-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KM4/Pq2Xj/YwsRNBoGkYO5TvOpBj7QBknTsOKTXKD1kNb4UiNbPkl6COZbLqYIsx j+CuWilkmGW4dV5DxmYtkw== 0000906345-01-000003.txt : 20010330 0000906345-01-000003.hdr.sgml : 20010330 ACCESSION NUMBER: 0000906345-01-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMDEN PROPERTY TRUST CENTRAL INDEX KEY: 0000906345 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 766088377 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-12110 FILM NUMBER: 1583959 BUSINESS ADDRESS: STREET 1: THREE GREENWAY PLAZA STREET 2: SUITE 1300 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7139643555 MAIL ADDRESS: STREET 1: THREE GREENWAY PLZ STREET 2: SUITE 1300 CITY: HOUSTON STATE: TX ZIP: 77046 10-K 1 0001.txt CAMDEN PROPERTY TRUST - DATED 12/31/00 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _________ Commission file number: 1-12110 CAMDEN PROPERTY TRUST (Exact Name of Registrant as Specified in Its Charter) Texas 76-6088377 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3 Greenway Plaza, Suite 1300 Houston, Texas 77046 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (713) 354-2500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Shares of Beneficial Interest, New York Stock Exchange $.01 par value 7.33% Convertible New York Stock Exchange Subordinated Debentures due 2001 $2.25 Series A Cumulative Convertible Preferred Shares, $.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. The aggregate market value of voting shares of beneficial interest held by non-affiliates of the registrant was $1,175,354,257 at March 16, 2001. The number of common shares of beneficial interest outstanding at March 16, 2001 was 38,114,218. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Annual Report to Shareholders for the year ended December 31, 2000 are incorporated by reference in Parts I, II and IV. Portions of the registrant's Proxy Statement in connection with its Annual Meeting of Shareholders to be held May 15, 2001 are incorporated by reference in Part III. 2 PART I Item 1. Business Introduction Camden Property Trust is a real estate investment trust that owns, develops, constructs, and manages multifamily apartment communities in the Southwest, Southeast, Midwest and Western regions of the United States. As of December 31, 2000, we owned interests in and operated 145 multifamily properties containing 51,336 apartment homes located in nine states. These properties had a weighted average occupancy rate of 94% for the year ended December 31, 2000. This represents the average occupancy for all our properties in 2000 weighted by the number of apartment homes in each property. Additionally, three of our multifamily properties containing 1,538 apartment homes were under development at December 31, 2000. We also have several sites which we intend to develop into multifamily apartment communities. Acquisition of Oasis Residential, Inc. On April 8, 1998, we acquired, through a tax-free merger, Oasis Residential, Inc., a publicly traded Las Vegas-based multifamily REIT. Through this acquisition, we acquired 52 completed multifamily properties and 15,514 apartment homes at the date of acquisition. Each share of Oasis common stock outstanding on April 8, 1998 was exchanged for 0.759 of a Camden common share. Each share of Oasis Series A cumulative convertible preferred stock outstanding on April 8, 1998 was exchanged for one Camden Series A cumulative convertible preferred share with terms and conditions comparable to the Oasis preferred stock. We issued 12.4 million common shares and 4.2 million preferred shares in exchange for the outstanding Oasis common and preferred stock, respectively. We assumed approximately $484 million of Oasis debt, at fair value, in the merger. In connection with the merger with Oasis, on June 30, 1998, we completed a transaction in which Camden USA, Inc., one of our wholly owned subsidiaries, and TMT-Nevada, L.L.C., a Delaware limited liability company, formed Sierra-Nevada Multifamily Investments, LLC. We entered into this transaction to reduce our market risk in the Las Vegas area. TMT-Nevada holds an 80% interest in Sierra-Nevada and Camden USA holds the remaining 20% interest. In the above transaction, we transferred to Sierra-Nevada 19 apartment communities containing 5,119 apartment homes for an aggregate of $248 million. Prior to the merger, Oasis owned 100% of each of these communities. In the merger, Camden USA acquired these communities. As a result, after the merger and prior to the Sierra-Nevada transaction, Camden USA owned 100% of each of these 19 properties which are located in Las Vegas, Nevada. This transaction was funded with capital invested by the members of Sierra-Nevada, the assumption of $9.9 million of existing nonrecourse indebtedness, the issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. At December 31, 2000, we had 1,735 employees. Our headquarters are located at 3 Greenway Plaza, Suite 1300, Houston, Texas 77046 and our telephone number is (713) 354-2500. Operating Strategy We believe that producing consistent earnings growth and selectively investing in favorable markets are crucial factors to our success. We rely heavily on our sophisticated property management capabilities and innovative operating strategies in our efforts to produce consistent earnings growth. Sophisticated Property Management. We believe the depth of our organization enables us to deliver quality services, thereby promoting resident satisfaction and improving resident retention, which should reduce operating expenses. We manage our properties utilizing a staff of professionals and support personnel, including certified property managers, experienced apartment managers and leasing agents, and trained apartment maintenance technicians. Our on-site personnel are trained to deliver high quality services to their residents. We attempt to motivate our on-site employees through incentive compensation arrangements based upon the net operating income produced at their property, as well as rental rate increases and the level of lease renewals achieved. 3 Innovative Operating Strategies. We believe an intense focus on operations is necessary to realize consistent, sustained earnings growth. Ensuring resident satisfaction, increasing rents as market conditions allow, maximizing rent collections, maintaining property occupancy at optimal levels and controlling operating costs comprise our principal strategies to maximize property net operating income. Lease terms are generally staggered based on vacancy exposure by apartment type so that lease expirations are better matched to each property's seasonal rental patterns. We offer leases ranging from six to thirteen months, with individual property marketing plans structured to respond to local market conditions. In addition, we conduct ongoing customer service surveys to ensure we respond timely to residents changing needs and to ensure that residents retain a high level of satisfaction. New Development and Acquisitions. We continue to operate in markets where we have a concentration advantage due to economies of scale. We feel that 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. We believe we are well positioned in our current markets and have the expertise to take advantage of both development and acquisition opportunities which have healthy long-term fundamentals and strong growth projections. This dual capability, combined with what we believe is a conservative financial structure, allows us to concentrate our growth efforts towards selective development alternatives and acquisition opportunities. Selective development of new apartment properties will continue to be important to the growth of our portfolio for the next several years. We use experienced on-site construction superintendents, operating under the supervision of project managers and senior management, to control the construction process. All development decisions are made from our corporate office. Risks inherent to developing real estate include zoning changes and environmental matters. There is also the risk that certain assumptions concerning economic conditions may change during the development process. We believe that we understand and effectively manage the risks associated with development and that the risks of new development are justified by higher potential yields. Properties under development in our consolidated financial statements includes $101.9 million related to the development of three urban land projects located in Dallas, Houston and Long Beach, California. Of this amount, $47.2 million relates to our two current development projects - The Park at Farmers Market in Dallas and The Park at Harbour View in Long Beach. We have an additional $22.3 million invested in Dallas, which may be used for the proposed future development of Farmers Market, Phase II, and we are also in the planning phase of for-sale townhomes in this area. We have $32.4 million invested in additional land under development in Houston and Long Beach. These properties are in the planning phase to determine further development of apartment homes in these areas, based on demand expectations, over the next three to five years. We may also sell certain parcels of all three properties to third parties for commercial and retail development. We plan to continue diversification of our investments, both geographically and in the number of apartment homes and selection of amenities offered. Our operating properties have an average age of 10 years (calculated on the basis of investment dollars). We believe that the physical improvements we have made at our acquired properties, such as new or enhanced landscaping design, new or upgraded amenities and redesigned building structures, coupled with a strong focus on property management and marketing, has resulted in attractive yields on acquired properties. Dispositions. To generate consistent earnings growth, we seek to selectively dispose of properties and redeploy capital if we determine a property cannot meet long-term earnings growth expectations. Additionally, over the next three years, we will continue rebalancing our portfolio with the goal of limiting any one market to no more than 12% of total real estate assets. Dispositions during 2000 included four parcels of undeveloped land and eleven properties containing 3,599 apartment homes. For the eleven properties sold, three were located in each of Houston, Dallas and Las Vegas, and one was located in each of St. Louis and El Paso. As a result of these sales, we have exited the El Paso market, reduced the number of assets in our three largest markets and believe that we have improved the overall quality and geographic mix of our portfolio. The land sales consisted of two parcels totaling 2.9 acres located in downtown Dallas and one parcel totaling 38.5 acres located in Houston. These parcels of land are adjacent to our land development projects located in those cities, and were sold for commercial and retail use. Our strategy regarding the undeveloped land sales has been to integrate the residential and retail components in such a way that enhances the quality of life for our residents. We 4 used the net proceeds from all sales during 2000, totaling $150.1 million, to reduce indebtedness outstanding under our unsecured line of credit. Environmental Matters. Under various federal, state and local laws, ordinances and regulations, we are liable for the costs of removal or remediation of certain hazardous or toxic substances on or in our properties. These laws often impose liability without regard to whether we knew of, or were responsible for, the presence of the hazardous or toxic substances. All of our properties have been subjected to Phase I site assessments or similar environmental audits to determine if there is a likelihood of contamination from either on- or off-site sources. These audits have been carried out in accordance with accepted industry practices. We have also conducted limited subsurface investigations and tested for radon and lead-based paint where such procedures have been recommended by our consultants. We cannot assure you that existing environmental studies reveal all environmental liabilities or that any prior owner did not create any material environmental condition not known to us. The costs of investigation, remediation or removal of hazardous substances may be substantial. If hazardous or toxic substances are present on a property, or if we fail to properly remediate such substances, our ability to sell or rent such property or to borrow using such property as collateral may be adversely affected. Insurance. We carry comprehensive liability, fire, flood, extended coverage and rental loss insurance on our properties, which we believe is of the type and amount customarily obtained on real property assets. We intend to obtain similar coverage for properties we acquire in the future. However, there are certain types of losses, generally of a catastrophic nature, such as losses from floods or earthquakes, that may be subject to limitations in certain areas. Our board exercises its discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining 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 cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed. Markets and Competition Our portfolio consists of middle to upper market apartment properties. We target acquisitions and developments in selected high-growth markets. Since our initial public offering in 1993, we have diversified into other markets in the Southwest region and into the Southeast, Midwest and Western regions of the United States. By combining acquisition, renovation and development capabilities, we believe we can better respond to changing conditions in each market, reduce market risk and take advantage of opportunities as they arise. There are numerous housing alternatives that compete with our properties in attracting residents. Our properties compete directly with other multifamily properties and single family homes that are available for rent in the markets in which our properties are located. Our properties also compete for residents with the new and existing owned-home market. The demand for rental housing is driven by economic and demographic trends. Recent trends in the economics of renting versus home ownership indicate an increasing demand for rental housing in certain markets, due to a number of factors, including the increase in mortgage interest rates. Rental demand should be strong in areas anticipated to experience in-migration, due to the younger ages that characterize movers as well as the relatively high cost of home ownership in higher growth areas. Disclosure Regarding Forward Looking Statements We have made statements in this report that are "forward-looking" in that they do not discuss historical fact, but instead note future expectations, projections, intentions or other items relating to the future. These forward-looking statements include those made in the documents incorporated by reference in this report. Forward-looking statements are subject to known and unknown risks, uncertainties and other facts that may cause our actual results or performance to differ materially from those contemplated by the forward- looking statements. Many of those factors are noted in conjunction with the forward-looking statements in the text. Other important factors that could cause actual results to differ include: 1. The results of our efforts to implement our property development strategy. 5 2. The effect of economic conditions. 3. Failure to qualify as a real estate investment trust. 4. The costs of our capital. 5. Actions of our competitors and our ability to respond to those actions. 6. Changes in government regulations, tax rates and similar matters. 7. Environmental uncertainties and natural disasters. Given these uncertainties, do not rely on these forward-looking statements. These forward-looking statements represent our estimates and assumptions as of the date of this report. We assume no obligation to update or revise any forward-looking statements. Item 2. Properties The Properties Our properties typically consist of two- and three-story buildings in a landscaped setting and provide residents with a variety of amenities. Most of the properties have, or are expected to have, one or more swimming pools and a clubhouse and many have whirlpool spas, tennis courts and controlled-access gates. Many of the apartment homes offer additional features such as fireplaces, vaulted ceilings, microwave ovens, covered parking, icemakers, washers and dryers and ceiling fans. The 145 properties, which we owned interests in and operated at December 31, 2000, average 848 square feet of living area. Operating Properties For the year ended December 31, 2000, no single operating property accounted for greater than 2.4% of our total revenues. The operating properties had a weighted average occupancy rate of 94% and 93% in 2000 and 1999, respectively. Resident lease terms generally range from six to thirteen months and usually require security deposits. One hundred twenty-six of our operating properties have over 200 apartment homes, with the largest having 894 apartment homes. Our operating properties were constructed and placed in service as follows: Year Placed in Service Number of Properties ------------------------------ --------------------------- 1994 - 2000 49 1988 - 1993 26 1983 - 1987 50 1978 - 1982 11 1973 - 1977 6 1967 - 1972 3 Property Table The following table sets forth information with respect to our operating properties at December 31, 2000. 6
OPERATING PROPERTIES - -------------------------------------------------------------------------------------------------------------------------------- December 2000 Avg. Mo. Rental Rates Number of Year Placed Average Apartment 2000 Average Per -------------------- Property and Location Apartments in Service Size (Sq. Ft.) Occupancy (1) Apartment Per Sq. Ft. - ------------------------------------ ------------ ----------- ----------------- ------------- ------------- -------------------- ARIZONA Phoenix Arrowhead Springs, The Park at 288 1997 925 95 % $ 732 $ 0.79 Arizona Center, The Park at (7) 332 2000 786 Lease-up 820 1.04 Fountain Palms, The Park at 192 1986/1996 1,050 97 750 0.71 Scottsdale Legacy 428 1996 1,067 92 901 0.84 Towne Center, The Park at 240 1998 871 96 760 0.87 Vista Valley, The Park at 357 1986 923 92 720 0.78 Tucson Eastridge 456 1984 559 90 461 0.83 Oracle Villa 365 1974 1,026 91 711 0.69 CALIFORNIA Orange County Martinique 713 1986 795 96 1,162 1.46 Parkside 421 1972 835 97 992 1.19 Sea Palms 138 1990 891 98 1,137 1.28 COLORADO Denver Caley, The Park at (2) 218 2000 925 96 981 1.06 Centennial, The Park at 276 1985 744 97 813 1.09 Deerwood, The Park at 342 1996 1,141 95 1,206 1.06 Denver West, The Park at (4) 321 1997 1,015 97 1,195 1.18 Interlocken, The Park at 340 1999 1,022 97 1,191 1.16 Lakeway, The Park at 451 1997 919 95 1,043 1.13 Park Place 224 1985 748 97 821 1.10 Wexford, The Park at 358 1986 810 95 845 1.04 FLORIDA Orlando Landtree Crossing 220 1983 748 94 637 0.85 Lee Vista, The Part at (7) 492 2000 937 Lease-up 805 0.86 Renaissance Pointe II 578 1996/1998 899 93 790 0.88 Riverwalk I & II 552 1984/1986 747 94 598 0.80 Sabal Club 436 1986 1,077 94 869 0.81 Vineyard, The 526 1990/1991 824 93 704 0.85 Tampa/St. Petersburg Chase Crossing 444 1986 1,223 93 770 0.63 Chasewood 247 1985 704 95 603 0.86 Dolphin/Lookout Pointe 832 1987/1989 748 93 683 0.91 Heron Pointe 276 1996 942 92 892 0.95 Island Club I & II 484 1983/1985 722 95 592 0.82 Live Oaks 770 1990 1,093 90 758 0.69 Mallard Pointe I & II 688 1982/1983 728 94 629 0.86 Marina Pointe Village 408 1997 927 92 831 0.90 Parsons Run 228 1986 728 96 633 0.87 Schooner Bay 278 1986 728 94 696 0.96 Summerset Bend 368 1984 771 93 640 0.83 KENTUCKY Louisville Copper Creek 224 1987 732 91 641 0.88 Deerfield 400 1987 746 93 643 0.86 Glenridge 138 1990 916 90 699 0.76 Oxmoor, The Park at (7) 432 2000 903 Lease-up 766 0.85 Sundance 254 1975 682 87 543 0.80 MISSOURI Kansas City Camden Passage I & II 596 1989/1997 832 91 717 0.86 St. Louis Cedar Ridge 420 1986 852 94 595 0.70 Cove at Westgate, The 276 1990 828 97 933 1.13 Spanish Trace 372 1972 1,158 95 776 0.67 Tempo 304 1975 676 96 545 0.81 Westchase 160 1986 945 95 900 0.95 Westgate I & II 591 1973/1980 947 90 806 0.85 NEVADA Las Vegas Oasis Bay (3) 128 1990 862 95 761 0.88
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OPERATING PROPERTIES (CONTINUED) - ----------------------------------------------------------------------------------------------------------------------- December 2000 Avg. Mo. Rental Rates ------------------------- Number of Year Placed Average Apartment 2000 Average Per Property and Location Apartments in Service Size (Sq. Ft.) Occupancy (1) Apartment Per Sq. Ft. - ---------------------------------- ------------ ------------- ----------------- ------------- ----------- ------------- Oasis Bel Air I & II 528 1988/1995 943 96 % $ 765 $ 0.81 Oasis Breeze 320 1989 846 96 718 0.85 Oasis Canyon 200 1995 987 97 794 0.80 Oasis Cliffs 376 1988 936 97 773 0.83 Oasis Club 320 1989 896 96 746 0.83 Oasis Cove 124 1990 898 97 729 0.81 Oasis Crossings (3) 72 1996 983 96 764 0.78 Oasis Del Mar 560 1995 986 95 840 0.85 Oasis Emerald (3) 132 1988 873 93 664 0.76 Oasis Gateway (3) 360 1997 1,146 94 843 0.74 Oasis Glen 113 1994 792 97 743 0.94 Oasis Greens 432 1990 892 94 748 0.84 Oasis Harbor 336 1996 1,008 96 830 0.82 Oasis Heritage (3) 720 1986 950 90 580 0.61 Oasis Hills 184 1991 579 96 552 0.95 Oasis Island (3) 118 1990 901 95 655 0.73 Oasis Landing (3) 144 1990 938 95 716 0.76 Oasis Meadows (3) 383 1996 1,031 94 761 0.74 Oasis Palms (3) 208 1989 880 97 702 0.80 Oasis Paradise 624 1991 905 94 770 0.85 Oasis Pearl (3) 90 1989 930 93 713 0.77 Oasis Pines 315 1997 1,005 97 793 0.79 Oasis Place (3) 240 1992 440 96 504 1.15 Oasis Plaza (3) 300 1976 820 93 630 0.77 Oasis Pointe 252 1996 985 96 778 0.79 Oasis Ridge (3) 477 1984 391 90 444 1.14 Oasis Rose (3) 212 1994 1,025 95 729 0.71 Oasis Sands 48 1994 1,125 96 775 0.69 Oasis Sierra (3) 208 1998 922 91 805 0.87 Oasis Springs (3) 304 1988 838 93 653 0.78 Oasis Suites (3) 409 1988 404 90 465 1.15 Oasis Summit 234 1995 1,187 97 1,069 0.90 Oasis Tiara 400 1996 1,043 95 848 0.81 Oasis View (3) 180 1983 940 93 680 0.72 Oasis Vinings (3) 234 1994 1,152 97 773 0.67 Oasis Vintage 368 1994 978 97 751 0.77 Reno Oasis Bluffs 450 1997 1,111 93 1,036 0.93 NORTH CAROLINA Charlotte Copper Creek 208 1989 703 94 643 0.91 Eastchase 220 1986 698 94 610 0.87 Habersham Pointe 240 1986 773 93 682 0.88 Overlook, The (5) 220 1985 754 92 696 0.92 Park Commons 232 1997 859 93 764 0.89 Pinehurst 407 1967 1,147 93 802 0.70 Timber Creek 352 1984 706 94 663 0.94 Greensboro Brassfield Park (5) 336 1996 889 94 746 0.84 Glen, The 304 1980 662 93 584 0.88 River Oaks 216 1985 795 94 654 0.82 TEXAS Austin Autumn Woods 283 1984 644 98 630 0.98 Calibre Crossing 183 1986 705 98 663 0.94 Huntingdon, The 398 1995 903 98 850 0.94 Quail Ridge 167 1984 859 98 738 0.86 Ridgecrest 284 1995 851 98 810 0.95 South Oaks 430 1980 711 97 630 0.89 Corpus Christi Breakers, The 288 1996 861 91 764 0.89 Miramar (6) 451 1995 708 94 750 1.32 Potters Mill 344 1986 775 93 598 0.77
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OPERATING PROPERTIES (CONTINUED) - -------------------------------------------------------------------------------------------------------------------------------- December 2000 Avg. Mo. Rental Rates ------------------------ Number of Year Placed Average Apartment 2000 Average Per Property and Location Apartments in Service Size (Sq. Ft.) Occupancy (1) Apartment Per Sq. Ft. - ----------------------------------------- ------------ ------------- ----------------- --------------- ----------- ------------- Waterford, The 580 1976 767 90% $ 507 $ 0.66 Dallas/Fort Worth Addison, The Park at 456 1996 942 94 891 0.95 Buckingham, The Park at 464 1997 919 96 851 0.93 Centreport, The Park at 268 1997 910 93 827 0.91 Cottonwood Ridge 208 1985 829 95 625 0.75 Emerald Valley 516 1986 743 95 702 0.94 Emerald Village 304 1986 713 94 635 0.89 Glen Lakes 424 1979 877 93 786 0.90 Highland Trace 160 1985 816 93 675 0.83 Highpoint (5) 708 1985 835 94 659 0.79 Ivory Canyon 602 1986 548 96 589 1.07 Los Rios 286 1992 772 96 822 1.07 North Dallas Crossing I & II 446 1985 730 96 656 0.90 Oakland Hills 476 1985 853 95 648 0.76 Pineapple Place 256 1983 652 93 620 0.95 Randol Mill Terrace 340 1984 848 95 629 0.74 Shadow Lake 264 1984 733 94 605 0.82 Stone Creek 240 1996 831 93 807 0.97 Stone Gate 276 1996 871 94 834 0.96 Towne Centre Village 188 1983 735 95 625 0.85 Towne Crossing, The Place at 442 1984 772 95 624 0.81 Valley Creek Village 380 1984 855 95 689 0.81 Valley Ridge 408 1987 773 95 652 0.84 Westview 335 1985 697 95 639 0.92 Houston Brighton Place 282 1980 749 92 579 0.77 Crossing, The 366 1982 762 93 597 0.78 Eagle Creek 456 1984 639 92 606 0.95 Goose Creek, The Park at 272 1999 844 95 710 0.84 Greenway, The Park at 756 1999 861 92 993 1.15 Holly Springs, The Park at 548 1999 934 97 896 0.96 Jones Crossing 290 1982 748 94 597 0.80 Midtown, The Park at 337 1999 843 96 1,022 1.21 Roseland 671 1982 726 91 564 0.78 Stonebridge 204 1993 845 93 808 0.96 Sugar Grove, The Park at 380 1997 917 92 847 0.92 Vanderbilt I & II, The Park at 894 1995/1997 863 92 1,009 1.17 Wallingford 462 1980 787 96 612 0.78 Wilshire Place 536 1982 761 94 592 0.78 Woodland Park 288 1995 866 90 818 0.94 Wyndham Park 448 1978 797 94 536 0.67 ------------ ----------------- --------------- ----------- ------------- Total 51,336 848 94% $ 744 $ 0.88 ============ ================= =============== =========== =============
(1) Represents average physical occupancy for the year, except as noted below. (2) Development property - average occupancy calculated from date at which occupancy exceeded 90% through year-end. (3) Properties owned through Sierra-Nevada Multifamily Investments, LLC joint venture in which we own a 20% interest. (4) Property owned through a joint venture in which we own a 50% interest. The remaining interest is owned by an unaffiliated private investor. (5) Properties owned through a joint venture in which we own a 44% interest. The remaining interest is owned by unaffiliated private investors. (6) Miramar is a student housing project for Texas A&M at Corpus Christi. Average occupancy includes summer which is normally subject to high vacancies. (7) Properties under lease-up at December 31, 2000. 9 Operating Properties Under Lease-Up The operating properties under lease-up table is incorporated herein by reference from page 15 of the Company's Annual Report to Shareholders for the year ended December 31, 2000, which page is filed as Exhibit 13.1 hereto. Development Properties The total budgeted cost of the development properties is approximately $238.4 million, with a remaining cost to complete, as of December 31, 2000, of approximately $114.9 million. There can be no assurance that our budget, leasing or occupancy estimates will be attained for the development properties or that their performance will be comparable to that of our existing portfolio. Development Properties Table The development properties table is incorporated herein by reference from page 15 of our Annual Report to Shareholders for the year ended December 31, 2000, which is filed as Exhibit 13.1. Management believes that we possess the development capabilities and experience to provide a continuing source of portfolio growth. In making development decisions, management considers a number of factors, including the size of the property, the season in which leasing activity will occur and the extent to which delivery of the completed apartment homes will coincide with leasing and occupancy of such apartment homes (which is dependent upon local market conditions). In order to pursue a development opportunity, we currently require a minimum initial stabilized target return of 9.0%-10.0%. This minimum target return is based on projected market rents and projected stabilized expenses, considering the market and the nature of the prospective development. Item 3. Legal Proceedings Prior to our merger with Oasis, Oasis had been contacted by certain regulatory agencies with regards to alleged failures to comply with the Fair Housing Amendments Act as it pertained to nine properties (seven of which we currently own) constructed for first occupancy after March 31, 1991. On February 1, 1999, the Justice Department filed a lawsuit against us and several other defendants in the United States District Court for the District of Nevada alleging (1) that the design and construction of these properties violates the Fair Housing Act and (2) that we, through the merger with Oasis, had discriminated in the rental of dwellings to persons because of handicap. The complaint requests an order that (i) declares that the defendants' policies and practices violate the Fair Housing Act; (ii) enjoins us from (a) failing or refusing, to the extent possible, to bring the dwelling units and public use and common use areas at these properties and other covered units that Oasis had designed and/or constructed into compliance with the Fair Housing Act, (b) failing or refusing to take such affirmative steps as may be necessary to restore, as nearly as possible, the alleged victims of the defendants alleged unlawful practices to positions they would have been in but for the discriminatory conduct and (c) designing or constructing any covered multi-family dwellings in the future that do not contain the accessibility and adaptability features set forth in the Fair Housing Act; and requires us to pay damages, including punitive damages, and a civil penalty. With any acquisition, we plan for and undertake renovations needed to correct deferred maintenance, life/safety and Fair Housing matters. On January 30, 2001, a consent decree was ordered and executed in the above Justice Department action. Under the terms of the decree, we were ordered to make certain retrofits and implement certain educational programs and fair housing advertising. These changes are to take place over the next five years. In management's opinion, the costs associated with complying with the decree are not expected to have a material impact on our financial statements. We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such matters will not have a material adverse effect on our consolidated financial statements. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise. 10 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Information with respect to this Item 5 is incorporated herein by reference from page 38 of our Annual Report to Shareholders for the year ended December 31, 2000, which is filed as Exhibit 13.1. The number of holders of record of our common shares, $0.01 par value, as of March 16, 2001, was 1,083. Item 6. Selected Financial Data Information with respect to this Item 6 is incorporated herein by reference from pages 39 and 40 of our Annual Report to Shareholders for the year ended December 31, 2000, which is filed as Exhibit 13.1. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information with respect to this Item 7 is incorporated herein by reference from pages 13 through 21 of our Annual Report to Shareholders for the year ended December 31, 2000, which is filed as Exhibit 13.1. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Information with respect to this Item 7A is incorporated herein by reference from page 18 of our Annual Report to Shareholders for the year ended December 31, 2000, which is filed as Exhibit 13.1. Item 8. Financial Statements and Supplementary Data Our financial statements and supplementary financial information for the years ended December 31, 2000, 1999 and 1998 are listed in the accompanying Index to Consolidated Financial Statements and Supplementary Data at F-1 and are incorporated herein by reference from pages 22 through 38 of our Annual Report to Shareholders for the year ended December 31, 2000, which is filed as Exhibit 13.1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant Information with respect to this Item 10 is incorporated by reference from our Proxy Statement, which we intend to file on or before March 30, 2001 in connection with the Annual Meeting of Shareholders to be held May 15, 2001. Item 11. Executive Compensation Information with respect to this Item 11 is incorporated by reference from our Proxy Statement, which we intend to file on or before March 30, 2001 in connection with the Annual Meeting of Shareholders to be held May 15, 2001. Item 12. Security Ownership of Certain Beneficial Owners and Management Information with respect to this Item 12 is incorporated by reference from our Proxy Statement, which we intend to file on or before March 30, 2001 in connection with the Annual Meeting of Shareholders to be held May 15, 2001. Item 13. Certain Relationships and Related Transactions Information with respect to this Item 13 is incorporated by reference from our Proxy Statement, which we intend to file on or before March 30, 2001 in connection with the Annual Meeting of Shareholders to be held May 15, 2001. 11 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) (1) Financial Statements: Our financial statements and supplementary financial information for the years ended December 31, 2000, 1999 and 1998 are listed in the accompanying Index to Consolidated Financial Statements and Supplementary Data at F-1 and are incorporated herein by reference from pages 22 through 38 of our Annual Report to the Shareholders for the year ended December 31, 2000, which pages are filed as Exhibit 13.1 hereto. (2) Financial Statement Schedule: The financial statement schedule listed in the accompanying Index to Consolidated Financial Statements and Supplementary Data at page F-1 is filed as part of this Report. (3) Index to Exhibits: Number Title 2.1 Agreement and Plan of Merger, dated December 16, 1997, among Camden Property Trust, Camden Subsidiary II, Inc. and Oasis Residential, Inc. Incorporated by reference from Exhibit 2.1 to Camden Property Trust's Form 8-K filed December 17, 1997 (File No. 1-12110). 2.2 Amendment No. 1, dated February 4, 1998, to the Agreement and Plan of Merger, dated December 16, 1997, among Camden Property Trust, Camden Subsidiary II, Inc. and Oasis Residential, Inc. Incorporated by reference from Exhibit 2.1 to Camden Property Trust's Form 8-K filed February 5, 1998 (File No. 1-12110). 2.3 Contribution Agreement, dated June 26, 1998, by and between Camden Subsidiary, Inc. and Sierra-Nevada Multifamily Investments, LLC. Incorporated by reference from Exhibit 2.1 to Camden Property Trust's Form 8-K filed July 15, 1998 (File No. 1-12110). 2.4 Agreement of Purchase and Sale, dated June 26, 1998, by and between Camden Subsidiary, Inc. and Sierra-Nevada Multifamily Investments, LLC. Incorporated by reference from Exhibit 2.2 to Camden Property Trust's Form 8-K filed July 15, 1998 (File No. 1-12110). 2.5 Agreement of Purchase and Sale, dated June 26, 1998, by and between NQRS, Inc. and Sierra-Nevada Multifamily Investments, LLC. Incorporated by reference from Exhibit 2.3 to Camden Property Trust's Form 8-K filed July 15, 1998 (Filed No. 1-12110). 3.1 Amended and Restated Declaration of Trust of Camden Property Trust. Incorporated by reference from Exhibit 3.1 to Camden Property Trust's Form 10-K for the year ended December 31, 1993 (File No. 1-12110). 3.2 Amendment to the Amended and Restated Declaration of Trust of Camden Property Trust. Incorporated by reference from Exhibit 3.1 to Camden Property Trust's Form 10-Q filed August 14, 1997 (File No. 1-12110). 3.3 Second Amended and Restated Bylaws of Camden Property Trust. Incorporated by reference from Exhibit 3.3 to Camden Property Trust's Form 10-K for the year ended December 31, 1997 (File No. 1-12110). 4.1 Specimen certificate for Common Shares of Beneficial Interest. Incorporated by reference from Exhibit 4.1 to Camden Property Trust's Registration Statement on Form S-11 filed September 15, 1993 (File No. 33-68736). 4.2 Indenture dated as of April 1, 1994 by and between Camden Property Trust and The First National Bank of Boston, as Trustee. Incorporated by reference from Exhibit 4.3 to Camden Property Trust's Statement on Form S-11 filed April 12, 1994 (File No. 33-76244). 12 4.3 Form of Convertible Subordinated Debenture Due 2001. Incorporated by reference from Exhibit 4.3 to Camden Property Trust's Statement on Form S-11 filed April 12, 1994 (File No. 33-76244). 4.4 Indenture dated as of February 15, 1996 between Camden Property Trust and the U.S. Trust Company of Texas, N.A., as Trustee. Incorporated by reference from Exhibit 4.1 to Camden Property Trust's Form 8-K filed February 15, 1996 (File No. 1-12110). 4.5 First Supplemental Indenture dated as of February 15, 1996 between Camden Property Trust and U.S. Trust Company of Texas N.A., as trustee. Incorporated by reference from Exhibit 4.2 to Camden Property Trust's Form 8-K filed February 15, 1996 (File No. 1-12110). 4.6 Form of Camden Property Trust 6 5/8% Note due 2001. Incorporated by reference from Exhibit 4.3 to Camden Property Trust's Form 8-K filed February 15, 1996 (File No. 1-12110). 4.7 Form of Camden Property Trust 7% Note due 2006. Incorporated by reference from Exhibit 4.3 to Camden Property Trust's Form 8-K filed December 2, 1996 (File No. 1-12110). 4.8 Specimen certificate for Camden Series A Cumulative Convertible Shares of Beneficial Interest. Incorporated from Exhibit 4.3 to Camden Property Trust's Registration Statement on Form S-4 filed February 6, 1998 (File No. 333-45817). 4.9 Statement of Designation, Preferences and Rights of Series A Cumulative Convertible Preferred Shares of Beneficial Interest. Incorporated by reference from Exhibit 4.1 to Camden Property Trust's Registration Statement on Form S-4 filed February 6, 1998 (File No. 333-45817). 4.10 Form of Statement of Designation of Series B Cumulative Redeemable Preferred Shares of Beneficial Interest. Incorporated by reference from Exhibit 4.1 to Camden Property Trust's Form 8-K filed on March 10, 1999 (File No. 1-12110). 4.11 Form of Statement of Designation of Series C Cumulative Redeemable Perpetual Preferred Shares of Beneficial Interest of Camden Property Trust. Incorporated by reference from Exhibit 4.11 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 4.12 Form of First Amendment to Statement of Designation of Series C Cumulative Redeemable Perpetual Preferred Shares of Beneficial Interest of Camden Property Trust. Incorporated by reference from Exhibit 4.12 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 4.13 Form of Second Amendment to Statement of Designation of Series C Cumulative Redeemable Perpetual Preferred Shares of Beneficial Interest of Camden Property Trust. Incorporated by reference from Exhibit 4.13 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 4.14 Form of Underwriting Agreement among Camden Property Trust and the Underwriters dated April 15, 1999 relating to the offering of 7% notes due 2004. Incorporated by reference from Exhibit 1.1 to Camden Property Trust's Form 8-K filed April 20, 1999 (File No. 1-12110). 4.15 Form of Camden Property Trust 7% Note due 2004. Incorporated by reference from Exhibit 4.3 to Camden Property Trust's Form 8-K filed April 20, 1999 (File No. 1-12110). 4.16 Form of Underwriting Agreement among Camden Property Trust and the Underwriters dated February 7, 2001 relating to the offering of 7% notes due 2006 and 7.625% notes dues 2011. Incorporated by reference from Exhibit 1.1 to Camden Property Trust's Form 8-K filed February 20, 2001 (File No. 1-12110). 13 4.17 Form of Camden Property Trust 7% Note due 2006. Incorporated by reference from Exhibit 4.3 to Camden Property Trust's Form 8-K filed February 20, 2001 (File No. 1-12110). 4.18 Form of Camden Property Trust 7.625% Note due 2011. Incorporated by reference from Exhibit 4.4 to Camden Property Trust's Form 8-K filed February 20, 2001 (File No. 1-12110). 10.1 Form of Indemnification Agreement by and between Camden Property Trust and certain of its trust managers and executive officers. Incorporated by reference from Exhibit 10.18 to Amendment No. 1 of Camden Property Trust's Registration Statement on Form S-11 filed July 9, 1993 (File No. 33-63588). 10.2 Amended and Restated Employment Agreement dated August 7, 1998 by and between Camden Property Trust and Richard J. Campo. Incorporated by reference from Exhibit 10.4 to Camden Property Trust's Form 10-K filed March 30, 1999 (File No. 1-12110). 10.3 Amended and Restated Employment Agreement dated August 7, 1998 by and between Camden Property Trust and D. Keith Oden. Incorporated by reference from Exhibit 10.5 to Camden Property Trust's Form 10-K filed March 30, 1999 (File No. 1-12110). 10.4 Form of Employment Agreement by and between Camden Property Trust and certain senior executive officers. Incorporated by reference from Exhibit 10.13 to Camden Property Trust's Form 10-K filed March 28, 1997 (File No. 1-12110). 10.5 Camden Property Trust Key Employee Share Option Plan. Incorporated by reference from Exhibit 10.14 to Camden Property Trust's Form 10-K filed March 28, 1997 (File No. 1-12110). 10.6 Distribution Agreement dated March 20, 1997 among Camden Property Trust and the Agents listed therein relating to the issuance of Medium Term Notes. Incorporated by reference from Exhibit 1.1 to Camden Property Trust's Form 8-K filed March 21, 1997 (File No. 1-12110). 10.7 Form of Master Exchange Agreement by and between Camden Property Trust and certain key employees. Incorporated by reference from Exhibit 10.16 to Camden Property Trust's Form 10-K filed February 6, 1998 (File No. 1-12110). 10.8 Form of Credit Agreement dated August 18, 1999 between Bank of America, N.A. and Camden Property Trust. Incorporated by reference from Camden Property Trust's Form 10-Q filed November 15, 1999 (File No. 1-12110). 10.9 Form of Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P. Incorporated by reference from Exhibit 10.1 to Camden Property Trust's Form S-4 filed on February 26, 1997 (File No. 333-22411). 10.10 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. Incorporated by reference from Exhibit 99.1 to Camden Property Trust's Form 8-K filed July 15, 1998 (File No. 1-12110). 10.11 Amended and Restated Limited Liability Company Agreement of Oasis Martinique, LLC, dated as of October 23, 1998, by and among Oasis Residential, Inc. and the persons named therein. Incorporated by reference from Exhibit 10.59 to Oasis Residential, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-12428). 10.12 Exchange Agreement, dated as of October 23, 1998, by and among Oasis Residential, Inc., Oasis Martinique, LLC and the holders listed thereon. Incorporated by reference from Exhibit 10.60 to Oasis Residential, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-12428). 14 10.13 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. Incorporated by reference from Exhibit 99.1 to Camden Property Trust's Form 8-K filed on March 10, 1999 (File No. 1-12110). 10.14 First Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of February 23, 1999. Incorporated by reference from Exhibit 99.2 to Camden Property Trust's Form 8-K filed on March 10, 1999 (File No. 1-12110). 10.15 Form of Second Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of August 13, 1999. Incorporated by reference from Exhibit 10.15 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 10.16 Form of Third Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of September 7, 1999. Incorporated by reference from Exhibit 10.16 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 10.17 Form of Fourth Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of January 7, 2000. Incorporated by reference from Exhibit 10.17 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 10.18 Amended and Restated 1993 Share Incentive Plan of Camden Property Trust. Incorporated by reference from Exhibit 10.18 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 10.19 Camden Property Trust 1999 Employee Share Purchase Plan. Incorporated by reference from Exhibit 10.19 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 10.20 Form of Senior Executive Loan Guaranty between Camden Operating L.P., Camden USA, Inc. and Bank One, NA. Incorporated by reference from Exhibit 10.20 to Camden Property Trust's Form 10-K for the year ended December 31, 1999 (File No. 1-12110). 12.1* Statement re Computation of Ratios 13.1* Selected pages of the Camden Property Trust Annual Report to Shareholders for the year ended December 31, 2000. 21.1* Subsidiaries of Camden Property Trust. 23.1* Consent of Deloitte & Touche LLP. 24.1* Powers of Attorney for Richard J. Campo, D. Keith Oden, G. Steven Dawson, William R. Cooper, George A. Hrdlicka, Scott S. Ingraham, Lewis A. Levey, F. Gardner Parker and Steven A. Webster. ____________________ *Filed herewith. 14(b) Reports on Form 8-K Camden Property Trust did not file any Current Reports on Form 8-K during the fourth quarter of 2000. 15 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. March 29, 2001 CAMDEN PROPERTY TRUST By: /s/G. Steven Dawson ---------------------------------- G. Steven Dawson Chief Financial Officer, Senior Vice President - Finance and Secretary By: /s/Dennis M. Steen ---------------------------------- Dennis M. Steen Vice President - Controller, Chief Accounting Officer and Treasurer 16 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of Camden Property Trust and in the capacities and on the dates indicated. Name Title Date * - ---------------------- Chairman of the Board of Trust March 29, 2001 Richard J. Campo Managers and Chief Executive Officer (Principal Executive Officer) * - ---------------------- President, Chief Operating March 29, 2001 D. Keith Oden Officer and Trust Manager /S/G. Steven Dawson - ---------------------- Senior Vice President-Finance, March 29, 2001 G. Steven Dawson Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer) /S/Dennis M. Steen - ---------------------- Vice President-Controller and March 29, 2001 Dennis M. Steen Chief Accounting Officer (Principal Accounting Officer) * - ---------------------- Trust Manager March 29, 2001 William R. Cooper * - ---------------------- Trust Manager March 29, 2001 George A. Hrdlicka * - ---------------------- Trust Manager March 29, 2001 Scott S. Ingraham * - ---------------------- Trust Manager March 29, 2001 Lewis A. Levey * - ---------------------- Trust Manager March 29, 2001 F. Gardner Parker * - ---------------------- Trust Manager March 29, 2001 Steven A. Webster *By: /S/G. Steven Dawson --------------------------------- G. Steven Dawson Attorney-in-Fact 17 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following financial statements of Camden Property Trust and its subsidiaries required to be included in Item 14(a)(1) are listed below: Page CAMDEN PROPERTY TRUST Independent Auditors' Report (included herein) ..............................F-2 Financial Statements (incorporated by reference under Item 8 of Part II from pages 22 through 38 of our Annual Report to Shareholders for the year ended December 31, 2000): Independent Auditors' Report Consolidated Balance Sheets as of December 31, 2000 and 1999 Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements The following financial statement supplementary data of Camden Property Trust and its subsidiaries required to be included in Item 14(a)(2) is listed below: Schedule III -- Real Estate and Accumulated Depreciation ................... S-1 18 INDEPENDENT AUDITORS' REPORT To the Shareholders of Camden Property Trust We have audited the consolidated financial statements of Camden Property Trust ("Camden") as of December 31, 2000 and 1999, and for each of the three years in the period ended December 31, 2000, and have issued our report thereon dated February 7, 2001; such consolidated financial statements and report are included in your 2000 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule of Camden Property Trust, listed in Item 14. This financial statement schedule is the responsibility of Camden's management. Our responsibility is to express an opinion based on our audits. 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. DELOITTE & TOUCHE LLP Houston, Texas February 7, 2001 19 Schedule III CAMDEN PROPERTY TRUST REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2000
(In thousands) Cost Capitalized Subsequent to Acquisition Initial Cost to or Description Encumbrances Camden Property Trust Development - --------------------------------------- ------------ ------------------------ ------------- Building and Property Name Location Land Improvements - ---------------------------- ---------- --------- ------------- Apartments TX $ 29,228 $125,478 $ 626,792 $ 63,398 Apartments AZ 7,982 19,296 129,963 5,966 Apartments CA 69,342 48,511 102,191 7,642 Apartments CO 32,583 21,907 163,371 3,229 Apartments FL 22,169 47,170 334,300 20,278 Apartments KY 18,305 5,107 66,524 2,964 Apartments MO 52,476 18,148 120,848 10,597 Apartments NV 93,431 52,789 371,902 10,646 Apartments NC 13,575 11,842 75,099 9,030 Properties under Development NV 3,305 10,028 Properties under Development CA 29,211 25,230 Properties under Development TX 44,711 36,256 ------------ --------- -------------- ------------ Total $ 339,091 $427,475 $ 2,062,504 $ 133,750 ============ ========= ============== ============
Gross Amount at Which Accumulated Date Constructed Depreciable Description Carried at December 31, 2000 (a) Depreciation(a) or Acquired Life (Years) - --------------------------------------- ------------------------------------ ----------------- ------------------ -------------- Property Name Location Land Building Total - ---------------------------- ---------- --------- ------------ ------------- Apartments TX $125,478 $ 690,190 $ 815,668 $ 142,229 1993- 3 - 35 Apartments AZ 19,296 135,929 155,225 22,190 1994- 3 - 35 Apartments CA 48,511 109,833 158,344 7,674 1998- 3 - 35 Apartments CO 21,907 166,600 188,507 12,863 1998- 3 - 35 Apartments FL 47,170 354,578 401,748 45,209 1997- 3 - 35 Apartments KY 5,107 69,488 74,595 9,103 1997- 3 - 35 Apartments MO 18,148 131,445 149,593 26,584 1997- 3 - 35 Apartments NV 52,789 382,548 435,337 36,098 1998- 3 - 35 Apartments NC 11,842 84,129 95,971 24,773 1997 3 - 35 Properties under Development NV 3,305 10,028 13,333 1998- Properties under Development CA 29,211 25,230 54,441 1998- Properties under Development TX 44,711 36,256 80,967 1995- --------- ------------ ------------- ------------------ Total $427,475 $ 2,196,254 $ 2,623,729 $ 326,723 ========= ============ ============= ==================
(a) The aggregate cost for federal income tax purposes at December 31,2000 was $2.2 billion. 20 The changes in total real estate assets for the years ended December 31, 2000, 1999 and 1998 are as follows: 2000 1999 1998 ----------- ------------ ------------ Balance, beginning of period $2,656,165 $ 2,455,458 $ 1,382,049 Additions during period: Acquisition-Oasis 888 997,049 Acquisition-other 139,199 Development 94,444 188,506 193,212 Improvements 27,940 33,366 26,108 Deductions during period: Cost of real estate sold-Sierra Nevada transaction (237,423) Cost of real estate sold-other (154,820) (22,053) (44,736) ----------- ------------ ------------ Balance, end of period $2,623,729 $ 2,656,165 $ 2,455,458 =========== ============ ============ The changes in accumulated depreciation for the years ended December 31, 2000, 1999 and 1998 are as follows: 2000 1999 1998 ----------- ----------- ------------ Balance, beginning of period $ 253,545 $ 167,560 $ 94,665 Depreciation 94,227 87,491 76,740 Real estate sold (21,049) (1,506) (3,845) ----------- ------------ ------------ Balance, end of period $ 326,723 $ 253,545 $ 167,560 =========== ============ ============ S-1 EX-12.1 2 0002.txt STATEMENT REGARDING COMPUATION OF RATIOS 21 EXHIBIT 12.1 CAMDEN PROPERTY TRUST STATEMENT REGARDING COMPUTATION OF RATIOS FOR THE FIVE YEARS ENDED DECEMBER 31, 2000
(In thousands, except for ratio amounts) 2000 (4) 1999 (3) 1998 1997 (2) 1996 (1) ----------- ------------ ----------- ----------- ----------- EARNINGS BEFORE FIXED CHARGES: Net income before minority interests $ 89,730 $ 71,915 $ 58,655 $ 40,093 $ 8,713 Less: equity in income of joint ventures (765) (683) (1,312) (1,141) ----------- ------------ ----------- ----------- ----------- 88,965 71,232 57,343 38,952 8,713 Distributed income of joint ventures 2,122 2,505 2,350 1,939 Less: interest capitalized (15,303) (16,396) (9,929) (3,338) (4,129) Less: preferred distribution of subsidiaries (12,845) (8,278) ----------- ------------ ----------- ----------- ----------- Total earnings before fixed charges 62,939 49,063 49,764 37,553 4,584 ----------- ------------ ----------- ----------- ----------- FIXED CHARGES: Interest expense 69,036 57,856 50,467 28,537 17,336 Interest capitalized 15,303 16,396 9,929 3,338 4,129 Accretion of discount 403 320 169 142 Loan amortization 1,340 1,100 785 864 825 Interest portion of rental expense 478 517 300 235 143 Preferred distribution of subsidiaries 12,845 8,278 ----------- ------------ ----------- ----------- ----------- Total fixed charges 99,405 84,467 61,650 33,116 22,433 ----------- ------------ ----------- ----------- ----------- Total earnings and fixed charges $ 162,344 $ 133,530 $ 111,414 $ 70,669 $ 27,017 =========== ============ =========== =========== =========== RATIO OF EARNINGS TO FIXED CHARGES 1.63x 1.58x 1.81x 2.13x 1.20x RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS: Total fixed charges $ 99,405 $ 84,467 $ 61,650 $ 33,116 $ 22,433 Preferred share dividends 9,371 9,371 9,371 4 ----------- ------------ ----------- ----------- ----------- Total combined fixed charges and preferred 108,776 93,838 71,021 33,116 22,437 share dividends Total earnings and combined fixed charges and preferred share dividends $ 171,715 $ 142,901 $ 120,785 $ 70,669 $ 27,021 =========== ============ =========== =========== =========== RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS 1.58x 1.52x 1.70x 2.13x 1.20x
(1) Earnings include a $(5,351) impact from the extinguishment of hedges upon debt refinancing. Excluding this impact, such ratios would be 1.44x. (2) Earnings include a $10,170 impact related to gain on sales of properties. Excluding this impact, such ratios would be 1.83x. (3) Earnings include a $2,979 impact related to gain on sales of properties. Excluding this impact, such ratios would be 1.55x and 1.49x. (4) Earnings include a $18,323 impact related to gain on sales of properties. Excluding this impact, such ratios would be 1.45x and 1.41x. EX-13.1 3 0003.txt MANAGEMENT'S DISCUSSION AND ANALYSIS 22 EXHIBIT 13.1 Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with all of the financial statements and notes appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. We have made statements in this report that are "forward-looking" in that they do not discuss historical fact, but instead note future expectations, projections, intentions or other items relating to the future. You should not rely on these forward-looking statements because they are subject to known and unknown risks, uncertainties and other factors that may cause our actual results or performance to differ materially from those contemplated by the forward-looking statements. Many of those factors are noted in conjunction with the forward-looking statements in the text. Other important factors that could cause actual results to differ include: the results of our efforts to implement our property development strategy; the effect of economic and market conditions; our failure to qualify as a real estate investment trust; our cost of capital; the actions of our competitors and our ability to respond to those actions; changes in government regulations, tax rates and similar matters; and environmental uncertainties and natural disasters. Do not rely on these forward-looking statements, which only represent our estimates and assumptions as of the date of this report. We assume no obligation to update or revise any forward-looking statement. Business Camden Property Trust is a real estate investment trust and, with our subsidiaries, reports as a single business segment. As of December 31, 2000, we owned interests in, operated or were developing 148 multifamily properties containing 52,874 apartment homes located in nine states. Our properties, excluding properties in lease-up and under development, had a weighted average occupancy rate of 94% for the year ended December 31, 2000. This represents the average occupancy for all our properties in 2000 weighted by the number of apartment homes in each property. Three of our multifamily properties containing 1,538 apartment homes were under development at December 31, 2000. Additionally, we have several sites which we intend to develop into multifamily apartment communities. On April 8, 1998, we acquired, through a tax-free merger, Oasis Residential, Inc., a publicly traded Las Vegas-based multifamily REIT. Through this acquisition, we acquired 52 completed multifamily properties and 15,514 apartment homes. Each share of Oasis common stock outstanding on April 8, 1998 was exchanged for 0.759 of a Camden common share. Each share of Oasis Series A cumulative convertible preferred stock outstanding on April 8, 1998 was exchanged for one Camden Series A cumulative convertible preferred share with terms and conditions comparable to the Oasis preferred stock. We issued 12.4 million common shares and 4.2 million preferred shares in exchange for the outstanding Oasis common and preferred stock, respectively. We assumed approximately $484 million of Oasis debt, at fair value in the merger. The accompanying consolidated financial statements include the operations of Oasis since April 1, 1998, the effective date of the Oasis merger for accounting purposes. 23 In connection with the merger with Oasis, on June 30, 1998, we completed a transaction in which Camden USA, Inc., one of our wholly owned subsidiaries, and TMT-Nevada, L.L.C., a Delaware limited liability company, formed Sierra-Nevada Multifamily Investments, LLC. We entered into this transaction to reduce our market risk in the Las Vegas area. TMT-Nevada holds an 80% interest in Sierra-Nevada and Camden USA holds the remaining 20% interest. In the above transaction, we transferred to Sierra-Nevada 19 apartment communities containing 5,119 apartment homes for an aggregate of $248 million. Prior to the merger, Oasis owned 100% of each of these communities. In the merger, Camden USA acquired these communities. As a result, after the merger and prior to the Sierra-Nevada transaction, Camden USA owned 100% of each of these 19 properties which are located in Las Vegas, Nevada. This transaction was funded with capital invested by the members of Sierra-Nevada, the assumption of $9.9 million of existing nonrecourse indebtedness, the issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. Property Update During 2000, we completed construction on the following four development properties totaling 1,474 apartment homes: The Park at Caley in Denver, The Park at Lee Vista in Orlando, The Park at Oxmoor in Louisville, and The Park at Arizona Center in Phoenix. We also completed the construction of an additional 151 apartment homes at Miramar, an existing operating property located in Corpus Christi, Texas. Stabilization occurred during 2000 at The Park at Caley, The Park at Holly Springs and The Park at Greenway, both of which are located in Houston, The Park at Goose Creek in Baytown, Texas and for the new units at Miramar. We consider a property stabilized once it reaches 90% occupancy, or generally one year from opening the leasing office, with some allowances for larger than average properties. We expect stabilization to occur at the remaining development properties during 2001. Additionally, construction continued at two properties: The Park at Farmers Market in Dallas and The Park at Crown Valley in Mission Viejo, California, both of which have begun leasing; and we began construction on Camden Harbour View, a 538-unit property located in Long Beach, California. Dispositions during the year included eleven properties containing 3,599 apartment homes, a mini-storage facility located in Las Vegas and four parcels of undeveloped land. Of the eleven properties sold, three were located in each of Houston, Dallas and Las Vegas, and one was located in each of St. Louis and El Paso. As a result of these sales, we have exited the El Paso market, reduced the number of assets in our three largest markets and believe that we have improved the overall quality and geographic mix of our portfolio. The land sales consisted of two parcels totaling 2.9 acres located in downtown Dallas and one parcel totaling 38.5 acres located in Houston. These parcels of land are adjacent to our land development projects located in those cities, and were sold for commercial and retail use. Additionally, we sold a 19.5 acre tract of land located in Las Vegas which we acquired in our merger with Oasis. We used the net proceeds from these dispositions, totaling $150.1 million, to reduce indebtedness outstanding under our unsecured line of credit. 24 Our multifamily property portfolio, excluding land we hold for future development and joint venture properties we do not manage, at December 31, 2000, 1999 and 1998 is summarized as follows:
2000 1999 1998 ------------------------- ------------------------- -------------------------- Apartment Apartment Apartment Homes Properties Homes Properties Homes Properties ----------- ------------- ------------ ------------ ------------- ------------ Operating Properties Texas Houston 7,190 16 8,258 19 6,345 15 Dallas (a) 8,447 23 9,381 26 9,381 26 Austin 1,745 6 1,745 6 1,745 6 Other 1,663 4 1,641 5 1,641 5 ------------- --------- ------------- --------- ------------- --------- Total Texas Operating Properties 19,045 49 21,025 56 19,112 52 Arizona 2,658 8 2,326 7 2,326 7 California 1,272 3 1,272 3 1,272 3 Colorado (a) 2,529 8 2,312 7 1,972 6 Florida (b) 7,827 17 7,335 17 7,261 17 Kentucky 1,448 5 1,016 4 1,142 5 Missouri 2,719 7 3,327 8 3,327 8 Nevada (a) 11,103 38 11,963 41 12,163 41 North Carolina (a) 2,735 10 2,735 10 2,735 10 ------------- --------- ------------- --------- ------------- --------- Total Operating Properties 51,336 145 53,311 153 51,310 149 ------------- --------- ------------- --------- ------------- --------- Properties Under Development Texas Houston (c) 2,213 5 Dallas 620 1 620 1 600 1 Arizona 332 1 325 1 California 918 2 380 1 380 1 Colorado 218 1 558 2 Florida (c) 492 1 1,150 3 Kentucky 432 1 432 1 ------------- --------- ------------- --------- ------------- --------- Total Properties Under Development 1,538 3 2,474 6 5,658 14 ------------- --------- ------------- --------- ------------- --------- Total Properties 52,874 148 55,785 159 56,968 163 ========= ========= ========= Less: Joint Venture Apartment Homes (a) 6,503 6,504 6,704 ------------- ------------- ------------- Total Apartment Homes - Owned 100% 46,371 49,281 50,264 ============= ============= =============
(a) The figures include properties held in joint ventures as follows: one property with 708 apartment homes in Dallas and two properties with 556 apartment homes in North Carolina in which we own a 44% interest, the remaining interest is owned by unaffiliated private investors; one property with 320 apartment homes (321 apartment homes at December 31, 1999 and 1998) in Colorado in which we own a 50% interest, the remaining interest is owned by an unaffiliated private investor; and 19 properties with 4,919 apartment homes (5,119 apartment homes at December 31, 1998) in Nevada owned through Sierra-Nevada Multifamily Investments, LLC in which we own a 20% interest. (b) Includes the combination of operations at January 1, 2000 of two adjacent properties. (c) The 2000 and 1999 figures exclude two properties classified as Properties Under Development at December 31, 1998 as follows: one property with 300 apartment homes in Houston which is now classified as land held for future development, and one property with 352 apartment homes in Florida which was sold during 1999. 25 At December 31, 2000, we had three completed properties in lease-up as follows:
Product Number of % Leased Estimated Type Apartment at 3/16/01 Date of Date of Property and Location Homes Completion Stabilization - -------------------------------------- ------------ --------------- ------------- -------------- ----------------- The Park at Oxmoor Garden 432 86% 1Q00 1Q01 Louisville, KY The Park at Lee Vista Garden 492 92% 1Q00 1Q01 Orlando, FL The Park at Arizona Center 70% 1Q00 3Q01 Phoenix, AZ Urban 332
At December 31, 2000, we had three development properties in various stages of construction as follows:
Product Number of Estimated Estimated Estimated Type Apartment Cost Date of Date of Property and Location Homes ($ millions)* Completion Stabilization - ------------------------------------------- ----------------- ----------- ---------------- ------------ ----------------- In Lease-Up The Park at Farmers Market, Phase I Urban 620 $ 59.9 1Q01 4Q01 Dallas, TX The Park at Crown Valley Garden 380 58.5 2Q01 4Q01 Mission Viejo, CA Under Construction Camden Harbour View Urban 538 120.0 2Q03 2Q04 Long Beach, CA ---------- ----------- Total development properties 1,538 $ 238.4 ========== ===========
*As of December 31, 2000, we had incurred $123.5 million of the estimated $238.4 million. Properties under development in our consolidated financial statements includes $101.9 million related to the development of three urban land projects located in Dallas, Houston and Long Beach, California. Of this amount, $47.2 million relates to two of our current development projects - The Park at Farmers Market in Dallas and Camden Harbour View in Long Beach. We have an additional $22.3 million invested in Dallas, which we may use for the future development of Farmers Market, Phase II, and we are also in the construction phase of for-sale townhomes in this area. We have $32.4 million invested in additional land under development in Houston and Long Beach. We are currently in the planning phase with respect to these properties to determine whether to further develop apartment homes in these areas. We may also sell certain parcels of all three properties to third parties for commercial and retail development. 26 Our multifamily property portfolio is diversified throughout markets in the Southwest, Southeast, Midwest and Western regions of the United States. At December 31, 2000 and 1999, our investment in various geographic areas, excluding investment in joint ventures, was as follows: (Dollars in thousands) 2000 1999 ------------------- -------------------- Texas Houston $ 379,036 14% $ 402,997 15% Dallas 388,212 15 393,223 15 Austin 70,244 3 69,162 3 Other 59,143 2 59,200 2 ------------- ----- ------------ ------- Total Texas Properties 896,635 34 924,582 35 ------------- ----- ------------ ------- Arizona 155,225 6 148,871 6 California 212,785 8 177,394 7 Colorado 188,507 7 184,798 7 Florida 401,748 15 393,569 15 Kentucky 74,595 3 69,322 3 Missouri 149,593 6 172,454 6 Nevada 448,670 17 491,226 18 North Carolina 95,971 4 93,949 3 ------------- ----- ------------ ------- Total Properties $ 2,623,729 100% $ 2,656,165 100% ============= ===== ============ ======= Beginning in 1999, we entered into agreements with unaffiliated third parties to develop, construct and manage nine multifamily projects in five states containing a total of 3,112 apartment homes. We are providing financing for a portion of each project in the form of notes receivable which mature through 2005. These notes earn interest at 10% annually and are secured by second liens on the assets and partial guarantees by the third party owners. At December 31, 2000 and 1999, these notes had principal balances totaling $72.9 million and $28.1 million, respectively. We anticipate funding up to an aggregate of $110 million in connection with these projects. We expect these notes to be repaid from operating cash flow or proceeds from the sale of the individual properties. We have begun construction on four of these projects, and initial occupancy has begun on three of the projects. We have the option to purchase these properties in the future at a price to be determined based upon the property's performance and an agreed valuation model. Liquidity and Capital Resources Financial Structure We intend to continue maintaining what management believes to be a conservative capital structure by: (i) using what management believes is a prudent combination of debt and common and preferred equity; (ii) extending and sequencing the maturity dates of our debt where possible; (iii) managing interest rate exposure using fixed rate debt and hedging where management believes it is appropriate; (iv) borrowing on an unsecured basis in order to maintain a substantial number of unencumbered assets; and (v) maintaining conservative coverage ratios. The interest expense coverage ratio, net of capitalized interest, was 3.4 and 3.7 times for the years ended December 31, 2000 and 1999, respectively. At December 31, 2000 and 1999, 75.6% and 76.0%, respectively, of our real estate assets (based on invested capital) were unencumbered. 27 Liquidity We intend to meet our short-term liquidity requirements through cash flows provided by operations, our unsecured line of credit discussed in the "Financial Flexibility" section and other short-term borrowings. We expect that our ability to generate cash will be sufficient to meet our short-term liquidity needs, which include: (i) normal operating expenses; (ii) current debt service requirements; (iii) recurring capital expenditures; (iv) property development; and (v) distributions on our common and preferred equity. We consider our long-term liquidity requirements to be the repayment of maturing debt and borrowings under our unsecured line of credit and funding of acquisitions. We intend to meet our long-term liquidity requirements through the use of common and preferred equity capital, senior unsecured debt and property dispositions. We intend to concentrate our growth efforts toward selective development and acquisition opportunities in our current markets, and through the acquisition of existing operating and development properties in selected new markets. During the year ended December 31, 2000, we incurred $94.4 million in development costs and no acquisition costs. We are developing three additional properties at an aggregate cost of approximately $238.4 million of which we incurred $68.1 million during 2000. Remaining costs on these three properties, at December 31, 2000, totaled approximately $ 114.9 million. At year end, we were obligated for approximately $13 million under construction contracts (a substantial amount of which we expect to fund by debt). We intend to fund our developments and acquisitions through a combination of equity capital, partnership units, medium-term notes, construction loans, other debt securities and the unsecured line of credit. We also seek to selectively dispose of assets that management believes have a lower projected net operating income growth rate than the overall portfolio, or no longer conform to our operating and investment strategies. Additionally, over the next three years, we will continue rebalancing our portfolio with the goal of limiting any one market to no more than 12% of total real estate assets. Such sales may generate capital for acquisitions and new developments or for debt reduction. Dispositions during the year included eleven properties containing 3,599 apartment homes, a mini-storage facility located in Las Vegas and four parcels of undeveloped land. Of the eleven properties sold, three were located in each of Houston, Dallas and Las Vegas, and one was located in each of St. Louis and El Paso. The land sales consisted of two parcels totaling 2.9 acres located in downtown Dallas and one parcel totaling 38.5 acres located in Houston. Additionally, we sold a 19.5 acre tract of land located in Las Vegas which we acquired in our merger with Oasis. We used the net proceeds from these dispositions, totaling $150.1 million, to reduce indebtedness outstanding under our unsecured line of credit. During 2000, we invested approximately $750,000 into BroadBand Residential Inc., a multi-unit owner-sponsored broadband company providing high-speed data services to multi-family residents, and invested approximately $2.1 million in Viva Group, Inc., an internet based company that provides online owner-renter matching services for the multi-family housing industry. Our investment in Broadband Residential is recorded using the equity method, and our investment in Viva is recorded at cost. Both of these investments are recorded in other assets in our consolidated financial statements. Additionally, we have signed a commitment to invest up to $3.5 million with a consortium of real estate and technology companies which intends to pursue a broad range of real estate technology initiatives and opportunities. All of these investments were made along with other multi-family real estate owners. Subsequent to yearend, we 28 committed an additional $1.8 million to BroadBand Residential which will be funded through a note receivable, of which we have funded approximately $600,000. Net cash provided by operating activities totaled $163.8 million for 2000 compared to $164.0 million for 1999. This slight decrease was attributable to a $20.4 million increase in net operating income from the real estate portfolio for 2000 as compared to 1999, offset by a $11.1 million increase in interest expense and a $4.6 million increase in distributions on units convertible into perpetual preferred shares. Net operating income represents total property revenues less property operating and maintenance expenses, including real estate taxes. Also during the year, other assets increased $9.2 million. Net cash used in investing activities totaled $13.1 million for the year ended 2000 compared to $220.6 million in 1999. Total real estate assets, before accumulated depreciation, decreased $31.7 million for 2000 as a result of property sales in excess of property additions, compared to an increase of $190.1 million during 1999. Net cash flows used in investing activities during 2000 included $150.1 million in net proceeds received from property dispositions. This increase in cash was offset by expenditures for property development and capital improvements totaling $94.4 million and $27.9 million, respectively for the year. For the year ended 1999, expenditures for property development and capital improvements were $188.5 million and $33.4 million, respectively. Additionally, we received $13.2 million in net proceeds from property dispositions during 1999. Net cash used in financing activities totaled $151.3 million for the year ended 2000 compared to net cash provided by financing activities of $56.4 million for 1999. During 2000, we paid distributions totaling $112.9 million, repaid notes payable totaling $107.4 million and repurchased $31.2 million in common shares and units convertible into common shares. These payments were offset by the issuances of $17.5 million of preferred units, which are discussed in the "Financial Flexibility" section, and an increase in borrowings under our line of credit of $80.0 million. For the year ended 1999, we paid distributions totaling $108.3 million and repurchased $128.9 million common shares and units convertible into common shares. Additionally, during the year ended 1999, we issued $135.5 million of preferred units and $254.5 million of senior unsecured notes. The proceeds from these issuances were used to pay down borrowings under our line of credit, which decreased $66.0 million during 1999. In 1998, we began repurchasing our securities under a program approved by our Board of Trust Managers. The plan allows us to repurchase or redeem up to $200 million of our securities through open market purchases and private transactions. Management consummates these repurchases and redemptions at the time when they believe that we can reinvest available cash flow into our own securities at yields which exceed those currently available on direct real estate investments. These repurchases were made and we expect that future repurchases, if any, will be made without incurring additional debt and, in management's opinion, without reducing our financial flexibility. At December 31, 2000, we had repurchased approximately 6.9 million common shares and redeemed approximately 106,000 units at a total cost of $180.9 million. On January 17, 2001, we paid a distribution of $0.5625 per share for the fourth quarter of 2000 to all holders of record of our common shares as of December 18, 2000, and paid an equivalent amount per unit to holders of common limited partnership units in Camden Operating, L.P. Total distributions to common shareholders and holders of common operating partnership units for the year ended December 31, 2000 were $2.25 per share or unit. We determine the amount of cash available for distribution to unitholders in accordance with the partnership agreements and have made and intend to continue to make distributions to the holders of common operating partnership units in amounts equivalent to the per share distributions paid to holders of common shares. We intend to continue to make shareholder distributions in accordance with REIT qualification requirements under the federal tax code while maintaining what 29 management believes to be a conservative payout ratio, and expect to continue reducing the payout ratio. The dividend payout ratio was 64% and 65% for the years ended December 31, 2000 and 1999, respectively. On February 15, 2001, we paid a quarterly dividend on our preferred shares of $0.5625 per share to all preferred shareholders of record as of December 18, 2000. Total dividends to holders of preferred shares for the year ended December 31, 2000 were $2.25 per share. In 1999, our operating partnership issued $100 million of 8.5% Series B Cumulative Redeemable Perpetual Preferred Units. Also during 1999 and 2000, our operating partnership issued $53 million of 8.25% Series C Cumulative Redeemable Perpetual Preferred Units. Distributions on the preferred units are payable quarterly in arrears. The preferred units are redeemable for cash by the operating partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The preferred units are convertible after 10 years by the holder into corresponding Cumulative Redeemable Perpetual Preferred Shares. The preferred units are subordinate to present and future debt. Distributions on the preferred units totaled $12.8 million for the year ended December 31, 2000. Financial Flexibility During the third quarter of 2000, our line of credit, which was entered into in August 1999 with 14 banks for a total commitment of $375 million, was increased to $400 million and the maturity was extended to August 2003. The scheduled interest rate is currently based on a spread over LIBOR or Prime. The scheduled interest rates are subject to change as our credit ratings change. Advances under the line of credit may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of six months or less and may not exceed the lesser of $200 million or the remaining amount available under the line of credit. The line of credit is subject to customary financial covenants and limitations. At year end, we were in compliance with all covenants and limitations. As an alternative to our unsecured line of credit, we from time to time borrow using competitively bid unsecured short-term notes with lenders who may or may not be a part of the unsecured line of credit bank group. Such borrowings vary in term and pricing and are typically priced at interest rates below those available under the unsecured line of credit. As of December 31, 2000, we had $204 million available under the unsecured line of credit. During January 2000, we combined our three outstanding shelf registrations into a single $750 million universal shelf registration, all of which was available at year end. The shelf registration allows us to issue up to $750 million in debt securities and common and preferred equity securities. We have significant unencumbered real estate assets which could be sold or used as collateral for financing purposes should other sources of capital not be available. Subsequent to year end, we issued from our $750 million shelf registration an aggregate principal amount of $50 million of 7% five-year senior unsecured notes maturing on February 15, 2006 and $150 million of 7.625% ten-year senior unsecured notes maturing on February 15, 2011. Interest on the notes is payable semiannually on February 15 and August 15, commencing on August 15, 2001. We may redeem the notes at any time at a redemption price equal to the principal amount and accrued interest, plus a make-whole provision. The notes are direct, senior unsecured obligations and rank equally with all other unsecured and unsubordinated indebtedness. The proceeds from the sale of the notes were $197.8 million, net of issuance costs. We used the net proceeds to reduce indebtedness outstanding under the unsecured line of credit. 30 Market Risk We use fixed and floating rate debt to finance acquisitions, developments and maturing debt. These transactions expose us to market risk related to changes in interest rates. Management's policy is to review our borrowings and attempt to mitigate interest rate exposure through the use of derivative instruments. Our policy regarding the use of derivative financial instruments in managing market risk exposures is consistent with the prior year and is not expected to change in future years. We do not use derivative financial instruments for trading or speculative purposes. As of December 31, 2000, we had no derivative instruments outstanding. For fixed rate debt, interest rate changes affect the fair market value but do not impact net income to common shareholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income to common shareholders and cash flows, assuming other factors are held constant. At December 31, 2000, we had fixed rate debt of $879.5 million and floating rate debt of $258.6 million. Holding other variables constant (such as debt levels), a one percentage point variance in interest rates would change the unrealized fair market value of the fixed rate debt by approximately $27.6 million. The net income 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 would be approximately $2.6 million, holding all other variables constant. Funds from Operations Management considers FFO to be an appropriate measure of performance of an equity REIT. The National Association of Real Estate Investment Trusts currently defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our definition of diluted FFO also assumes conversion at the beginning of the period of all dilutive convertible securities, including minority interest, which are convertible into common equity. We believe that in order to facilitate a clear understanding of our consolidated historical operating results, FFO should be examined in conjunction with net income as presented in the consolidated financial statements and data included elsewhere in this report. FFO is not defined by generally accepted accounting principles. FFO should not be considered as an alternative to net income as an indication of our operating performance or to net cash provided by operating activities as a measure of our liquidity. Further, FFO as disclosed by other REIT's may not be comparable to our calculation. Our diluted FFO for the year ended December 31, 2000 increased $3.9 million over 1999. On a per share basis, diluted FFO for 2000 increased 9.4% over 1999. This increase in diluted FFO was due to a $20.4 million increase in net operating income from our real estate portfolio, offset by an increase in interest on debt which was used to fund developments and repurchase shares under our securities repurchase program, and an increase in distributions on units convertible into perpetual preferred shares. 31 The calculation of basic and diluted FFO for the years ended December 31, 2000 and 1999 follows: (In thousands)
2000 1999 ---------- ---------- Funds from operations Net income to common shareholders $ 65,053 $ 52,252 Real estate depreciation 94,277 87,491 Real estate depreciation from unconsolidated ventures 3,238 3,198 Loss on sale of property held in unconsolidated ventures 738 Gain on sales of properties and joint venture interests (18,323) (2,979) ---------- ---------- Funds from operations - basic 144,245 140,700 Preferred share dividends 9,371 9,371 Income allocated to units convertible into common shares 2,461 2,014 Interest on convertible subordinated debentures 177 258 Amortization of deferred costs on convertible debentures 20 26 ---------- ---------- Funds from operations - diluted $ 156,274 $ 152,369 ========== ========== Weighted average shares - basic 38,112 41,236 Common share options and awards granted 729 431 Preferred shares 3,207 3,207 Minority interest units 2,547 2,624 Convertible subordinated debentures 105 146 ---------- ---------- Weighted average shares - diluted 44,700 47,644 ========== ==========
Results of Operations Changes in revenues and expenses related to the operating properties from period to period are primarily due to property acquisitions, including the Oasis merger during 1998, developments, dispositions and improvements in the performance of the stabilized properties in the portfolio. Where appropriate, comparisons are made on a dollars-per-weighted-average-apartment homes basis in order to adjust for such changes in the number of apartment homes owned during each period. Selected weighted average revenues and expenses per operating apartment home for the three years ended December 31, 2000 are as follows:
2000 1999 1998 ------------ ----------- ------------ Rental income per apartment home per month $ 653 $ 623 $ 591 Property operating and maintenance per apartment home per year $ 2,424 $ 2,367 $ 2,290 Real estate taxes per apartment home per year $ 840 $ 798 $ 742 Weighted average number of operating apartment homes 46,501 45,606 42,411
2000 Compared to 1999 Earnings before interest, depreciation and amortization increased $21.1 million, or 9.8%, from $216.3 million to $237.4 million for the years ended December 31, 1999 and 2000, respectively. The weighted average number of apartment homes increased by 895 apartment homes, or 1.9%, from 45,606 to 46,501 for the years ended December 31, 1999 and 2000, respectively. Total operating properties were 122 and 130 at December 31, 2000 and 1999, respectively. The weighted average number of apartment homes and the operating properties exclude the impact of our ownership interest in properties owned in joint ventures. Our apartment communities generate rental revenue and other income through the leasing of apartment homes. Revenues from our rental operations comprised 97%and 98% of our total revenues for the years ended December 31, 2000 and 1999, 32 respectively. Our primary financial focus for our apartment communities is net operating income. Net operating income represents total property revenues less property operating and maintenance expenses, including real estate taxes. Net operating income increased $20.4 million, or 9.3%, from $218.9 million to $239.4 million for the years ended December 31, 1999 and 2000, respectively. Rental income for the year ended December 31, 2000 increased $22.9 million, or 6.7% over the year ended December 31, 1999. Rental income per apartment home per month increased $30, or 4.8%, from $623 to $653 for the years ended December 31, 1999 and 2000, respectively. The increase was primarily due to increased revenue growth from the stabilized real estate portfolio and higher average rental rates on the completed development properties. Additionally, overall average occupancy increased from 93.4% for the year ended December 31, 1999 to 94.0% for the year ended December 31, 2000. Other property income increased $4.9 million from $22.1 million to $27.0 million for the years ended December 31, 1999 and 2000, respectively, which represents a monthly increase of $8 per apartment home. This increase in other property income was primarily due to increases from revenue sources such as telephone, cable and water. Other income increased $3.9 million from $1.9 million to $5.8 million for the years ended December 31, 1999 and 2000, respectively. This increase was primarily due to interest earned on our notes receivable which increased $38.5 million during the year. Property operating and maintenance expenses increased $4.8 million or 4.4%, from $108.0 million to $112.7 million, but decreased as a percent of total property income from 29.7% to 28.8%, for the years ended December 31, 1999 and 2000, respectively. The increase in operating expense was due to a larger number of apartment homes in operation and an increase in salary and benefit expenses per unit. Our operating expense ratios decreased primarily as a result of operating efficiencies generated by our newly developed properties. Real estate taxes increased $2.6 million from $36.4 million to $39.1 million for the years ended December 31, 1999 and 2000, respectively, which represents an annual increase of $42 per apartment home. The increase was primarily due to increases in the valuations of renovated and developed properties and increases in property tax rates. General and administrative expenses increased $3.7 million, from $10.6 million in 1999 to $14.3 million in 2000, and increased as a percent of revenues from 2.9% to 3.6%. The increase was primarily due to increases in incentive-based compensation expense, including the vesting of previously issued and outstanding restricted performance-based compensation awards related to successful implementation of our land development strategy, and expenses related to our information technology initiatives. Excluding the vesting of the restricted awards associated with the land sales, the general and administrative expense percentage would have been 3.0% of revenues for the year ended December 31, 2000. Interest expense increased from $57.9 million in 1999 to $69.0 million in 2000 primarily due to interest on debt incurred to fund new development and repurchase securities under our repurchase program. Interest capitalized was $15.3 million and $16.4 million for the years ended December 31, 2000 and 1999, respectively. Depreciation and amortization increased from $89.5 million to $97.0 million. This increase was due primarily to the completion of new development and capital expenditures over the past two years, partially offset by property dispositions. 33 Gains on sales of properties for the year ended December 31, 2000 totaled $18.3 million due to the sale of eleven properties containing a total of 3,599 apartment homes. Also included in the gain is the sale of a mini-storage facility in Las Vegas and the sale of approximately 61 acres of undeveloped land located in Las Vegas, Dallas and Houston. Gains on sales of properties for the year ended December 31, 1999 totaled $3.0 million due to the sale of two multifamily properties containing 358 units and the sale of our investment in two commercial office buildings. The gains recorded on these 1999 dispositions were partially offset by a loss on the sale of a retail/commercial center. The gains in 1999 do not include a loss on the sale of a 408 unit property held in a joint venture of $738,000 which is included in "Equity in income of joint ventures." Distributions on units convertible into perpetual preferred shares increased $4.6 million, from $8.3 million for the year ended December 31, 1999 to $12.8 million for the year ended December 31, 2000. This increase is attributable to our issuances of perpetual preferred units during 1999 and 2000 as follows: $100 million in February 1999; $35.5 million in August and September of 1999; and $17.5 million in January 2000. 1999 Compared to 1998 Earnings before interest, depreciation and amortization increased $29.1 million, or 15.5%, from $187.2 million to $216.3 million for the years ended December 31, 1998 and 1999, respectively. The weighted average number of apartment homes increased by 3,195 apartment homes, or 7.5%, from 42,411 to 45,606 for the years ended December 31, 1998 and 1999, respectively. Total operating properties were 126 and 130 at December 31, 1998 and 1999, respectively. The weighted average number of apartment homes and the operating properties exclude the impact of our ownership interest in operating properties and apartment homes owned in joint ventures. Our apartment communities generate rental revenue and other income through the leasing of apartment homes. Revenues from our rental operations comprised 98% of our total revenues for the years ended December 31, 1999 and 1998. Our primary financial focus for our apartment communities is net operating income. Net operating income represents total property revenues less property operating and maintenance expenses, including real estate taxes. Net operating income increased $28.8 million, or 15.2%, from $190.1 million to $218.9 million for the years ended December 31, 1998 and 1999, respectively. Rental income per apartment home per month increased $32, or 5.4%, from $591 to $623 for the years ended December 31, 1998 and 1999, respectively. The increase was primarily due to a 3.0% increase in revenues from the stabilized real estate portfolio, higher average rental rates on properties added to the portfolio through the Oasis merger and on four of the five acquired properties, and the completion of new development properties with higher average rental rates. Additionally, seven of the eight disposed properties had average rental rates significantly lower than the portfolio average. Other property income increased $4.1 million from $18.1 million to $22.1 million for the years ended December 31, 1998 and 1999, respectively, which represents a monthly increase of $4 per apartment home. This increase in other property income was primarily due to a larger number of apartment homes owned and in operation and a $2.7 million increase from revenue sources such as telephone, cable and water. Fee and asset management income increased $3.8 million from $1.6 million to $5.4 million for the years ended December 31, 1998 and 1999, respectively. This increase is primarily due to fees generated from the construction and renovation of multifamily properties for third parties. 34 Property operating and maintenance expenses increased $10.8 million, from $97.1 million to $108.0 million, but decreased as a percent of total property income from 30.5% to 29.7% for the years ended December 31, 1998 and 1999, respectively. Our operating expense ratio decreased from the prior year primarily as a result of our continued focus on creating operating efficiencies in the stabilized portfolio, and the impact of our April 1, 1998 adoption of a new accounting policy, whereby expenditures for floor coverings, appliances and HVAC unit replacements are expensed in the first five years of a property's life and capitalized thereafter. Prior to the adoption of this policy, we had been expensing these costs. Had this policy change been adopted as of January 1, 1998, the operating expense ratio would have been 30.1%. Real estate taxes increased $4.9 million from $31.5 million to $36.4 million for the years ended December 31, 1998 and 1999, respectively, which represents an annual increase of $56 per apartment home. Real estate taxes per apartment home have increased due to increases in the valuations of renovated, acquired and developed properties and increases in property tax rates. This increase per apartment home was partially offset by lower property taxes in the portfolio added through the Oasis merger. General and administrative expenses increased from $8.0 million in 1998 to $10.6 million in 1999, and increased as a percent of revenues from 2.5% to 2.9%. The general and administrative expense ratio increase is primarily attributable to the impact of our March 20, 1998 adoption of Issue No. 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions", which required certain costs that were previously capitalized to be expensed, an increase in compensation costs and additional expenses associated with training and information systems functions. Interest expense increased from $50.5 million in 1998 to $57.9 million in 1999 primarily due to increased indebtedness related to the Oasis merger, completed developments, renovations and property acquisitions. Additionally, the average interest rate on our debt increased slightly from 7.1% for 1998 to 7.2% for the year ended 1999. Interest capitalized was $16.4 million and $9.9 million for the years ended December 31, 1999 and 1998, respectively. Depreciation and amortization increased from $78.1 million to $89.5 million. This increase was due primarily to the Oasis merger, developments, renovations and property acquisitions. Gains on sales of properties and joint venture interests increased $3.0 million due to gains from the disposition of two multifamily properties containing 358 units and the sale of our joint venture investment in two commercial office buildings. The gains recorded on these dispositions were partially offset by a loss on the sale of a retail/commercial center. These gains do not include a loss on the sale of a 408 unit property held in a joint venture of $738,000 which is included in "Equity in income of joint ventures." Inflation We lease apartments under lease terms generally ranging from six to thirteen months. Management believes that such short-term lease contracts lessen the impact of inflation due to the ability to adjust rental rates to market levels as leases expire. Impact of New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", which is effective for all fiscal years beginning after June 15, 2000. SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS No. 133, certain contracts that were not formerly 35 considered derivatives may now meet the definition of a derivative. We have adopted SFAS No. 133 effective January 1, 2001. The adoption of SFAS No. 133 did not have a material impact on our financial position, results of operations, or cash flows. In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 provides guidance on revenue recognition as well as the presentation and disclosure of revenue in financial statements for all public companies. Our rental and other property income is recorded when due from residents and is recognized monthly as it is earned. Our apartment homes are rented to residents on lease terms generally ranging from six to thirteen months, with monthly payments due in advance. We are currently following the criteria set forth in SAB No. 101 to determine when revenue can be recognized, and therefore our adoption of SAB No. 101 during 2000 did not have a material impact on our financial statements. 36 INDEPENDENT AUDITORS' REPORT To the Shareholders of Camden Property Trust We have audited the accompanying consolidated balance sheets of Camden Property Trust as of December 31, 2000 and 1999, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the management of Camden Property Trust. Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 at December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Houston, Texas February 7, 2001 37 CAMDEN PROPERTY TRUST CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
December 31, ----------------------------- 2000 1999 -------------- -------------- Assets Real estate assets, at cost Land $ 350,248 $ 354,833 Buildings and improvements 2,124,740 2,122,793 -------------- -------------- 2,474,988 2,477,626 Less: accumulated depreciation (326,723) (253,545) -------------- -------------- Net operating real estate assets 2,148,265 2,224,081 Properties under development, including land 148,741 178,539 Investment in joint ventures 22,612 21,869 -------------- -------------- Total real estate assets 2,319,618 2,424,489 Accounts receivable-- affiliates 3,236 2,228 Notes receivable: Affiliates 1,800 1,800 Other 72,893 34,442 Other assets, net 23,923 14,744 Cash and cash equivalents 4,936 5,517 Restricted cash 4,475 4,712 -------------- -------------- Total assets $ 2,430,881 $ 2,487,932 ============== ============== Liabilities and Shareholders' Equity Liabilities Notes payable: Unsecured $ 799,026 $ 820,623 Secured 339,091 344,467 Accounts payable 13,592 20,323 Accrued real estate taxes 26,781 24,485 Accrued expenses and other liabilities 36,981 33,987 Distributions payable 28,900 27,114 -------------- -------------- Total liabilities 1,244,371 1,270,999 Minority interests: Units convertible into perpetual preferred shares 149,815 132,679 Units convertible into common shares 60,562 64,173 -------------- -------------- Total minority interests 210,377 196,852 7.33% Convertible Subordinated Debentures 1,950 3,406 Shareholders' Equity Convertible preferred shares of beneficial interest; $2.25 Series A Cumulative Convertible, $0.01 par value per share, liquidation preference of $25 per share, 10,000 shares authorized, 4,165 issued and outstanding at December 31, 2000 and 1999 42 42 Common shares of beneficial interest; $0.01 par value per share; 100,000 shares authorized; 45,760 and 45,317 issued at December 31, 2000 and 1999, respectively 450 448 Additional paid-in capital 1,312,323 1,303,645 Distributions in excess of net income (153,972) (132,198) Unearned restricted share awards (6,680) (8,485) Less: treasury shares, at cost (177,980) (146,777) -------------- -------------- Total shareholders' equity 974,183 1,016,675 -------------- -------------- Total liabilities and shareholders' equity $ 2,430,881 $ 2,487,932 ============== ==============
See Notes to Consolidated Financial Statements. 38 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Year Ended December 31, ----------------------------------------- 2000 1999 1998 ----------- ----------- ----------- Revenues Rental income $ 364,111 $ 341,168 $ 300,632 Other property income 27,030 22,148 18,093 ----------- ----------- ----------- Total property income 391,141 363,316 318,725 Equity in income of joint ventures 765 683 1,312 Fee and asset management 5,810 5,373 1,552 Other income 5,823 1,924 2,250 ----------- ----------- ----------- Total revenues 403,539 371,296 323,839 ----------- ----------- ----------- Expenses Property operating and maintenance 112,727 107,972 97,137 Real estate taxes 39,054 36,410 31,469 General and administrative 14,349 10,606 7,998 Interest 69,036 57,856 50,467 Depreciation and amortization 96,966 89,516 78,113 ----------- ----------- ----------- Total expenses 332,132 302,360 265,184 ----------- ----------- ----------- Income before gain on sales of properties and joint venture interests, and minority interests 71,407 68,936 58,655 Gain on sales of properties and joint venture interests 18,323 2,979 ---------- ---------- ---------- Income before minority interests 89,730 71,915 58,655 Income allocated to minority interests Distributions on units convertible into perpetual preferred shares (12,845) (8,278) Income allocated to units convertible into common shares (2,461) (2,014) (1,322) ----------- ----------- ----------- Total income allocated to minority interests (15,306) (10,292) (1,322) ----------- ----------- ----------- Net income 74,424 61,623 57,333 Preferred share dividends (9,371) (9,371) (9,371) ----------- ----------- ----------- Net income to common shareholders $ 65,053 $ 52,252 $ 47,962 =========== =========== =========== Basic earnings per share $ 1.71 $ 1.27 $ 1.16 Diluted earnings per share $ 1.63 $ 1.23 $ 1.12 Distributions declared per common share $ 2.25 $ 2.08 $ 2.02 Weighted average number of common shares outstanding 38,112 41,236 41,174 Weighted average number of common and common dilutive 41,388 44,291 44,183 equivalent shares outstanding
See Notes to Consolidated Financial Statements. 39
CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands, except per share amounts) Preferred Common Additional Distributions Unearned Treasury Shares of Shares of Paid-In in Excess of Restricted Shares Beneficial Beneficial Capital Net Income Share Interest Interest Awards ---------- ---------- ----------- ------------- ------------ ---------- Shareholders' Equity, January 1, 1998 $ $ 317 $ 780,738 $ (63,526) $ (6,965) $ Net income to common shareholders 47,962 Common shares issued in Oasis Merger (12,393 shares) 124 395,404 Preferred shares issued in Oasis Merger (4,165 shares) 42 104,083 Common shares issued under dividend reinvestment plan 35 Conversion of debentures (102 shares) 1 2,408 Restricted shares issued under benefit plan (232 shares) 2 6,675 (3,076) Employee Stock Purchase Plan (136) Restricted shares placed into Rabbi Trust (236 shares) (2) 2 Common share options exercised (82 shares) 1 428 Conversion of Operating Partnership units (346 shares) 4 9,904 Repurchase of common shares (801 shares) (20,704) Cash distributions ($2.02 per share) (83,333) ---------- ---------- ----------- ------------- ------------ ---------- Shareholders' Equity, December 31, 1998 42 447 1,299,539 (98,897) (10,039) (20,704) ---------- ---------- ----------- ------------- ------------ ---------- Net income to common shareholders 52,252 Common shares issued under dividend reinvestment plan 28 Conversion of debentures (7 shares) 169 Restricted shares issued under benefit plan (90 shares) 1 2,041 1,559 Employee Stock Purchase Plan (522) Restricted shares placed into Rabbi Trust (35 shares) 5 (5) Common share options exercised (80 shares) 1,806 Conversion of Operating Partnership units (23 shares) 479 Repurchase of minority interest units 100 Repurchase of common shares (4,890 shares) (126,073) Cash distributions ($2.08 per share) (85,553) ---------- ---------- ----------- ------------- ------------ ---------- Shareholders' Equity, December 31, 1999 42 448 1,303,645 (132,198) (8,485) (146,777) ---------- ---------- ----------- ------------- ------------ ---------- Net income to common shareholders 65,053 Common shares issued under dividend reinvestment plan 23 Conversion of debentures (61 shares) 1 1,462 Restricted shares issued under benefit plan (329 shares) 3 6,195 1,805 Employee Stock Purchase Plan (189) Restricted shares placed into Rabbi Trust (241 shares) (2) 2 Common share options exercised (46 shares) 1,052 Conversion of Operating Partnership units (6 shares) 133 Repurchase of common shares (1,166 shares) (31,203) Cash distributions ($2.25 per share) (86,827) ---------- ---------- ----------- ------------- ------------ ---------- Shareholders' Equity, December 31, 2000 $ 42 $ 450 $1,312,323 $ (153,972) $ (6,680) $(177,980) ========== ========== =========== ============= ============ ==========
See Notes to Consolidated Financial Statements. 40 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Year Ended December 31, ------------------------------------ 2000 1999 1998 ----------- ----------- ------------ Cash Flow from Operating Activities Net income $ 74,424 $ 61,623 $ 57,333 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 96,966 89,516 78,113 Equity in income of joint ventures, net of cash received 1,959 2,491 1,278 Gain on sales of properties and joint venture interests (18,323) (2,979) Income allocated to units convertible into common shares 2,461 2,014 1,322 Accretion of discount on unsecured notes payable 403 320 169 Net change in operating accounts 5,931 11,036 204 ----------- ----------- ------------ Net cash provided by operating activities 163,821 164,021 138,419 Cash Flow from Investing Activities Cash of Oasis at acquisition 7,253 Net proceeds from Sierra-Nevada transaction 226,128 Increase in real estate assets (120,636) (213,352) (335,567) Net proceeds from sales of properties 150,141 13,226 42,513 Net proceeds from sale of joint venture interests 5,465 6,841 Increase in investment in joint ventures (2,702) (2,012) (4,922) Decrease in investment in joint ventures 1,505 1,478 Increase in notes receivable. (38,451) (23,530) Net decrease in affiliate notes receivable 5,389 Other (1,488) (1,873) (4,126) ---------- ----------- ------------ Net cash used in investing activities (13,136) (220,571) (55,013) Cash Flow from Financing Activities Net increase (decrease) in unsecured lines of credit and short-term borrowings 80,000 (66,000) 146,792 Proceeds from notes payable 253,380 152,600 Losses related to early retirement of debt Repayment of notes payable (107,376) (25,178) (274,473) Proceeds from issuance of preferred units, net 17,136 132,679 Distributions to shareholders and minority interests (112,850) (108,253) (89,115) Repurchase of common shares and units (31,203) (128,929) (20,704) Other 3,027 (1,279) 673 ----------- ----------- ------------ Net cash (used in) provided by financing activities (151,266) 56,420 (84,227) ----------- ----------- ------------ Net decrease in cash and cash equivalents (581) (130) (821) Cash and cash equivalents, beginning of period 5,517 5,647 6,468 ----------- ----------- ------------ Cash and cash equivalents, end of period $ 4,936 $ 5,517 $ 5,647 =========== =========== ============ Supplemental Information Cash paid for interest, net of interest capitalized $ 70,310 $ 54,226 $ 51,574 Interest capitalized....... 15,303 16,396 9,929 Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of Oasis (including the Sierra-Nevada transaction), net of cash acquired: Fair value of assets acquired $ $ 835 $ 793,513 Liabilities assumed 835 505,721 Common shares issued 395,528 Preferred shares issued 104,125 Fair value of minority interest 21,520 Notes payable assumed upon purchase of properties 22,424 Conversion of 7.33% subordinated debentures to common shares, net 1,456 169 2,409 Value of shares issued under benefit plans, net 5,873 2,047 6,821 Conversion of operating partnership units to common shares 144 479 9,881 Notes receivable issued upon sale of real estate assets 10,912
See Notes to Consolidated Financial Statements. 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business Camden Property Trust is a self-administered and self-managed real estate investment trust organized on May 25, 1993. We, with our subsidiaries, report as a single business segment, with activities related to the ownership, development, construction and management of multifamily apartment communities in the Southwest, Southeast, Midwest and Western regions of the United States. As of December 31, 2000, we owned interests in, operated or were developing 148 multifamily properties containing 52,874 apartment homes located in nine states. Three of our multifamily properties containing 1,538 apartment homes were under development at December 31, 2000. Additionally, we have several sites which we intend to develop into multifamily apartment communities. Acquisition of Oasis Residential, Inc. On April 8, 1998, we acquired, through a tax-free merger, Oasis Residential, Inc., a publicly traded Las Vegas-based multifamily REIT. Through this acquisition, we acquired 52 completed multifamily properties and 15,514 apartment homes at the date of acquisition. Each share of Oasis common stock outstanding on April 8, 1998 was exchanged for 0.759 of a Camden common share. Each share of Oasis Series A cumulative convertible preferred stock outstanding on April 8, 1998 was exchanged for one Camden Series A cumulative convertible preferred share with terms and conditions comparable to the Oasis preferred stock. We issued 12.4 million common shares and 4.2 million preferred shares in exchange for the outstanding Oasis common and preferred stock, respectively. We assumed approximately $484 million of Oasis debt, at fair value, in the merger. The accompanying consolidated financial statements include the operations of Oasis since April 1, 1998, the effective date of the Oasis merger for accounting purposes. In connection with the merger with Oasis, on June 30, 1998, we completed a transaction in which Camden USA, Inc., one of our wholly owned subsidiaries, and TMT-Nevada, L.L.C., a Delaware limited liability company, formed Sierra-Nevada Multifamily Investments, LLC. We entered into this transaction to reduce our market risk in the Las Vegas area. TMT-Nevada holds an 80% interest in Sierra-Nevada and Camden USA holds the remaining 20% interest. In the above transaction, we transferred to Sierra-Nevada 19 apartment communities containing 5,119 apartment homes for an aggregate of $248 million. Prior to the merger, Oasis owned 100% of each of these communities. In the merger, Camden USA acquired these communities. As a result, after the merger and prior to the Sierra-Nevada transaction, Camden USA owned 100% of each of these 19 properties which are located in Las Vegas, Nevada. This transaction was funded with capital invested by the members of Sierra-Nevada, the assumption of $9.9 million of existing nonrecourse indebtedness, the issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. 2. Summary of Significant Accounting Policies Principles of Consolidation. The consolidated financial statements include our assets, liabilities and operations and those of our wholly-owned subsidiaries and partnerships in which our aggregate ownership is greater than 50%. Those entities owned less than 50% where significant influence is in effect are accounted for using the equity method. Those entities owned less than 50% where significant influence is not exercised are accounted for using the cost method. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and 42 liabilities at the date of the financial statements, results of operations during the reporting periods and related disclosures. Actual results could differ from those estimates. Operating Partnership and Minority Interests. Approximately 27% of our multifamily apartment units at December 31, 2000 were held in Camden Operating, L.P. This operating partnership has issued both common and preferred limited partnership units. As of December 31, 2000, we held 82.4% of the common limited partnership units and the sole 1% general partnership interest of the operating partnership. The remaining 16.6% of the common limited partnership units are primarily held by former officers, directors and investors of Paragon Group, Inc., which we acquired in 1997, who collectively owned 1,969,272 common limited partnership units at December 31, 2000. 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 common limited partnership units and only two of our eight Trust Managers own common limited partnership units. In 1999, our operating partnership issued $100 million of 8.5% Series B Cumulative Redeemable Perpetual Preferred Units. Also during 1999 and 2000, our operating partnership issued $53 million of 8.25% Series C Cumulative Redeemable Perpetual Preferred Units. Distributions on the preferred units are payable quarterly in arrears. The preferred units are redeemable for cash by the operating partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The preferred units are convertible after 10 years by the holder into corresponding Cumulative Redeemable Perpetual Preferred Shares. The preferred units are subordinate to present and future debt. Additionally, in conjunction with the Oasis merger, we acquired the controlling managing member interest in Oasis Martinique, LLC which owns one property in Orange County, California and is included in our consolidated financial statements. The remaining interests comprising 754,270 units are exchangeable into 572,490 of our common shares. Minority interests in the accompanying consolidated financial statements relate to holders of common and preferred limited partnership units of Camden Operating, L.P. and units in Oasis Martinique, LLC. Cash and Cash Equivalents. All cash and investments in money market accounts and other securities with a maturity of three months or less at the date of purchase are considered to be cash and cash equivalents. Restricted Cash. Restricted cash mainly consists of escrow deposits held by lenders for property taxes, insurance and replacement reserves. Substantially all restricted cash is invested in short-term securities. Real Estate Assets, at Cost. Real estate assets are carried at cost plus capitalized carrying charges. Expenditures directly related to the development, acquisition and improvement of real estate assets, excluding internal costs relating to acquisitions, are capitalized at cost as land, buildings and improvements. All construction and carrying costs are capitalized and reported on the balance sheet in "Properties under development, including land" until individual buildings are completed. Upon completion of each building, the total cost of that building and the associated land is transferred to "Land" and "Buildings and improvements" and the assets are depreciated over their estimated useful lives using the straight line method of depreciation. All operating expenses, excluding depreciation, associated with occupied apartment homes for properties in the development and leasing phase are expensed against revenues generated by those apartment homes as they become occupied. Upon achieving 90% occupancy, or generally one year from opening the leasing office (with some 43 allowances for larger than average properties), whichever occurs first, all apartment homes are considered operating and we begin expensing all items that were previously considered as carrying costs. If an event or change in circumstance indicates a potential impairment in the value of a property has occurred, our policy is to assess any potential impairment by making a comparison of the current and projected operating cash flows for such property over its remaining useful life, on an undiscounted basis, to the carrying amount of the property. If such carrying amounts are in excess of the estimated projected operating cash flows of the property, we would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its estimated fair market value. Real estate to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Depreciation expense is not recorded during the period in which such assets are held for sale. Effective April 1, 1998, we implemented prospectively a new accounting policy whereby expenditures for carpet, appliances and HVAC unit replacements are capitalized and depreciated over their estimated useful lives. Previously, all such replacements had been expensed. We believe that the newly adopted accounting policy is preferable as it is consistent with standards and practices utilized by the majority of our peers and provides a better matching of expenses with the related benefit of the expenditure. The change in accounting principle is inseparable from the effect of the change in accounting estimate and is therefore treated as a change in accounting estimate. See New Accounting Pronouncements section for the effect of this change and our adoption of a new accounting pronouncement on our financial results for the nine months ended December 31, 1998. We capitalized $27.9 million and $33.4 million in 2000 and 1999, respectively, of renovation and improvement costs which extended the economic lives and enhanced the earnings of our multifamily properties. Carrying charges, principally interest and real estate taxes, of land under development and buildings under construction are capitalized as part of properties under development and buildings and improvements to the extent that such charges do not cause the carrying value of the asset to exceed its net realizable value. Capitalized interest was $15.3 million in 2000, $16.4 million in 1999 and $9.9 million in 1998. Capitalized real estate taxes were $2.9 million in 2000, $3.2 million in 1999 and $1.4 million in 1998. All initial buildings and improvements costs are depreciated over their remaining estimated useful lives of 5 to 35 years using the straight line method. Capital improvements subsequent to the initial renovation period are depreciated over their expected useful lives of 3 to 15 years using the straight line method. Other Assets, Net. Other assets in our consolidated financial statements include deferred financing costs, non-real estate leasehold improvements and equipment, investments in e-commerce initatives and other miscellaneous receivables. Deferred financing costs are amortized over the terms of the related debt on the straight line method. Leasehold improvements and equipment are depreciated on the straight line method over the shorter of the expected useful lives or the lease terms which range from 3 to 10 years. Accumulated depreciation and amortization for such assets was $9.0 million in 2000 and $5.6 million in 1999. Interest Rate Swap Agreements. The differential to be paid or received on interest rate swap agreements is accrued as interest rates change and is recognized over the life of the agreements as an increase or decrease in interest expense. We do not use these instruments for trading or speculative purposes. 44 Income Recognition. In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 provides guidance on revenue recognition as well as the presentation and disclosure of revenue in financial statements for all public companies. Our rental and other property income is recorded when due from residents and is recognized monthly as it is earned. Our apartment homes are rented to residents on lease terms generally ranging from six to thirteen months, with monthly payments due in advance. Interest, fee and asset management and all other sources of income are recognized as earned. We are currently following the criteria set forth in SAB No. 101 to determine when revenue can be recognized, and therefore our adoption of SAB No. 101 during 2000 did not have a material impact on our financial statements. Rental Operations. We own and operate multifamily apartment homes that are rented to residents. None of the properties are subject to rent control or rent stabilization. Operations of apartment properties acquired are recorded from the date of acquisition in accordance with the purchase method of accounting. In management's opinion, due to the number of residents, the type and diversity of submarkets in which the properties operate, and the collection terms, there is no concentration of credit risk. Income Taxes and Distributions. We have maintained and intend to maintain our election as a REIT under the Internal Revenue Code of 1986, as amended. As a result, we generally will not be subject to federal taxation to the extent we distribute 95% of our REIT taxable income to our shareholders and satisfy certain other requirements. The distribution percentage decreases to 90% beginning 2001. Accordingly, no provision for federal income taxes has been included in the accompanying consolidated financial statements. Taxable income differs from net income for financial reporting purposes due principally to the timing of the recognition of depreciation expense. This difference is primarily due to the difference in the book/tax basis of the real estate assets and the differing methods of depreciation and useful lives of the assets. During 2000, book depreciation expense exceeded the amount reported for tax purposes by $19.1 million. The net book basis of our real estate assets exceeds our net tax basis by $185.5 million at December 31, 2000. A schedule of per share distributions we paid and reported to our shareholders is set forth in the following tables: Year Ended December 31, ------------------------------------- Common Share Distributions 2000 1999 1998 - -------------------------- --------- ---------- ---------- Ordinary income $ 1.71 $ 2.08 $ 1.68 20% Long-term capital gain 0.11 0.10 25% Sec. 1250 capital gain 0.43 0.24 --------- ---------- ---------- Total $ 2.25 $ 2.08 $ 2.02 ========= ========== ========== Percentage of distributions representing tax preference items. 12.090% 12.187% 9.052% Year Ended December 31 ------------------------------------- Preferred Share Dividends 2000 1999 1998* - ------------------------- ---------- --------- ---------- Ordinary income $ 1.71 $ 2.25 $ 1.40 20% Long-term capital gain 0.11 0.09 25% Sec. 1250 capital gain 0.43 0.20 ---------- --------- ---------- Total $ 2.25 $ 2.25 $ 1.69 ========== ========= ========== * Preferred share dividends for 1998 only include dividends paid from date of the Oasis merger through December 31, 1998. 45 Property Operating and Maintenance Expenses. Property operating and maintenance expenses included normal repairs and maintenance totaling $27.6 million in 2000, $24.5 million in 1999 and $21.5 million in 1998. Earnings Per Share. Basic earnings per share is computed based on net income to common shareholders and the weighted average number of common shares outstanding. Diluted earnings per share reflects common shares issuable from the assumed conversion of common share options and awards granted, preferred shares, units convertible into common shares and convertible subordinated debentures. Only those items that have a dilutive impact on our basic earnings per share are included in diluted earnings per share. The following table presents information necessary to calculate basic and diluted earnings per share for the periods indicated (in thousands, except per share amounts).
Year Ended December 31, ----------------------------------------- 2000 1999 1998 ---------- ---------- ---------- BASIC EARNINGS PER SHARE Weighted average common shares outstanding 38,112 41,236 41,174 ========== ========== ========== Basic earnings per share $ 1.71 $ 1.27 $ 1.16 ========== ========== ========== DILUTED EARNINGS PER SHARE Weighted average common shares outstanding 38,112 41,236 41,174 Shares issuable from assumed conversion of: Common share options and awards granted 729 431 399 Units convertible into common shares 2,547 2,624 2,610 ---------- ---------- ---------- Weighted average common shares outstanding, as adjusted 41,388 44,291 44,183 ========== ========== ========== Diluted earnings per share $ 1.63 $ 1.23 $ 1.12 ========== ========== ========== EARNINGS FOR BASIC AND DILUTED COMPUTATION Net income $ 74,424 $ 61,623 $ 57,333 Less: preferred share dividends 9,371 9,371 9,371 ---------- ---------- ---------- Net income to common shareholders (basic earnings per share computation) 65,053 52,252 47,962 Income allocated to units convertible into common shares 2,461 2,014 1,322 ---------- ---------- ---------- Net income to common shareholders, as adjusted (diluted earnings per share computation) $ 67,514 $ 54,266 $ 49,284 ========== ========== ==========
Reclassifications. Certain reclassifications have been made to amounts in prior year financial statements to conform with current year presentations. New Accounting Pronouncements. In March 1998, the Emerging Issues Task Force ("EITF") of the Financial Accounting Standards Board ("FASB") reached a consensus decision on Issue No. 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions", which requires that internal costs of identifying and acquiring operating properties be expensed as incurred for transactions entered into on or after March 20, 1998. Prior to our adoption of this policy, we had been capitalizing such costs. Had we adopted Issue No. 97-11 and the new accounting policy for floor coverings, appliances and HVAC unit replacements as of January 1, 1998, net income to common shareholders would have increased $650,000 or $0.02 per basic and diluted earnings per share for the year ended December 31, 1998. In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for 46 Derivative Instruments and Hedging Activities", which is effective for all fiscal years beginning after June 15, 2000. SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS No. 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. We have adopted SFAS No. 133 effective January 1, 2001. The adoption of SFAS No. 133 did not have a material impact on our financial position, results of operations, or cash flows. 3. Notes Receivable Beginning in 1999, we entered into agreements with unaffiliated third parties to develop, construct and manage nine multifamily projects containing a total of 3,112 apartment homes. We are providing financing for a portion of each project in the form of notes receivable which mature through 2005. These notes earn interest at 10% annually and are secured by second liens on the assets and partial guarantees by the third party owners. We expect these notes to be repaid from operating cash flow or proceeds from the sale of the individual properties. At December 31, 2000 and 1999, these notes had principal balances totaling $72.9 million and $28.1 million, respectively, and we anticipate funding up to an aggregate of $110 million in connection with these projects. We earn fees for managing the development, construction and eventual operations of these properties. The related fees we earned for these projects totaled $2.2 million and $1.7 million for the years ended December 31, 2000 and 1999, respectively. We have begun construction on four of these projects, and initial occupancy has begun on three of the projects. We have the option to purchase these properties in the future at a price to be determined based upon the property's performance and an agreed valuation model. The following is a detail of our third party construction subject to notes receivable:
Number of Estimated Estimated/ Estimated Apartment Cost Actual Date Date of Property and Location Homes ($ millions) of Completion Stabilization - -------------------------------- ------------ ------------- ---------------- -------------- In lease-up Pecos Ranch Phoenix, AZ 272 $ 21 4Q00 1Q01 Marina Pointe II Tampa, FL 352 30 1Q01 3Q01 Creekside Denver, CO 279 32 1Q01 4Q01 Under Construction Ybor City Tampa, FL 454 40 4Q01 3Q02 Pre-Development Little Italy San Diego, CA 160 32 Otay Ranch San Diego, CA 422 57 California Oaks Murietta, CA 264 35 Lee Vista II Orlando, FL 366 31 Midtown West Houston, TX 543 54 ------------ ------------ Total Third Party Development 3,112 $ 332 ============ ============
47 4. Notes Payable The following is a summary of our indebtedness: (In millions)
December 31, ------------------------ 2000 1999 --------- ---------- Senior Unsecured Notes: 6.73% - 7.28% Notes, due 2001 - 2006 $ 523.5 $ 523.1 6.68% - 7.63% Medium-Term Notes, due 2002 - 2009 79.5 181.5 Unsecured Line of Credit and Short-Term Borrowings 196.0 116.0 --------- ---------- 799.0 820.6 Secured Notes - Mortgage Loans (5.75% - 8.63%), due 2001-2028 339.1 344.5 --------- ---------- Total notes payable $ 1,138 $ 1,165.1 ========= ========== Floating rate debt included in unsecured notes payable agreements (7.31% - 7.73%) $ 196.0 $ 161.0 Floating rate tax-exempt debt included in mortgage loans (5.87% - 6.10%) $ 62.6 $ 63.5 Net book value of real estate assets subject to mortgage notes $ 577.6 $ 605.5
During the third quarter of 2000, our line of credit, which was entered into in August 1999 with 14 banks for a total commitment of $375 million, was increased to $400 million and the maturity was extended to August 2003. The scheduled interest rate is currently based on a spread over LIBOR or Prime. The scheduled interest rates are subject to change as our credit ratings change. Advances under the line of credit may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of six months or less and may not exceed the lesser of $200 million or the remaining amount available under the line of credit. The line of credit is subject to customary financial covenants and limitations. At year end, we were in compliance with all covenants and limitations. As of December 31, 2000, we had $204 million available under our unsecured line of credit. The weighted average balance outstanding on the unsecured lines of credit during the year ended December 31, 2000 was $156.4 million, with a maximum outstanding balance of $222 million. During September 1999, we executed three interest rate swap agreements totaling $70 million which matured in October 2000. These swaps were being used as a hedge of interest rate exposure on our $90 million medium term notes issued in October 1998 which matured in October 2000. At December 31, 2000, the weighted average interest rate on floating rate debt was 7.18%. Scheduled principal repayments on all notes payable outstanding at December 31, 2000 over the next five years are $167.5 million in 2001, $40.4 million in 2002, $321.5 million in 2003, $235.3 million in 2004, $61.9 million in 2005 and $311.5 million thereafter. During January 2000, we combined our three outstanding shelf registrations into a single $750 million universal shelf registration, all of which was available at year end. On February 7, 2001, we issued from our $750 million shelf registration an aggregate principal amount of $50 million of 7% five-year senior unsecured notes maturing on February 15, 2006 and $150 million of 7.625% ten-year senior unsecured notes maturing on February 15, 2011. Interest on the notes is payable semiannually on February 15 and August 15, commencing on August 15, 2001. We may redeem the notes at any time at a redemption price equal to the principal amount and accrued interest, plus a make-whole provision. The notes are direct, senior 48 unsecured obligations and rank equally with all other unsecured and unsubordinated indebtedness. The proceeds from the sale of the notes were $197.8 million, net of issuance costs. We used the net proceeds to reduce indebtedness outstanding under the unsecured line of credit. 5. Convertible Subordinated Debentures In April 1994, we issued $86.3 million aggregate principal amount of 7.33% Convertible Subordinated Debentures due April 2001. The debentures are convertible at any time prior to maturity into our common shares of beneficial interest at a conversion price of $24 per share, subject to adjustment under certain circumstances. The debentures will not be redeemable prior to maturity, except in certain circumstances intended to maintain our status as a REIT. Interest on the debentures is payable on April and October 1 of each year. The debentures are unsecured and subordinated to present and future senior debt and will be effectively subordinated to all debt and other liabilities. 6. Incentive and Benefit Plans We have elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25") and related interpretations in accounting for our share-based compensation. Under APB No. 25, since the exercise price of share options equals the market price of our shares at the date of grant, no compensation expense is recorded. Restricted shares are recorded to compensation expense over the vesting periods based on the market value on the date of grant, and no compensation expense is recorded for our Employee Stock Purchase Plan ("ESPP"), since the ESPP is considered non-compensatory. We have adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Incentive Plan. We have a non-compensatory option plan which was amended in 2000 by our shareholders and trust managers. This amendment resulted in an increase in the maximum number of common shares available for issuance under the plan to 10% of the common shares outstanding at any time plus the number of common shares, if any, held as treasury shares, plus the number of common shares reserved for issuance upon the conversion of securities convertible into or exchangeable for common shares. Compensation awards that can be granted under the plan include various forms of incentive awards including incentive share options, non-qualified share options and restricted share awards. The class of eligible persons that can receive grants of incentive awards under the plan consists of non-employee trust managers, key employees, consultants, and directors of subsidiaries as determined by a committee of our Board of Trust Managers. No incentive awards may be granted under this plan after May 27, 2003. 49 Following is a summary of the activity of the plan for the three years ended December 31, 2000:
Shares Available for Issuance Options and Restricted Shares ------------ ----------- -------------------------------------------------------- Weighted Weighted Weighted Average Average Average 2000 2000 2000 Price 1999 1999 Price 1998 1998 Price ------------ ----------- ---------- ----------- ---------- ----------- ---------- Balance at January 1 196,273 3,311,705 $ 27.50 2,838,499 $ 28.03 1,303,849 $ 24.94 Current Year Share Adjustment (a) 1,507,731 Options Granted (5,250) 5,250 25.88 603,072 24.88 1,657,008 29.32 Exercised (147,589) 29.22 (79,650) 22.67 (82,327) 22.96 Forfeited 36,083 (36,083) 27.09 (139,768) 27.38 (271,538) 23.57 ------------ ----------- ---------- ----------- ---------- ----------- ---------- Net Options 30,833 (178,422) 28.91 383,654 27.71 1,303,143 30.92 ------------ ----------- ---------- ----------- ---------- ----------- ---------- Restricted Shares Granted (260,114) 260,114 26.91 142,826 25.31 248,769 29.06 Forfeited (41,693) 27.24 (53,274) 27.01 (17,262) 27.67 ------------ ----------- ---------- ----------- ---------- ----------- ---------- Net Restricted Shares (260,114) 218,421 26.80 89,552 26.79 231,507 29.16 ------------ ----------- ---------- ----------- ---------- ----------- ---------- Balance at December 31 1,474,723 3,351,704 $ 28.30 3,311,705 $ 27.50 2,838,499 $ 28.03 ============ =========== ========== =========== ========== =========== ========== Exercisable options at December 31 889,654 $ 28.78 1,056,076 $ 27.86 586,607 $ 26.26 Vested restricted shares at December 31 655,504 $ 25.56 343,702 $ 25.93 213,782 $ 25.20
(a) Current year share adjustment reflects the new method of accounting for shares available for issuance, which now includes treasury shares repurchased, and common shares underlying Camden Operating, L.P. units, convertible preferred shares, convertible debentures, martinique LLC units, and restricted shares outstandng in the total shares available pool. Options are exercisable, subject to the terms and conditions of the plan, in increments of 33.33% per year on each of the first three anniversaries of the date of grant. The plan provides that the exercise price of an option will be determined by the compensation committee of the Board on the day of grant and to date all options have been granted at an exercise price which equals the fair market value on the date of grant. Options exercised during 2000 were exercised at prices ranging from $22 to $29.44 per share. At December 31, 2000, options outstanding were at exercise prices ranging from $22 to $30.75 per share. Such options have a weighted average remaining contractual life of eight years. In 1998, in connection with the merger with Oasis, we assumed the Oasis stock incentive plans. We converted all unexercised Oasis stock options issued under the former Oasis stock incentive plans that are held by former employees of Oasis into 894,111 options to purchase Camden common shares based on the 0.759 exchange ratio described in Note 1. The options are exercisable at prices ranging from $28.66 to $33.76. All of the Oasis options became fully vested upon conversion, and have a weighted average remaining contractual life of four years. As of December 31, 2000, there were 599,618 Oasis options outstanding, which are exercisable at prices ranging from $28.66 to $33.76 per share. The fair value of each option grant, excluding the Oasis stock options, was estimated on the date of grant utilizing the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2000, 1999 and 1998, respectively: risk-free interest rates of 6.6%, 4.9% and 5.5% to 5.6%, expected life of ten years, dividend yield of 6.7%, 7.6% and 7.8%, and expected share volatility of 13.4% 13.7% and 13.9%. The weighted average fair value of options granted in 2000, 1999 and 1998, respectively, was $2.54, $0.91 and $1.27 per share. 50 Restricted shares have vesting periods of up to five years. The compensation cost for restricted shares has been recognized at the fair market value of our shares. During 2000, we accelerated vesting of 180,634 restricted shares, which had a weighted average price of $27.74, in connection with the successful implementation of our land development and strategy. Employee Stock Purchase Plan. In July 1997, we established and commenced an ESPP for all active employees, officers, and trust managers who have completed one year of continuous service. Participants may elect to purchase Camden common shares through payroll or director fee deductions and/or through quarterly contributions. At the end of each six-month offering period, each participant's account balance is applied to acquire common shares on the open market at 85% of the market value, as defined, on the first or last day of the offering period, whichever price is lower. Effective for the 2000 plan year, each participant must hold the shares purchased for nine months in order to receive the discount. A participant may not purchase more than $25,000 in value of shares during any plan year, as defined. No compensation expense was recognized for the difference in price paid by employees and the fair market value of our shares at the date of purchase. There were 35,900, 98,456 and 32,678 shares purchased under the ESPP during 2000, 1999 and 1998, respectively. The weighted average fair value of ESPP shares purchased in 2000, 1999, and 1998 was $28.67, $27.42 and $30.41 per share, respectively. On January 3, 2001, 6,020 shares were purchased under the ESPP related to the 2000 plan year. If we applied the recognition provisions of SFAS No. 123 to our option grants and ESPP, our net income to common shareholders and related basic and diluted earnings per share would be as follows (in thousands, except per share amounts): Year Ended December 31, ----------------------------------- 2000 1999 1998 ----------- ----------- ----------- Net income to common shareholders $ 64,317 $ 51,076 $ 47,360 Basic earnings per share $ 1.69 $ 1.24 $ 1.15 Diluted earnings per share $ 1.62 $ 1.20 $ 1.10 The effects of applying SFAS No. 123 in this pro forma disclosure are not indicative of future amounts. Rabbi Trust. In February 1997, we established a rabbi trust in which salary and bonus amounts awarded to certain officers under the key employee share option plan and restricted shares awarded to certain officers and trust managers may be deposited. We account for the rabbi trust similar to a compensatory stock option plan. At December 31, 2000, approximately 773,000 restricted shares were held in the rabbi trust. 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 earlier of January 1 or July 1 following 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% nor more than 15% of the participant's compensation. The federal tax code limits the annual amount of salary deferrals that may be made by any participant. We may make matching contributions on the participant's behalf. A participant's salary deferral contribution will always be 100% vested and nonforfeitable. A participant will become vested in our matching contributions 33.33% after one year of service, 66.67% after two years of service and 100% after three years of service. Expenses under the savings plan were not material. 7. Securities Repurchase Program In 1998 and 1999, the Board of Trust Managers authorized us to repurchase or redeem up to $200 million of our common equity securities through open market 51 purchases and private transactions. As of December 31, 2000, we had repurchased 6,857,726 common shares and redeemed 105,814 units for a total cost of $178.0 million and $2.9 million, respectively. 8. Convertible Preferred Shares The 4,165,000 preferred shares pay a cumulative dividend quarterly in arrears in an amount equal to $2.25 per share per annum. The preferred shares generally have no voting rights and have a liquidation preference of $25 per share plus accrued and unpaid distributions. The preferred shares are convertible at the option of the holder at any time into common shares at a conversion price of $32.4638 per common share (equivalent to a conversion rate of 0.7701 per common share for each preferred share), subject to adjustment in certain circumstances. The preferred shares are not redeemable prior to April 30, 2001. 9. E-commerce Investments During 2000, our Board of Trust Managers authorized us to invest in non-real estate initiatives, including investments in e-commerce initiatives with other multi-family real estate owners. These investments may be made in companies that will provide our residents with a broad range of real estate technology services including high-speed data, video and entertainment services, as well as resident portals. These portals will provide our residents with a variety of online services, including online rental payments and maintenance requests, which we believe will improve their overall living experience. During 2000, we invested approximately $750,000 into BroadBand Residential Inc., a multi-unit owner-sponsored broadband company providing high-speed data services to multi-family residents, and invested approximately $2.1 million in Viva Group, Inc., an internet based company that provides online owner-renter matching services for the multi-family housing industry. Our investment in Broadband Residential is recorded using the equity method, and our investment in Viva is recorded at cost. Both of these investments are recorded in other assets in our consolidated financial statements. Additionally, we have signed a commitment to invest up to $3.5 million with a consortium of real estate and technology companies which intends to pursue a broad range of real estate technology initiatives and opportunities. All of these investments were made along with other multi-family real estate owners. In January 2001, we committed an additional $1.8 million to BroadBand Residential which will be funded through a note receivable, of which we have funded approximately $600,000. 10. Related Party Transactions Two of our executive officers have loans totaling $1.8 million with one of our nonqualified-REIT subsidiaries. The executives utilized amounts received from these loans to purchase our common shares in 1994. The loans mature in February 2004 and bear interest at the fixed rate of 5.23%. These loans are full recourse obligations of the officers and do not require any prepayments of principal until maturity. In connection with the Paragon and Oasis mergers and the formation of Sierra-Nevada, we began performing property management services for owners of affiliated properties. Management fees earned on the properties amounted to $944,000, $845,000, and $583,000 for the years ended December 31, 2000, 1999, and 1998, respectively. In connection with the Oasis merger, we entered into consulting agreements with two former Oasis executives, one of whom currently serves as a trust manager, to locate potential investment opportunities in California. We paid consulting fees totaling $389,000 and $340,000 to these executives in 1999 and 1998, respectively. No fees were paid during 2000. 52 In 1999 and 2000, our Board of Trust Managers approved a plan which permitted six of our senior executive officers to complete the purchase of $23.0 million of our common shares in open market transactions. The purchases were funded with unsecured full recourse personal loans made to each of the executives by a third party lender. The loans mature in five years, bear interest at market rates and require interest to be paid quarterly. In order to facilitate the employee share purchase transactions, we entered into a guaranty agreement with the lender for payment of all indebtedness, fees and liabilities of the officers to the lender. Simultaneously, we entered into a reimbursement agreement with each of the executive officers whereby each executive officer has indemnified us and absolutely and unconditionally agreed to reimburse us should any amounts ever be paid by us pursuant to the terms of the guaranty agreement. The reimbursement agreements require the executives to pay interest from the date any amounts are paid by us until repayment by the officer. We have not had to perform under the guaranty agreement. As described in Note 9, we invested approximately $750,000 in BroadBand Residential, Inc. and $2.1 million in Viva Group, Inc. One of our trust managers is a director, executive officer and significant shareholder of Viva. In connection with our investment in BroadBand Residential, one of our executive officers was given a seat on its board of directors. 11. Fair Value of Financial Instruments SFAS No. 107 requires disclosure about fair value for all financial instruments, whether or not recognized, for financial statement purposes. Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2000 and 1999. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could obtain on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. As of December 31, 2000 and 1999, management estimates that the fair value of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, accrued expenses and other liabilities and distributions payable are carried at amounts which reasonably approximate their fair value. As of December 31, 2000, the outstanding balance of fixed rate notes payable approximates fair value. As of December 31, 1999, the outstanding balance of fixed rate notes payable of $985.6 million (excluding $25 million of variable rate debt fixed through an interest rate swap agreement) had a fair value of $963.5 million. Both estimates were based upon interest rates available for the issuances of debt with similar terms and remaining maturities. The floating rate notes payable balance at December 31, 2000 and 1999 approximates fair value. The fair value of our interest rate swap agreements, which were used for hedging purposes, were estimated by obtaining quotes from an investment broker. At December 31, 1999, there were no carrying amounts related to these arrangements in the consolidated balance sheet, and the fair value of these agreements was approximately $90,000. At December 31, 2000, we were not party to any interest rate swap agreements. We were exposed to credit risk in the event of nonperformance by counterparties to our interest rate swap agreements, but had no off-balance sheet risk of loss. Our counter-parties fully performed their obligations under the agreements. 53 12. Net Change in Operating Accounts The effect of changes in the operating accounts on cash flows from operating activities is as follows:
(In thousands) Year Ended December 31, -------------------------------------- 2000 1999 1998 ------------ ----------- ----------- Decrease (increase) in assets: Accounts receivable - affiliates $ (65) $ (1,085) $ 1,496 Other assets, net (3,565) 38 1,518 Restricted cash 237 (426) 1,272 Increase (decrease) in liabilities: Accounts payable (6,999) (3,768) 11,570 Accrued real estate taxes 3,526 3,011 3,879 Accrued expenses and other liabilities 12,797 13,266 (19,531) ------------ ----------- ----------- Change in operating accounts $ 5,931 $ 11,036 $ 204 ============ =========== ===========
13. Commitments and Contingencies Construction Contracts. As of December 31, 2000, we were obligated for approximately $13.0 million of additional expenditures (a substantial amount of which we expect to be provided by debt). Lease Commitments. At December 31, 2000, we had long-term leases covering certain land, office facilities and equipment. Rental expense totaled $1.6 million in 2000, $1.7 million in 1999 and $1.0 million in 1998. Minimum annual rental commitments for the years ending December 31, 2001 through 2005 are $1.7 million, $1.5 million, $1.3 million, $1.2 million and $1.2 million, respectively, and $7.0 million in the aggregate thereafter. Employment Agreements. We have employment agreements with six of our senior officers, the terms of which expire at various times through August 20, 2001. 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 in the event certain situations occur such as termination without cause or a change of control. The severance payments vary based on the officer's position and amount to one times the current salary base for four of the officers and 2.99 times the average annual compensation over the previous three fiscal years for the two remaining officers. Six months prior to expiration, unless notification of termination is given by the senior officers, these agreements extend for one year from the date of expiration. Contingencies. Prior to our merger with Oasis, Oasis had been contacted by certain regulatory agencies with regards to alleged failures to comply with the Fair Housing Amendments Act (the "Fair Housing Act") as it pertained to nine properties (seven of which we currently own) constructed for first occupancy after March 31, 1991. On February 1, 1999, the Justice Department filed a lawsuit against us and several other defendants in the United States District Court for the District of Nevada alleging (1) that the design and construction of these properties violates the Fair Housing Act and (2) that we, through the merger with Oasis, had discriminated in the rental of dwellings to persons because of handicap. The complaint requests an order that (i) declares that the defendant's policies and practices violate the Fair Housing Act; (ii) enjoins us from (a) failing or refusing, to the extent possible, to bring the dwelling units and public use and common use areas at these properties and other covered units that Oasis has designed and/or constructed into compliance with the Fair Housing Act, (b) failing or refusing to take such affirmative steps as may be necessary to restore, as nearly as possible, the alleged victims of the 54 defendants alleged unlawful practices to positions they would have been in but for the discriminatory conduct and (c) designing or constructing any covered multi-family dwellings in the future that do not contain the accessibility and adaptability features set forth in the Fair Housing Act; and requires us to pay damages, including punitive damages, and a civil penalty. With any acquisition, we plan for and undertake renovations needed to correct deferred maintenance, life/safety and Fair Housing matters. On January 30, 2001, a consent decree was ordered and executed in the above Justice Department action. Under the terms of the decree, we were ordered to make certain retrofits and implement certain educational programs and fair housing advertising. These changes are to take place over the next five years. In management's opinion, the costs associated with complying with the decree are not expected to have a material impact on our financial statements. We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such matters will not have a material adverse effect on our consolidated financial statements. 14. Subsequent Events In the ordinary course of our business, we issue letters of intent indicating a willingness to negotiate for the purchase or sale of multifamily properties or development land. In accordance with local real estate market practice, such letters of intent are non-binding, and neither party to the letter of intent is obligated to pursue negotiations unless and until a definitive contract is entered into by the parties. Even if definitive contracts are entered into, the letters of intent and resulting contracts contemplate that such contracts will provide the purchaser with time to evaluate the properties and conduct due diligence and 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 that definitive contracts will be entered into with respect to any properties covered by letters of intent or that we will acquire or sell any property as to which we may have entered into a definitive contract. Further, due diligence periods are frequently extended as needed. An acquisition or sale becomes probable at the time that the due diligence period expires and the definitive contract has not been terminated. We are then at risk under an acquisition contract, but only to the extent of any earnest money deposits associated with the contract, and is obligated to sell under a sales contract. We are currently in the due diligence period for the purchase of land for development. No assurance can be made that we will be able to complete the negotiations or become satisfied with the outcome of the due diligence. 55 15. Quarterly Financial Data (unaudited) Summarized quarterly financial data for the years ended December 31, 2000 and 1999 are as follows:
(In thousands, except per share amounts) First Second Third Fourth Total ---------- ----------- ---------- ------------ ----------- 2000: Revenues $ 98,714 $ 101,327 $ 102,395 $ 101,103 $ 403,539 Net income to common shareholders 12,676* 10,594 28,203** 13,580 65,053 Basic earnings per share 0.33* 0.28 0.74** 0.36 1.71 Diluted earnings per share 0.31* 0.27 0.72** 0.33 1.63 1999: Revenues $ 88,835 $ 91,412 $ 94,177 $ 96,872 $ 371,296 Net income to common shareholders 13,706*** 12,838 13,535**** 12,173 52,252 Basic earnings per share 0.32*** 0.31 0.33**** 0.30 1.27 Diluted earnings per share 0.31*** 0.30 0.32**** 0.29 1.23
* Includes a $1,933, or $0.05 basic and diluted earnings per share, impact related to the gain on sale of land. ** Includes a $16,440, or $0.43 basic and $0.37 diluted earnings per share, impact related to the gain on sale of properties. *** Includes a $720, or $0.02 basic and diluted earnings per share, impact related to gain on the sale of a property. **** Includes a $2,259, or $0.06 basic and $0.05 diluted earnings per share, impact related to gain on Sales of properties. 16. Price Range of Common Shares (unaudited) The high and low sales prices per share of our common shares, as reported on the New York Stock Exchange composite tape, and distributions per share declared for the quarters indicated were as follows: High Low Distributions ---------------- -------------- --------------- 2000: First $ 27 3/8 $ 25 7/8 $ 0.5625 Second 30 3/4 27 1/16 0.5625 Third 32 29 7/16 0.5625 Fourth 33 13/16 28 1/2 0.5625 1999: First $ 26 11/16 $ 24 3/16 $ 0.520 Second 28 3/16 24 1/8 0.520 Third 28 3/16 25 15/16 0.520 Fourth 27 3/4 25 9/16 0.520 56 CAMDEN PROPERTY TRUST COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
(In thousands, except per share amounts) Year Ended December 31, ----------------------------------------------------------------------- 2000 1999 1998* 1997** 1996 ------------- ------------- ------------- ------------ ----------- Operating Data Revenues: Rental income $ 364,111 $ 341,168 $ 300,632 $ 187,928 $ 105,785 Other property income 27,030 22,148 18,093 9,446 4,453 ------------- ------------- ------------- ------------ ----------- Total property income 391,141 363,316 318,725 197,374 110,238 Equity in income of joint ventures 765 683 1,312 1,141 Fee and asset management 5,810 5,373 1,552 743 949 Other income 5,823 1,924 2,250 531 419 ------------- ------------- ------------- ------------ ----------- Total revenues 403,539 371,296 323,839 199,789 111,606 ------------- ------------- ------------- ------------ ----------- Expenses Property operating and maintenance 112,727 107,972 97,137 70,679 40,604 Real estate taxes 39,054 36,410 31,469 21,028 13,192 General and administrative 14,349 10,606 7,998 4,389 2,631 Interest 69,036 57,856 50,467 28,537 17,336 Depreciation and amortization 96,966 89,516 78,113 44,836 23,894 ------------- ------------- ------------- ------------ ----------- Total expenses 332,132 302,360 265,184 169,469 97,657 ------------- ------------- ------------- ------------ ----------- Income before gain on sales of properties and joint venture interests, losses related to early retirement of debt and minority interests 71,407 68,936 58,655 30,320 13,949 Gain on sales of properties and joint venture interests 18,323 2,979 10,170 115 Losses related to early retirement of debt (397) (5,351) ------------- ------------- ------------- ------------ ----------- Income before minority interests 89,730 71,915 58,655 40,093 8,713 Income allocated to minority interests Distributions on units convertible into perpetual preferred shares (12,845) (8,278) Income allocated to units convertible into common shares (2,461) (2,014) (1,322) (1,655) ------------- ------------- ------------- ------------ ----------- Total income allocated to minority interests (15,306) (10,292) (1,322) (1,655) ------------- ------------- ------------- ------------ ----------- Net income 74,424 61,623 57,333 38,438 8,713 Preferred share dividends (9,371) (9,371) (9,371) (4) ------------- ------------- ------------- ----------- ----------- Net income to common shareholders $ 65,053 $ 52,252 $ 47,962 $ 38,438 $ 8,709 ============= ============= ============= ============ =========== Basic earnings per share $ 1.71 $ 1.27 $ 1.16 $ 1.46 $ 0.59 Diluted earnings per share $ 1.63 $ 1.23 $ 1.12 $ 1.41 $ 0.58 Distributions per common share $ 2.25 $ 2.08 $ 2.02 $ 1.96 $ 1.90 Weighted average number of common shares outstanding 38,112 41,236 41,174 26,257 14,849 Weighted average number of common and common dilutive equivalent shares outstanding 41,388 44,291 44,183 28,356 14,979 Balance Sheet Data (at end of period) Real estate assets $ 2,646,341 $ 2,678,034 $ 2,487,942 $ 1,397,138 $ 646,545 Accumulated depreciation (326,723) (253,545) (167,560) (94,665) (56,369) Total assets 2,430,881 2,487,932 2,347,982 1,323,620 603,510 Notes payable 1,138,117 1,165,090 1,002,568 480,754 244,182 Minority interests 210,377 196,852 71,783 63,325 Convertible subordinated debentures 1,950 3,406 3,576 6,025 27,702 Shareholders' Equity 974,183 1,016,675 1,170,388 710,564 295,428 Common shares outstanding 38,129 39,093 43,825 31,694 16,521
57 CAMDEN PROPERTY TRUST COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA (CONTINUED)
(In thousands, except property data amounts) Year Ended December 31, ------------------------------------------------------------------- 2000 1999 1998* 1997** 1996 ------------ ------------ ------------- ------------ ------------- Other Data Cash flows provided by (used in): Operating activities $ 163,821 $ 164,021 $ 138,419 $ 65,974 $ 41,267 Investing activities (13,136) (220,571) (55,013) (73,709) (41,697) Financing activities (151,266) 56,420 (84,227) 11,837 2,560 Funds from operations*** 156,274 152,369 137,996 75,753 39,999 Property Data Number of operating properties (at end of period) 145 153 149 100 48 Number of operating apartment homes (at end of period) 51,336 53,311 51,310 34,669 17,611 Number of operating apartment homes (weighted average) 46,501 45,606 42,411 29,280 17,362 Weighted average monthly total property income per apartment home $ 701 $ 664 $ 626 $ 562 $ 529 Properties under development (at end of period) 3 6 14 6 5
* Effective April 1, 1998 we acquired Oasis. ** Effective April 1, 1997 we acquired Paragon. *** Management considers FFO to be an appropriate measure of the performance of an equity REIT. The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In addition, extraordinary or unusual items, along with significant non-recurring events that materially distort the comparative measure of FFO are typically disregarded in its calculation. Our definition of diluted FFO also assumes conversion at the beginning of the period of all convertible securities, including minority interests, which are convertible into common equity. We believe that in order to facilitate a clear understanding of our consolidated historical operating results, FFO should be examined in conjunction with net income as presented in the consolidated financial statements and data included elsewhere in this report. FFO is not defined by generally accepted accounting principles. FFO should not be considered as an alternative to net income as an indication of our operating performance or to net cash provided by operating activities as a measure of our liquidity. Further, FFO as disclosed by other REIT's may not be comparable to our calculation. EX-21.1 4 0004.txt SUBSIDIARIES OF THE REGISTRANT 58 EXHIBIT 21.1 State of Incorporation/ Name Under Which Names of Subsidiaries Organization Business is Done - --------------------------------- ---------------- --------------------------- 1.Camden Operating, L.P. Delaware Camden Operating, L.P. 2.Camden USA, Inc. Delaware Camden USA, Inc. 3.Camden Development, Inc. Delaware Camden Development, Inc. 4.Camden Realty, Inc. Delaware Camden Realty, Inc. EX-23.1 5 0005.txt INDEPENDENT AUDITORS' CONSENT 59 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 33-80230, No. 333-32569 and No. 333-57565, each on Form S-8, Amendment No. 2 to No. 33-84658, Amendment No. 1 to No. 33-84536, Amendment No. 4 to No. 333-70295 and Post-Effective Amendment No.1 to No. 333-92959, each on Form S-3, of Camden Property Trust of our report dated February 7, 2001, appearing in this Annual Report on Form 10-K of Camden Property Trust for the year ended December 31, 2000. DELOITTE & TOUCHE LLP Houston, Texas March 29, 2001 EX-24.1 6 0006.txt POWER OF ATTORNEY 60 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Richard J. Campo ------------------------------------ Signature Richard J. Campo ------------------------------------ Print Name Dated: March 29, 2001 61 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/D. Keith Oden ------------------------------------ Signature D. Keith Oden ------------------------------------ Print Name Dated: March 29, 2001 62 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden and Richard J. Campo, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/G. Steven Dawson ------------------------------------ Signature G. Steven Dawson ------------------------------------ Print Name Dated: March 29, 2001 63 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/William R. Cooper ------------------------------------ Signature William R. Cooper ------------------------------------ Print Name Dated: March 29, 2001 64 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/George A. Hrdlicka ------------------------------------ Signature George A. Hrdlicka ------------------------------------ Print Name Dated: March 29, 2001 65 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Scott S. Ingraham ------------------------------------ Signature Scott S. Ingraham ------------------------------------ Print Name Dated: March 29, 2001 66 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Lewis A. Levey ------------------------------------ Signature Lewis A. Levey ------------------------------------ Print Name Dated: March 29, 2001 67 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/F. Gardner Parker ------------------------------------ Signature F. Gardner Parker ------------------------------------ Print Name Dated: March 29, 2001 68 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 2000 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Steven A. Webster ------------------------------------ Signature Steven A. Webster ------------------------------------ Print Name Dated: March 29, 2001 -----END PRIVACY-ENHANCED MESSAGE-----