10-K 1 cpt1231201810k.htm Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 FORM 10-K
(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 1-12110
 
CAMDEN PROPERTY TRUST
(Exact name of registrant as specified in its charter)
 
Texas
 
76-6088377
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
11 Greenway Plaza, Suite 2400
Houston, Texas
 
77046
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (713) 354-2500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Common Shares of Beneficial Interest, $.01 par value
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ý    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  ý
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer
 
ý
Accelerated filer
 
¨
Non-accelerated filer
 
¨
Smaller reporting company
 
¨
 
 
 
Emerging growth company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected to not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant of Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in the Rule 12b-2 of the Act).    Yes  ¨     No  ý
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $8,386,569,325 based on a June 29, 2018 share price of $91.13.
On February 7, 2019, 93,259,373 common shares of the registrant were outstanding, net of treasury shares and shares held in our deferred compensation arrangements.
 
 
 
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement in connection with its Annual Meeting of Shareholders to be held May 9, 2019 are incorporated by reference in Part III.

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TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 1B.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
Item 7.
 
 
 
Item 7A.
 
 
 
Item 8.
 
 
 
Item 9.
 
 
 
Item 9A.
 
 
 
Item 9B.
 
 
 
 
 
 
 
 
Item 10.
 
 
 
Item 11.
 
 
 
Item 12.
 
 
 
Item 13.
 
 
 
Item 14.
 
 
 
 
 
 
 
 
Item 15.
Item 16.
 
 
 


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PART I
Item 1. Business
General
Formed on May 25, 1993, Camden Property Trust, a Texas real estate investment trust (“REIT”), and all its consolidated subsidiaries are primarily engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. Unless the context requires otherwise, “we,” “our,” “us,” and the “Company” refer to Camden Property Trust and its consolidated subsidiaries. Our multifamily apartment communities are referred to as “communities,” “multifamily communities,” “properties,” or “multifamily properties” in the following discussion.
Our website is located at www.camdenliving.com. We make available free of charge through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments to such reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission (the “SEC”). We also make available, free of charge on our website, our Guidelines on Governance, Code of Business Conduct and Ethics, Code of Ethical Conduct for Senior Financial Officers, and the charters of each of our Audit, Compensation, and Nominating and Corporate Governance Committees. Copies are also available, without charge, from Investor Relations, 11 Greenway Plaza, Suite 2400, Houston, Texas 77046. References to our website in this report are provided as a convenience and do not constitute, and should not be viewed as, an incorporation by reference of the information contained on, or available through our website, and therefore such information should not be considered part of this report.
Our annual, quarterly, and current reports, proxy statements, and other information are electronically filed with the SEC. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC.
Narrative Description of Business
As of December 31, 2018, we owned interests in, operated, or were developing 167 multifamily properties comprised of 56,858 apartment homes across the United States. Of the 167 properties, six properties were under construction and will consist of a total of 1,698 apartment homes when completed. We also own land holdings which we may develop into multifamily communities in the future.
Operating and Business Strategy
We believe producing consistent earnings growth through property operations, development and acquisitions, achieving market balance, and recycling capital are crucial factors to our success. We rely heavily on our sophisticated property management capabilities and innovative operating strategies to help us maximize the earnings potential of our communities.
Real Estate Investments and Market Balance. We believe we are well positioned in our current markets and have the expertise to take advantage of new opportunities as they arise. These capabilities, combined with what we believe is a conservative financial structure, should allow us to concentrate our growth efforts toward selective opportunities to enhance our strategy of having a geographically diverse portfolio of assets which meet the requirements of our residents.
We continue to operate in our core markets which we believe provides an advantage due to economies of scale. We believe, where possible, it is best to operate with a strong base of properties in order to benefit from the personnel allocation and the market strength associated with managing multiple properties in the same market. However, consistent with our goal of generating sustained earnings growth, we intend to selectively dispose of properties and redeploy capital for various strategic reasons, including if we determine a property cannot meet our long-term earnings growth expectations.
We try to maximize capital appreciation of our properties by investing in markets characterized by conditions favorable to multifamily property appreciation. These markets generally feature the following:
 
Strong economic growth leading to household formation and job growth, which in turn should support higher demand for our apartments; and
An attractive quality of life, which may lead to higher demand and retention for our apartments and allow us to more readily increase rents.
Subject to market conditions, we intend to continue to seek opportunities to develop new communities, and to redevelop, reposition and acquire existing communities. We also intend to evaluate our operating property and land development portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities arise.

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We expect to maintain a strong balance sheet and preserve our financial flexibility by continuing to focus on our core fundamentals which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our near-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured credit facility or other short-term borrowing, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2017 at-the-market ("ATM") share offering program, other unsecured borrowings, or secured mortgages.
Sophisticated Property Management. We believe the depth of our organization enables us to deliver quality services, promote resident satisfaction, and retain residents, thereby increasing our operating revenues and reducing our operating expenses. We manage our properties utilizing a staff of professionals and support personnel, including certified property managers, experienced apartment managers and leasing agents, and trained apartment maintenance technicians. Our on-site personnel are trained to deliver high-quality services to our residents, and we strive to motivate our on-site employees through incentive compensation arrangements based upon property operational results, rental rate increases, occupancy levels, and level of new leases and lease renewals achieved.
Operations. We believe an intense focus on operations is necessary to realize consistent, sustained earnings growth. Ensuring resident satisfaction, increasing rents as market conditions allow, maximizing rent collections, maintaining property occupancy at optimal levels, and controlling operating costs comprise our principal strategies to maximize property financial results. We believe our web-based property management and revenue management systems strengthen on-site operations and allow us to quickly adjust rental rates as local market conditions change. Lease terms are generally staggered based on vacancy exposure by apartment type so lease expirations are matched to each property's seasonal rental patterns. We generally offer leases ranging from twelve to fifteen months with individual property marketing plans structured to respond to local market conditions. In addition, we conduct ongoing customer service surveys to help ensure timely response to residents' changing needs and a high level of satisfaction.
Investments in Joint Ventures. We have entered into, and may continue in the future to enter into, joint ventures or partnerships, including limited liability companies, through which we own an indirect economic interest in less than 100% of the community or land owned by the joint venture or partnership. We account for three investment funds (collectively, the "Funds") utilizing the equity method of accounting. As of December 31, 2018, we have two discretionary investment funds, which are closed to future investments, and a third fund which we formed in March 2015 for future multifamily investments of up to $450 million. See Note 9, “Investments in Joint Ventures,” and Note 15, “Commitments and Contingencies,” in the notes to the Consolidated Financial Statements for further discussion of our investments in joint ventures.
Competition
There are numerous housing alternatives which compete with our communities in attracting residents. Our properties compete directly with other multifamily properties as well as condominiums, single-family homes, third-party providers of short-term rentals and serviced apartments, which are available for rent or purchase in the markets in which our communities are located. This competitive environment could have a material adverse effect on our ability to lease apartment homes at our present properties or any newly developed or acquired property, as well as on the rents realized.
Employees
At December 31, 2018, we had approximately 1,600 employees, including executive, administrative, and community personnel.
Qualification as a Real Estate Investment Trust
As of December 31, 2018, we met the qualification of a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, we, with the exception of our taxable REIT subsidiaries, will not be subject to federal income tax to the extent we continue to meet certain requirements of the Code.
Item 1A. Risk Factors
In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition, or results of operations could be materially adversely affected by any of these risks.

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Risks Associated with Capital Markets, Credit Markets, and Real Estate
Volatility in capital and credit markets, or other unfavorable changes in economic conditions, either nationally or regionally in one or more of the markets in which we operate, could adversely impact us.
The capital and credit markets are subject to volatility and disruption. We therefore may not be able to obtain new debt financing or refinance our existing debt on favorable terms or at all, which would adversely affect our liquidity, our ability to make distributions to shareholders, acquire assets and continue our development activities. Other weakened economic conditions, including job losses, high unemployment levels, stock market volatility, and uncertainty about the future, could adversely affect rental rates and occupancy levels. Unfavorable changes in economic conditions may have a material adverse impact on our cash flows and operating results.
Additional key economic risks which may adversely affect conditions in the markets in which we operate include the following:
 
local conditions, such as an oversupply of apartments or other housing available for rent, or a reduction in demand for apartments in the area;
declines in the financial condition of our residents, which may make it more difficult for us to collect rents from some residents;
declines in market rental rates;
low mortgage interest rates and home pricing, making alternative housing more affordable;
government or builder incentives which enable home buyers to put little or no money down, making alternative housing options more attractive;
regional economic downturns, including, but not limited to, business layoffs, downsizing and increased unemployment, which may impact one or more of our geographical markets; and
increased operating costs, if these costs cannot be passed through to our residents.
Short-term leases expose us to the effects of declining market rents.
Our apartment leases are generally for a term of fifteen months or less. As these leases typically permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.
Competition could limit our ability to lease apartments or increase or maintain rental income.
There are numerous housing alternatives which compete with our properties in attracting residents. Our properties compete directly with other multifamily properties, condominiums, single-family homes, third-party providers of short-term rentals and serviced apartments, which are available for rent or purchase in the markets in which our properties are located. This competitive environment could have a material adverse effect on our ability to lease apartment homes at our present properties or any newly developed or acquired property, as well as on the rents realized.
We face risks associated with land holdings and related activities.
We hold land for future development and may in the future acquire additional land holdings. The risks inherent in purchasing, owning, and developing land increase as demand for apartments, or rental rates, decrease. Real estate markets are highly uncertain and, as a result, the value of undeveloped land may fluctuate significantly. In addition, carrying costs can be significant and can result in losses or reduced profitability. As a result, we hold certain land, and may in the future acquire additional land, in our development pipeline at a cost we may not be able to fully recover or at a cost which may preclude us from developing a profitable multifamily community. If there are subsequent changes in the fair market value of our land holdings which we determine is less than the carrying basis of our land holdings reflected in our financial statements plus estimated costs to sell, we may be required to take future impairment charges which would reduce our net income.
Potential reforms to Fannie Mae and Freddie Mac could adversely affect us.
There is significant uncertainty surrounding the futures of Fannie Mae and Freddie Mac. Through their lender originator networks, Fannie Mae and Freddie Mac are potential significant lenders both to us and to buyers of our properties. Fannie Mae and Freddie Mac have a mandate to support multifamily housing through their financing activities and any changes to their mandates, further reductions in their size or the scale of their activities, or loss of their key personnel could have a significant adverse impact on us and may, among other things, lead to lower values for our assets and higher interest rates on our borrowings.

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Fannie Mae's and Freddie Mac's regulator has set overall volume limits on most of Fannie Mae's and Freddie Mac's lending activities. The regulator in the future could require Fannie Mae and Freddie Mac to focus more of their lending activities on small borrowers or properties the regulator deems affordable, which may or may not include our assets, which could also adversely impact us. In addition, the members of the current Presidential administration and House and Senate banking committees have proposed various reform plans for Fannie Mae and Freddie Mac, and there is uncertainty regarding the impact of these actions on us and buyers of our properties.
Risks Associated with Our Operations
Development, redevelopment and construction risks could impact our profitability.
We intend to continue to develop, redevelop and construct multifamily apartment communities for our portfolio. In 2019, we expect to incur costs between approximately $205 million and $225 million related to the construction of six consolidated projects. Additionally, during 2019, we expect to incur costs between approximately $95 million and $105 million related to the start of new development activities, between approximately $46 million and $50 million related to repositions and revenue enhancing expenditures of existing properties and between approximately $25 million and $33 million in extensive redevelopment expenditures of existing properties. Our development, redevelopment and construction activities may be exposed to a number of risks which may increase our construction costs and decrease our profitability, including the following:
 
inability to obtain, or delays in obtaining, necessary zoning, land-use, building, occupancy, and other required permits and authorizations;
increased materials and labor costs, problems with contractors or subcontractors, or other costs including those costs due to errors and omissions which occur in the design or construction process;
inability to obtain financing with favorable terms;
inability to complete construction and lease-up of a community on schedule;
forecasted occupancy and rental rates may differ from the actual results; and
the incurrence of costs related to the abandonment of development opportunities which we have pursued and subsequently deemed unfeasible.
Our inability to successfully implement our development, redevelopment and construction strategy could adversely affect our results of operations and our ability to satisfy our financial obligations and pay distributions to shareholders.
One of our wholly-owned subsidiaries is engaged in the business of providing general contracting services under construction contracts entered into between it and third parties (which may include our nonconsolidated affiliates). The terms of those construction contracts generally require this subsidiary to estimate the time and costs to complete a project to calculate the cost plus margin for the project fee, but not to exceed a maximum amount, and to assume the risk when these estimates may be greater than anticipated. As a result, profitability on those contracts is dependent on the ability to accurately predict such factors. The time and costs necessary to complete a project may be affected by a variety of factors, including, but not limited to, those listed above, many of which are beyond this subsidiary’s control. In addition, the terms of those contracts generally require this subsidiary to warrant its work for a period of time during which it may be required to repair, replace, or rebuild non-conforming work. Further, trailing liabilities, based on various legal theories such as claims of negligent construction, may result from such projects, and these trailing liabilities may go on for a number of years depending on the length of the statute of repose in the applicable jurisdictions.
Investments through joint ventures and investment funds involve risks not present in investments in which we are the sole investor.
We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including, but not limited to, the possibility the other joint venture partner may: have business goals which are inconsistent with ours, possess the ability to take or force action or withhold consent contrary to our requests, or become insolvent and require us to assume and fulfill the joint venture’s financial obligations. We and our joint venture partners may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire a joint venture partner’s interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate, finance, or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the applicable joint venture agreement. We account for three investment funds (collectively, the "Funds") utilizing the equity method of accounting. As of December 31, 2018, we had two discretionary investment funds and in March 2015, we completed the formation of a third fund with an unaffiliated third party and it did not own any properties in 2018, 2017, or 2016. The risks associated with our Funds, which we manage as the general partner and advisor, include, but are not limited to, the following:

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one of our wholly-owned subsidiaries is the general partner of the Funds and has unlimited liability for the third-party debts, obligations, and liabilities of the Funds pursuant to partnership law;
investors in the Funds (other than us), by majority vote, may remove our subsidiary as the general partner of the Funds with or without cause and the Funds’ advisory boards, by a majority vote of their members, may remove our subsidiary as the general partner of the Funds at any time for cause;
while we have broad discretion to manage the Funds and make investment decisions on behalf of the Funds, the investors or the Funds' advisory boards must approve certain matters, and as a result we may be unable to make certain investments or implement certain decisions on behalf of the Funds which we consider beneficial;
our ability to dispose of all or a portion of our investments in the Funds is subject to significant restrictions; and
we may be liable if the Funds fail to comply with various tax or other regulatory matters.
Competition could adversely affect our ability to acquire properties.
We expect other real estate investors will compete with us to acquire additional operating properties. This competition could increase prices for the type of properties we would likely pursue and adversely affect our ability to acquire these properties or achieve the expected profitability of such properties upon acquisition.
Our acquisition strategy may not produce the cash flows expected.
We may acquire additional operating properties on a selective basis. Our acquisition activities are subject to a number of risks, including, but not limited to, the following:
 
we may not be able to successfully integrate acquired properties into our existing operations;
our estimates of the costs, if any, of repositioning or redeveloping the acquired property may prove inaccurate;
the expected occupancy, rental rates and operating expenses may differ from the actual results;
we may not be able to obtain adequate financing; and
we may not be able to identify suitable candidates on terms acceptable to us and may not achieve expected returns or other benefits as a result of integration challenges, such as personnel and technology.
Failure to qualify as a REIT could have adverse consequences.

We may not continue to qualify as a REIT in the future. Also, the Internal Revenue Service may challenge our qualification as a REIT for prior years.

For any taxable year we fail to qualify as a REIT and do not qualify under statutory relief provisions:
we would be subject to federal income tax on our taxable income at regular corporate rates including, for taxable years ended before January 1, 2019, any applicable alternative minimum tax;
we would be disqualified from treatment as a REIT for the four taxable years following the year in which we failed to qualify, thereby reducing our net income, including any distributions to shareholders, as we would be required to pay significant income taxes for the year or years involved; and
our ability to expand our business and raise capital would be impaired, which may adversely affect the value of our common shares.

We may face other tax liabilities in the future which may impact our cash flow. These potential tax liabilities may be calculated on our income or property values at either the corporate or individual property levels. Any additional tax expense incurred would decrease the cash available for cash distributions to our common shareholders and non-controlling interest holders. Additionally, in order for us to continue to qualify as a REIT we must meet a number of organizational and operational requirements, including a requirement to distribute annual dividends to our shareholders equal to a minimum of 90% of our adjusted taxable income.
Tax laws have recently changed and may continue to change at any time, and any such legislative or other actions could have a negative effect on us.
Tax laws remain under constant review by persons involved in the legislative process, at the Internal Revenue Service and the U.S. Department of Treasury, and by various state and local tax authorities, as evidenced by the 2017 Jobs Act signed into law

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in December 2017. Future changes in tax laws, including to the administrative interpretations thereof or to the enacted tax rates, or new pronouncements relating to accounting for income taxes, could adversely affect us in a number of ways, including making it more difficult or more costly for us to qualify as a REIT.
Litigation risks could affect our business.
As an owner, manager and developer of multifamily properties, we may incur liability based on various conditions at our properties and the buildings thereon, and we also have become and in the future may become involved in legal proceedings, including consumer, employment, tort or commercial litigation, which if decided adversely to or settled by us, and not adequately covered by insurance, could result in liability which is material to our financial condition or results of operations.
Damage from catastrophic weather and other natural events could result in losses.
A certain number of our properties are located in areas that have experienced and may in the future experience catastrophic weather and other natural events from time to time, including fires, snow or ice storms, windstorms, tornadoes, hurricanes, earthquakes, flooding or other severe weather. These adverse weather or natural events could cause substantial damages or losses to our properties which could exceed our insurance coverage. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected property, anticipated future revenue from the property, and could also continue to be obligated to repay any mortgage indebtedness or other obligations related to the property. Any such loss could materially and adversely affect our business, financial condition and results of operations.

We are in the process of implementing a new enterprise resource planning system and problems with the design or implementation of this system could interfere with our business and operations.
We are engaged in a multi-year implementation of a cloud-based enterprise resource planning (ERP) system which is planned to be deployed in phases beginning in 2019. The new ERP system will replace multiple current business systems and is being designed to improve processes across the Company. The new ERP system will maintain books and records, record transactions and provide important information of the operations of our business to our management. The implementation of the new ERP system has required, and will continue to require, the investment of significant personnel and financial resources. While we have invested, and will continue to invest, significant resources in planning and project management, implementation issues may arise during the course of implementation, and it is possible we may experience delays, increased costs and other difficulties not presently contemplated.  Any disruptions, delays or deficiencies in the design and implementation of the new ERP system could have a materially adverse affect on our financial condition and results of operations.
A cybersecurity incident and other technology disruptions could negatively impact our business.
We use technology in substantially all aspects of our business operations, including internet and cloud-based systems and applications. We also use mobile devices, social networking, outside vendors and other online activities to connect with our employees, suppliers and residents. Such uses and the on-going advancement in technology give rise to potential cybersecurity risks with increasing sophistication, including but not limited to, security breach, espionage, system disruption, theft and inadvertent release of confidential information. Our business involves the storage and transmission of numerous classes of sensitive and confidential information and intellectual property, including residents' and suppliers' personal information, private information about employees, and financial and strategic information about us. Further, as we pursue our strategy to grow through acquisitions and developments and to pursue new initiatives to improve our operations, we are also expanding our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with our operations, we may become increasingly vulnerable to such risks and may be liable for the consequential litigation and remediation costs. Additionally, the measures we have implemented to prevent security breaches and cyber incidents may not be effective and there can be no complete assurance of prevention or anticipation of such incidents. The theft, destruction, loss, misappropriation, or release of sensitive data, confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of residents, potential liability and competitive disadvantage, any of which could result in a material adverse effect on our financial condition or results of operations.
Our third-party service providers are primarily responsible for the security of their own information technology environments and in certain instances, we rely significantly on third-party service providers to supply and store our sensitive data in a secure manner. All of these third parties face potential risks relating to cybersecurity similar to ours which could disrupt their businesses and therefore adversely impact us. While we provide guidance and specific requirements in some cases, we do not directly control any of these parties' information technology security operations, or the amount of investment they place in guarding against cybersecurity threats. Accordingly, we are subject to any flaws in or breaches to their information technology systems or those which they operate for us, which could have a material adverse effect on our financial condition or results of operations.

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Risks Associated with Our Indebtedness and Financing
We have significant debt, which could have adverse consequences.
As of December 31, 2018, we had outstanding debt of approximately $2.3 billion. This indebtedness could have adverse consequences, including, but not limited to, the following:
 
if a property is mortgaged to secure payment of indebtedness, and if we are unable to meet our mortgage obligations, we could sustain a loss as a result of foreclosure on the mortgaged property;
our vulnerability to general adverse economic and industry conditions is increased; and
our flexibility in planning for, or reacting to, changes in business and industry conditions is limited.
The mortgages on our properties subject to secured debt, our unsecured credit facilities, and the indenture under which our unsecured debt was issued, contain customary restrictions, requirements, and other limitations, as well as certain financial and operating covenants including maintenance of certain financial ratios. Maintaining compliance with these provisions could limit our financial flexibility. A default in these provisions, if uncured, could require us to repay the indebtedness before the scheduled maturity date, which could adversely affect our liquidity and increase our financing costs.
Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders.
Substantially all of our income is derived from rental and other income from our multifamily communities. As a result, our performance depends in large part on our ability to collect rent from residents, which could be negatively affected by a number of factors, including, but not limited to, the following:
 
delay in resident lease commencements;
decline in occupancy;
failure of residents to make rental payments when due;
the attractiveness of our properties to residents and potential residents;
our ability to adequately manage and maintain our communities;
competition from other available apartments and housing alternatives;
changes in market rents; and
increases in operating expenses.
Cash flow could be insufficient to meet required payments of principal and interest with respect to debt financing. In order for us to continue to qualify as a REIT we must meet a number of organizational and operational requirements, including a requirement to distribute annual dividends to our shareholders equal to a minimum of 90% of our adjusted taxable income. This requirement limits the cash available to meet required principal payments on our debt.
Issuances of additional debt may adversely impact our financial condition.
Our capital requirements depend on numerous factors, including the rental and occupancy rates of our multifamily properties, minimum dividend requirements to our equity holders, development, redevelopment and other capital expenditures, costs of operations, and potential acquisitions. If our capital requirements vary materially from our plans, we may require additional financing earlier than anticipated. If we issue more debt, we could become more leveraged, resulting in increased risk of default on our obligations and an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future.
We may be unable to renew, repay, or refinance our outstanding debt.
We are subject to the risk indebtedness on our properties or our unsecured indebtedness will not be renewed, repaid, or refinanced when due or the terms of any renewal or refinancing will not be as favorable as the existing terms of such indebtedness. If we are unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of the properties on disadvantageous terms, which might result in losses to us. Such losses could have a material adverse effect on us and our ability to pay amounts due on our debt and make distributions to our shareholders. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose on the property, appoint a receiver and exercise rights under an assignment of rents and leases, or pursue other remedies, all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Code.

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We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.
Our unsecured credit facilities, unsecured term loan, and fair value of derivative instruments are indexed to the London Interbank Offered Rate ("LIBOR"). Central banks around the world, including the Federal Reserve, have commissioned working groups of market participants and official sector representatives with the goal of finding suitable replacements for LIBOR based on observable market transactions. It is expected a transition away from the widespread use of LIBOR to alternative rates will occur over the course of the next few years. The U.K. Financial Conduct Authority (FCA), which regulates LIBOR, has announced it has commitments from panel banks to continue to contribute to LIBOR through the end of 2021, but it will not use its powers to compel contributions beyond such date. Accordingly, there is considerable uncertainty regarding the publication of such rates beyond 2021. The Federal Reserve Bank of New York and various other authorities have commenced the publication of reforms and actions relating to alternatives to U.S. dollar LIBOR. Although the full impact of such reforms and actions, together with any transition away from LIBOR, including the potential or actual discontinuance of LIBOR publication, remains unclear, these changes may have a material adverse impact on the availability of financing, including LIBOR-based loans, and on our financing costs.
Rising interest rates could both increase our borrowing costs, thereby adversely affecting our cash flows and the amounts available for distribution to our shareholders, and decrease our share price, if investors seek higher yields through other investments.
We have mortgage debt with varying interest rates dependent upon various market indexes. In addition, we have unsecured credit facilities and an unsecured term loan bearing interest at variable rates on all amounts drawn. We may incur additional variable rate debt in the future. Increases in interest rates would increase our interest expense, unless we make arrangements which hedge the risk of rising interest rates, and would increase the costs of refinancing existing debt and of issuing new debt. Accordingly, higher interest rates would adversely affect cash flow, net income, and cash available for payment of our debt obligations and distributions to shareholders.
An environment of rising interest rates could also lead holders of our securities to seek higher yields through other investments, which could adversely affect the market price of our shares. One of the factors which may influence the price of our stock in public markets is the annual distribution rate we pay as compared with the yields on alternative investments.
Failure to hedge effectively against interest rates may adversely affect results of operations.
From time-to-time, we may seek to manage our exposure to interest rate volatility by using interest rate hedging arrangements for debt instruments and future debt issuances. These agreements involve risks, such as the risk the counterparties may fail to honor their obligations under these arrangements, and these arrangements may not be effective in reducing our exposure to interest rate changes. Failure to hedge effectively against interest rate changes could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt.
Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets.
Moody’s, Fitch, and Standard & Poor's, the major debt rating agencies, routinely evaluate our debt and have given us ratings of A3 with stable outlook, A- with stable outlook, and BBB+ with positive outlook, respectively, on our senior unsecured debt as of December 31, 2018. In February 2019, Standard and Poor's upgraded our senior unsecured debt rating to A- with stable outlook. These ratings are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow and earnings. Due to changes in market conditions, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity, and access to capital markets.
Risks Associated with Our Shares
Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders.
For us to maintain our qualification as a REIT, we must have 100 or more shareholders during the year and not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term “individuals” includes a number of specified entities. To minimize the possibility of us failing to qualify as a REIT under this test, our declaration of trust includes restrictions on transfers of our shares and ownership limits. The ownership limits, as well as our ability to issue other classes of equity securities, may delay, defer, or prevent a change in control. These provisions may also deter tender offers for our common shares which may be attractive to you or limit your opportunity to receive a premium for your shares which might otherwise exist if a third party were attempting to effect a change in control transaction.

8


Our share price will fluctuate.
The market price and trading volume of our common shares are subject to fluctuation due to general market conditions, the risks discussed in this report and other matters, including, but not limited to, the following:
 
operating results which vary from the expectations of securities analysts and investors;
investor interest in our property portfolio;
the reputation and performance of REITs;
the attractiveness of REITs as compared to other investment vehicles;
the results of our financial condition and operations;
the perception of our growth and earnings potential;
minimum dividend requirements;
increases in market interest rates, which may lead purchasers of our common shares to demand a higher yield; and
changes in financial markets and national and regional economic and general market conditions.
The form, timing and amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.
The form, timing and amount of dividend distributions will be declared at the discretion of our Board of Trust Managers and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the Board of Trust Managers may consider relevant. The Board of Trust Managers may modify the form, timing and amount of dividends from time to time.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Properties
Our properties typically consist of mid-rise buildings or two and three story buildings in a landscaped setting, as well as high-rise buildings, and provide residents with a variety of amenities common to multifamily rental properties.
Operating Properties (including properties held through unconsolidated joint ventures)
The 161 operating properties in which we owned interests and operated at December 31, 2018 averaged 956 square feet of living area per apartment home. For the year ended December 31, 2018, no single operating property accounted for greater than 1.6% of our total revenues. Our stabilized operating properties had a weighted average occupancy rate of approximately 96% and 95% for the years ended December 31, 2018 and 2017, respectively, and an average monthly rental revenue per apartment home of $1,502 and $1,447 for the same periods, respectively. Resident lease terms generally range from twelve to fifteen months. At December 31, 2018, 146 of our operating properties had over 200 apartment homes, with the largest having 904 apartment homes. Our operating properties were constructed and placed in service as follows:
Year Placed in Service
Number of Operating Properties
2014-2018
25
2009-2013
20
2004-2008
33
1999-2003
47
1994-1998
25
Prior to 1994
11


9


Property Table
The following table sets forth information with respect to our 161 operating properties at December 31, 2018:
 
 
 
OPERATING PROPERTIES
Property and Location
 
Year Placed
in Service
 
Average Apartment
Size (Sq. Ft.)
 
Number of
Apartments
 
2018 Average
Occupancy  (1)
 
2018 Average
Monthly Rental
Rate per
Apartment (2)
ARIZONA
 
 
 
 
 
 
 
 
 
 
Phoenix/Scottsdale
 
 
 
 
 
 
 
 
 
 
Camden Chandler
 
2016
 
1,146

 
380
 
94.9
%
 
$
1,372

Camden Copper Square
 
2000
 
786

 
332
 
94.9

 
1,155

Camden Foothills
 
2014
 
1,032

 
220
 
95.7

 
1,605

Camden Hayden
 
2015
 
1,043

 
234
 
94.5

 
1,476

Camden Legacy
 
1996
 
1,067

 
428
 
96.3

 
1,270

Camden Montierra
 
1999
 
1,071

 
249
 
97.1

 
1,332

Camden Pecos Ranch
 
2001
 
924

 
272
 
95.6

 
1,117

Camden San Marcos
 
1995
 
984

 
320
 
96.7

 
1,240

Camden San Paloma
 
1993/1994
 
1,042

 
324
 
97.0

 
1,256

Camden Sotelo
 
2008/2012
 
1,303

 
170
 
95.3

 
1,513

CALIFORNIA
 
 
 
 
 
 
 
 
 
 
Los Angeles/Orange County
 
 
 
 
 
 
 
 
 
 
Camden Crown Valley
 
2001
 
1,009
 
380
 
96.1

 
2,058

Camden Glendale
 
2015
 
882
 
303
 
94.4

 
2,273

Camden Harbor View
 
2004
 
981
 
546
 
95.6

 
2,607

Camden Main and Jamboree
 
2008
 
1,011
 
290
 
95.2

 
2,110

Camden Martinique
 
1986
 
795
 
714
 
95.6

 
1,776

Camden Sea Palms
 
1990
 
891
 
138
 
94.3

 
2,110

The Camden
 
2016
 
768
 
287
 
94.8

 
3,184

San Diego/Inland Empire
 
 
 
 
 
 
 
 
 
 
Camden Landmark
 
2006
 
982
 
469
 
95.3

 
1,622

Camden Old Creek
 
2007
 
1,037
 
350
 
95.1

 
2,134

Camden Sierra at Otay Ranch
 
2003
 
962
 
422
 
95.6

 
1,957

Camden Tuscany
 
2003
 
896
 
160
 
95.7

 
2,607

Camden Vineyards
 
2002
 
1,053
 
264
 
95.4

 
1,718

COLORADO
 
 
 
 
 
 
 
 
 
 
Denver
 
 
 
 
 
 
 
 
 
 
Camden Belleview Station
 
2009
 
888
 
270
 
95.9

 
1,452

Camden Caley
 
2000
 
925
 
218
 
95.5

 
1,463

Camden Denver West
 
1997
 
1,015
 
320
 
96.1

 
1,712

Camden Flatirons
 
2015
 
960
 
424
 
95.8

 
1,596

Camden Highlands Ridge
 
1996
 
1,149
 
342
 
93.2

 
1,731

Camden Interlocken
 
1999
 
1,010
 
340
 
94.8

 
1,604

Camden Lakeway
 
1997
 
932
 
451
 
94.4

 
1,535

Camden Lincoln Station
 
2017
 
844
 
267
 
95.0

 
1,545

WASHINGTON DC METRO
 
 
 
 
 
 
 
 
 
 
Camden Ashburn Farm
 
2000
 
1,062
 
162
 
96.1

 
1,683

Camden College Park
 
2008
 
942
 
508
 
95.9

 
1,565


10


 
 
OPERATING PROPERTIES
Property and Location
 
Year Placed
in Service
 
Average Apartment
Size (Sq. Ft.)
 
Number of
Apartments
 
2018 Average
Occupancy  (1)
 
2018 Average
Monthly Rental
Rate per
Apartment (2)
Camden Dulles Station
 
2009
 
978
 
382
 
96.6
%
 
$
1,718

Camden Fair Lakes
 
1999
 
1,056
 
530
 
96.8

 
1,807

Camden Fairfax Corner
 
2006
 
934
 
489
 
96.7

 
1,872

Camden Fallsgrove
 
2004
 
996
 
268
 
96.0

 
1,767

Camden Grand Parc
 
2002
 
672
 
105
 
95.9

 
2,490

Camden Lansdowne
 
2002
 
1,006
 
690
 
94.9

 
1,612

Camden Largo Town Center
 
2000/2007
 
1,027
 
245
 
94.1

 
1,668

Camden Monument Place
 
2007
 
856
 
368
 
96.7

 
1,597

Camden NoMa
 
2014
 
770
 
321
 
95.7

 
2,217

Camden NoMa II (3)
 
2017
 
759
 
405
 
95.1

 
2,310

Camden Potomac Yard (4)
 
2008
 
835
 
378
 
94.5

 
1,980

Camden Roosevelt
 
2003
 
856
 
198
 
93.3

 
2,788

Camden Russett
 
2000
 
992
 
426
 
95.2

 
1,475

Camden Shady Grove (5)
 
2018
 
877
 
457
 
Lease-Up

 
1,743

Camden Silo Creek
 
2004
 
975
 
284
 
96.2

 
1,606

Camden South Capitol (6)
 
2013
 
821
 
281
 
95.8

 
2,251

Camden Washingtonian (5)
 
2018
 
871
 
365
 
Lease-Up

 
1,764

FLORIDA
 
 
 
 
 
 
 
 
 
 
Southeast Florida
 
 
 
 
 
 
 
 
 
 
Camden Aventura
 
1995
 
1,108
 
379
 
96.3

 
1,951

Camden Boca Raton
 
2014
 
843
 
261
 
96.9

 
1,935

Camden Brickell (4)
 
2003
 
937
 
405
 
94.1

 
2,102

Camden Doral
 
1999
 
1,120
 
260
 
97.1

 
1,909

Camden Doral Villas
 
2000
 
1,253
 
232
 
97.4

 
2,036

Camden Las Olas (4)
 
2004
 
1,043
 
420
 
94.4

 
2,086

Camden Plantation
 
1997
 
1,201
 
502
 
96.6

 
1,674

Camden Portofino
 
1995
 
1,112
 
322
 
96.3

 
1,733

Orlando
 
 
 
 
 
 
 
 
 
 
Camden Hunter’s Creek
 
2000
 
1,075
 
270
 
96.7

 
1,396

Camden Lago Vista
 
2005
 
955
 
366
 
96.6

 
1,289

Camden LaVina
 
2012
 
970
 
420
 
96.7

 
1,300

Camden Lee Vista
 
2000
 
937
 
492
 
96.8

 
1,230

Camden North Quarter (7)
 
2016
 
806
 
333
 
94.9

 
1,541

Camden Orange Court
 
2008
 
817
 
268
 
95.7

 
1,362

Camden Thornton Park (7)
 
2016
 
920
 
299
 
92.2

 
1,925

Camden Town Square
 
2012
 
983
 
438
 
97.1

 
1,345

Camden Waterford Lakes (6)
 
2014
 
971
 
300
 
96.5

 
1,411

Camden World Gateway
 
2000
 
979
 
408
 
96.7

 
1,289

Tampa/St. Petersburg
 
 
 
 
 
 
 
 
 
 
Camden Bay
 
1997/2001
 
943

 
760
 
95.9

 
1,175

Camden Montague
 
2012
 
975

 
192
 
96.7

 
1,335

Camden Pier District (7)
 
2016
 
989

 
358
 
93.2

 
2,403

Camden Preserve
 
1996
 
942

 
276
 
94.7

 
1,402


11


 
 
OPERATING PROPERTIES
Property and Location
 
Year Placed
in Service
 
Average Apartment
Size (Sq. Ft.)
 
Number of
Apartments
 
2018 Average
Occupancy  (1)
 
2018 Average
Monthly Rental
Rate per
Apartment (2)
Camden Royal Palms
 
2006
 
1,017

 
352
 
96.5
%
 
$
1,197

Camden Visconti (6)
 
2007
 
1,125

 
450
 
95.8

 
1,345

Camden Westchase Park
 
2012
 
992

 
348
 
96.2

 
1,427

GEORGIA
 
 
 
 
 
 
 
 
 
 
Atlanta
 
 
 
 
 
 
 
 
 
 
Camden Brookwood
 
2002
 
912

 
359
 
96.8

 
1,358

Camden Buckhead Square
 
2015
 
827

 
250
 
95.0

 
1,555

Camden Creekstone
 
2002
 
990

 
223
 
95.5

 
1,326

Camden Deerfield
 
2000
 
1,187

 
292
 
96.1

 
1,395

Camden Dunwoody
 
1997
 
1,007

 
324
 
96.3

 
1,329

Camden Fourth Ward
 
2014
 
847

 
276
 
96.8

 
1,666

Camden Midtown Atlanta
 
2001
 
935

 
296
 
96.2

 
1,474

Camden Paces
 
2015
 
1,407

 
379
 
95.6

 
2,652

Camden Peachtree City
 
2001
 
1,027

 
399
 
95.2

 
1,277

Camden Phipps (6)
 
1996
 
1,018

 
234
 
95.9

 
1,528

Camden Shiloh
 
1999/2002
 
1,143

 
232
 
96.4

 
1,264

Camden St. Clair
 
1997
 
999

 
336
 
95.9

 
1,321

Camden Stockbridge
 
2003
 
1,009

 
304
 
95.4

 
1,066

Camden Vantage
 
2010
 
901

 
592
 
96.5

 
1,404

NORTH CAROLINA
 
 
 
 
 
 
 
 
 
 
Charlotte
 
 
 
 
 
 
 
 
 
 
Camden Ballantyne
 
1998
 
1,048

 
400
 
95.1

 
1,283

Camden Cotton Mills
 
2002
 
905

 
180
 
95.1

 
1,462

Camden Dilworth
 
2006
 
857

 
145
 
96.1

 
1,432

Camden Fairview
 
1983
 
1,036

 
135
 
96.6

 
1,173

Camden Foxcroft
 
1979
 
940

 
156
 
96.0

 
1,053

Camden Foxcroft II
 
1985
 
874

 
100
 
95.7

 
1,159

Camden Gallery
 
2017
 
743

 
323
 
95.7

 
1,507

Camden Grandview
 
2000
 
1,059

 
266
 
95.3

 
1,655

Camden Sedgebrook
 
1999
 
972

 
368
 
95.7

 
1,102

Camden South End
 
2003
 
882

 
299
 
95.3

 
1,398

Camden Southline (6)
 
2015
 
831

 
266
 
95.8

 
1,516

Camden Stonecrest
 
2001
 
1,098

 
306
 
95.1

 
1,294

Camden Touchstone
 
1986
 
899

 
132
 
96.5

 
1,059

Raleigh
 
 
 
 
 
 
 
 
 
 
Camden Asbury Village (6)
 
2009
 
1,009

 
350
 
95.6

 
1,187

Camden Crest
 
2001
 
1,013

 
438
 
95.9

 
1,034

Camden Governor’s Village
 
1999
 
1,046

 
242
 
95.5

 
1,085

Camden Lake Pine
 
1999
 
1,066

 
446
 
95.7

 
1,143

Camden Manor Park
 
2006
 
966

 
484
 
94.1

 
1,098

Camden Overlook
 
2001
 
1,060

 
320
 
95.6

 
1,236

Camden Reunion Park
 
2000/2004
 
972

 
420
 
94.9

 
1,027


12


 
 
OPERATING PROPERTIES
Property and Location
 
Year Placed
in Service
 
Average Apartment
Size (Sq. Ft.)
 
Number of
Apartments
 
2018 Average
Occupancy  (1)
 
2018 Average
Monthly Rental
Rate per
Apartment (2)
Camden Westwood
 
1999
 
1,027

 
354
 
94.7
%
 
$
1,072

TEXAS
 
 
 
 
 
 
 
 
 
 
Austin
 
 
 
 
 
 
 
 
 
 
Camden Amber Oaks (6)
 
2009
 
862

 
348
 
95.5

 
1,081

Camden Amber Oaks II (6)
 
2012
 
910

 
244
 
95.5

 
1,146

Camden Brushy Creek (6)
 
2008
 
882

 
272
 
96.3

 
1,151

Camden Cedar Hills
 
2008
 
911

 
208
 
96.2

 
1,260

Camden Gaines Ranch
 
1997
 
955

 
390
 
96.8

 
1,398

Camden Huntingdon
 
1995
 
903

 
398
 
96.2

 
1,144

Camden La Frontera
 
2015
 
901

 
300
 
95.5

 
1,218

Camden Lamar Heights
 
2015
 
838

 
314
 
95.8

 
1,477

Camden Shadow Brook (6)
 
2009
 
909

 
496
 
95.8

 
1,142

Camden Stoneleigh
 
2001
 
908

 
390
 
96.5

 
1,253

Corpus Christi
 
 
 
 
 
 
 
 
 
 
Camden Breakers
 
1996
 
868

 
288
 
93.1

 
1,109

Camden Copper Ridge
 
1986
 
775

 
344
 
92.1

 
860

Camden South Bay (6)
 
2007
 
1,055

 
270
 
93.6

 
1,232

Dallas/Fort Worth
 
 
 
 
 
 
 
 
 
 
Camden Addison
 
1996
 
942

 
456
 
95.3

 
1,235

Camden Belmont
 
2010/2012
 
945

 
477
 
95.4

 
1,441

Camden Buckingham
 
1997
 
919

 
464
 
95.1

 
1,209

Camden Centreport
 
1997
 
911

 
268
 
95.2

 
1,177

Camden Cimarron
 
1992
 
772

 
286
 
96.5

 
1,206

Camden Design District (6)
 
2009
 
939

 
355
 
94.9

 
1,382

Camden Farmers Market
 
2001/2005
 
932

 
904
 
95.1

 
1,352

Camden Henderson
 
2012
 
967

 
106
 
96.4

 
1,531

Camden Legacy Creek
 
1995
 
831

 
240
 
96.6

 
1,273

Camden Legacy Park
 
1996
 
871

 
276
 
96.1

 
1,270

Camden Panther Creek (6)
 
2009
 
946

 
295
 
95.2

 
1,229

Camden Riverwalk (6)
 
2008
 
982

 
600
 
95.5

 
1,453

Camden Valley Park
 
1986
 
743

 
516
 
95.4

 
1,082

Camden Victory Park (3)
 
2016
 
861

 
423
 
95.5

 
1,605

Houston
 
 
 
 
 
 
 
 
 
 
Camden City Centre
 
2007
 
932

 
379
 
94.9

 
1,456

Camden City Centre II
 
2013
 
868

 
268
 
95.1

 
1,505

Camden Cypress Creek (6)
 
2009
 
993

 
310
 
95.9

 
1,268

Camden Downs at Cinco Ranch (6)
 
2004
 
1,075

 
318
 
95.0

 
1,242

Camden Grand Harbor (6)
 
2008
 
959

 
300
 
94.9

 
1,175

Camden Greenway
 
1999
 
861

 
756
 
96.4

 
1,371

Camden Heights (6)
 
2004
 
927

 
352
 
95.6

 
1,461

Camden Holly Springs
 
1999
 
934

 
548
 
95.0

 
1,206

Camden McGowen Station (5)
 
2018
 
1,007

 
315
 
Lease-Up

 
2,310


13


 
 
OPERATING PROPERTIES
Property and Location
 
Year Placed
in Service
 
Average Apartment
Size (Sq. Ft.)
 
Number of
Apartments
 
2018 Average
Occupancy  (1)
 
2018 Average
Monthly Rental
Rate per
Apartment (2)
Camden Midtown
 
1999
 
844

 
337
 
94.8
%
 
$
1,522

Camden Northpointe (6)
 
2008
 
940

 
384
 
95.8

 
1,099

Camden Oak Crest
 
2003
 
870

 
364
 
96.1

 
1,117

Camden Park
 
1995
 
866

 
288
 
96.2

 
1,083

Camden Plaza
 
2007
 
915

 
271
 
96.1

 
1,550

Camden Post Oak
 
2003
 
1,200

 
356
 
94.2

 
2,448

Camden Royal Oaks
 
2006
 
923

 
236
 
93.9

 
1,334

Camden Royal Oaks II
 
2012
 
1,054

 
104
 
93.7

 
1,541

Camden Spring Creek (6)
 
2004
 
1,080

 
304
 
92.5

 
1,271

Camden Stonebridge
 
1993
 
845

 
204
 
96.0

 
1,089

Camden Sugar Grove
 
1997
 
921

 
380
 
95.7

 
1,179

Camden Travis Street
 
2010
 
819

 
253
 
95.4

 
1,474

Camden Vanderbilt
 
1996/1997
 
863

 
894
 
96.4

 
1,415

Camden Whispering Oaks
 
2008
 
934

 
274
 
95.6

 
1,223

Camden Woodson Park (6)
 
2008
 
916

 
248
 
95.0

 
1,195

Camden Yorktown (6)
 
2008
 
995

 
306
 
95.9

 
1,166

(1)
Represents average physical occupancy for the year except as noted.
(2)
The average monthly rental rate per apartment incorporates vacant units and resident concessions calculated on a straight-line basis over the life of the lease.
(3)
Development property stabilized during 2018—average occupancy calculated from date at which occupancy exceeded 90% through December 31, 2018.
(4)
Property under redevelopment at December 31, 2018.
(5)
Property under lease-up at December 31, 2018.
(6)
Property owned through an unconsolidated joint venture in which we currently own a 31.3% interest. The remaining interest is owned by an unaffiliated third party.
(7)
Property acquired in 2018 - average occupancy calculated from date property was acquired.
Item 3. Legal Proceedings
None.
Item 4. Mine Safety Disclosures
None.

14


PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Our common shares are traded on the New York Stock Exchange under the symbol "CPT." As of February 7, 2019, there were approximately 365 shareholders of record and approximately 42,402 beneficial owners of our common shares.
In the first quarter of 2019, the Company's Board of Trust Managers declared a first quarter dividend of $0.80 per common share to our common shareholders of record as of March 29, 2019. Future dividend payments are paid at the discretion of the Board of Trust Managers and depend on cash flows generated from operations, the Company's financial condition and capital requirements, distribution requirements under the REIT provisions of the Code and other factors which may be deemed relevant by our Board of Trust Managers. Assuming similar dividend distributions for the remainder of 2019, our annualized dividend rate for 2019 would be $3.20 as compared to a dividend rate of $3.08 in 2018.
The following graph assumes the investment of $100 on December 31, 2013 and quarterly reinvestment of dividends, including the special dividend of $4.25 paid in September 2016.
chart-a7024a71d6bd5f19821.jpg
(Source: S&P Global Market Intelligence)
 
 
 
 
 
Index
2014
 
2015
 
2016
 
2017
 
2018
Camden Property Trust
$
134.84

 
$
145.52

 
$
173.51

 
$
196.61

 
$
194.61

FTSE NAREIT Equity
130.14

 
134.30

 
145.74

 
153.36

 
146.27

S&P 500
113.69

 
115.26

 
129.05

 
157.22

 
150.33

Russell 2000
104.89

 
100.26

 
121.63

 
139.44

 
124.09


   

15


In May 2017, we created an at-the market ("ATM") share offering program through which we can, but have no obligation to, sell common shares having an aggregate offering price of up to $315.3 million (the "2017 ATM program"), in amounts and at times as we determine, into the existing trading market at current market prices as well as through negotiated transactions. Actual sales from time to time may depend on a variety of factors including, among others, market conditions, the trading price of our common shares, and determinations by management of the appropriate sources of funding for us. During the year ended December 31, 2018, we did not sell any shares under the 2017 ATM Program. During the year ended December 31, 2017, we issued approximately 28.1 thousand common shares under the 2017 ATM program at our average price of $90.44 per share for a total net consideration of approximately $2.5 million. The proceeds from the sale of our common shares under the 2017 ATM program are intended to be used for general corporate purposes, which may include reducing future borrowings under our unsecured line of credit or short-term borrowing facilities, the repayment of other indebtedness, the redemption or other repurchase of outstanding debt or equity securities, funding for development activities, and financing for acquisitions.
As of the date of this filing, we had common shares having an aggregate offering price of up to $312.8 million remaining available for sale under the 2017 ATM program. No additional shares were sold under the 2017 ATM program subsequent to December 31, 2018 through the date of this filing.
See Part III, Item 12, for a description of securities authorized for issuance under equity compensation plans.
We have a repurchase plan approved by our Board of Trust Managers which allows for the repurchase of up to $500 million of our common equity securities through open market purchases, block purchases, and privately negotiated transactions. In March 2018, we repurchased 3,222 common shares for approximately $0.3 million. As of the date of this filing, the remaining dollar value of our common equity securities authorized to be repurchased under this program was approximately $269.5 million. There were no repurchases under this program for the years ended December 31, 2017 or 2016, or subsequent to December 31, 2018 through the date of this filing.

16


Item 6. Selected Financial Data
The following table provides selected financial data relating to our historical financial condition and results of operations as of and for each of the years ended December 31, 2014 through 2018. This data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes. Prior year amounts have been reclassified for discontinued operations.
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
 
 
Year Ended December 31,
(in thousands, except per share amounts and property data)
2018
 
2017
 
2016
 
2015
 
2014
Operating Data (a)
 
 
 
 
 
 
 
 
 
Total property revenues
$
954,505

 
$
900,896

 
$
876,447

 
$
835,618

 
$
790,263

Total property expenses
343,579

 
328,742

 
311,355

 
301,000

 
285,700

Total non-property income
2,797

 
27,795

 
14,577

 
7,332

 
14,611

Total other expenses
459,441

 
447,595

 
425,190

 
412,022

 
399,314

Income from continuing operations attributable to common shareholders
156,128

 
196,422

 
436,981

 
229,565

 
273,892

Net income attributable to common shareholders
156,128

 
196,422

 
819,823

 
249,315

 
292,089

Earnings per common share from continuing operations:
 
 
 
 
 
 
 
 
 
Basic
$
1.63

 
$
2.14

 
$
4.81

 
$
2.55

 
$
3.08

Diluted
1.63

 
2.13

 
4.79

 
2.54

 
3.06

Total earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
$
1.63

 
$
2.14

 
$
9.08

 
$
2.77

 
$
3.29

Diluted
1.63

 
2.13

 
9.05

 
2.76

 
3.27

Distributions declared per common share
$
3.08

 
$
3.00

 
$
3.00

 
$
2.80

 
$
2.64

Special dividend per common share (b)
$

 
$

 
$
4.25

 
$

 
$

Balance Sheet Data (at end of year)
 
 
 
 
 
 
 
 
 
Total real estate assets, at cost (c)
$
8,328,475

 
$
7,667,743

 
$
7,376,690

 
$
7,387,597

 
$
7,025,376

Total assets
6,219,586

 
6,173,748

 
6,028,152

 
6,037,612

 
6,043,981

Notes payable
2,321,603

 
2,204,598

 
2,480,588

 
2,724,687

 
2,730,613

Non-qualified deferred compensation share awards
52,674

 
77,230

 
77,037

 
79,364

 
68,134

Equity
3,385,104

 
3,484,714

 
3,095,553

 
2,892,896

 
2,888,409

Other Data
 
 
 
 
 
 
 
 
 
Cash flows provided by (used in):
 
 
 
 
 
 
 
 
 
Operating activities
$
503,747

 
$
434,656

 
$
443,063

 
$
423,238

 
$
418,528

Investing activities
(640,921
)
 
(189,754
)
 
690,412

 
(293,235
)
 
(326,587
)
Financing activities
(197,028
)
 
(112,923
)
 
(904,237
)
 
(273,231
)
 
43,482

Funds from operations – diluted (d)
463,982

 
424,072

 
425,464

 
414,497

 
378,043

Adjusted funds from operations – diluted (d)
391,686

 
359,314

 
366,380

 
350,328

 
318,189

Property Data
 
 
 
 
 
 
 
 
 
Number of operating properties (at the end of year) (e)
161
 
155

 
152

 
172

 
168

Number of operating apartment homes (at end of year) (e)
55,160
 
53,033

 
52,793

 
59,792

 
58,948

Number of operating apartment homes (weighted average) (e) (f)
46,925
 
46,210

 
46,934

 
47,088

 
47,915

Weighted average monthly total property revenue per apartment home (a) (f)
$
1,695

 
$
1,625

 
$
1,556

 
$
1,479

 
$
1,374

Properties under development (at end of period)
6
 
7

 
7

 
8

 
13

(a)
Excludes discontinued operations. See Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements," and Note 8, "Acquisitions, Dispositions, and Discontinued Operations," in the Notes to Consolidated Financial Statements for further discussion of discontinued operations.
(b)
A special dividend was paid on September 30, 2016. Refer to Note 5 "Common Shares" in the Notes to the Consolidated Financial Statements for further discussion of the special dividend.

17


(c)
Includes operating properties held for sale at net book value and excludes discontinued operating properties and joint ventures for all periods presented.
(d)
Management considers Funds from Operations (“FFO”) and adjusted FFO ("AFFO") to be appropriate measures of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”)), excluding gains (or losses) associated with previously depreciated operating properties, real estate depreciation and amortization, impairments of depreciable assets, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of operating properties, and depreciation, FFO can assist in the comparison of the operating performance of a company’s real estate investments between periods or to different companies. AFFO is calculated utilizing FFO less recurring capitalized expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. We also consider AFFO to be a useful supplemental measure because it is frequently used by analysts and investors to evaluate a REIT's operating performance between periods or different companies. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs. To facilitate a clear understanding of our consolidated historical operating results, we believe FFO and AFFO should be examined in conjunction with net income attributable to common shareholders as presented in the consolidated statements of income and comprehensive income and data included elsewhere in this report. FFO and AFFO are not defined by GAAP and should not be considered alternatives to net income attributable to common shareholders as an indication of our operating performance. Additionally, FFO and AFFO as disclosed by other REITs may not be comparable to our calculation. See "Funds from Operations and Adjusted FFO" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" for reconciliations of net income attributable to common shareholders to FFO and AFFO.
(e)
Includes operating properties held for sale and discontinued operating properties held for sale for all periods presented.
(f)
Excludes apartment homes owned in joint ventures.


18


Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report. Historical results and trends which might appear in the consolidated financial statements should not be interpreted as being indicative of future operations.
We consider portions of this report to be “forward-looking” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions, or other items relating to the future; forward-looking statements are not guarantees of future performance, results, or events. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance our expectations will be achieved. Any statements contained herein which are not statements of historical fact should be deemed forward-looking statements. Reliance should not be placed on these forward-looking statements as these statements are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.
Factors which may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include, but are not limited to, the following:
 
Volatility in capital and credit markets, or other unfavorable changes in economic conditions, either nationally or regionally in one or more of the markets in which we operate, could adversely impact us;
Short-term leases expose us to the effects of declining market rents;
Competition could limit our ability to lease apartments or increase or maintain rental income;
We face risks associated with land holdings and related activities;
Potential reforms to Fannie Mae and Freddie Mac could adversely affect us;
Development, redevelopment and construction risks could impact our profitability;
Investments through joint ventures and investment funds involve risks not present in investments in which we are the sole investor;
Competition could adversely affect our ability to acquire properties;
Our acquisition strategy may not produce the cash flows expected;
Failure to qualify as a REIT could have adverse consequences;
Tax laws have recently changed and may continue to change at any time, and any such legislative or other actions could have a negative effect on us;
Litigation risks could affect our business;
Damage from catastrophic weather and other natural events could result in losses;
We are in the process of implementing a new enterprise resource planning system and problems with the design or implementation of this system could interfere with our business and operations;
A cybersecurity incident and other technology disruptions could negatively impact our business;
We have significant debt, which could have adverse consequences;
Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders;
Issuances of additional debt may adversely impact our financial condition;
We may be unable to renew, repay, or refinance our outstanding debt;
We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined;
Rising interest rates could both increase our borrowing costs, thereby adversely affecting our cash flows and the amounts available for distribution to our shareholders, and decrease our share price, if investors seek higher yields through other investments;
Failure to hedge effectively against interest rates may adversely affect results of operations;

19


Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets;
Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders;
Our share price will fluctuate; and
The form, timing and amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.
These forward-looking statements represent our estimates and assumptions as of the date of this report, and we assume no obligation to update or supplement forward-looking statements because of subsequent events.
Executive Summary
We are primarily engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. Overall, we focus on investing in markets characterized by high-growth economic conditions, strong employment, and attractive quality of life which we believe leads to higher demand and retention of our apartments. As of December 31, 2018, we owned interests in, operated, or were developing 167 multifamily properties comprised of 56,858 apartment homes across the United States as detailed in the following Property Portfolio table. In addition, we own other land holdings which we may develop into multifamily apartment communities in the future.
Property Operations
Our results for the year ended December 31, 2018 reflect an increase in same store revenues of 3.2% as compared to 2017. These increases were due to higher average rental rates, which we believe was primarily attributable to improving job growth, favorable demographics, a manageable supply of new multifamily housing, and in part to more individuals choosing to rent versus buy as evidenced by the continued low level of homeownership rates. We believe the continued low levels of homeownership rates are mainly attributable to difficulties in obtaining mortgage loans as well as changing demographic trends which demonstrate certain generations having a higher propensity to rent, both of which promote apartment rentals. We also believe U.S. economic and employment growth are likely to continue during 2019 and the supply of new multifamily homes will likely remain at manageable levels. If economic conditions were to worsen, our operating results could be adversely affected.
Construction Activity
At December 31, 2018, we had six projects under construction comprised of 1,698 apartment homes, with stabilization expected to be completed within the next 42 months. As of December 31, 2018, we estimate the additional cost to complete the construction of the six projects to be approximately $335.2 million.
Acquisitions
Operating properties: During the year ended December 31, 2018 we acquired the following operating properties:
In September 2018, we acquired one operating property comprised of 299 apartment homes located in Orlando, Florida, for approximately $89.8 million.
In February 2018, we acquired one operating property comprised of 333 apartment homes located in Orlando, Florida, for approximately $81.4 million.
In January 2018, we acquired one operating property comprised of 358 apartment homes located in St. Petersburg, Florida, for approximately $126.9 million.
Land: In April 2018, we acquired approximately 1.8 acres of land in Orlando, Florida for approximately $11.4 million for the future development of a community with 360 wholly-owned apartment homes which started construction during the quarter ended June 30, 2018.
Dispositions
Land. In September 2018, we sold approximately 14.1 acres of land adjacent to two development properties in Phoenix, Arizona for approximately $11.5 million.

20


Future Outlook
Subject to market conditions, we intend to continue to seek opportunities to develop new communities, and to redevelop, reposition and acquire existing communities. We also intend to evaluate our operating property and land development portfolio and plan to continue our practice of selective dispositions as market conditions warrant and opportunities arise. We expect to maintain a strong balance sheet and preserve our financial flexibility by continuing to focus on our core fundamentals which currently are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our near-term liquidity requirements through a combination of one or more of the following: cash flows generated from operations, draws on our unsecured credit facility or other short-term borrowing, the use of debt and equity offerings under our automatic shelf registration statement, proceeds from property dispositions, equity issued from our 2017 ATM program, other unsecured borrowings, or secured mortgages.
As of December 31, 2018, we had approximately $34.4 million in cash and cash equivalents, and $634.9 million available under our $645.0 million unsecured credit facilities. As of the date of this filing, we had common shares having an aggregate offering price of up to $312.8 million remaining available for sale under our 2017 ATM program. We believe scheduled payments of debt in 2019 are manageable at $437.3 million, which represents approximately 18.8% of our total outstanding debt, and includes the amortization of debt discounts and debt issuance costs, net of scheduled principal payments of approximately $1.8 million. We believe we are well-positioned with a strong balance sheet and sufficient liquidity to cover near-term debt maturities and new development, redevelopment, and other capital funding requirements. We will, however, continue to assess and take further actions we believe are prudent to meet our objectives and capital requirements.

21


Property Portfolio
Our multifamily property portfolio is summarized as follows:
 
 
December 31, 2018
 
December 31, 2017
 
Apartment
Homes
 
Properties
 
Apartment
Homes
 
Properties
Operating Properties
 
 
 
 
 
 
 
Houston, Texas
8,749

 
25

 
8,434

 
24

Washington, D.C. Metro
6,862

 
19

 
6,040

 
17

Dallas, Texas
5,666

 
14

 
5,666

 
14

Atlanta, Georgia
4,496

 
14

 
4,496

 
14

Orlando, Florida
3,594

 
10

 
2,962

 
8

Austin, Texas
3,360

 
10

 
3,360

 
10

Charlotte, North Carolina
3,076

 
13

 
3,076

 
13

Raleigh, North Carolina
3,054

 
8

 
3,054

 
8

Phoenix, Arizona
2,929

 
10

 
2,929

 
10

Southeast Florida
2,781

 
8

 
2,781

 
8

Tampa, Florida
2,736

 
7

 
2,378

 
6

Los Angeles/Orange County, California
2,658

 
7

 
2,658

 
7

Denver, Colorado
2,632

 
8

 
2,632

 
8

San Diego/Inland Empire, California
1,665

 
5

 
1,665

 
5

Corpus Christi, Texas
902

 
3

 
902

 
3

Total Operating Properties
55,160

 
161

 
53,033

 
155

Properties Under Construction
 
 
 
 
 
 
 
Phoenix, Arizona
441

 
1

 
441

 
1

Atlanta, Georgia
365

 
1

 

 

Orlando, Florida
360

 
1

 

 

Houston, Texas
271

 
1

 
586

 
2

Denver, Colorado
233

 
1

 
233

 
1

Charlotte, North Carolina
28

 
1

 
28

 
1

Washington, D.C. Metro

 

 
822

 
2

Total Properties Under Construction
1,698

 
6

 
2,110

 
7

Total Properties
56,858

 
167

 
55,143

 
162



22


 
December 31, 2018
 
December 31, 2017
 
Apartment
Homes
 
Properties
 
Apartment
Homes
 
Properties
Less: Unconsolidated Joint Venture Properties (1)
 
 
 
 
 
 
 
Houston, Texas
2,522

 
8

 
2,522

 
8

Austin, Texas
1,360

 
4

 
1,360

 
4

Dallas, Texas
1,250

 
3

 
1,250

 
3

Tampa, Florida
450

 
1

 
450

 
1

Raleigh, North Carolina
350

 
1

 
350

 
1

Orlando, Florida
300

 
1

 
300

 
1

Washington, D.C. Metro
281

 
1

 
281

 
1

Corpus Christi, Texas
270

 
1

 
270

 
1

Charlotte, North Carolina
266

 
1

 
266

 
1

Atlanta, Georgia
234

 
1

 
234

 
1

Total Unconsolidated Joint Venture Properties
7,283

 
22

 
7,283

 
22

Total Properties Fully Consolidated
49,575

 
145

 
47,860

 
140


(1)
Refer to Note 9, "Investments in Joint Ventures," in the notes to Consolidated Financial Statements for further discussion of our joint venture investments.

Stabilized Communities
We generally consider a property stabilized once it reaches 90% occupancy. During the year ended December 31, 2018, stabilization was achieved at one consolidated operating property as follows:

Stabilized Property and Location
Number of
Apartment
Homes
 
Date of
Construction
Completion
 
Date of
Stabilization
Cons