on sale, attributable to
common shareholders
Net income (loss) attributable to common shareholders, as adjusted — basic
Income (loss) from continuing operations attributable to common shareholders,
as adjusted — per share
Income from discontinued operations, including gain on sale, attributable to
common shareholders — per share
Net income (loss) attributable to common shareholders, as adjusted — per share
Weighted average number of common shares outstanding
Diluted earnings per share calculation
Income (loss) from continuing operations attributable to common
shareholders, net of amount allocated to participating securities
Income allocated to common units
Income (loss) from continuing operations attributable to common shareholders,
as adjusted
Net income (loss) attributable to common shareholders, as adjusted
Income from discontinued operations, including gain on sale, attributable to
common shareholders — per share
Incremental shares issuable from assumed conversion of:
Common share options and share awards granted
Common units
Weighted average number of common shares and dilutive equivalent common shares
outstanding
4. Common Shares
In March 2010, we announced the creation of an at-the-market (“ATM”) share offering program
through which we may, but have no obligation to, sell common shares having an aggregate offering
price of up to $250 million, in amounts and at times as we determine, into the existing trading
market at current market prices as well as through negotiated transactions. Actual sales from time
to time may depend on a variety of factors including, among others, market conditions, the trading
price of our common shares, and determinations of the appropriate sources of funding for us.
During the year ended December 31, 2010, we issued approximately 4.9 million common
shares at an average price of $48.37 per share for total net consideration of approximately
$231.7 million. In January 2011, we issued 0.1 million common shares at an average price of $54.06
per share for total net consideration of approximately $3.8 million. As of the date of this
filing, we had common shares having an aggregate offering price of up to $10.7 million remaining
available for sale under the ATM program.
We currently have an automatic shelf registration statement on file with the Securities and
Exchange Commission which 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. As of December 31, 2010, we had approximately 69.6 million common
shares outstanding, net of treasury shares and shares held in our deferred compensation
arrangements, and no preferred shares outstanding.
5. Operating Partnerships
At December 31, 2010, approximately 12% 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, 2010, we held 89.8% of the
common limited partnership units and the sole 1% general partnership interest of the operating
partnership. The remaining common limited partnership units, comprising approximately 1.1 million
units, are primarily held by former officers, directors, and investors of Paragon Group, Inc.,
which we acquired in 1997. Each common limited partnership unit is redeemable for one common share
of Camden or cash at our election. Holders of common limited partnership units are not entitled to
rights as shareholders prior to redemption of their common limited partnership units. No member of
our management owns Camden Operating common limited partnership units, and two of our ten trust
managers own Camden Operating common limited partnership units.
Camden Operating has $100 million of 7.0% Series B Cumulative Redeemable Perpetual Preferred
Units outstanding. Distributions on the preferred units are payable quarterly in arrears. The
Series B preferred units 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, 2010. The preferred units are convertible beginning in 2015 by the
holder into a fixed number of corresponding Series B Cumulative Redeemable Perpetual Preferred
Shares of Camden. 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 approximately 0.4 million units, are exchangeable into
approximately 0.3 million of our common shares.
At December 31, 2010, approximately 25% 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, 2010, we held 94.0% 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 approximately 1.1 million
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.
6. 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 margin taxes.
Taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to
applicable federal, state, and local income and margin taxes. Our operating partnerships are
flow-through entities and are not subject to federal income taxes at the entity level. We have
provided for federal, state, and local income, franchise, and margin taxes in the consolidated
statements of income and comprehensive income for the years ended December 31, 2010, 2009 and 2008.
These taxes are primarily for margin taxes and entity level state income and franchise taxes on
certain ventures, and federal taxes on one of our taxable REIT subsidiaries. We have no significant
temporary differences or tax credits associated with our taxable REIT subsidiaries.
The following table reconciles net income to REIT taxable income for the years ended December
31:
Net income (loss)
Less (income) loss attributable to noncontrolling interests
Loss of taxable REIT subsidiaries included above
Net income (loss) from REIT operations
Book depreciation and amortization, including discontinued operations
Tax depreciation and amortization
Book/tax difference on gains/losses from capital transactions
Book/tax difference on impairment associated with land
development activities
Other book/tax differences, net
REIT taxable income
Dividends paid deduction
Dividends paid in excess of taxable income
A schedule of per share distributions we paid and reported to our shareholders is set
forth in the following table:
Common Share Distributions
Ordinary income
Long-term capital gain
Unrecaptured Sec. 1250 gain
Return of capital
Percentage of distributions representing tax preference items
We have taxable REIT subsidiaries which are subject to federal and state income taxes.
At December 31, 2010, our taxable REIT subsidiaries had net operating loss carryforwards (“NOL’s”)
of approximately $25.1 million which expire in years 2019 to 2030. Because NOL’s are subject to
certain change of ownership, continuity of business, and separate return year limitations, and
because it is unlikely the available NOL’s will be utilized or because we consider any amounts
possibly utilized to be immaterial, no benefits of these NOL’s have been recognized in our
consolidated financial statements.
The carrying value of net assets reported in our consolidated financial statements at December
31, 2010 exceeded the tax basis by approximately $843.9 million.
Income Tax Expense — Current. For the tax years ended December 31, 2010, 2009, and 2008, we
had current income tax expense of approximately $1.6 million, $1.0 million, and $0.8 million,
respectively. The 2010 tax expense was comprised mainly of entity level state income taxes on
certain ventures and federal income tax on one of our taxable REIT subsidiaries. The 2009 and 2008
amounts were comprised mainly of state income taxes.
Income Tax Expense — Deferred. For the years ended December 31, 2010, 2009, and 2008, our
deferred tax expense was not significant.
The company and its subsidiaries’ income tax returns are subject to examination by federal,
state and local tax jurisdictions for years 2007 through 2009. Net income tax loss carryforwards
and other tax attributes generated in years prior to 2007 are also subject to challenge in any
examination of those tax years. The company and its subsidiaries are not under any notice of audit
from any taxing authority at year end 2010. We believe we have no uncertain tax positions or
unrecognized tax benefits requiring disclosure for the periods presented.
7. Property Acquisitions, Discontinued Operations, and Impairments
Acquisitions. During 2010, we acquired three multifamily properties for an aggregate of
approximately $63.0 million on behalf of one of our discretionary investment funds (the “Fund”) in
which we have a 20% ownership interest. The acquisitions were comprised of 306 units located in
Houston, Texas, 110 units located in Atlanta, Georgia and 270 units located in Corpus Christi,
Texas.
In August 2010, the ownership of one of our joint ventures, which owns a multifamily property
located in Irvine, California, was restructured and resulted in our ownership interest increasing
from 30% to 99.99%. We previously accounted for this joint venture in accordance with the equity
method of accounting. Following this restructuring, we have consolidated this entity for financial
reporting purposes. At the time of this restructuring, we recorded the assets and liabilities of
the joint venture at fair value, which resulted in an increase of real estate assets of
approximately $92.7 million and a reduction to investments in joint ventures and notes
receivable-affiliates of approximately $21.2 million and $20.7 million, respectively. We did not
record a gain or loss on this restructuring as the net consideration approximated the fair market
value of the net assets received. Subsequent to this restructuring, we repaid the joint venture’s
existing $52.1 million secured note, which accrued interest at LIBOR plus 2.25%, and the joint
venture entered into a 35 year secured credit agreement with a third-party lender in the amount of
$53.0 million with an effective annual interest rate of approximately 4.35%.
In December 2010, the ownership of two of our joint ventures, which own multifamily properties
located in Houston, Texas and College Park, Maryland, were restructured and resulted in our
ownership interests increasing from 30% to 99.99%. We previously accounted for these joint
ventures in accordance with the equity method of accounting. Following this restructuring, we have
consolidated these entities for financial reporting purposes. At the time of this restructuring,
we recorded the assets and liabilities of the joint ventures at fair value, which resulted in an
increase of real estate assets of approximately $146.2 million and a reduction to investments in
joint ventures and notes receivable-affiliates of approximately $2.4 million and $14.3 million,
respectively. We did not record a gain or loss on this restructuring as the net consideration
approximated the fair market value of the net assets received. Subsequent to this restructuring,
we repaid one joint venture’s existing $108.8 million secured note, which accrued interest at LIBOR
plus 2.0%. Additionally, we assumed the debt of one of the joint venture’s secured notes with
third-party lenders for approximately $27.2 million, and repaid one of the secured notes for
approximately $4.6 million. The remaining $22.6 million secured note matures in May 2019 and has
an effective annual interest rate of 5.33%.
The following is a summary of revenue and earnings, which represents property revenue less
property expenses, for the three restructured joint ventures from their respective consolidation
dates through December 31, 2010:
Property revenues
Property operating income
The following summarized pro forma consolidated income statement information assumes the
acquisition of control of the three joint ventures discussed above occurred as of January 1, 2009:
We did not acquire any operating properties in 2009 or 2008.
Discontinued Operations. Two operating properties, one operating property, and eight operating
properties were sold in the years ended December 31, 2010, 2009, and 2008, respectively. Income
from discontinued operations in each of the years includes the results of operations of the
operating properties that were sold during such year through their sale dates.
The following is a summary of income from discontinued operations for the years presented
below:
Property expenses
Gain on sale of discontinued operations
Impairment.
The impairment associated with land development activities for the years
ended December 31, 2009 and 2008 totaled approximately $72.2 million and $50.2 million,
respectively, for the difference between the estimated fair value and the carrying value of various
land holdings for development projects we either placed on hold or planned to not pursue.
Impairment for the year ended December 31, 2009 included $13.4 million of costs capitalized
and exit costs associated with a land development joint venture we placed on hold. In the fourth
quarter of 2010, this joint venture was dissolved. Refer to Note 8, “Investments in Joint
Ventures,” for further discussion.
8. Investments in Joint Ventures
As of December 31, 2010, our equity investments in unconsolidated joint ventures, which we
account for utilizing the equity method of accounting, consisted of 20 joint ventures, with our
ownership percentages ranging from 15% to 72%. We provide property management services to the
majority of these joint ventures which own operating properties and may provide asset management
services in addition to 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):
Total third-party debt
Total equity
Total revenues
Equity in income (loss) (1)
Equity in income (loss) of unconsolidated joint ventures excludes our ownership interest
of fee income from various property management services and interest income from mezzanine loans
with our joint ventures.
During 2010, we consolidated three joint ventures previously accounted for in accordance
with the equity method. Refer to Note 7, “Property Acquisitions, Discontinued Operations and
Impairments,” for further discussion of these restructurings.
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 $11.0 million, of two loans utilized for construction and development activities for
our joint ventures.
Mezzanine loans we have made to affiliated joint ventures are recorded as “Notes receivable —
affiliates” and as of December 31, 2010 and 2009, the balance was $3.2 million and $45.8 million,
respectively. At December 31, 2010, we had one mezzanine loan outstanding and our commitment to
fund additional amounts under this mezzanine loan was approximately $6.0 million.
We may earn fees for property and asset management, construction, development, and other
services related primarily to joint ventures in which we own an interest. Fees earned for these
services amounted to approximately $8.2 million, $8.0 million, and $9.2 million for the years ended
December 31, 2010, 2009, and 2008, respectively. We eliminate fee income from property management
services provided to these joint ventures to the extent of our ownership.
On April 15, 2010, a $24.5 million secured third-party construction note made by one of our
joint ventures which owns a multifamily property located in Houston, Texas, originally scheduled to
mature in April 2010, was contractually extended to April 2011. Concurrent with the construction
note extension, our $8.2 million mezzanine loan to this joint venture was converted into an
additional $7.2 million common equity interest in the joint venture (with a preference on
distribution of cash flows) and $1.0 million common equity interest in the joint venture (without
such preference).
In the fourth quarter of 2010, we dissolved a joint venture located in Austin, Texas. In
connection with the dissolution, our joint venture partner purchased the third-party debt made by
this joint venture from the note holder, which relieved us of our guarantee of our proportionate
interest of this debt of approximately $4.2 million; we had previously recorded a charge for this
indemnification. Accordingly, we recorded the $4.2 million as other income in our 2010
consolidated statements of income and comprehensive income.
In
February 2011, the Fund acquired one multifamily property for
approximately $44.5 million.
The multifamily property is located in Houston, TX and is comprised of 352 apartment homes.
9. Notes Payable
The following is a summary of our indebtedness:
Commercial Banks
Unsecured line of credit and short-term borrowings
Term loan, due 2012
Senior unsecured notes
4.39% Notes, due 2010
6.75% Notes, due 2010
7.69% Notes, due 2011
5.93% Notes, due 2012
5.45% Notes, due 2013
5.08% Notes, due 2015
5.75% Notes, due 2017
Medium-term notes
4.90% Notes, due 2010
6.79% Notes, due 2010
4.99% Notes, due 2011
Total unsecured notes payable
Secured notes
1.12% - 6.00% Conventional Mortgage Notes, due 2011 — 2045
1.78% Tax-exempt Mortgage Note, due 2028
Total notes payable
Floating rate tax-exempt debt included in secured notes (1.78%)
Floating rate debt included in secured notes (1.12% - 1.70%)
Value of real estate assets, at cost, subject to secured notes
In August 2010, we entered into a $500 million unsecured credit facility, with the option to
increase this credit facility to $600 million, which matures in August 2012 and may be extended at
our option to August 2013. This facility replaced our $600 million unsecured credit facility which
was scheduled to mature in January 2011. Interest rate spreads float on a margin based on LIBOR
and 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 180 days or less and may not
exceed the lesser of $250 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.
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, 2010, approximately $0.4 million of the fair value adjustment remained unamortized and
substantially all of the remaining adjustment will be recorded as an adjustment to interest expense
in 2011. We recorded amortization of the fair value adjustment, which resulted in a decrease of
interest expense of approximately $1.1 million, $2.3 million, and $5.4 million during the years
ended December 31, 2010, 2009, and 2008, respectively.
Subsequent to the restructuring of one of our unconsolidated joint ventures in August 2010,
this now fully consolidated joint venture entered into a 35 year secured credit agreement with a
third-party lender in the amount of $53.0 million with an effective annual interest rate of
approximately 4.35%. Refer to Note 7, “Property Acquisitions, Discontinued Operations, and
Impairments,” for further discussion of this transaction.
As part of the joint venture restructurings in December 2010, we assumed the debt of one of
the joint venture’s secured notes with a third-party lender for approximately $22.6 million, which
matures in May 2019 and has an effective annual interest rate of 5.33%. See Note 7, “Property
Acquisitions, Discontinued Operations and Impairments,” for further discussion of these
restructurings.
At December 31, 2010 and 2009, the weighted average interest rate on our floating rate debt,
which includes our unsecured line of credit, was approximately 1.3% and 1.2%, respectively.
Our indebtedness, including our unsecured line of credit, had a weighted average maturity of
approximately 5.5 years at December 31, 2010. 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, 2010 are as follows:
2011
2012
2013
2014
2015
2016 and thereafter
The remaining principal amount outstanding on our 7.69%
senior unsecured notes matured and was repaid in February 2011 for a total of approximately $88.0 million.
10. Derivative Instruments and 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 may 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 these objectives, 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 upfront premium.
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 income
or 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 $22.6 million
will be reclassified to interest expense. The ineffective portion of the change in fair value of
the derivatives, if any, is recognized directly in earnings. No portion was ineffective during the
years ended December 31, 2010, 2009, and 2008.
As of December 31, 2010, we had the following outstanding interest rate derivatives designated
as cash flow hedges of interest rate risk:
Interest Rate Swaps
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, 2010, we had the following outstanding interest rate derivative which was
not designated as a hedge of interest rate risk:
Interest Rate Cap
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):
Derivatives designated as
hedging instruments
Interest Rate Swaps
Derivatives not designated as
hedging instruments
Interest Rate Cap
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).
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 provisions which provide the
counterparty the right to declare a default on our derivative obligations if we are in default on
any of our indebtedness, subject to certain thresholds. For all instances, these provisions
include a default even if there is no acceleration of the indebtedness. 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, 2010, 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 $38.6 million. As of December 31, 2010, we
had not posted any collateral related to these agreements. If we were in breach of any of these
provisions at December 31, 2010, or terminated these agreements, we would have been required to
settle our obligations at their aggregate termination value of approximately $38.6 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.
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 2010 were exercised at prices ranging from $25.88 to $48.02 per option. At
December 31, 2010, outstanding options and exercisable options were at prices ranging from $30.06
to $73.32 per option and had a weighted average remaining contractual life of approximately 5.1
years and 3.6 years, respectively.
The total intrinsic value of options exercised was approximately $1.5 million, $0.1 million,
and $0.5 million during the years ended December 31, 2010, 2009 and 2008, respectively. As of
December 31, 2010, there was approximately $2.3 million of total unrecognized compensation cost
related to unvested options, which is expected to be amortized over the next four years.
The following table summarizes share outstanding options and exercisable options at December
31, 2010:
$30.06-$41.91
$42.90-$44.00
$45.53-$73.32
Total options
The aggregate intrinsic value of outstanding and exercisable options at December 31,
2010 was approximately $22.2 million and $10.9 million, respectively. The aggregate
intrinsic values were calculated as the excess, if any, between our closing share price of
$53.98 per share on December 31, 2010 and the strike price of the underlying award.
Valuation Assumptions. Options generally have a vesting period of three to five years.
We estimate the fair values 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:
Weighted average fair value of options granted
Expected volatility
Risk-free interest rate
Expected dividend yield
Expected life (in years)
Our computation of expected volatility for 2010 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 2010 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, 2010, the unamortized value of previously issued unvested share awards
was approximately $22.1 million which is expected to be amortized over the next four years. The
total fair value of shares vested during the years ended December 31, 2010, 2009, and 2008 was
approximately $10.6 million, $10.2 million, and $8.8 million, respectively, and there were a total
of 2.4 million vested share awards outstanding at December 31, 2010 with a weighted average
issuance price of $38.72. At December 31, 2010, there were approximately 1.3 million share awards
and options available for issuance.
Total compensation cost for option and share awards charged against income was approximately
$11.7 million, $8.7 million, and $7.3 million for 2010, 2009, and 2008, respectively. Total
capitalized compensation cost for option and share awards was approximately $1.0 million, $1.7
million, and $2.6 million for 2010, 2009 and 2008, respectively.
The following table summarizes activity under our Share Incentive Plans for the three years
ended December 31:
Balance at December 31, 2007
Vested share awards at
December 31, 2007 (1)
Options and nonvested share
awards outstanding at
December 31, 2007
Granted
Exercised/Vested
Forfeited
Net activity
Balance at December 31, 2008
Balance at December 31, 2009
Granted
Exercised/Vested
Forfeited
Total options and nonvested
share awards outstanding at
December 31, 2010
Balance includes 76,563 shares at December 31, 2007, which do not impact
compensation expense.
Employee Share Purchase Plan (“ESPP”). We have established an ESPP for all active employees
and officers who have completed one year of continuous service. Participants may elect to purchase
our common shares through payroll deductions and/or through semi-annual contributions. At the end
of each six-month offering period, each participant’s account balance is applied to acquire common
shares at 85% of the market value, as defined, on the first or last day of the offering period,
whichever price is lower. We currently use treasury shares to satisfy ESPP share requirements.
Each participant must hold the shares purchased for nine months in order to receive the discount,
and a participant may not purchase more than $25,000 in value of shares during any plan year, as
defined. The following table presents information related to our ESPP:
Shares purchased
Weighted average fair value of shares purchased
Expense recorded (in millions)
In January 2011, approximately 21,825 shares were purchased under the ESPP related to the 2010
plan year.
Rabbi Trust. We established a rabbi trust for a select group of participants in which share
awards granted under the share incentive plan and salary and other cash amounts earned may be
deposited. The rabbi trust is an irrevocable trust and no portion of the trust fund may be used
for any purpose other than the delivery of those assets to the participants. The assets held in
the rabbi trust are subject to the claims of our general creditors in the event of bankruptcy or
insolvency. The rabbi trust is in use only for deferrals made prior to 2005, including bonuses
related to service in 2004 but paid in 2005.
The value of the assets of the rabbi trust are consolidated into our financial statements
based on GAAP. Granted share awards held by the rabbi trust are classified in equity in a manner
similar to the manner in which treasury stock is accounted. Subsequent changes in the fair value
of the shares are not recognized. The deferred compensation obligation is classified as an equity
instrument and changes in the fair value of the amount owed to the participant are not recognized.
At December 31, 2010 and 2009, approximately 2.0 million share awards were held in the rabbi trust.
Additionally, as of December 31, 2010 and 2009, the rabbi trust held trading securities totaling
approximately $53.1 million and $61.7 million, respectively, which represents cash deferrals made
by plan participants. Market value fluctuations on these trading securities are recognized in
income in accordance with GAAP and the fair value of the liability due to participants is adjusted
accordingly.
At December 31, 2010 and 2009, approximately $31.4 million and $34.7 million, respectively,
was required to be paid to us by plan participants upon the withdrawal of any assets from the rabbi
trust, and is included in “Accounts receivable-affiliates” in our consolidated financial
statements.
Non-Qualified Deferred Compensation Plan. The Non-Qualified Deferred Compensation Plan (the
“Plan”), effective December 1, 2004, is an unfunded arrangement established and maintained
primarily for the benefit of a select group of participants. Eligible participants shall commence
participation in the Plan on the date the deferral election first becomes effective. We will
credit to the participant’s account an amount equal to the amount designated as the participant’s
deferral for the plan year as indicated in the participant’s deferral election(s). Any
modification to or termination of the Plan will not reduce a participant’s right to any vested
amounts already credited to his or her account. At December 31, 2010 and 2009, approximately 0.7
million and 0.5 million share awards, respectively, were held in the Plan. Additionally, as of
December 31, 2010 and 2009, the Plan held trading securities totaling approximately $14.3 million
and $12.1 million, respectively, which represents cash deferrals made by plan participants. Market
value fluctuations on these trading securities are recognized in income in accordance with GAAP and
the fair value of the liability due to participants is adjusted accordingly.
401(k) Savings Plan. We have a 401(k) savings plan, which is a voluntary defined contribution
plan. Under the savings plan, every employee is eligible to participate, beginning on the date the
employee has completed six months of continuous service with us. Each participant may make
contributions to the savings plan by means of a pre-tax salary deferral, which may not be less than
1% or more than 60% of the participant’s compensation. The federal tax code limits the annual
amount of salary deferrals which may be made by any participant. We may make matching
contributions on the participant’s behalf up to a predetermined limit. The matching contribution
made for each of the years ended December 31, 2010 and 2009, was approximately $1.3 million, and
was approximately $1.4 million for the year ended December 31, 2008. A participant’s salary
deferral contribution is 100% vested and nonforfeitable. A participant will become vested in our
matching contributions 33% after one year of service, 67% after two years of service and 100% after
three years of service. Administrative expenses under the savings plan were paid by us and were not
significant for all periods presented.
12. Fair Value Measurements
For financial assets and liabilities fair valued on a recurring basis, fair value is the price
we would receive to sell an asset, or pay to transfer a liability, in an orderly transaction with a
market participant at the measurement
date. In the absence of such data, fair value is estimated using internal information
consistent with what market participants would use in a hypothetical transaction which occurs at
the transaction date.
Observable inputs reflect market data obtained from independent sources, while unobservable
inputs reflect our market assumptions; preference is given to observable inputs. These two types
of inputs create the following fair value hierarchy:
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant value
drivers are observable.
Level 3: Significant inputs to the valuation model are unobservable.
The following table presents information about our financial assets and liabilities measured
at fair value as of December 31, 2010 and 2009 under the fair value hierarchy discussed above
(there was no Level 3 activity during the periods presented):
Assets and Liabilities Measured at Fair Value on a Recurring Basis
(in millions)
(in millions)
Deferred
compensation plan
investments
Available-for-sale
investment
Derivative financial
instruments
Liabilities
Derivative
financial instruments
Deferred Compensation Plan Investments. The estimated fair values of investment
securities classified as deferred compensation plan investments are included in Level 1 and are
based on quoted market prices utilizing public information for the same transactions or information
provided through third-party advisors. Our deferred compensation plan investments are recorded in
other assets in our consolidated balance sheets. The balance at December 31, 2010 also reflects
approximately $16.3 million of participant withdrawals from our deferred compensation plan
investments during 2010.
Available-for-sale
Investment. A company in which we had a recorded value of approximately
$0.2 million completed an initial public offering during the three months
ending September 30, 2010. We have classified this investment as available-for-sale under the
Accounting Standards Codification (the “Codification”) and recorded this security as a component of
other assets, with any unrealized gains or losses, net of tax, included in accumulated other
comprehensive income (loss). The available-for-sale investment is included in Level 1 in the
preceding table and is valued using quoted market prices. The following table sets forth the
maturity, cost, gross unrealized gains, and fair value of our available-for-sale investment held as
of December 31, 2010 (we did not have any available-for-sale investments at December 31, 2009):
Marketable equity
securities with no
maturity date
This amount is exclusive
of deferred taxes of approximately $1.5 million.
Derivative Financial Instruments. The estimated fair values of derivative financial
instruments are included in Level 2 and are valued using widely accepted valuation techniques
including discounted cash flow analysis on the expected cash flows of each derivative. This
analysis reflects the contractual terms of the derivatives, including the period to maturity, and
uses observable market-based inputs, including interest rate curves and volatility. The fair
values of interest rate swaps and caps are estimated using the market standard methodology of
netting the discounted fixed cash payments and the discounted expected variable cash receipts. The
variable cash receipts are based on an expectation of interest rates (forward curves) derived from
observable market interest rate curves. In addition, credit valuation adjustments, which consider
the impact of any credit enhancements to the contracts, are incorporated in the fair values to
account for potential nonperformance risk, both our own nonperformance risk and the respective
counterparty’s nonperformance risk. The fair value of interest rate caps are determined using the
market standard methodology of discounting the future expected cash receipts which would occur if
variable interest rates rise above the strike rate of the caps. The variable interest rates used
in the calculation of projected receipts on the cap are based on an expectation of future interest
rates derived from observed market interest rate curves and volatilities.
Although we have determined the majority of the inputs used to value our derivatives fall
within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our
derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the
likelihood of default by us and our counterparties. However, as of December 31, 2010, we have
assessed the significance of the impact of the credit valuation adjustments on the overall
valuation of our derivative positions and have determined the credit valuation adjustments are not
significant to the overall valuation of our derivatives. As a result, we have determined our
derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Other Fair Value Disclosures. As of December 31, 2010 and 2009, management estimated the
carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts
payable, accrued expenses and other liabilities, and distributions payable approximated their fair
value based on the short-term nature of these instruments.
In calculating the fair value of our notes receivable and notes payable, interest rates and
spreads reflect current creditworthiness and market conditions available for the issuance of notes
receivable and notes payable with similar terms and remaining maturities. The following table
presents the carrying and estimated fair value of our notes receivable and notes payable for the
years ended December 31 (in millions):
Fixed rate notes payable (1)
Floating rate notes payable
Includes a $500 million term loan entered into in 2007 and $16.6 million of a
construction loan entered into in 2008 which are effectively fixed by the use of
interest rate swaps but evaluated for estimated fair value at the floating rate.
Nonrecurring Fair Value Disclosures. Nonfinancial assets and nonfinancial liabilities
measured on a nonrecurring basis utilizing level 3 inputs, primarily relate to impairment of
long-lived assets or investments, and also consolidation of joint ventures as disclosed at Note 7,
“Property Acquisitions, Discontinued Operations and Impairments.”
13. Net Change in Operating Accounts
The effect of changes in the operating accounts on cash flows from operating activities is as
follows:
Change in assets:
Other assets, net
Change in liabilities:
Change in operating accounts
14. Commitments and Contingencies
Construction Contracts. As of December 31, 2010, we intend to incur approximately $57.2
million of additional expenditures on our construction projects currently under development. We
expect to fund these amounts through available cash balances and draws on our unsecured line of
credit.
Litigation. We are subject to various legal proceedings and claims which arise in the
ordinary course of business. Matters which arise out of allegations of bodily injury, property
damage, and employment practices are generally covered by insurance. While the resolution of these
legal proceedings and claims cannot be predicted with certainty, management believes the final
outcome of such matters will not have a material adverse effect on our consolidated financial
statements.
Other Contingencies. In the ordinary course of our business, we issue letters of intent
indicating a willingness to negotiate for acquisitions, dispositions, or joint ventures and also
enter into arrangements contemplating various transactions. Such letters of intent and other
arrangements are non-binding as to either party unless and until a definitive contract is entered
into by the parties. Even if definitive contracts relating to the purchase or sale of real
property are entered into, these contracts generally provide the purchaser with time to evaluate
the property and conduct due diligence, during which periods the purchaser will have the ability to
terminate the contracts without penalty or forfeiture of any deposit or earnest money. There can be
no assurance definitive contracts will be entered into with respect to any matter covered by
letters of intent or we will consummate any transaction contemplated by any definitive contract.
Furthermore, due diligence periods for real property are frequently extended as needed. An
acquisition or sale of real property becomes probable at the time the due diligence period expires
and the definitive contract has not been terminated. We are then at risk under a real property
acquisition contract, but generally only to the extent of any earnest money deposits associated
with the contract, and are obligated to sell under a real property sales contract.
Lease Commitments. At December 31, 2010, we had long-term leases covering certain land,
office facilities, and equipment. Rental expense totaled approximately $2.9 million for the year
ended December 31, 2010 and totaled approximately $3.0 million for each of the years ended December
31, 2009 and 2008. Minimum annual rental commitments for the years ending December 31, 2011
through 2015 are approximately $2.5 million, $2.1 million, $1.9 million, $1.8 million, and $1.1
million, respectively, and approximately $0.6 million in the aggregate thereafter.
Investments in Joint Ventures. We have entered into, and may continue in the future to enter
into, joint ventures or partnerships (including limited liability companies) through which we own
an indirect economic interest in less than 100% of the community or communities owned directly by
the joint venture or partnership. Our decision whether to hold the entire interest in an apartment
community ourselves, or to have an indirect interest in the community through a joint venture or
partnership, is based on a variety of factors and considerations, including: (i) our projection, in
some circumstances, that we will achieve higher returns on our invested capital or reduce our risk
if a joint venture or partnership vehicle is used; (ii) our desire to diversify our portfolio of
communities by market; (iii) our desire at times to preserve our capital resources to maintain
liquidity or balance sheet strength; and (iv) the economic and tax terms required by a seller of
land or of a community, who may prefer or who may require less payment if the land or community is
contributed to a joint venture or partnership. Investments in joint ventures or
partnerships are not limited to a specified percentage of our assets. Each joint venture or
partnership agreement is individually negotiated, and our ability to operate and/or dispose of a
community in our sole discretion is limited to varying degrees in our existing joint venture
agreements and may be limited to varying degrees depending on the terms of future joint venture
agreements.
We have discretionary investment vehicles (the “Funds”) to make direct and indirect
investments in multifamily real estate throughout the United States, primarily through acquisitions
of operating properties and certain land parcels which will be acquired by or contributed to the
Funds for development. The Funds will serve, until the earlier of (i) April 8, 2012, or (ii) such
time as 90% of the Funds’ committed capital is invested, as the exclusive vehicles through which we
will acquire fully-developed multifamily properties, subject to certain exceptions. These
exceptions include properties acquired in tax-deferred transactions, follow-on investments made
with respect to prior investments, significant transactions which include the issuance of our
securities, significant individual asset and portfolio acquisitions, significant merger and
acquisition activities, acquisitions which are inadvisable or inappropriate for the Funds,
transactions with our existing ventures, contributions or sales of properties to or entities in
which we remain an investor, and transactions approved by the Funds’ advisory board. The Funds
will not restrict our development activities and will terminate on April 8, 2018. We are currently
targeting acquisitions for the Funds where value creation opportunities are present through one or
more of the following: redevelopment activities, market cycle opportunities, or improved property
operations. One of our wholly-owned subsidiaries is the general partner of each of the Funds, and
we have committed 20% of the total equity of each of the Funds, up to $75 million in the aggregate.
We have received commitments to each of the Funds from an unaffiliated investor of $150 million
and on December 31, 2008 the Funds were closed to additional investors. Our total capital
contributions made to one of the Funds through December 31, 2010 was approximately $10.6 million.
Employment Agreements. At December 31, 2010, we had employment agreements with nine of our
senior officers, the terms of which expire at various times through August 20, 2011. Such
agreements provide for minimum salary levels, as well as various incentive compensation
arrangements, which are payable based on the attainment of specific goals. The agreements also
provide for severance payments plus a gross-up payment if certain situations occur, such as
termination without cause or a change of control. In the case of six of the agreements, the
severance payment equals one times the respective current annual base salary in the case of
termination without cause and 2.99 times the respective average annual base salary over the
previous three fiscal years in the case of a change of control and a termination of employment or a
material adverse change in the scope of their duties. In the case of one agreement, the severance
payment equals one times the respective current annual base salary for termination without cause
and 2.99 times the greater of current gross income or average gross income over the previous three
fiscal years in the case of a change of control. In the case of the other two agreements, the
severance payment generally equals 2.99 times the respective average annual compensation over the
previous three fiscal years in connection with, among other things, a termination without cause or
a change of control, and the officer would be entitled to receive continuation and vesting of
certain benefits in the case of such termination.
15. Postretirement Benefits
We maintain a postretirement benefit for two former officers of Summit, who also serve on our
Board of Trust Managers. Benefits received by these former employees include medical benefits and
office space. Participants in the postretirement plan contribute to the cost of the medical
benefits. Our contribution for medical benefits is limited to amounts between $450 and $730 per
month per participant and dependents. We contributed approximately $0.2 million for office space
during the year ended December 31, 2010 and expect to contribute $0.2 million for office space in
2011. For measurement purposes, an 8.5% rate of increase in the per capita cost of covered health
care claims were assumed; the rate was assumed to decrease until 2024 at which point the annual
rate would be 4.5% and remain at that level thereafter.
As of December 31, the status of our defined postretirement benefit plan, calculated using
generally accepted actuarial principles and procedures, was as follows:
Postretirement benefit obligation, beginning of year
Interest cost
Actuarial gain (1)
Benefits paid
Accumulated postretirement benefit obligation, end of year
Included in other comprehensive income in our Consolidated Statements of Income and
Comprehensive Income.
The weighted average discount rate used to determine the value of accumulated
postretirement benefit obligation for the years ended December 31, 2010 and 2009 was 6.10% and
6.29%, respectively. As of December 31, 2010, we had accrued for the approximate $2.8 million
postretirement liabilities in other liabilities in our consolidated balance sheets.
The benefits expected to be paid in each of the next five fiscal years, and in the aggregate
for the five fiscal years thereafter, are as follows:
2016-2020
The estimated benefit payments are based on assumptions about future events. Actual benefit
payments may vary significantly from these estimates.
A 1% increase or decrease in assumed health care cost trend rates has no significant effect on
the interest cost component of net periodic postretirement benefit costs. A 1% increase or
decrease in assumed health care cost trend rates would increase or decrease the accumulated
postretirement benefit obligation by approximately $0.3 million.
16. Noncontrolling Interests
The following table summarizes the effect of changes in our ownership interest in subsidiaries
on the equity attributable to us for each of the years ended December 31:
Transfers from the noncontrolling interests:
Increase in equity for conversion of operating partnership units
Increase in equity from purchase of noncontrolling interests
Change in common equity and net transfers from
noncontrolling interests
17. Quarterly Financial Data (unaudited)
Summarized quarterly financial data, which has been adjusted for discontinued operations as
discussed in Note 7, “Property Acquisitions, Discontinued Operations, and Impairments,” for the
years ended December 31, 2010 and 2009, is as follows:
2010:
Revenues
Net income attributable to common shareholders
Net income attributable to common shareholders
per share — basic
Net income attributable to common
shareholders per share — diluted
2009:
Net income (loss) attributable to common
shareholders
Net income (loss)attributable to common
shareholders per share — basic
Net income (loss) attributable to common
shareholders per share — diluted
Net income (loss) per share is computed independently for each of the quarters
presented. Therefore, the sum of quarterly net income (loss) per share amounts may not
equal the total computed for the year.
Includes a $9,614, or $0.14 basic and $0.13 diluted per share, impact related
to the gain on sale of discontinued operations.
Includes an $85,614, or $1.24 for both basic and diluted per share, impact
related to the impairment associated with land development activities.
Schedule III
Camden Property Trust
Real Estate and Accumulated Depreciation
As of December 31, 2010
(in thousands)
Real Estate and Accumulated Depreciation
As of December 31, 2010
(in thousands)
Current communities:
Camden Ashburn Farm
Camden Aventura
Camden Ballantyne
Camden Bay
Camden Bay Pointe
Camden Bayside
Camden Baytown
Camden Bel Air
Camden Breakers
Camden Breeze
Camden Brickell
Camden Brookwood
Camden Buckingham
Camden Caley
Camden Canyon
Camden Cedar Hills
Camden Centennial
Camden Centre
Camden Centreport
Camden Cimarron
Camden Citrus Park
Camden City Centre
Camden Clearbrook
Camden Club
Camden College Park
Camden Commons
Camden Copper Ridge
Camden Copper Square
Camden Cotton Mills
Camden Cove
Camden Creek
Camden Crest
Camden Crown Valley
Camden Deerfield
Camden Del Mar
Camden Dilworth
Camden Doral
Camden Doral Villas
Camden Dulles Station
Camden Dunwoody
Camden Fair Lakes
Camden Property Trust
Real Estate and Accumulated Depreciation
As of December 31, 2010
(in thousands)
Real Estate and Accumulated Depreciation
As of December 31, 2010
(in thousands)
Camden Fairfax Corner
Camden Fairview
Camden Fairways
Camden Fallsgrove
Camden Farmers Market
Camden Forest
Camden Foxcroft
Camden Gaines Ranch
Camden Gardens
Camden Glen Lakes
Camden Governor’s Village
Camden Grand Parc
Camden Grandview
Camden Greenway
Camden Habersham
Camden Harbor View
Camden Highlands Ridge
Camden Hills
Camden Hunter’s Creek
Camden Huntingdon
Camden Interlocken
Camden Lago Vista
Camden Lake Pine
Camden Lakes
Camden Lakeside
Camden Lakeway
Camden Landings
Camden Landsdowne
Camden Largo Town Center
Camden Las Olas
Camden Laurel Ridge
Camden Lee Vista
Camden Legacy
Camden Legacy Creek
Camden Legacy Park
Camden Legends
Camden Live Oaks
Camden Main & Jamboree
Camden Manor Park
Camden Martinique
Camden Midtown
Camden Midtown Atlanta
Camden Miramar
Camden Monument Place
Camden Oak Crest
Camden Old Creek
Camden Orange Court
Camden Overlook
Camden Palisades
Camden Park Commons
Camden Peachtree City
Camden Pinehurst
Camden Pinnacle
Camden Plantation
Camden Plaza
Camden Pointe
Camden Portofino
Camden Potomac Yard
Camden Preserve
Camden Providence Lakes
Camden Renaissance
Camden Reserve
Camden Reunion Park
Camden Ridgecrest
Camden River
Camden Roosevelt
Camden Royal Oaks
Camden Royal Palms
Camden Russett
Camden San Paloma
Camden Sea Palms
Camden Sedgebrook
Camden Shiloh
Camden Sierra at Otay
Camden Silo Creek
Camden Simsbury
Camden South End Square
Camden Springs
Camden St. Clair
Camden Steeplechase
Camden Stockbridge
Camden Stonebridge
Camden Stonecrest
Camden Stoneleigh
Camden Summerfield
Camden Sweetwater
Camden Touchstone
Camden Travis Street
Camden Tuscany
Camden Valley Creek
Camden Valley Park
Camden Valley Ridge
Camden Valleybrook
Camden Vanderbilt
Camden Vineyards
Camden Vintage
Camden Vista Valley
Camden Westshore
Camden Westview
Camden Westwood
Camden Whispering Oaks
Camden Woods
Camden World Gateway
Total Current
communities(1):
Current communities may include costs included in properties under development on the balance
sheet as of December 31, 2010.
Lease-up & development communities:
Camden Lake Nona
Camden Summerfield II
Total Lease-up development communities (2):
Development communities:
5400 Lamar Acreage
Camden Amber Oaks Phase II
Camden Boca Raton
Camden Celebration
Camden City Centre II
Camden Countryway
Camden Deer Springs
Camden Farmer’s Market Phase III/IV
Camden Farmer’s Market Townhomes I/II
Camden Highlands
Camden Lincoln Station
Camden McGowen Station
Camden Montague
Camden NOMA
Camden NOMA II
Camden Royal Oaks II
Camden Selma & Vine
Camden South Capital
Camden Whispering Oaks II
Total Development communities (2):
Corporate
TOTAL
Lease-up/development communities may include costs included under buildings and
improvements on the balance sheet as of December 31, 2010.
The changes in total real estate assets for the
years ended December 31:
Balance, beginning of period
Additions during period:
Acquisition
Development
Improvements
Classification from held for sale
Deductions during period:
Cost of real estate sold
Impairment
Classification to held for sale
Balance, end of period
The changes in accumulated depreciation for
the years ended December 31:
Balance, Beginning of period
Depreciation
Real Estate sold
Transferred to held for sale
Transferred from held for sale
The aggregate cost for federal income tax purposes at December 31, 2010 was $4.9 billion.