SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Number)
3200 Southwest Freeway, Suite 1500, Houston, Texas 77027
(Address of principal executive offices)
(713) 964-3555
(Registrant's telephone number, including area code)
Indicate by check mark whether the 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 X NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
As of May 3, 1996, there were 14,667,617 shares of Common Shares of
Beneficial Interest, $0.01 par value outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
ASSETS
March 31, December 31,
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Real estate assets, at cost:
Land $ 80,857 $ 81,544
Buildings and improvements 476,149 471,584
Projects under development,
including land 45,169 54,470
________ ________
602,175 607,598
Less: accumulated depreciation (40,421) (36,800)
________ ________
561,754 570,798
Accounts receivable - affiliates 468 369
Notes receivable - affiliates 3,569 3,477
Deferred financing and other assets, net 4,883 4,839
Cash and cash equivalents 442 236
Restricted cash - escrow deposits 1,357 2,633
________ ________
Total assets $572,473 $582,352
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Liabilities:
Notes payable:
Unsecured $125,071 $122,783
Secured 117,241 112,676
Accounts payable 6,572 8,300
Accrued real estate taxes 3,654 11,865
Accrued expenses and other liabilities 7,508 6,276
Dividends payable 6,897 6,623
________ ________
Total liabilities 266,943 268,523
7.33% Convertible Subordinated Debentures 44,050 44,050
Preferred Shares of Beneficial Interest - 1,950
Shareholders' Equity:
Common shares of beneficial interest 147 145
Additional paid-in capital 303,227 299,808
Distributions in excess of net income (38,272) (29,625)
Unearned restricted share awards (3,622) (2,499)
________ ________
Total shareholders' equity 261,480 267,829
________ ________
Total liabilities and
shareholders' equity $572,473 $582,352
======== ========
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
------- -------
<S> <C> <C>
Revenues
Rental income $25,145 $21,510
Other income 1,445 1,038
_______ _______
Total revenues 26,590 22,548
Expenses
Property operating and
maintenance 9,263 7,853
Real estate taxes 3,225 2,881
General and administrative 1,109 998
Interest 4,060 2,981
Depreciation and amortization 5,523 4,720
_______ _______
Total expenses 23,180 19,433
_______ _______
Income before gain on sales of properties
and extinguishment of hedges upon debt
refinancing 3,410 3,115
Gain on sales of properties 195
Extinguishment of hedges upon
debt refinancing (5,351)
_______ _______
Net income(loss) (1,746) 3,115
Preferred share dividends (4) (10)
_______ _______
Net income(loss) to common
shareholders $(1,750) $ 3,105
======= =======
Net income(loss) per common
share and common equivalent share $ (0.12) $ 0.22
Distributions declared per
common share $ 0.475 $ 0.46
Weighted average number of
common and common equivalent
shares outstanding 14,512 14,312
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
For the Quarter Ended March 31,
-------------------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) $ (1,746) $ 3,115
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,523 4,720
Gain on sales of properties (195)
Extinguishment of hedges upon debt refinancing 5,351
Net change in operating accounts (6,628) (4,937)
________ _______
Net cash provided by operating activities 2,305 2,898
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from issuance of common shares, net 10
Investment in real estate assets (15,301) (17,459)
Net proceeds from sales of properties 19,436
Increase in notes receivable for net advances
to affiliates (92) (116)
Decrease in earnest money deposits 75 100
Other (24) (32)
________ _______
Net cash provided by (used in) investing
activities 4,104 (17,507)
CASH FLOW FROM FINANCING ACTIVITIES
Net (decrease) increase in lines of credit (97,283) 14,559
Proceeds from notes payable 104,359 10,415
Extinguishment of hedges upon debt refinancing (5,351)
Principal reduction on notes payable (223) (4,098)
Distributions to common shareholders (6,623) (6,280)
Cash dividends paid to preferred shareholders (10)
Payment of loan costs (1,184) (60)
Other 102 47
________ _______
Net cash provided by (used in) financing
activities (6,203) 14,573
________ _______
Net increase (decrease) in cash and cash
equivalents 206 (36)
Cash and cash equivalents, beginning of period 236 241
________ _______
Cash and cash equivalents, end of period $ 442 $ 205
======== =======
SUPPLEMENTAL INFORMATION
Cash paid for interest, net of interest
capitalized $ 3,196 $ 1,958
Interest capitalized $ 1,424 $ 1,067
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Shares issued under benefit plans $ 1,690 $ 1,984
Conversion of preferred shares $ 1,950
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CAMDEN PROPERTY TRUST
Notes to Consolidated Financial Statements
(Unaudited)
1. Interim Unaudited Financial Information
The accompanying interim unaudited financial information has been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although management believes that the disclosures are adequate to
make the information presented not misleading. In the opinion of management,
all adjustments and eliminations, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of Camden
Property Trust as of March 31, 1996 and the results of operations and cash
flows for the three months ended March 31, 1996 and 1995 have been included.
The results of operations for such interim periods are not necessarily
indicative of the results for the full year.
Summary
Camden Property Trust and its subsidiaries ("Camden" or the "Company") are
engaged in the ownership, development, acquisition, management, marketing and
disposition of multifamily apartment communities in the Southwest and Mountain
regions of the United States. As of March 31, 1996, the Company owned and
operated 49 multifamily properties located in Houston, Dallas/Fort Worth,
Austin, Corpus Christi, El Paso and Tucson. These 49 properties contained
16,737 apartment units and had a weighted average occupancy rate of 94.1% for
the quarter ended March 31, 1996. The Company is developing four multifamily
properties in Houston, Dallas and Phoenix which will, when completed, add 1,552
units to its portfolio, and has three properties on which it intends to develop
an estimated 1,010 units.
Property Update
During the first quarter of 1996, the Company completed construction of
the 516-unit Vanderbilt Square apartments in Houston and the 288-unit Breakers
apartments in Corpus Christi. As of March 31, 1996, the properties were near
stabilization as occupancies reached 75% and 68%. These properties were 81%
and 73% leased, respectively.
Construction was begun during the quarter on The Park at Sugar Grove
apartments, a 380-unit property in the Houston area, and Arrowhead Springs
apartments, a 288-unit property in the Phoenix area. These properties are
expected to be ready for first occupancy during the second half of 1996 with
stabilization to occur during 1997.
The Company seeks to selectively dispose of assets that are either not in
core markets or that have a lower projected net operating income growth rate
than the overall portfolio. The proceeds from these sales may be reinvested in
acquisitions or developments or used to retire debt. During the first quarter
of 1996, the Company disposed of three properties for slightly in excess of
their net book value of $19.2 million. These properties contained 117 units in
Houston, 476 units in Dallas and 216 units in San Antonio.
See note 7, "Subsequent Events", regarding a property acquisition on May
1, 1996.
Other
In March 1996, the Company announced that its Board of Trust Managers
declared a dividend in the amount of $0.475 per common share for the first
quarter of 1996. This quarterly dividend represents an increase of $.015 per
share from the fourth quarter 1995 and an annualized dividend rate of $1.90 per
share, and a 3.3% increase over the $1.84 annualized rate for 1995. The
Company intends to continue increasing its dividend annually at a rate which is
less than its rate of growth in funds from operation. Management believes that
retaining funds from operations in the maximum allowable amounts is in the best
interest of the Company's shareholders.
2. Property Operating and Maintenance Expenses
Property operating and maintenance expenses included normal repairs and
maintenance totaling $1.9 million for the first three months of 1996 and $1.5
million for the same period in 1995. In addition, amounts incurred subsequent
to the initial renovation and rehabilitation periods for recurring expenditures
such as carpets, appliances and other furnishings and equipment, which might
otherwise be capitalized, totaled $870,000 for the first quarter of 1996 and
$445,000 for the same period in 1995 and were included in expense.
3. Notes Payable
<TABLE>
<CAPTION>
A summary of the Company's notes payable follows:
(In thousands)
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Unsecured notes:
Senior unsecured notes $ 99.5 $
Unsecured credit facility 25.5 122.8
______ ______
125.0 122.8
Secured notes:
Construction loans 58.3 53.5
Conventional mortgage loans 59.0 59.2
______ ______
117.3 112.7
______ ______
Total notes payable $242.3 $235.5
====== ======
Floating rate debt included in notes payable $ 33.8 $ 26.3
</TABLE>
During the first quarter of 1996, the Company issued from its previously
filed shelf registration statement an aggregate principal amount of $100
million of five-year senior unsecured notes ("Notes"). Interest on the Notes
accrues at a rate of 6 5/8% per annum and is payable semi-annually on February
15 and August 15, commencing on August 15, 1996. The Notes are direct, senior
unsecured obligations of the Company and rank equally with all other unsecured
and unsubordinated indebtedness of the Company from time to time outstanding.
The Notes may be redeemed at any time at the option of the Company subject to a
make whole provision. The proceeds to the Company from the sale of the Notes
were $98.4 million, net of issuance costs. The Company used the net proceeds
to reduce $93.4 million of indebtedness under the unsecured credit facility, to
pay $4.9 million arising from the early settlement of hedging agreements
related to the indebtedness repaid and to pay $0.5 million to extinguish a
bank's option related to a settled hedging agreement. At March 31, 1996, a
total of $50 million in interest rate hedging agreements remain in effect. One
$25 million contract matures in June 1996 with a bank's option to extend to
June 1997. A second $25 million contract matures in July 2000 with a bank's
option to extend to July 2002. The actual rate on such $50 million of
indebtedness consists of the 5.9% average fixed rate plus the spread over
LIBOR, which ranges from 1.5% to 1.8%. Each of these two swaps continue to
operate as a hedge to manage the risk of interest rate fluctuations.
At the end of March 1996, the Company reduced its interest rate on its
$150 million unsecured credit facility and on $12.2 million of its construction
loans to LIBOR plus 150 basis points or Prime. Subsequent to March 31, 1996,
the rate on an additional $9.4 million of construction debt was reduced to 150
basis points over LIBOR or Prime.
4. Restricted Share Awards
During the first quarter of 1996, 75,841 restricted share awards were
granted in lieu of cash compensation to certain key employees. At March 31,
1996, 227,847 of such shares have been granted since the inception of the 1993
Share Incentive Plan of which 16,196 awards were canceled and 51,664 have
vested. The value of the restricted share awards at the date of grant are
amortized over vesting periods ranging from three to five years from the date
of grant.
5. Changes in Operating Accounts
The effect of changes in the operating accounts on cash flows from
operating activities is as follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------
1996 1995
------- -------
<S> <C> <C>
Decrease(increase) in assets:
Escrow deposits $ 1,276 $ 1,226
Accounts receivable-affiliates (99) 68
Other assets 902 320
Increase(decrease) in liabilities:
Accounts payable (1,728) (224)
Accrued real estate taxes (8,211) (7,010)
Accrued expenses and other liabilities 1,232 683
_______ _______
Net change in operating accounts $(6,628) $(4,937)
======= =======
</TABLE>
6. Convertible Preferred Shares
During the first quarter, all preferred shareholders elected to convert
all of their preferred shares into 85,369 common shares. In 1993, the Company
issued 84,783 shares of Series A cumulative convertible preferred shares of
beneficial interests in exchange for the remaining multifamily operations of
the Company's predecessor entities. These operations consisted primarily of
asset management and construction activities.
7. Subsequent Events
On May 1, 1996, the Company purchased a 400-unit multifamily property in
Houston. The property is adjacent to an existing property, Sierra Pines, and
the two will be operated as one property. The new addition was 94.5% occupied
at closing.
In the ordinary course of its business, the Company issues letters of
intent indicating a willingness to negotiate for the purchase or sale of
multifamily properties or development land. In accordance with the 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 contract will provide the purchaser with periods varying
from 25 to 90 days during which it will evaluate the properties and conduct its
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 the
Company will acquire or sell any property as to which the Company 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. The Company is 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.
The Company is currently in the due diligence period on contracts for the
purchase of land for development or acquisition of properties. No assurance
can be made that the Company will be able to complete the negotiations or
become satisfied with the outcome of the due diligence.
The Company seeks to selectively dispose of assets that are either not in
core markets or that have a lower projected net operating income growth rate
than the overall portfolio. The proceeds from these sales may be reinvested in
acquisitions or developments or used to retire debt. The Company currently has
letters of intent or contracts for the sale of certain properties from
potential unaffiliated buyers. No assurances can be made that these
transactions will be consummated.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Overview
The following discussion should be read in conjunction with all of the
financial statements and notes thereto appearing elsewhere in this report as
well as the audited financial statements appearing in the Company's 1995 Annual
Report to Shareholders. Where appropriate, comparisons are made on a
dollars-per-weighted-average-unit basis in order to adjust for changes in the
number of units owned during each period.
Camden Property Trust and its subsidiaries ("Camden" or the "Company") are
engaged in the ownership, development, acquisition, management, marketing and
disposition of multifamily apartment communities in the Southwest and Mountain
regions of the United States. As of March 31, 1996, the Company owned and
operated 49 multifamily properties located in Houston, Dallas/Fort Worth,
Austin, Corpus Christi, El Paso and Tucson. These 49 properties contained
16,737 apartment units and had a weighted average occupancy rate of 94.1% for
the quarter ended March 31, 1996. The Company had four multifamily properties
in Houston, Dallas and Phoenix which will, when completed, add 1,552 units to
its portfolio, and has three properties on which it intends to develop an
estimated 1,010 units.
Camden's real estate portfolio at December 31, 1995 and March 31, 1996 is
summarized as follows:
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1996
------------------- -------------------
Units Projects %* Units Projects %*
----- -------- -- ----- -------- --
<S> <C> <C> <C> <C> <C> <C>
Operating Properties
Texas
Houston 6,598 20 33% 6,997 19 36%
Dallas 6,065 17 30 5,589 16 29
Austin 1,745 6 9 1,745 6 9
Other 1,513 5 8 1,585 6 8
______ __ ____ ______ __ ____
Total Texas Properties 15,921 48 79 15,916 47 82
______ __ ____ ______ __ ____
Arizona 821 2 4 821 2 4
______ __ ____ ______ __ ____
Total Operating
Properties 16,742 50 83 16,737 49 87
Projects Under Development**
Texas
Houston 1,226 3 6 710 2 4
Dallas 920 2 5 920 2 5
Other 288 1 1
______ __ ____ ______ __ ____
Total Texas Properties 2,434 6 12 1,630 4 8
______ __ ____ ______ __ ____
Arizona 716 2 4 716 2 4
Colorado 216 1 1 216 1 1
______ __ ____ ______ __ ____
Total Projects Under
Development 3,366 9 17 2,562 7 13
______ __ ____ ______ __ ____
Total Properties 20,108 59 100% 19,299 56 100%
====== == ==== ====== == ====
<FN>
*Based on units.
**The totals for projects under development include three projects comprising
1,010 units on which construction has not commenced.
</FN>
</TABLE>
At March 31, 1996, the Company had four development properties in
various stages of development and three properties which it intends to develop
as follows:
<TABLE>
<CAPTION>
Development Properties
Estimated
Number Budgeted Cost to Estimated Estimated
Property of Cost Complete Completion Stabilization
and Location Units ($ millions)($ millions) Date Date
- - ------------- ------ ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Arrowhead Springs 288 $15.3 $13.6 1st Qtr., 4th Qtr.,
Phoenix, AZ 1997 1997
The Park at
Addison 456 25.3 2.6 2nd Qtr., 4th Qtr.,
Dallas, TX 1996 1996
The Park at
Sugar Grove 380 19.1 16.0 1st Qtr., 3rd Qtr.,
Houston, TX 1997 1997
Scottsdale Legacy 428 29.0 4.8 3rd Qtr., 4th Qtr.,
Phoenix, AZ 1996 1996
_____ _____ _____
1,552 $88.7 $37.0
===== ===== =====
<CAPTION>
Future Development Properties
Estimated
Property and Number Total Project Cost Construction
Location of Units ($ millions) Start Date
- - ------------ -------- ----------------- --------------
<S> <C> <C> <C>
The Village at 464 $24.2 To be determined
Buckingham
Dallas, TX
Remington 216 12.6 To be determined
Denver, CO
Vanderbilt Square II 330 22.6 To be determined
Houston, TX
_____ _____
1,010 $59.4
===== =====
</TABLE>
Comparison of the Quarter Ended March 31, 1996 to the Quarter Ended March 31,
1995
The changes in operating results from period to period are primarily the
result of the development of 1,586 units and the disposition of three
properties containing 809 units since March 31, 1995. During the first quarter
of 1996, the completion of the Vanderbilt apartments in Houston and The
Breakers apartments in Corpus Christi added 804 units to the portfolio. During
this same period, the Company disposed of the above mentioned 809 units
consisting of: the 117-unit The Madison apartments in Houston, the 216-unit
Wolfe Run apartments in San Antonio and the 476-unit Collins Pointe apartments
in Dallas. The weighted average number of units increased by 1,016 units, or
6.4%, from 15,945 to 16,961. Total units owned were 16,737 and 15,960 at March
31, 1996 and 1995, respectively. The portfolio had an average occupancy of
94.1% and 92.7% for the quarter ended March 31, 1996 and 1995, respectively.
The average rental income per unit per month increased $44 or 9.8%, from
$450 to $494 from March 31, 1995 to 1996, respectively. The increase is
primarily due to 5.7% higher average rental rates from the stabilized real
estate portfolio that existed throughout both periods and higher than average
rental rates achieved on properties added to the portfolio.
Other income increased by 39.2% or $407,000, from $1.0 million to $1.4
million for the quarter ended March 31, 1995, and 1996, respectively. The
increase is due to a larger number of units owned and in operation combined
with an increase in third party construction and management fee income of
$132,000. Construction and management fee income totaled $279,000 and $147,000
for the quarter ended March 31, 1996 and 1995, respectively.
Property operating and maintenance expenses and real estate taxes
increased $1.8 million, from $10.7 million to $12.5 million, which represents
an annual increase of $253 per unit. However, the Company's operating expense
ratios decreased slightly over the prior year. This decrease was primarily a
result of the change in the property mix due to development. Real estate taxes
increased as a result of increases in valuations of renovated properties and
increases in property tax rates. Operating expenses from the stabilized real
estate portfolio in operation throughout both periods increased 2.8% resulting
in an 8.3% increase in net operating income from these properties.
General and administrative expense increased $111,000 from $1.0 million to
$1.1 million. However, the Company's ratio of general and administrative
expenses to revenues has decreased 6%.
Interest expense increased 36.2%, from $3.0 million to $4.1 million due to
increased indebtedness related to completed development and renovation costs,
partially offset by reductions in interest rates. Interest capitalized was
$1.4 million and $1.1 million for the quarter ended March 31, 1996 and 1995,
respectively.
Depreciation and amortization increased 17.0% to $5.5 million versus $4.7
million in the prior year. This increase was due primarily to developments and
renovations.
Liquidity and Capital Resources
The Company funds its development and acquisitions through a combination
of equity capital, conventional mortgage loans, construction loans and an
unsecured revolving credit facility of $150 million with six banks (the
"Unsecured Credit Facility"). During the first quarter of 1996, the Company
issued from its previously filed shelf registration statement an aggregate
principal amount of $100 million of five-year senior unsecured notes (the
"Notes"). Interest on the Notes accrues at a rate of 6 5/8% per annum and is
payable semi-annually on February 15 and August 15, commencing on August 15,
1996. The Notes are direct, senior unsecured obligations of the Company and
rank equally with all other unsecured and unsubordinated indebtedness of the
Company from time to time outstanding. The Notes may be redeemed at any time
at the option of the Company subject to a make whole provision. The net
proceeds to the Company from the sale of the Notes were $98.4 million, net of
issuance costs. The Company used the net proceeds to reduce $93.4 million of
indebtedness under the unsecured credit facility, to pay $4.9 million arising
from the early settlement of hedging agreements related to the indebtedness
repaid and to pay $0.5 million to extinguish a bank's option related to a
settled hedging agreement. At March 31, 1996, a total of $50 million in
interest rate hedging agreements remain in effect. One $25 million contract
matures in June 1996 with a bank's option to extend to June 1997. A second $25
million contract matures in July 2000 with a bank's option to extend to July
2002. The actual rate on such $50 million of indebtedness consists of the 5.9%
average fixed rate plus the spread over LIBOR, which ranges from 1.5% to 1.8%.
Each of these two hedging agreements continue to operate as a hedge to manage
the risk of interest rate fluctuations.
At the end of March 1996, the Company reduced its interest rate on its
$150 million Unsecured Credit Facility and on one of its construction loans to
LIBOR plus 150 basis points or Prime. Subsequent to March 31, 1996, the rate
on an additional $9.4 million of construction debt was reduced to 150 basis
points over LIBOR or Prime.
On March 15, 1996, the Company declared a first quarter dividend in the
amount of $0.475 per common share. The distributions were payable on April 17,
1996 to shareholders of record as of March 29, 1996. The Company intends to
continue shareholder distributions in accordance with REIT requirements while
maintaining a conservative payout ratio, and expects to continue reducing the
payout ratio to the maximum allowable levels by raising the dividends at a rate
which is less than the FFO growth rate.
The Company intends to meet its short-term liquidity requirements through
cash flow provided by operations, the Unsecured Credit Facility and
construction loans. The Company intends to use senior unsecured debt (such as
the Notes) to refinance the construction loans and other secured debt and
borrowings under the Unsecured Credit Facility. The Company considers its
ability to generate cash to be sufficient, and expects it to continue to be
sufficient to meet future operating requirements and shareholder distributions.
Funds from Operations
Funds from operations for the quarter ended March 31, 1996 increased $1.1
million over the same quarter of 1995, primarily due to properties added to the
portfolio and rental growth in the Company's Dallas and Houston markets.
Industry analysts generally consider funds from operations ("FFO") an
appropriate measure of performance of an equity REIT. FFO is defined 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 other non-cash items. The Company believes that
in order to facilitate a clear understanding of the consolidated historical
operating results of the Company, FFO should be examined in conjunction with
net income as presented in the consolidated financial statements and data
included elsewhere in this report. FFO should not be considered as an
alternative to net income as an indication of the Company's operating
performance or to net cash provided by operating activities as a measure of the
Company's liquidity. A calculation of FFO follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------
1996 1995
------ ------
<S> <C> <C>
Net income(loss) to common shareholders $(1,750) $3,105
Real estate asset depreciation 5,336 4,478
Gain on sales of properties (195)
Extinguishment of hedges upon debt refinancing 5,351
_______ ______
Funds from operations available to
common shareholders 8,742 7,583
Preferred share dividends 4 10
_______ ______
Total funds from operations 8,746 7,593
Interest on convertible subordinated debentures 807 876
Amortization of deferred costs on
convertible debentures 79 86
_______ ______
Funds from operations - Fully diluted $ 9,632 $8,555
======= ======
</TABLE>
The Company seeks to continue to maintain a conservative capital structure
by: (i) targeting a ratio of total debt to total market capitalization of less
than 50%; (ii) extending and sequencing the maturity dates of its debt where
possible; (iii) borrowing at fixed rates; (iv) borrowing on an unsecured basis;
(v) maintaining a substantial number of unencumbered assets; and (vi)
maintaining a conservative debt service coverage ratio. At March 31,
1996, the Company's ratio of total debt to total market capitalization was
approximately 39% (based on the closing price of $23.125 per common share of
beneficial interest, $0.01 par value, of the Company on the New York Stock
Exchange composite tape on March 29, 1996). This ratio represents total
consolidated debt of the Company (excluding the Company's Convertible
Debentures due 2001) as a percentage of the market value of the Company's
common shares (including common shares issuable upon conversion of the
Convertible Debentures, but excluding common shares issuable upon exercise of
outstanding options) plus total consolidated debt (excluding the Convertible
Debentures). The interest coverage ratio was 3.2 times for the first quarter
of 1996. At March 31, 1996, 72.4% of the Company's portfolio (based on the
number of units) were unencumbered.
Inflation
The Company leases 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.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Statement re Computation of Per Share Earnings
(b) Reports of Form 8-K
No reports on Form 8-K have been filed by the registrant during
the quarter for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMDEN PROPERTY TRUST
G. Steven Dawson May 14, 1996
(Signature) Date
Sr. Vice President of Finance,
Chief Financial Officer and Treasurer
(Duly Authorized Officer and
Principal Financial and Accounting Officer)
EXHIBIT 11.1
<TABLE>
CAMDEN PROPERTY TRUST
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
<CAPTION>
For the Quarter Ended March 31,
-------------------------------
1996 1995
------- -------
<S> <C> <C>
SIMPLE EARNINGS PER SHARE
Weighted Average Common Shares Outstanding 14,457 14,214
======= =======
Simple Earnings Per Share $ (0.12) $ 0.22
======= =======
PRIMARY EARNINGS PER SHARE
Weighted Average Common Shares Outstanding 14,457 14,214
Shares Issuable from Assumed Conversion of:
Common Share Options and Awards Granted
and Outstanding 55 13
Convertible Preferred Shares - 85
_______ _______
Weighted Average Common Shares Outstanding,
as Adjusted 14,512 14,312
======= =======
Primary Earnings Per Share $ (0.12) $ 0.22
======= =======
FULLY DILUTED EARNINGS PER SHARE(*)
Weighted Average Common Shares Outstanding 14,457 14,214
Shares Issuable from Assumed Conversion of:
Common Share Options and Awards Granted
and Outstanding 83 13
Convertible Preferred Shares - 85
Convertible Subordinated Debentures 1,835 1,991
_______ _______
Weighted Average Common Shares Outstanding,
as Adjusted 16,375 16,303
======= =======
Fully Diluted Earnings Per Share $ (0.05) $ 0.25
======= =======
EARNINGS FOR SIMPLE, PRIMARY AND FULLY
DILUTED COMPUTATION:
Earnings to Common Shareholders (Simple
Earnings Per Share Computation) $(1,750) $ 3,105
Dividends on Convertible Preferred Shares 4 10
_______ _______
Earnings (Primary Earnings Per Share
Computation) (1,746) 3,115
Interest on Convertible Subordinated
Debentures 807 876
Convertible Subordinated Debenture
Cost Amortization 79 86
_______ _______
Earnings (Fully Diluted Earnings Per Share
Computation) $ (860) $ 4,077
======= =======
<FN>
(*) Fully diluted earnings per share of beneficial interest is not dilutive
and is not presented in the Consolidated Statement of Operations
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 442
<SECURITIES> 0
<RECEIVABLES> 468
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 602,175
<DEPRECIATION> 40,421
<TOTAL-ASSETS> 572,473
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 147
<OTHER-SE> (3,622)
<TOTAL-LIABILITY-AND-EQUITY> 572,473
<SALES> 0
<TOTAL-REVENUES> 26,590
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,060
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,746)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> 0
</TABLE>
