<PAGE> 1
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 June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number: 1-12110
CAMDEN PROPERTY TRUST
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 76-6088377
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
3200 Southwest Freeway, Suite 1500, Houston, Texas 77027
(Address of Principal Executive Offices)
(713) 964-3555
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
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 August 11, 1997, there were 31,637,963 shares of Common Shares of
Beneficial Interest, $0.01 par value outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Real estate assets, at cost:
Land $ 178,745 $ 86,673
Buildings and improvements 1,091,064 523,325
Projects under development, including land 34,187 36,547
Investment in joint ventures 16,179
------------ ------------
1,320,175 646,545
Less: accumulated depreciation (74,363) (56,369)
------------ ------------
1,245,812 590,176
Accounts receivable - affiliates 2,010 148
Notes receivable - affiliates 3,406 3,550
Deferred financing and other assets, net 6,028 4,847
Cash and cash equivalents 5,104 2,366
Restricted cash - escrow deposits 3,358 2,423
------------ ------------
Total assets $ 1,265,718 $ 603,510
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable:
Unsecured $ 344,869 $ 185,800
Secured 222,857 58,382
Accounts payable 15,636 7,512
Accrued real estate taxes 12,465 13,246
Accrued expenses and other liabilities 15,153 7,675
Distributions payable 14,371 7,765
------------ ------------
Total liabilities 625,351 280,380
Minority Interest in Operating Partnership 64,565
7.33% Convertible Subordinated Debentures 7,270 27,702
Shareholders' Equity:
Preferred shares of beneficial interest
Common shares of beneficial interest 270 165
Additional paid-in capital 634,388 348,339
Distributions in excess of net income (60,337) (49,515)
Unearned restricted share awards (5,789) (3,561)
------------ ------------
Total shareholders' equity 568,532 295,428
------------ ------------
Total liabilities and shareholders' equity $ 1,265,718 $ 603,510
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 51,084 $ 25,956 $ 79,038 $ 51,101
Other property income 2,304 1,134 3,598 2,162
-------- -------- -------- --------
Total property income 53,388 27,090 82,636 53,263
Equity in income of joint ventures 436 436
Fee and asset management 119 48 263 327
Other income 129 93 209 231
-------- -------- -------- --------
Total revenues 54,072 27,231 83,544 53,821
EXPENSES
Property operating and maintenance 18,663 9,892 28,655 19,640
Real estate taxes 5,975 3,323 9,667 6,548
General and administrative 1,216 696 2,040 1,320
Interest 9,090 4,177 13,276 8,237
Depreciation and amortization 12,102 5,645 18,530 11,168
-------- -------- -------- --------
Total expenses 47,046 23,733 72,168 46,913
-------- -------- -------- --------
INCOME BEFORE GAIN ON SALES OF PROPERTIES, LOSSES RELATED
TO EARLY RETIREMENT OF DEBT AND MINORITY INTEREST 7,026 3,498 11,376 6,908
GAIN ON SALES OF PROPERTIES 195
LOSSES RELATED TO EARLY RETIREMENT OF DEBT (286) (5,351)
-------- -------- -------- --------
INCOME BEFORE MINORITY INTEREST 7,026 3,498 11,090 1,752
MINORITY INTEREST IN OPERATING PARTNERSHIP (597) (597)
-------- -------- -------- --------
NET INCOME 6,429 3,498 10,493 1,752
PREFERRED SHARE DIVIDENDS (4)
-------- -------- -------- --------
NET INCOME TO COMMON SHAREHOLDERS $ 6,429 $ 3,498 $ 10,493 $ 1,748
======== ======== ======== ========
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.24 $ 0.24 $ 0.48 $ 0.12
DISTRIBUTIONS DECLARED PER COMMON SHARE $ 0.490 $ 0.475 $ 0.980 $ 0.950
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 26,663 14,511 21,687 14,512
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 4
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
---------------------------------
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 10,493 $ 1,752
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 18,530 11,168
Equity in income of joint ventures, net of cash received (161)
Gain on sales of properties (195)
Losses related to early retirement of debt 286 5,351
Minority interest in Operating Partnership 597
Accretion of discount on unsecured notes payable 69 27
Net change in operating accounts (11,420) (3,196)
--------- ---------
Net cash provided by operating activities 18,394 14,907
CASH FLOW FROM INVESTING ACTIVITIES
Cash of Paragon at acquisition 12,400
Increase in real estate assets (41,384) (39,393)
Net proceeds from sales of properties 19,436
Decrease (increase) in notes receivable for net advances to affiliates 6,139 (92)
Decrease in investment in joint ventures 4,624
Other (308) 7
--------- ---------
Net cash used in investing activities (18,529) (20,042)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase (decrease) in lines of credit and short-term notes 59,000 (80,783)
Proceeds from notes payable 100,000 106,883
Losses related to early retirement of debt (286) (5,351)
Repayment of notes payable (37,392) (581)
Repayment of Paragon debt, including line of credit (93,639)
Distributions to common shareholders and minority interests (24,391) (13,520)
Payment of loan costs (798) (1,349)
Other 379 170
--------- ---------
Net cash provided by financing activities 2,873 5,469
--------- ---------
Net increase in cash and cash equivalents 2,738 334
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,366 236
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,104 $ 570
========= =========
SUPPLEMENTAL INFORMATION
Cash paid for interest, net of interest capitalized $ 13,179 $ 6,831
Interest capitalized $ 1,714 $ 2,533
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisition of Paragon, net of cash acquired:
Fair value of assets acquired $ 647,795
Liabilities assumed 332,553
Common shares issued 262,370
Fair value of minority interest 65,272
Conversion of 7.33% subordinated debentures to common shares, net $ 19,839 $ 2,690
Shares issued under benefit plans $ 3,335 $ 1,678
Conversion of preferred shares and dividends $ 1,954
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 5
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 June 30, 1997 and the results of operations for the three
and six months ended June 30, 1997 and 1996, and cash flows for the six months
ended June 30, 1997 and 1996 have been included. The results of operations for
such interim periods are not necessarily indicative of the results for the full
year.
Business
Camden Property Trust and its subsidiaries ("Camden" or the "Company")
report as a single business segment related to the ownership, development,
acquisition, management, marketing and disposition of multifamily apartment
communities in the Southwest, Southeast and Midwest regions of the United
States. At June 30, 1997, the Company owned interests in, operated or was
developing 103 multifamily properties containing 35,460 apartment units located
in Texas, Arizona, Florida, Kentucky, Missouri, and North Carolina. Three of
the Company's multifamily properties were under development at June 30, 1997 in
Houston and Dallas containing 1,110 apartment units. Five of the Company's
newly developed multifamily properties containing 1,524 apartment units were in
various stages of lease-up at June 30, 1997 in Houston, Phoenix, Charlotte,
Greensboro and Kansas City. The Company has several additional sites including
land in Denver which it intends to develop into multifamily apartment
communities. Additionally, the Company manages 4,673 apartment units in 16
properties for third-parties and affiliates.
Acquisition of Paragon Group, Inc.
On April 15, 1997, the Company acquired through a tax-free merger Paragon
Group, Inc. ("Paragon"), a publicly-traded Dallas-based multifamily real estate
investment trust. The acquisition increased the size of the Company's portfolio
from 53 to 103 multifamily properties (after combining the operations of seven
of the acquired properties with adjacent properties), and from 19,389 to 35,364
apartment units at the date of acquisition, (the "Paragon Acquisition"). As
provided in the Plan of Merger dated December 16, 1996 (the "Merger Agreement")
each share of Paragon common stock outstanding on April 15, 1997 was exchanged
for 0.64 shares of the Company's common shares (based on a share price of
$17.75 per share of Paragon common stock and $27.75 per share of Camden common
shares). The Company issued 9,466,346 shares in exchange for all of the
outstanding shares of Paragon common stock. Subsequent to the acquisition,
2,352,161 Operating Partnership units were outstanding. Approximately $296
million of Paragon debt, at fair value, was assumed in the acquisition.
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<PAGE> 6
The Paragon Acquisition has been recorded under the purchase method of
accounting. In accordance with generally accepted accounting principles, the
purchase price was preliminarily allocated to the net assets acquired based on
their estimated fair values. Such estimates may be revised at a later date. No
goodwill is expected to be recorded in this transaction. The accompanying
consolidated statements of operations include the operating results of Paragon
since April 1, 1997, the effective date of the Paragon Acquisition for
accounting purposes. Pro forma unaudited consolidated operating results of the
Company for the six months ended June 30, 1997 and 1996, assuming that the
Paragon Acquisition had been made as of January 1, 1996, are summarized below
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
Total revenues $ 105,764 $ 103,242
Net income to common shareholders $ 11,773 $ 1,331
Net income per common and common equivalent share $ 0.45 $ 0.06
</TABLE>
The non-residential operations of Paragon Group Property Services, Inc., a
Paragon affiliate which was sold on June 30, 1996, and the related gain from
the sale have been adjusted out of the six months ended June 30, 1996 pro forma
amounts. These pro forma results have been prepared for informational purposes
only and do not purport to be indicative of the results of operations which
actually would have resulted had the Paragon Acquisition been completed on the
date indicated, nor are they necessarily indicative of future operations.
Operating Partnership
Camden owns the assets acquired from Paragon, comprising approximately
45.2% of Camden's multifamily apartment units, in an operating partnership (the
"Operating Partnership") in which Camden holds 79.1% of the Operating
Partnership units (the "OP Units"), and the sole 1% general partner interest.
The remaining 19.9% of the Operating Partnership interests are held by former
officers, directors and investors in Paragon, who collectively owned 2,346,640
OP Units at June 30, 1997. Each OP Unit is convertible into one common share of
Camden or cash at the election of the Company. Holders of OP Units are not
entitled to rights as shareholders of the Company prior to redemption of their
OP Units. No members of the Company's management team own OP Units and only two
of the seven Trust Managers of the Company own OP Units.
Camden, through its general partner interest in the Operating Partnership,
holds exclusive power over the business and affairs of the Operating
Partnership without the consent of the holders of OP Units, subject to certain
limitations. As the general partner, subject to the limitations discussed
below, Camden may engage in transactions (including transactions with
affiliates of Camden) to purchase, sell, or finance the real estate assets of
the Operating Partnership, and may borrow or lend funds, as long as such
transactions are fair and reasonable to the Operating Partnership.
As the holder of more than two-thirds of the OP Units, Camden has the
power to dissolve at any time and liquidate the Operating Partnership, and in
connection therewith sell or otherwise dispose of any part or all of the
Operating Partnership's assets. Either the sale of all or substantially all of
the assets of the Operating Partnership without liquidation of the partnership
or, a merger in which the holders of OP Units do not receive the same
consideration as Camden shareholders requires the majority consent of holders
of OP Units, excluding OP Units held by the Company. Otherwise, Camden
generally has
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<PAGE> 7
complete discretion to manage the Operating Partnership and its assets without
consent of the other OP Units holders.
Accounting for Subsidiaries and Joint Ventures
The Company consolidates the operations and accounts of all subsidiaries
and partnerships in which its aggregate ownership is greater than 50%. Those
owned less than 50%, are accounted for using the equity method. As a result of
the Paragon Acquisition, the Company now owns a substantial number of its
assets in an Operating Partnership. At June 30, 1997, the Company owns, through
its wholly-owned subsidiaries, an 80.1% interest in the Operating Partnership.
The remaining 19.9% interest, comprising 2,346,640 OP Units, is accounted for
as minority interest. In connection with the Paragon Acquisition, the Company
also obtained an ownership interest in three properties containing 1,264
apartment units controlled through a private real estate investment trust, and
interests in three office building limited partnerships, all of which are
included as investment in joint ventures.
July 1997 Equity Offering
In July 1997 the Company completed the public sale and issuance of
4,830,000 common shares (the "July 1997 Equity Offering") at a price of $31 per
share. The net proceeds of $142.6 million were used to retire certain secured
indebtedness assumed in the Paragon Acquisition and to reduce amounts
outstanding under the Company's credit facility. See Note 8 for further
discussion.
Dividend Declaration
On July 17, 1997, the Company paid a distribution of $0.49 per share for
the second quarter of 1997 to all holders of record of Camden's common shares
as of June 30, 1997, and paid an equivalent amount per unit to holders of OP
Units. This distribution to common shareholders and holders of OP Units equates
to an annualized dividend rate of $1.96 per share or unit. The Company
determines the amount of cash distributable from the Operating Partnership in
accordance with the partnership agreement and intends to make distributions to
the holders of OP Units in amounts equivalent to the per share dividends paid
to holders of common shares.
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS
128"). SFAS No. 128, which is effective for periods ending after December 15,
1997, specifies the computation, presentation and disclosure requirements of
earnings per share ("EPS") and supercedes Accounting Principles Board Opinion
No. 15 ("APB No. 15"). SFAS 128 requires a dual presentation of basic and
diluted EPS. Basic EPS, which excludes the impact of common share equivalents,
replaces primary EPS. Diluted EPS, which utilizes the average market price per
share as opposed to the greater of the average market price per share or ending
market price per share when applying the treasury stock method in determining
common share equivalents, replaces fully diluted EPS. Pro forma basic and
diluted EPS for all historical periods presented, assuming SFAS No. 128 was
effective at the beginning of each such historical period, would not be
materially different than the presentations using APB No. 15.
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<PAGE> 8
Also in February 1997, the FASB issued SFAS No. 129, Disclosure of
Information about Capital Structure, which establishes standards for disclosing
information about an entity's capital structure. Such SFAS is effective for
periods ending after December 15, 1997. The Company believes that its
disclosures already comply with the requirements of SFAS No. 129. In June 1997,
the FASB issued SFAS No. 130, Reporting Comprehensive Income, and SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information. SFAS No.
130 establishes standards for reporting and displaying of comprehensive income
and its components. SFAS No. 131 establishes standards for the way that public
business enterprises report information about operating segments and related
information in interim and annual financial statements. SFAS No. 131 will not
impact the Company's financial statements as it reports as a single segment.
SFAS Nos. 130 and 131 are effective for periods beginning after December 15,
1997. Management is evaluating what, if any, additional disclosures may be
required upon the implementation of SFAS No. 130.
Reclassifications
Certain reclassifications have been made to amounts in prior year
financial statements to conform with current year presentations. Specifically,
direct on-site general and administrative expenses previously classified as
general and administrative expenses are now reflected as a part of property
operating and maintenance expenses, and certain components of revenues have
been reported separately.
2. NOTES PAYABLE
The following is a summary of the Company's indebtedness:
(In millions)
<TABLE>
<CAPTION>
PRO FORMA AFTER
EQUITY OFFERING DECEMBER 31,
(SEE NOTE 8) JUNE 30, 1997 1996
--------------- ------------- ------------
<S> <C> <C> <C>
Senior Unsecured Notes:
6 5/8% Notes, due 2001 $ 99.7 $ 99.7 $ 99.6
7.172% Medium Term Notes, due 2004 25.0 25.0
7% Notes, due 2006 74.2 74.2 74.2
Reset Notes, due 2002 75.0 75.0
Credit facility and other short-term notes 71.0 12.0
------ ------- --------
273.9 344.9 185.8
Secured Notes:
Mortgage loans 156.0 222.8 58.4
------ ------- --------
Total notes payable $ 429.9 $ 567.7 $ 244.2
======= ======= ========
Floating rate debt included in notes payable, net of
hedging agreements $ 50.0 $ 121.0
</TABLE>
The Company has a revolving $150 million unsecured line of credit (the
"Unsecured Credit Facility") which matures July 28, 2000. One year prior to
maturity, this debt becomes a term loan, unless it is extended, renegotiated or
repaid. The scheduled interest rate on the loan is currently based on LIBOR
plus 105 basis points or Prime plus 25 basis points. This scheduled rate is
subject to change as the
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<PAGE> 9
Company's credit ratings change. Advances under the Unsecured Credit Facility
may be priced at the scheduled rate, or, the Company may enter into bid rate
loans ("Bid Rate Loans") with participating banks at rates below the scheduled
rate. These Bid Rate Loans have terms of six months or less and may not exceed
the lesser of $75 million or the remaining amount available under the Unsecured
Credit Facility. The Unsecured Credit Facility is subject to customary
financial covenants and limitations.
As an alternative to its Unsecured Credit Facility, the Company from time
to time borrows using competitively bid unsecured short-term notes with lenders
who may or may not be a part of the Unsecured Credit Facility bank group. Such
borrowings vary in term and pricing but have the same covenants as the
Unsecured Credit Facility and are typically priced at interest rates below
those available under the Unsecured Credit Facility.
Subsequent to June 30, 1997, Camden retired an additional $66.7 million
mortgage loan using a portion of the proceeds of the July 1997 Equity Offering.
Including the debt retirements made in conjunction with the July 1997 Equity
Offering, the Company has retired $160.3 million of the $296 million of debt
assumed in the Paragon Acquisition.
On May 9, 1997, the Company issued from its recently filed shelf
registration statement an aggregate principal amount of $75 million of its
unsecured reset notes maturing May 2002 (the "Reset Notes"). During the
one-year period ending May 11, 1998, the interest rate on the Reset Notes,
which will be reset quarterly, will equal 90-day LIBOR plus 32 basis points and
interest will be payable on a quarterly basis. After the one-year period, the
mode and duration of the interest rate on the Reset Notes will be reset by the
Company and a remarketing underwriter as either fixed or floating and for
durations of from six months to four years. The Reset Notes are direct, senior
unsecured obligations of the Company and rank equally with all other unsecured
and unsubordinated indebtedness of the Company. The Reset Notes are redeemable
after May 11, 1998 at the option of the Company at par value. The net proceeds
to the Company from the sale of the Notes were $74.8 million. The Company used
the net proceeds to reduce indebtedness incurred under the Unsecured Credit
Facility which had been used to liquidate portions of the debt assumed in the
Paragon Acquisition.
On June 20, 1997, the Company issued $25 million aggregate principal
amount of senior unsecured notes from its $196 million Medium Term Notes shelf
registration. These fixed rate notes, due in June 2004, bear interest at the
annual rate of 7.172% payable semiannually on March 15 and September 15. The
net proceeds were used to reduce indebtedness outstanding under short-term
unsecured notes.
At June 30, 1997, the Company was party to a $25 million interest rate
hedging agreement which is scheduled to mature in July 2000. The issuing bank
has an option to extend this agreement to July 2002. The LIBOR rate is fixed at
6.1%, resulting in a fixed rate equal to 6.1% plus the actual LIBOR spread on
the related indebtedness. This swap continues to be used as a hedge to manage
the risk of interest rate fluctuations on the Unsecured Credit Facility and
other floating rate indebtedness.
At June 30, 1997, the weighted average interest rate on total notes
payable was 7.1%. Following the retirement of debt using the proceeds of the
July 1997 Equity Offering, the weighted average interest rate was reduced to
7.0%.
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<PAGE> 10
3. NET CHANGE IN OPERATING ACCOUNTS
The effect of changes in the operating accounts on cash flows from
operating activities is as follows:
(In thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1996
--------- ---------
<S> <C> <C>
Decrease (increase) in assets:
Accounts receivable - affiliates $ 986 $ (365)
Deferred financing and other assets, net (255) 770
Restricted cash - escrow deposits 1,543 827
Increase (decrease) in liabilities:
Accounts payable 2,646 (1,262)
Accrued real estate taxes (2,938) (4,528)
Accrued expenses and other liabilities (13,402) 1,362
--------- --------
Net change in operating accounts $ (11,420) $ (3,196)
========= ========
</TABLE>
4. PROPERTY OPERATING AND MAINTENANCE EXPENSES
Property operating and maintenance expenses included normal repairs and
maintenance totaling $3.8 million and $5.5 million for the three and six months
ended June 30, 1997, respectively and $2.1 million and $4.0 million for the
three and six months ended June 30, 1996, respectively. In addition, property
operating and maintenance expense included 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, totaling $1.5 million and $2.2 million for the three
and six months of 1997 and $0.9 million and $1.8 million for the same periods
in 1996.
5. RESTRICTED SHARE AND OPTION AWARDS
During the first six months of 1997, 124,159 restricted shares were
granted in lieu of cash compensation to certain key employees and non-employee
trust managers. The restricted shares were issued based on market value at the
date of grant and have vesting periods of up to five years. An additional
310,000 options were granted at the market value exercise price and are
exercisable in equal increments on or following each of the first three
anniversaries of the date of grant. During the second quarter of 1997, the
Company's shareholders and Trust Managers voted to amend the Plan, which
resulted in an increase in the maximum number of common shares available for
issuance under the Plan to 10% of the common shares outstanding at any time.
During the six month period ended June 30, 1997, previously granted options for
65,064 shares became exercisable and 47,804 restricted shares became vested.
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<PAGE> 11
6. EMPLOYEE STOCK PURCHASE PLAN
In July 1997, the Company established and commenced an Employee Stock
Purchase Plan ("ESPP") for all active employees, officers, and Trust Managers
who have completed one month of continuous service. Participants may elect to
purchase Camden common shares through payroll or director fee deductions and/or
through quarterly contributions. At the end of each six-month offering period,
each participant's account balance is applied to acquire common shares of the
Company at 85% of the market value, as defined, on the first or last day of the
offering period, whichever price is lower. A participant may not purchase more
than $25,000 in value of shares during any Plan Year, as defined.
7. CONVERTIBLE SUBORDINATED DEBENTURES
During the first six months of 1997, debentures in the principal amount of
$20.4 million were converted into approximately 851,000 common shares. These
debentures were converted on or before the record date for the quarterly
dividend and the related debenture interest was forfeited by the debenture
holders in accordance with the indenture. In addition, $593,000 of unamortized
debenture issue costs were reclassified to additional paid-in capital. Had all
converted debentures converted as of the beginning of the period, net income
per common and common equivalent share would have remained at $0.24 for the
three months ended June 30,1997, and would have been $0.50 per share for the
six months ended June 30, 1997.
8. SUBSEQUENT EVENTS
On July 21, 1997, the Company completed the public sale and issuance of
4,830,000 common shares, including 630,000 shares issued to the underwriters to
satisfy over-allotments, at a price of $31 per share. The net proceeds of
$142.6 million were used to retire certain secured indebtedness assumed in the
Paragon Acquisition and to reduce amounts outstanding under the Unsecured
Credit Facility which had been advanced to fund recent property developments, a
96-unit apartment acquisition and other working capital requirements. Had the
July 1997 Equity Offering been completed on the effective date of the Paragon
Acquisition, interest expense on a pro forma basis would have been $6.6 million
for the three months ended June 30, 1997. Net income to common shareholders on
a pro forma basis would have been $8.9 million or $0.28 per share for the three
months ended June 30, 1997.
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 180 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
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<PAGE> 12
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, have a lower projected net operating income growth rate than the
overall portfolio, or no longer conform to the Company's operating and
investment strategies. The proceeds from these sales may be reinvested in
acquisitions, developments or used to retire debt.
-12-
<PAGE> 13
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 1996 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. The statements contained in this
report that are not historical facts are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual results may
differ materially from those included in the forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, the following: changes in general economic conditions in the
markets that could impact demand for the Company's product and changes in
financial markets and interest rates impacting the Company's ability to meet
its financing needs and obligations.
Camden Property Trust and its subsidiaries ("Camden" or the "Company")
report as a single business segment related to the ownership, development,
acquisition, management, marketing and disposition of multifamily apartment
communities in the Southwest, Southeast and Midwest regions of the United
States. At June 30, 1997, the Company owned interests in, operated or was
developing 103 multifamily properties containing 35,460 apartment units located
in Texas, Arizona, Florida, Kentucky, Missouri, and North Carolina. Three of
the Company's multifamily properties were under development at June 30, 1997 in
Houston and Dallas containing 1,110 apartment units ("Development Properties").
Five of the Company's newly developed multifamily properties containing 1,524
apartment units were in various stages of lease-up at June 30, 1997 in Houston,
Phoenix, Charlotte, Greensboro and Kansas City ("Lease-up Properties"). The
Company has several additional sites including land in Denver which it intends
to develop into multifamily apartment communities. Additionally, the Company
manages 4,673 apartment units in 16 properties for third-parties and
affiliates.
Acquisition of Paragon Group, Inc.
On April 15, 1997, the Company acquired through a tax-free merger Paragon
Group, Inc., ("Paragon"), a publicly-traded Dallas-based multifamily real
estate investment trust. The acquisition increased the size of the Company's
portfolio from 53 to 103 multifamily properties (after combining the operations
of seven of the acquired properties with adjacent properties), and from 19,389
to 35,364 apartment units at the date of acquisition, (the "Paragon
Acquisition"). As provided in the Plan of Merger dated December 16, 1996 (the
"Merger Agreement") each share of Paragon common stock outstanding on April 15,
1997 was exchanged for 0.64 shares of the Company's common shares (based on a
share price of $17.75 per share of Paragon common stock and $27.75 per share of
Camden common shares). The Company issued 9,466,346 shares in exchange for all
of the outstanding shares of Paragon common stock. Subsequent to the
acquisition, 2,352,161 Operating Partnership units were outstanding.
Approximately $296 million of Paragon debt, at fair value, was assumed in the
acquisition.
-13-
<PAGE> 14
Property Portfolio
The Company's multifamily property portfolio, excluding land held for
development, at June 30, 1997 and December 31, 1996 is summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997** DECEMBER 31, 1996
----------------------------------- -----------------------------------
Number Number of Number of Number of
of Units Properties %* Units Properties %*
----------- ------------ ------ ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Texas
Houston 7,745 20 22% 7,745 20 40%
Dallas 9,381 26 27 6,777 18 35
Austin 1,745 6 5 1,745 6 9
Other 1,585 5 4 1,585 5 8
------- ---- ---- ------ --- ----
Total Texas Properties 20,456 57 58 17,852 49 92
------- ---- ---- ------ --- ----
Arizona 1,537 4 4 1,537 4 8
Florida 6,103 17 17
Kentucky 1,142 5 3
Missouri 3,487 10 10
North Carolina 2,735 10 8
------- ---- ---- ------ --- ----
Total Properties 35,460 103 100% 19,389 53 100%
======= ==== ==== ====== === ====
</TABLE>
* Based on number of units.
** Includes three properties containing 1,264 units owned in joint ventures.
Property Update
Leasing continued during the second quarter on the two development
properties completed during the first quarter of 1997 and on the three
development properties acquired in the Paragon Acquisition.
The following table sets forth information regarding the Lease-Up
Properties:
<TABLE>
<CAPTION>
Estimated
Number Cost % Leased Date of Estimated
Property and Location of Units ($ millions) at 8/6/97 Completion Stabilization
- ------------------------------------ ---------- ------------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C>
The Park at Sugar Grove
Houston, TX 380 $ 19.3 96% 1Q97 3Q97
The Park at Arrowhead Springs
Phoenix, AZ 288 16.1 80 1Q97 3Q97
Park Commons*
Charlotte, NC 232 11.5 83 2Q97 3Q97
Brassfield Park*
Greensboro, NC 336 17.1 82 2Q97 3Q97
Camden Passage Phase II*
Kansas City, MO 288 15.6 74 2Q97 3Q97
----- ------
Total 1,524 $ 79.6
===== ======
</TABLE>
* Acquired in Paragon Acquisition. Brassfield is owned through a joint venture.
-14-
<PAGE> 15
Construction continued on The Park at Centreport, The Park at Buckingham,
and Phase II of The Park at Vanderbilt. The Park at Centreport is expected to
be ready for first occupancy during the third quarter of 1997 with
stabilization to occur during the third quarter of 1998. The Park at Buckingham
and Phase II of The Park at Vanderbilt began leasing during the second quarter
of 1997.
The following table sets forth information regarding the Development
Properties:
<TABLE>
<CAPTION>
Estimated
Number Cost % Leased Estimated Date Estimated
Property and Location of Units ($ millions) at 8/6/97 of Completion Stabilization
- ------------------------------------ ---------- ------------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C>
The Park at Buckingham
Dallas, TX 464 $ 25.5 22% 1Q98 3Q98
The Park at Centreport
Dallas, TX 268 14.0 0 1Q98 3Q98
The Park at Vanderbilt, Phase II
Houston, TX 378 24.6 60 3Q97 4Q97
----- ------
Total 1,110 $ 64.1
===== ======
</TABLE>
Historically, the Company has staged its construction to allow leasing and
occupancy during the construction period thereby minimizing the lease-up period
following completion of construction. The Company's accounting policy related
to properties in the development and leasing phase is that all operating
expenses, excluding depreciation, associated with occupied units are expensed
against revenues generated by those units as they become occupied. All
construction and carrying costs are capitalized and reported on the balance
sheet in "Projects under development, including land" until such units are
completed. Upon completion of each building of the project, the total cost of
that building and the associated land is transferred to "Land" and "Buildings
and improvements" and the assets are depreciated over their estimated useful
lives using the straight-line method of depreciation. Upon achieving 90%
occupancy, or one year from opening the leasing office, whichever occurs first,
all units are considered operating and the Company begins expensing all items
that were previously considered as carrying costs.
Comparison of the Quarter Ended June 30, 1997 and June 30, 1996
The changes in operating results from period to period are primarily due to
the Paragon Acquisition, development of four properties aggregating 1,552
units, and an increase in net operating income generated by the stabilized
portfolio. The weighted average number of units for the second quarter of 1997
increased by 15,218 units, or 88.6%, from 17,174 to 32,392. Total operating
properties were 97 and 50 at June 30, 1997 and 1996, respectively. The 32,392
weighted average units and the 97 operating properties exclude the impact of
the Company's ownership interest in 1,264 units on three properties owned in
joint ventures.
The average rental income per unit per month increased $22 or 4.4%, from
$504 to $526 for the second quarter of 1996 and 1997, respectively. The
increase was primarily due to increased revenue growth from the stabilized real
estate portfolio and higher average rental rates on properties added to the
portfolio through the Paragon Acquisition and completion of new development
properties. Overall average occupancy decreased slightly from 94.2% to 93.8%
for the quarters ended June 30, 1996 and 1997, respectively.
-15-
<PAGE> 16
Other property income increased $1.2 million from $1.1 million to $2.3
million for the quarters ended June 30, 1996 and 1997, respectively. The
increase in other property income was due to a larger number of units owned and
in operation.
Property operating and maintenance expenses and real estate taxes increased
$11.4 million, from $13.2 million to $24.6 million, which represents an annual
decrease of $36 per unit. The Company's operating expense ratios decreased over
the prior year primarily as a result of operating efficiencies resulting from a
larger portfolio together with savings in utilities and other costs. Real
estate taxes increased as a result of the Paragon Acquisition, increases in the
valuations of renovated and developed properties, and increases in property tax
rates. However, on a per unit basis, annualized taxes declined from $774 to
$738.
General and administrative expenses increased $520,000 from $696,000 to
$1.2 million, a rate consistent with the overall increase in revenues.
Interest expense increased from $4.2 million to $9.1 million due to
increased indebtedness related to the Paragon Acquisition, completed
developments and renovations. The increase was partially offset by reductions
in average interest rates on the Company's debt. Interest capitalized remained
constant at $1.1 million for the quarters ended June 30, 1997 and 1996,
respectively.
Depreciation and amortization increased from $5.6 million to $12.1 million.
This increase was due primarily to the Paragon Acquisition, developments, and
renovations.
Comparison of the Six Months Ended June 30, 1997 and June 30, 1996
The changes in operating results from period to period are primarily due to
the Paragon Acquisition, development of six properties aggregating 2,356 units,
and an increase in net operating income generated by the stabilized portfolio.
The weighted average number of units for the first six months of 1997 increased
by 8,040 units, or 47.1%, from 17,068 to 25,108. Total operating properties
were 97 and 50 at June 30, 1997 and 1996, respectively. The 25,108 weighted
average units and the 97 operating properties exclude the impact of the
Company's ownership interest in 1,264 units on three properties owned in joint
ventures.
The average rental income per unit per month increased $26 or 5.2%, from
$499 to $525 for the six months ended June 30, 1996 and 1997, respectively. The
increase was primarily due to increased revenue growth from the stabilized real
estate portfolio and higher average rental rates on properties added to the
portfolio through the Paragon Acquisition and completion of new development
properties.
Other property income increased $1.4 million from $2.2 million to $3.6
million for the six months ended June 30, 1996 and 1997, respectively. The
increase in other property income was due to a larger number of units owned and
in operation.
Property operating and maintenance expenses and real estate taxes increased
$12.1 million, from $26.2 million to $38.3 million, which represents an annual
decrease of $16 per unit. The Company's operating expense ratios decreased over
the prior year primarily as a result of operating efficiencies resulting from a
larger portfolio together with savings in utilities and other costs. Real
estate taxes increased as a result of the Paragon Acquisition, increases in the
valuations of renovated and developed properties, and increases in property tax
rates.
General and administrative expenses increased $720,000 from $1.3 million to
$2.0 million, a rate consistent with the overall increase in revenues.
-16-
<PAGE> 17
Interest expense increased from $8.2 million to $13.3 million due to
increased indebtedness related to the Paragon Acquisition, completed
developments and renovations. This increase was partially offset by reductions
in average interest rates on the Company's debt. Interest capitalized was $1.7
million and $2.5 million for the six months ended June 30, 1997 and 1996,
respectively.
Depreciation and amortization increased from $11.2 million to $18.5
million. This increase was due primarily to the Paragon Acquisition,
developments, and renovations.
LIQUIDITY AND CAPITAL RESOURCES
Financial Structure
The Company intends to continue maintaining what management believes to be
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) managing floating interest
rate exposure using fixed rate debt and hedging, where appropriate; (iv)
borrowing on an unsecured basis; (v) maintaining a substantial number of
unencumbered assets; and (vi) maintaining a conservative debt service coverage
ratio.
On July 21, 1997, the Company completed the public sale and issuance of
4,830,000 common shares, including 630,000 shares issued to the underwriters to
satisfy over-allotments, (the "July 1997 Equity Offering") at a price of $31
per share. Net proceeds from the July 1997 Equity Offering were used to retire
certain secured indebtedness assumed in the Paragon Acquisition and to reduce
amounts outstanding under the $150 million unsecured line of credit (the
"Unsecured Credit Facility") which had been advanced to fund recent property
developments, a 96-unit apartment acquisition and other working capital
requirements. Following the July 1997 Equity Offering, the Company had
outstanding 31,002,349 common shares, (excluding: 897,733 shares reserved for
issuance upon the exercise of outstanding options granted pursuant to the
Company's 1993 Share Incentive Plan (the "Plan"); (ii) 2,346,640 common shares
issuable upon conversion of Operating Partnership Units; (iii) 299,583 common
shares issuable upon conversion of the Company's outstanding convertible
debentures; and, (iv) 183,434 common shares awarded under the Plan to certain
executive officers of the Company and held in trust by the Company.)
Camden has maintained on a quarterly basis a financial structure with no
more than 40% total debt to total market capitalization since its initial
public offering in July 1993. At June 30, 1997, the Company's ratio of total
debt to total market capitalization was approximately 37.7% (based on the
closing price of $31.63 per common share of the Company on the New York Stock
Exchange composite tape on June 30, 1997). This ratio represents total
consolidated debt of the Company as a percentage of the market value of the
Company's common shares (including common shares issuable upon the conversion
of convertible securities and operating partnership units, but excluding common
shares issuable upon exercise of outstanding options) plus total consolidated
debt. The interest coverage ratio was 3.1 and 3.2 times earnings before
interest, taxes, depreciation, and amortization ("EBITDA") for the three months
ended June 30, 1997 and 1996, respectively, and 3.3 and 3.2 times EBITBA, for
the six months ended June 30, 1997 and 1996, respectively. Following the July
1997 Equity Offering and the application of proceeds to reduce outstanding
secured and unsecured debt, the ratio of debt to total market capitalization
was reduced to 28.3%. Had the offering and subsequent debt retirement been
completed at the beginning of the quarter, the interest coverage ratio for the
second quarter of 1997 would have been 4.3 times EBITDA.
-17-
<PAGE> 18
Liquidity
The Company intends to meet its short-term liquidity requirements through
cash flows provided by operations, the Unsecured Credit Facility, and other
short-term borrowings. The Company uses equity capital and senior unsecured
debt to refinance maturing secured debt and borrowings under its Unsecured
Credit Facility and other short-term borrowings. Following the Offering in July
1997, the Company had availability of $142 million under the Unsecured Credit
Facility. The Company has on file a universal shelf registration providing for
the issuance of up to $500 million in equity, debt, preferred or convertible
securities, of which, over $275 million remains unused. Additionally, the
Company has a $196 million medium-term note program used to provide
intermediate and long-term, unsecured publicly-traded debt financing, of which
$171 million remains unused. Finally, the Company has significant unencumbered
real estate assets which could be sold or used as collateral for financing
purposes should other sources of capital not be available. The Company
considers its ability to generate cash to be sufficient, and expects to be able
to meet future operating cash requirements and to pay distributions to
shareholders and holders of operating partnership units.
On July 17, 1997, the Company paid a distribution of $0.49 per share for
the second quarter of 1997 to all holders of record of Camden's common shares
as of June 30, 1997, and paid an equivalent amount per unit to holders of
Operating Partnership Units ("OP Units"). This distribution to common
shareholders and holders of OP Units equates to an annualized dividend rate of
$1.96 per share or unit. The Company determines the amount of cash
distributable from the Operating Partnership in accordance with the partnership
agreement and intends to make distributions to the holders of OP Units in
amounts equivalent to the per share dividends paid to holders of common shares.
Financial Flexibility
The Company concentrates its growth efforts toward selective development
and acquisition opportunities in its core markets, and through the acquisition
of existing operating portfolios and development properties in selected new
markets. During the six months ended June 30, 1997, the Company incurred $33.5
million in development costs and $3.9 million in acquisition costs for a
property purchased for cash. In addition, Camden issued 9.5 million common
shares and assumed $296 million of indebtedness, at fair value, to purchase
Paragon. The Company funds its developments and acquisitions through a
combination of equity capital, OP Units, debt securities, the Unsecured Credit
Facility, other short-term borrowing arrangements, and previously has used
construction and other mortgage loans. The Company also seeks to selectively
dispose of assets that are either not in core markets, have a lower projected
net operating income growth rate than the overall portfolio, or no longer
conform to the Company's operating and investment strategies. Such sales also
generate capital for reinvestment into other acquisitions and new developments.
The Company's Unsecured Credit Facility matures July 28, 2000. One year
prior to maturity, this note becomes a term loan, unless it is extended,
renegotiated or repaid. The scheduled interest rate on the loan is currently
based on LIBOR plus 105 basis points or Prime plus 25 basis points. This
scheduled rate is subject to change as the Company's credit ratings change.
Advances under the Unsecured Credit Facility may be priced at the scheduled
rate, or, the Company may enter into bid rate loans ("Bid Rate Loans") with
participating banks at rates below the scheduled rate. These Bid Rate Loans
have terms of six months or less and may not exceed the lesser of $75 million
or the remaining amount available under the Unsecured Credit Facility. The
Unsecured Credit Facility is subject to customary financial covenants and
limitations.
As an alternative to its Unsecured Credit Facility, the Company from time
to time borrows using competitively bid unsecured short-term notes with lenders
who may or may not be a part of the Unsecured Credit Facility bank group. Such
borrowings vary in term and pricing but have the same
-18-
<PAGE> 19
covenants as the Unsecured Credit Facility and are typically priced at interest
rates below those available under the Unsecured Credit Facility.
Subsequent to June 30, 1997, Camden retired an additional $66.7 million
mortgage loan using a portion of the proceeds of the July 1997 Equity Offering.
Including the debt retirements made in conjunction with the July 1997 Equity
Offering, the Company has retired $160.3 million of the $296 million of debt
assumed in the Paragon Acquisition.
On May 9, 1997, the Company issued from its recently filed shelf
registration statement an aggregate principal amount of $75 million of its
unsecured reset notes maturing May 2002 (the "Reset Notes"). During the
one-year period ending May 11, 1998, the interest rate on the Reset Notes,
which will be reset quarterly, will equal 90-day LIBOR plus 32 basis points and
interest will be payable on a quarterly basis. After the one-year period, the
mode and duration of the interest rate on the Reset Notes will be reset by the
Company and a remarketing underwriter as either fixed or floating and for
durations of from six months to four years. The Reset Notes are direct, senior
unsecured obligations of the Company and rank equally with all other unsecured
and unsubordinated indebtedness of the Company. The Reset Notes are redeemable
after May 11, 1998 at the option of the Company at par value. The net proceeds
to the Company from the sale of the Notes were $74.8 million. The Company used
the net proceeds to reduce indebtedness incurred under the Unsecured Credit
Facility which had been used to liquidate portions of the debt assumed in the
Paragon Acquisition.
On June 20, 1997, the Company issued $25 million aggregate principal amount
of senior unsecured notes from its $196 million Medium Term Notes shelf
registration. These fixed rate notes, due in June 2004, bear interest at the
annual rate of 7.172% payable semiannually on March 15 and September 15. The
net proceeds were used to reduce indebtedness outstanding under short-term
unsecured notes.
At June 30, 1997, the Company was party to a $25 million interest rate
hedging agreement which is scheduled to mature in July 2000. The issuing bank
has an option to extend this agreement to July 2002. The LIBOR rate is fixed at
6.1%, resulting in a fixed rate equal to 6.1% plus the actual LIBOR spread on
the related indebtedness. This swap continues to be used as a hedge to manage
the risk of interest rate fluctuations on the Unsecured Credit Facility and
other floating rate indebtedness.
At June 30, 1997, the weighted average interest rate on total notes payable
was 7.1%. Following the retirement of debt using the proceeds of the July 1997
Equity Offering, the weighted average interest rate was reduced to 7.0%.
FUNDS FROM OPERATIONS
Funds from operations ("FFO") for the three and six months ended June 30,
1997 increased $9.5 million and $10.7 million, respectively over the same
periods of 1996. Management considers FFO an appropriate measure of performance
of an equity REIT. The National Association of Real Estate Investment Trusts
("NAREIT") currently defines FFO as net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from
debt restructuring and sales of property, plus real estate depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. In addition, extraordinary or unusual items, along with significant
non-recurring events that materially distort the comparative measure of FFO are
typically disregarded in its calculation. 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.
-19-
<PAGE> 20
Further, FFO as disclosed by other REITs may not be comparable to the Company's
calculation of FFO. Camden's calculation of FFO for the three and six month
periods ended June 30, 1997 and June 30, 1996 follows:
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -----------------------
1997 1996 1997 1996
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net income to common shareholders $ 6,429 $ 3,498 $ 10,493 $ 1,748
Real estate depreciation 11,807 5,451 17,996 10,787
Minority interest in Operating Partnership 597 597
Real estate depreciation from unconsolidated ventures 283 283
Interest on convertible subordinated debentures 133 756 429 1,563
Amortization of deferred costs on convertible debentures 22 80 64 159
Gain on sales of properties (195)
Losses related to early retirement of debt 286 5,351
Preferred share dividends 4
-------- ------- -------- --------
Funds from operations - fully diluted $ 19,271 $ 9,785 $ 30,148 $ 19,417
======== ======= ======== ========
Weighted average number of common and common
equivalent shares outstanding - fully diluted 29,633 16,381 23,689 16,378
</TABLE>
The Company expenses recurring capital expenditures for items such as
carpets, appliances and HVAC units as these items are replaced in their normal
course. During a renovation, many of these items may be capitalized,
particularly to the extent that an inordinate number of such items are
replaced. Nonrecurring capital expenditures for such items as roof replacements
are capitalized. The Company capitalized $4.4 million and $3.8 million in the
six months ended June 30, 1997 and 1996, respectively of non-recurring
renovations and improvements to extend the economic lives and enhance its
multifamily properties.
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.
-20-
<PAGE> 21
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
(a) The Company held a Special Shareholders Meeting April 15, 1997.
The Shareholders voted to approve the Agreement and Plan of
Merger by and among Camden Property Trust, Camden Subsidiary,
Inc., and Paragon Group, Inc.
<TABLE>
<CAPTION>
Affirmative Negative Abstentions
----------- -------- -----------
<S> <C> <C>
11,105,390 57,678 88,955
</TABLE>
(b) The Company's Annual Meeting of Shareholders was held June 5,
1997.
(1) The Shareholders elected five of the seven Trust Managers
nominated by the Board of Trust Managers. William R. Cooper
and Lewis A. Levey, who were nominated by the Board of
Trust Managers, did not receive the requisite two-thirds
majority vote by the shareholders of all outstanding
shares. The Board of Trust Managers re-appointed Messrs.
Cooper and Levey, however, as Trust Managers.
<TABLE>
<CAPTION>
Broker
Affirmative Negative Abstentions Non-Votes
----------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Richard J. Campo 15,652,818 62,204 0 0
D. Keith Oden 15,658,430 56,593 0 0
George A. Hrdlicka 15,658,430 56,593 0 0
F. Gardner Parker 15,658,430 56,593 0 0
Steven A. Webster 15,658,430 56,593 0 0
William R. Cooper 15,658,430 56,593 0 0
Lewis A. Levey 15,658,430 56,593 0 0
</TABLE>
(2) The Shareholders approved an amendment to the 1993 Share
Incentive Plan to increase the number of shares authorized
for issuance under the Plan.
<TABLE>
<CAPTION>
Broker
Affirmative Negative Abstentions Non-Votes
----------- -------- ----------- ---------
<S> <C> <C> <C>
11,853,947 3,500,980 242,561 124,055
</TABLE>
-21-
<PAGE> 22
(3) The Shareholders ratified the appointment of Deloitte &
Touche LLP as independent auditors of the Company for the
year ending December 31, 1997.
<TABLE>
<CAPTION>
Broker
Affirmative Negative Abstentions Non-Votes
----------- -------- ----------- ---------
<S> <C> <C> <C>
15,670,370 18,512 26,189 124,055
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
3.1 Amended and Restated Declaration of the Trust of the
Company, as last amended on April 15, 1997
3.2 Amended and Restated Bylaws of the Trust (filed as
Exhibit 3.1 to the Company's Current Report on Form 8-K
dated October 10, 1996, filed with the Commission on
November 18, 1996 (File No. 1-12110), and incorporated
by reference herein)
4.1 Indenture dated as of February 15, 1996 between the
Company and U.S. Trust Company of Texas, N.A., as
trustee (filed as Exhibit 4.1 to the Company's Current
Report on Form 8-K dated February 15, 1996 (File No.
1-12110), and incorporated by reference herein)
4.2 First Supplemental Indenture dated as of February 15,
1996 between the Company and U.S. Trust Company of
Texas N.A., as trustee (filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K dated February 15,
1996 (File No. 1-12110), and incorporated by reference
herein)
4.3 Form of Camden Property Trust Remarketed Reset Note due
May 9, 2002 (filed as Exhibit 4.3 to the Company's
Current Report on Form 8-K dated May 9, 1997, filed
with the Commission on May 21, 1997 (File No. 1-12110),
and incorporated by reference by herein)
10.1 Underwriting Agreement dated May 6, 1997 between the
Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (filed as Exhibit 1.1 to the Company's
Current Report on Form 8-K dated May 9, 1997, filed
with the Commission on May 21, 1997 (File No. 1-12110),
and incorporated by reference herein)
10.2 Remarketing Agreement dated May 6, 1997 between the
Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (filed as Exhibit 1.2 to the Company's
Current Report on Form 8-K dated May 9, 1997, filed
with the Commission on May 21, 1997 (File No. 1-12110),
and incorporated by reference herein)
10.3 Camden Development, Inc. 1997 Non-Qualified Employee
Stock Purchase Plan
11.1 Statement regarding Computation of Per Share Earnings
</TABLE>
-22-
<PAGE> 23
<TABLE>
<S> <C>
23.1 Consent of Ernst & Young LLP (filed as Exhibit 23.1 to
the Company's Current Report on Form 8-K dated June 30,
1997, filed with the Commission on July 8, 1997, as
amended by Form 8-K/A filed with the Commission on July
18, 1997 (Filed No. 1-12110), and incorporated by
reference herein)
27.1 Financial Data Schedule (filed only electronically with
the Commission)
99.1 Registration Rights Agreement dated April 15, 1997
among the Company, the Operating Partnership and
certain investors set forth therein (filed as Exhibit
99.1 to the Company's Registration Statement on Form
S-3 filed with the Commission on April 22, 1997 (File
No. 333-25637) and incorporated by reference herein)
</TABLE>
(b) Reports on Form 8-K
Current Report on Form 8-K dated April 15, 1997 was filed with
the Commission on April 30, 1997, contained information under
Item 2 (Acquisition or Disposition of Assets) and Item 7
(Financial Statements, Pro Forma Financial Information and
Exhibits), and was amended by Form 8-K/A filed with the
Commission on June 16, 1997, which contained information under
Item 7 (Financial Statements, Pro Forma Financial Information
and Exhibits).
Current Report on Form 8-K dated May 9, 1997 and filed with
the Commission on May 21, 1997, contained information under
Item 5 (Other Events) and Item 7 (Financial Statements, Pro
Forma Financial Information and Exhibits).
Current Report on Form 8-K dated June 30, 1997 and filed with
the Commission on July 8, 1997, contained information under
Item 5 (Other Events) and Item 7 (Financial Statement, Pro
Forma Financial Information and Exhibits), and was amended by
Form 8-K/A filed with the Commission on July 18, 1997, which
contained information under Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and
Exhibits).
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<PAGE> 24
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
/s/ G. STEVEN DAWSON August 13, 1997
- ------------------------------------------ -------------------
G. Steven Dawson Date
Sr. Vice President of Finance,
Chief Financial Officer and Treasurer
(Duly Authorized Officer and
Principal Financial and Accounting Officer)
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<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
3.1 Amended and Restated Declaration of the Trust of the
Company, as last amended on April 15, 1997
3.2 Amended and Restated Bylaws of the Trust (filed as
Exhibit 3.1 to the Company's Current Report on Form 8-K
dated October 10, 1996, filed with the Commission on
November 18, 1996 (File No. 1-12110), and incorporated
by reference herein)
4.1 Indenture dated as of February 15, 1996 between the
Company and U.S. Trust Company of Texas, N.A., as
trustee (filed as Exhibit 4.1 to the Company's Current
Report on Form 8-K dated February 15, 1996 (File No.
1-12110), and incorporated by reference herein)
4.2 First Supplemental Indenture dated as of February 15,
1996 between the Company and U.S. Trust Company of
Texas N.A., as trustee (filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K dated February 15,
1996 (File No. 1-12110), and incorporated by reference
herein)
4.3 Form of Camden Property Trust Remarketed Reset Note due
May 9, 2002 (filed as Exhibit 4.3 to the Company's
Current Report on Form 8-K dated May 9, 1997, filed
with the Commission on May 21, 1997 (File No. 1-12110),
and incorporated by reference by herein)
10.1 Underwriting Agreement dated May 6, 1997 between the
Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (filed as Exhibit 1.1 to the Company's
Current Report on Form 8-K dated May 9, 1997, filed
with the Commission on May 21, 1997 (File No. 1-12110),
and incorporated by reference herein)
10.2 Remarketing Agreement dated May 6, 1997 between the
Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (filed as Exhibit 1.2 to the Company's
Current Report on Form 8-K dated May 9, 1997, filed
with the Commission on May 21, 1997 (File No. 1-12110),
and incorporated by reference herein)
10.3 Camden Development, Inc. 1997 Non-Qualified Employee
Stock Purchase Plan
11.1 Statement regarding Computation of Per Share Earnings
23.1 Consent of Ernst & Young LLP (filed as Exhibit 23.1 to
the Company's Current Report on Form 8-K dated June 30,
1997, filed with the Commission on July 8, 1997, as
amended by Form 8-K/A filed with the Commission on July
18, 1997 (Filed No. 1-12110), and incorporated by
reference herein)
27.1 Financial Data Schedule (filed only electronically with
the Commission)
99.1 Registration Rights Agreement dated April 15, 1997
among the Company, the Operating Partnership and
certain investors set forth therein (filed as Exhibit
99.1 to the Company's Registration Statement on Form
S-3 filed with the Commission on April 22, 1997 (File
No. 333-25637) and incorporated by reference herein)
</TABLE>
<PAGE> 1
EXHIBIT 3.1
AMENDMENT
TO THE
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CAMDEN PROPERTY TRUST
The undersigned, acting as the Trust Managers of Camden Property Trust, a
real estate investment trust under the Texas Real Estate Investment Trust Act
(the "Texas REIT Act"), hereby adopt the following amendment to the Amended and
Restated Declaration of Trust for such trust which amendment replaces in its
entirety the following Article of the Amended and Restated Declaration of Trust
for such trust.
ARTICLE FIVE
The names and mailing addresses of the Trust Managers are as follows:
Name Mailing Address
---- ---------------
Richard J. Campo 3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
D. Keith Oden 3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
F. Gardner Parker 6200 Savoy, Suite 1200
Houston, Texas 77036
George A. Hrdlicka 1200 Smith, Suite 1400
Houston, Texas 77002
Steven A. Webster 1900 W. Loop South, Suite 1800
Houston, Texas 77027
William R. Cooper 7557 Rambler Road, Suite 1200
Dallas, Texas 75231
Lewis A. Levey 12400 Olive Blvd., Suite 100
St. Louis, MO 63141
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<PAGE> 2
IN WITNESS WHEREOF, the undersigned Trust Managers do hereby execute this
Amendment to the Amended and Restated Declaration of Trust as of the 15th day
of April, 1997.
/s/ RICHARD J. CAMPO
------------------------------------
RICHARD J. CAMPO
/s/ D. KEITH ODEN
------------------------------------
D. KEITH ODEN
/s/ F. GARDNER PARKER
------------------------------------
F. GARDNER PARKER
/s/ GEORGE A. HRDLICKA
------------------------------------
GEORGE A. HRDLICKA
/s/ STEVEN A. WEBSTER
------------------------------------
STEVEN A. WEBSTER
/s/ WILLIAM R. COOPER
------------------------------------
WILLIAM R. COOPER
/s/ LEWIS A. LEVEY
------------------------------------
LEWIS A. LEVEY
-2-
<PAGE> 3
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CAMDEN PROPERTY TRUST
The undersigned, acting as the Trust Managers of a real estate investment
trust under the Texas Real Estate Investment Trust Act (the "Texas REIT Act"),
hereby adopt the following Amended and Restated Declaration of Trust for such
trust, which replaces in its entirety the previously enacted Declaration of
Trust for such trust.
ARTICLE ONE
The name of the trust (the "Trust") is "Camden Property Trust." An assumed
name certificate setting forth such name has been filed in the manner
prescribed by law.
ARTICLE TWO
The Trust is formed pursuant to the Texas REIT Act and has the following
as its purpose:
To purchase, hold, lease, manage, sell, exchange, develop, subdivide and
improve real property and interests in real property, and in general, to
carry on any other business and do any other acts in connection with the
foregoing and to have and exercise all powers conferred by the laws of the
State of Texas upon real estate investment trusts formed under the Texas
REIT Act, and to do any or all of the things hereinafter set forth to the
same extent as natural persons might or could do. The term "real property"
and the term "interests in real property" for the purposes stated herein
shall not include severed mineral, oil or gas royalty interests.
ARTICLE THREE
As to any real property of any character, major capital improvements must
be made within 15 years of purchase or the property must be sold. Such major
capital improvements must equal or exceed the purchase price of such real
property, if the same is unimproved property at the time of purchase or
property outside the corporate limits of a city, town or village. Any citizen
of the State of Texas may force compliance with this provision by filing suit
in any district court of the State of Texas and shall receive from the Trust,
if the Trust is forced to sell a real property interest under this provision,
the sum of 5% of the sale price of such real property interest as compensation.
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<PAGE> 4
ARTICLE FOUR
The address of the Trust's initial principal office and place of business
is 3200 Southwest Freeway, Suite 1500, Houston, Texas 77027.
ARTICLE FIVE
The names and mailing addresses of the Trust Managers are as follows:
Name* Mailing Address
----- ---------------
Richard J. Campo 3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
D. Keith Oden 3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
* All of the initial Trust Managers qualify as "Resident Trust Managers" as
that term is defined in the Texas REIT Act.
ARTICLE SIX
The period of the Trust's duration is perpetual. The Trust may be sooner
terminated by the vote of the holders of at least a two-thirds majority of the
voting power of the outstanding Shares.
ARTICLE SEVEN
The aggregate number of shares of beneficial interest which the Trust
shall have authority to issue is one hundred million common shares, par value
$.01 per share ("Common Shares"), and ten million preferred shares, par value
$.01 per share ("Preferred Shares"). All of the Common Shares shall be equal in
all respects to every other such Common Share, and shall have no preference,
conversion, exchange or preemptive rights.
Unless otherwise specified, in this Declaration of Trust the term "Shares"
shall be deemed to refer to the Common Shares and, solely to the extent
specifically required by law or as specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, to the Preferred Shares. For purposes of Articles
Ten and Nineteen (other than Article Nineteen (j)) of this Declaration of
Trust, the term Shares shall be deemed to refer to both the Common Shares and
the Preferred Shares and, for purposes of such Articles Ten and Nineteen (other
than Article Nineteen (j)), the number of outstanding Shares shall be deemed to
be equal to the value of the Trust's outstanding Shares as determined from time
to time by resolution of the Trust Managers, such determination to include an
allocation of relative value among the Common Shares and any outstanding series
of Preferred Shares.
The Trust may issue one or more series of Preferred Shares, each such
series to consist of such number of shares as shall be determined by resolution
of the Trust Managers creating such series. The Preferred Shares of each such
series shall have such designations, preferences, conversion, exchange or other
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<PAGE> 5
rights, participations, voting powers, options, restrictions, limitations,
special rights or relations, limitations as to dividends, qualifications or
terms, or conditions of redemption thereof, as shall be stated and expressed by
the Trust Managers in the resolution or resolutions providing for the issuance
of such series of Preferred Shares pursuant to the authority to do so which is
hereby expressly vested in the Trust Managers.
Except as otherwise specifically provided in any resolution or resolutions
of the Trust Managers providing for the issue of any particular series of
Preferred Shares, the number of shares of any such series so set forth in such
resolution or resolutions may be increased or decreased (but not below the
number of shares of such series then outstanding) by a resolution or
resolutions likewise adopted by the Trust Managers.
Except as otherwise specifically provided in any resolution or resolutions
of the Trust Managers providing for the issue of any particular series of
Preferred Shares, Preferred Shares redeemed or otherwise acquired by the Trust
shall assume the status of authorized but unissued Preferred Shares and shall
be unclassified as to series and may thereafter, subject to the provisions of
this Article Seven and to any restrictions contained in any resolution or
resolutions of the Trust Managers providing for the issuance of any such series
of Preferred Shares, be reissued in the same manner as other authorized but
unissued Preferred Shares.
Except as otherwise specifically provided in any resolution or resolutions
of the Trust Managers providing for the issue of any particular series of
Preferred Shares, holders of Preferred Shares shall have no preemptive rights.
Except as otherwise specifically required by law or this Declaration of
Trust or as specifically provided in any resolution or resolutions of the Trust
Managers providing for the issuance of any particular series of Preferred
Shares, the exclusive voting power of the Trust shall be vested in the Common
Shares of the Trust. Each Common Share entitles the holder thereof to one vote
at all meetings of the shareholders of the Trust.
ARTICLE EIGHT
The Trust shall issue Shares only for money or property actually received.
ARTICLE NINE
The Trust Managers shall hold all money and property received for the
issuance of Shares for the benefit of the owners of such Shares.
ARTICLE TEN
The Trust will not commence operations until the beneficial ownership of
the Shares is held by 100 or more persons with no five persons owning more than
50% of the total number of outstanding Shares. The word "person," as used in
the- second clause of the immediately preceding sentence, shall not include
corporations.
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<PAGE> 6
ARTICLE ELEVEN
The Trust shall not engage in any activities beyond the scope of the
purpose of a real estate investment trust formed pursuant to the Texas REIT
Act, as such purpose is set forth in Article Two hereof.
ARTICLE TWELVE
Cumulative voting for the election of Trust Managers is prohibited.
ARTICLE THIRTEEN
(a) The affirmative vote of the holders of not less than 80% of the
outstanding Shares of the Trust, including the affirmative vote of the holders
of not less than 50% of the outstanding Shares not owned, directly or
indirectly, by any "Related Person" (as hereinafter defined), shall be required
for the approval or authorization of any "Business Combination" (as hereinafter
defined); provided, however, that the 50% voting requirement referred to above
shall not be applicable if the Business Combination is approved by the
affirmative vote of the holders of not less than 90% of the outstanding Shares;
provided further, that neither the 80% voting requirement nor the 50% voting
requirement referred to above shall be applicable if:
(i) The Trust Managers of the Trust by a vote of not less than 80% of the
Trust Managers then holding office (A) have expressly approved in advance the
acquisition of Shares of the Trust that caused the Related Person to become a
Related Person or (B) have expressly approved the Business Combination prior to
the date on which the Related Person involved in the Business Combination shall
have become a Related Person; or
(ii) The Business Combination is solely between the Trust and another
corporation, 100% of the voting stock of which is owned directly or indirectly
by the Trust; or
(iii) The Business Combination is proposed to be consummated within one
year of the consummation of a Fair Tender Offer (as hereinafter defined) by the
Related Person in which Business Combination the cash or Fair Market Value (as
hereinafter defined) of the property, securities or other consideration to be
received per Share by all remaining holders of Shares of the Trust in the
Business Combination is not less than the price offered in the Fair Tender
Offer; or
(iv) All of conditions (A) through (D) of this subparagraph (iv) shall
have been met: (A) if and to the extent permitted by law, the Business
Combination is a merger or consolidation, consummation of which is proposed to
take place within one year of the date of the transaction pursuant to which
such person became a Related Person and the cash or Fair Market Value of the
property, securities or other consideration to be received per share by all
remaining holders of Shares of the Trust in the Business Combination is not
less than the Fair Price (as hereinafter defined); (B) the consideration to be
received by such holders is either cash or, if the Related Person shall have
acquired the majority of its holdings of the Trust's Shares for a form of
consideration other than cash, in the same form of consideration with which the
Related Person acquired such majority; (C) after such person has become a
Related Person and prior to consummation of such Business Combination: (1)
there shall have been no reduction in the annual rate of dividends, if any,
paid per share on the Trust's Shares (adjusted as appropriate for
recapitalizations and for Share splits, reverse Share splits and Share
dividends) except any reduction in such rate that is made
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<PAGE> 7
proportionately with any decline in the Trust's net income for the period for
which such dividends are declared and except as approved by a majority of the
Continuing Trust Managers (as hereinafter defined), and (2) such Related Person
shall not have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or other tax advantages
provided by the Trust prior to the consummation of such Business Combination
(other than in connection with financing a Fair Tender Offer); and (D) a proxy
statement that conforms in all respects with the provisions of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations
thereunder (or any subsequent provisions replacing the Exchange Act or the
rules or regulations thereunder) shall be mailed to holders of the Trust's
Shares at least 30 days prior to the consummation of the Business Combination
for the purpose of soliciting shareholder approval of the Business Combination;
or
(v) The "Rights" (as defined in paragraph (b) of this Article Thirteen)
shall have become exercisable.
(b) If a person has become a Related Person and within one year after the
date (the "Acquisition Date") of the transaction pursuant to which the Related
Person became a Related Person (x) a Business Combination meeting all of the
requirements of subparagraph (iv) of the proviso to paragraph (a) of this
Article Thirteen regarding the applicability of the 80% voting requirement
shall not have been consummated and (y) a Fair Tender Offer shall not have been
consummated and (z) the Trust shall not have been dissolved and liquidated,
then, in such event the beneficial owner of each Share (not including Shares
beneficially owned by the Related Person) (each such beneficial owner being
hereinafter referred to as a "Holder") shall have the right (individually a
"Right" and collectively the "Rights"), which may be exercised subject to the
provisions of paragraph (d) of this Article Thirteen, commencing at the opening
of business on the one-year anniversary date of the Acquisition Date and
continuing for a period of 90 days thereafter, subject to extensions as
provided in paragraph (d) of this Article Thirteen (the "Exercise Period"), to
sell to the Trust on the terms set forth herein one Share upon exercise of such
Right. Within five business days after the commencement of the Exercise Period
the Trust shall notify the Holders of the commencement of the Exercise Period,
specifying therein the terms and conditions for exercise of the Rights. During
the Exercise Period, each certificate representing Shares beneficially owned by
a Holder (a "Certificate") shall also represent the number of Rights equal to
the number of Shares represented thereby and the surrender for transfer of any
Certificate shall also constitute the transfer of the Rights represented by
such Shares. At 5:00 P.M., Houston, Texas time, on the last day of the Exercise
Period, each Right not exercised shall become void, all rights in respect
thereof shall cease as of such time and the Certificates shall no longer
represent Rights.
(c) The purchase price for a Share upon exercise of an accompanying Right
shall be equal to the then-applicable Fair Price paid by the Related Person
(plus, as an allowance for interest, an amount equal to the prime rate of
interest of NationsBank of Texas, N.A. as in effect from time to time from the
Acquisition Date until the date of the payment for such Share but less the
amount of any cash and the Fair Market Value of any property or securities
distributed with respect to such Shares as dividends or otherwise during such
time period), pursuant to the exercise of the Right relating thereto. In the
event the 'Related Person shall have acquired any of its holdings of the
Trust's Shares for a form of consideration other than cash, the value of such
other consideration shall be the Fair Market Value thereof.
(d) Notwithstanding the foregoing in paragraph (b) of this Article
Thirteen, the Exercise Period will be deferred in the event (a "Deferral
Event") that the Trust is otherwise prohibited under applicable law from
repurchasing Shares pursuant to the Rights. In the event the Exercise Period is
deferred,
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<PAGE> 8
or if at any time the Trust reasonably anticipates that a Deferral Event will
exist, the Trust will, as soon as practicable, notify the Holders. If at the
end of any fiscal quarter the Deferral Event ceases to exist, notice shall be
given to the Holders of the commencement of the deferred Exercise Period, which
Exercise Period shall commence no sooner than 15 days nor more than 45 days
from the date of such notice and which shall continue in effect for a period of
time equal in duration to the previously unexpired portion of the Exercise
Period. Notwithstanding any other provision of this Declaration of Trust to the
contrary, during the Exercise Period (including during the existence of any
Deferral Event), neither the Trust nor any subsidiary may declare or pay any
dividend or make any distribution on its shares or to its shareholders (other
than dividends or distributions payable in its shares or, in the case of any
subsidiary, dividends payable to the Trust) or purchase, redeem or otherwise
acquire or retire for value, or permit any subsidiary to purchase or otherwise
acquire for value, any Shares of the Trust if, upon giving effect to such
dividend, distribution, purchase, redemption, or other acquisition or
retirement, the aggregate amount expended for all such purposes (the amount
expended for such purposes, if other than in cash, to be determined by a
majority of the Continuing Trust Managers, whose determination shall be
conclusive) would prejudice the ability of the Trust to satisfy its maximum
obligation to purchase Shares upon exercise of the Rights.
(e) Rights may be exercised upon surrender to the Trust's principal
transfer agent (the "Transfer Agent") at its office in Houston, Texas of the
Certificate or Certificates evidencing the Shares to be tendered for purchase
by the Trust, together with the form on the reverse thereof completed and duly
signed in accordance with the instructions thereon. In the event that a Holder
shall tender a Certificate which represents greater than the number of Shares
which the Holder elects to require the Trust to purchase upon exercise of the
Rights, the Holder shall designate on the reverse side of such Certificate the
number of Shares to be sold from such Certificate. The Transfer Agent shall
thereupon issue a new Certificate or Certificates for the balance of the number
of Shares not sold to the Trust, which new Certificate or Certificates shall
also represent Rights for an equivalent number of Shares.
(f) For the purposes of this Article:
(i) The term "Business Combination" shall mean (A) any merger or
consolidation, if and to the extent permitted by law, of the Trust or a
subsidiary, with or into a Related Person, (B) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, of all or any Substantial Part
(as hereinafter defined) of the assets of the Trust and its subsidiaries (taken
as a whole) (including, without limitation, any voting securities of a
subsidiary) to or with a Related Person, (C) the issuance or transfer by the
Trust or a subsidiary (other than by way of a pro rata distribution to all
shareholders) of any securities of the Trust or a subsidiary of the Trust to a
Related Person, (D) any reclassification of securities (including any reverse
Share split) or recapitalization by the Trust, the effect of which would be to
increase the voting power (whether or not currently exercisable) of the Related
Person, (E) the adoption of any plan or proposal for the liquidation or
dissolution of the Trust proposed by or on behalf of a Related Person which
involves any transfer of assets, or any other transaction, in which the Related
Person has any direct or indirect interest (except proportionately as a
shareholder), (F) any series or combination of transactions having, directly or
indirectly, the same or substantially the same effect as any of the foregoing,
and (G) any agreement, contract or other arrangement providing, directly or
indirectly, for any of the foregoing.
(ii) The term "Continuing Trust Manager" shall mean (x) any Trust Manager
of the Trust who is not affiliated with a Related Person and who was a Trust
Manager immediately prior to the time that the Related Person became a Related
Person, and (y) any other Trust Manager who is not affiliated with the Related
Person and is recommended either by a majority of the persons described in
clause (x) of this subparagraph (ii) or by persons described in this clause (y)
who are then Trust Managers of the Trust to succeed a person described in
either the said clause (x) or clause (y) as a Trust Manager of the Trust.
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<PAGE> 9
(iii) The term "Fair Market Value" shall mean: (A) in the case of
securities, the highest closing sale price during the 30-day period immediately
preceding the date in question of such security on the Composite Tape for New
York Stock Exchange-Listed Stocks, or, if such security is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such security is not
listed on such Exchange, on the principal United States securities exchange
registered under the Exchange Act on which such security is listed, or, if such
security is not listed on any such exchange, the highest closing bid quotation
with respect to such security during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotation System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of such security as
reasonably determined by an independent appraiser selected by a majority of the
Continuing Trust Managers (or, if there are no Continuing Trust Managers, by
Kidder, Peabody & Co. Incorporated) in good faith; and (B) in the case of
property other than cash or stock, the fair market value of such property on
the date in question as reasonably determined by an independent appraiser
selected by a majority of the Continuing Trust Managers (or, if there are no
Continuing Trust Managers, by Kidder, Peabody & Co. Incorporated) in good
faith. In each case hereunder in which an independent appraiser is to be
selected to determine Fair Market Value, (1) in the event (x) there are no
Continuing Trust Managers, and (y) Kidder, Peabody & Co. Incorporated is unable
or elects not to serve as such appraiser, or (2) in the event there are
Continuing Trust Managers that do not select an independent appraiser within 10
days of a request for such appointment made by a Related Person, such
independent appraiser may be selected by such Related Person.
(iv) The term "Fair Price" shall mean the highest per-Share price (which,
to the extent not paid in cash, shall equal the Fair Market Value of any other
consideration paid), with appropriate adjustments for recapitalizations and for
Share splits, reverse Share splits and Share dividends, paid by a person in
acquiring any of its holdings of the Trust's Shares.
(v) The term "Fair Tender Offer" shall mean a bona fide tender offer for
all of the Trust's Shares outstanding (and owned by persons other than a
Related Person if the tender offer is made by the Related Person), whether or
not such offer is conditional upon any minimum number of Shares being tendered,
in which the aggregate amount of cash or the Fair Market Value of any
securities or other property to be received by all holders who tender their
Shares for each Share so tendered shall be at least equal to the then
applicable Fair Price paid by a Related Person or paid by the person making the
tender offer if such person is not a Related Person. In the event that at the
time such tender offer is commenced the terms and conduct thereof are not
directly regulated by Section 14(d) or 13(e) of the Exchange Act and the
general rules and regulations promulgated thereunder, then the terms of such
tender offer regarding the time such offer is held open and regarding
withdrawal rights shall conform in all respects with such terms applicable to
tender offers regulated by either of such Sections of the Exchange Act. A Fair
Tender Offer shall not be deemed to be "consummated" until Shares are purchased
and payment in full has been made for all duly tendered Shares.
(vi) The term "Related Person" shall mean and include any individual,
corporation, partnership or other "person" (as defined in Section 13(d)(3) of
the Exchange Act), and the "Affiliates" and "Associates" (as defined in Rule
12b-2 of the Exchange Act) of any such individual, corporation, partnership or
other person which individually or together is the "Beneficial Owner" (as
defined in Rule 13d-3 of the Exchange Act) in the aggregate of more than 50% of
the Shares of the Trust, other than the Trust or any employee benefit plan(s)
sponsored by the Trust.
(vii) The term "Substantial Part" shall mean more than 35% of the book
value of the total assets of the Trust and its subsidiaries (taken as a whole)
as of the end of the fiscal year ending prior to the time the determination is
being made.
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<PAGE> 10
(viii) Any person (as such term is defined in subsection (vi) of this
paragraph (f)) that has the right to acquire any Shares of the Trust pursuant
to any agreement, or upon the exercise of conversion rights, warrants or
options, or otherwise, shall be deemed a Beneficial Owner of such Shares for
purposes of determining whether such person, individually or together with its
Affiliates and Associates, is a Related Person.
(ix) For purposes of subparagraph (iii) of paragraph (a) of this Article
Thirteen, the term "other consideration to be received" shall include, without
limitation, Shares of the Trust retained by its existing public shareholders in
the event of a Business Combination in which the Trust is the surviving entity.
(g) The affirmative vote of the holders of not less than 80% of the
outstanding Shares of the Trust, including the affirmative vote of the holders
of not less than 50% of the outstanding Shares not owned, directly or
indirectly, by any Related Person (such 50% voting requirement shall not be
applicable if such amendment, alteration, change, repeal or rescission is
approved by the affirmative vote of not less than 90% of the outstanding
Shares) shall be required to amend, alter, change, repeal or rescind, or adopt
any provisions inconsistent with, this Article Thirteen.
(h) The provisions of this Article Thirteen shall be subject to all valid
and applicable laws, including, without limitation, the Texas REIT Act, and, in
the event this Article Thirteen or any of the provisions hereof are found to be
inconsistent with or contrary to any such valid laws, such laws shall be deemed
to control and this Article Thirteen shall be regarded as modified accordingly,
and, as so modified, to continue in full force and effect.
ARTICLE FOURTEEN
The Trust Managers may from time to time declare, and the Trust may pay,
dividends on its outstanding Shares in cash, in property or in its Shares,
except that no dividend shall be declared or paid when the Trust is unable to
pay its debts as they become due in the usual course of its business, or when
the payment of such dividend would result in the Trust being unable to pay its
debts as they become due in the usual course of business.
ARTICLE FIFTEEN
A holder of Shares shall not be personally or individually liable in any
manner whatsoever for any debt, act, omission or obligation incurred by the
Trust or the Trust Managers. A holder of Shares shall be under no obligation to
the Trust or to its creditors with respect to such Shares other than the
obligation to pay to the Trust the full amount of the consideration for which
such Shares were issued or to be issued. Upon the payment of such
consideration, such Shares shall be fully paid and non-assessable by the Trust.
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<PAGE> 11
ARTICLE SIXTEEN
(a) In this Article:
(i) "Indemnitee" means (A) any present or former Trust Manager or officer
of the Trust, (B) any person who while serving in any of the capacities
referred to in clause (A) hereof served at the Trust's request as a director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another real estate investment trust or foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise and (C) any person nominated or designated by
(or pursuant to authority granted by) the Trust Managers or any committee
thereof to serve in any of the capacities referred to in clauses (A) or (B)
hereof.
(ii) "Official Capacity" means (A) when used with respect to a Trust
Manager, the office of Trust Manager of the Trust and (B) when used with
respect to a person other than a Trust Manager, the elective or appointive
office of the Trust held by such person or the employment or agency
relationship undertaken by such person on behalf of the Trust, but in each case
does not include service for any other real estate investment trust or foreign
or domestic corporation or any partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise.
(iii) "Proceeding" means any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or proceeding, and any
inquiry or investigation that could lead to such an action, suit or proceeding.
(b) The Trust shall indemnify every Indemnitee against all judgments,
penalties (including excise and similar taxes), fines, amounts paid in
settlement and reasonable expenses actually incurred by the Indemnitee in
connection with any Proceeding in which he was, is or is threatened to be named
defendant or respondent, or in which he was or is a witness without being named
a defendant or respondent, by reason, in whole or in part, of his serving or
having served, or having been nominated or designated to serve, in any of the
capacities referred to in paragraph (a)(i) of this Article Sixteen, to the
fullest extent that indemnification is permitted by Texas law in accordance
with the Bylaws of the Trust. An Indemnitee shall be deemed to have been found
liable in respect of any claim, issue or matter only after the Indemnitee shall
have been so adjudged by a court of competent jurisdiction after exhaustion of
all appeals therefrom. Reasonable expenses shall include, without limitation,
all court costs and all fees and disbursements of attorneys for the Indemnitee.
(c) Without limitation of paragraph (b) of this Article Sixteen and in
addition to the indemnification provided for in paragraph (b) of this Article
Sixteen, the Trust shall indemnify every Indemnitee against reasonable expenses
incurred by such person in connection with any Proceeding in which he is a
witness or a named defendant or respondent because he served in any of the
capacities referred to in paragraph (a)(i) of this Article Sixteen, if such
person has been wholly successful, on the merits or otherwise, in defense of
the Proceeding.
(d) Reasonable expenses (including court costs and attorneys' fees)
incurred by an Indemnitee who was or is a witness or was, is or is threatened
to be made a named defendant or respondent in a Proceeding shall be paid or
reimbursed by the Trust at reasonable intervals in advance of the final
disposition of such Proceeding after receipt by the Trust of a written
undertaking by or on behalf of such Indemnitee to repay the amount paid or
reimbursed by the Trust if it shall ultimately be determined that he is not
entitled to be indemnified by the Trust as authorized in this Article Sixteen.
Such written undertaking shall be an
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<PAGE> 12
unlimited obligation of the Indemnitee but need not be secured and it may be
accepted without reference to financial ability to make repayment.
Notwithstanding any other provision of this Article Sixteen, the Trust may pay
or reimburse expenses incurred by an Indemnitee in connection with his
appearance as a witness or other participation in a Proceeding at a time when
he is not named a defendant or respondent in the Proceeding.
(e) The indemnification provided by this Article Sixteen shall (i) not be
deemed exclusive of, or to preclude, any other rights to which those seeking
indemnification may at any time be entitled under the Trust's Bylaws, any law,
agreement or vote of shareholders or disinterested Trust Managers, or
otherwise, or under any policy or policies of insurance purchased and
maintained by the Trust on behalf of any Indemnitee, both as to action in his
Official Capacity and as to action in any other Capacity, (ii) continue as to a
person who has ceased to be in the Capacity by reason of which he was an
Indemnitee with respect to matters arising during the period he was in such
Capacity, and (iii) inure to the benefit of the heirs. executors and
administrators of such a person.
(f) The provisions of this Article Sixteen (i) are for the benefit of, and
may be enforced by, each Indemnitee of the Trust, the same as if set forth in
their entirety in a written instrument duly executed and delivered by the Trust
and such Indemnitee and (ii) constitute a continuing offer to all present and
future Indemnitees. The Trust, by its adoption of this Declaration of Trust,
(x) acknowledges and agrees that each Indemnitee of the Trust has relied upon
and will continue to rely upon the provisions of this Article Sixteen in
becoming, and serving in any of the capacities referred to in paragraph (a)(i)
of this Article Sixteen, (y) waives reliance upon, and all notices of
acceptance of, such provisions by such Indemnitees and (z) acknowledges and
agrees that no present or future Indemnitee shall be prejudiced in his right to
enforce the provisions of this Article Sixteen in accordance with their terms
by any act or failure to act on the part of the Trust.
(g) No amendment, modification or repeal of this Article Sixteen or any
provision of this Article Sixteen shall in any manner terminate, reduce or
impair the right of any past, present or future Indemnitees to be indemnified
by the Trust, nor the obligation of the Trust to indemnify any such
Indemnitees, under and in accordance with the provisions of this Article
Sixteen as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may be asserted.
(h) If the indemnification provided in this Article Sixteen is either
insufficient to cover all costs and expenses incurred by any Indemnitee as a
result of such Indemnitee being made or threatened to be made a defendant or
respondent in a Proceeding by reason of his holding or having held a position
named in paragraph (a)(i) of this Article Sixteen or (ii) not permitted by
Texas law, the Trust shall indemnify, to the fullest extent that
indemnification is permitted by Texas law, every Indemnitee with respect to all
costs and expenses incurred by such Indemnitee as a result of such Indemnitee
being made or threatened to be made a defendant or respondent in a Proceeding
by reason of his holding or having held a position named in paragraph (a)(i) of
this Article Sixteen.
(i) The indemnification provided by this Article Sixteen shall be subject
to all valid and applicable laws, including, without limitation, the Texas REIT
Act, and, in the event this Article Sixteen or any of the provisions hereof or
the indemnification contemplated hereby are found to be inconsistent with or
contrary to any such valid laws, such laws shall be deemed to control and this
Article Sixteen shall be regarded as modified accordingly, and, as so modified,
to continue in full force and effect.
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<PAGE> 13
(j) The indemnification provisions contained in this Article Sixteen may
be amended only by the affirmative vote of the holders of at least two-thirds
of the outstanding Shares.
(k) Pursuant to Section 24 of the Texas REIT Act, and pursuant to Section
111.003(3) of the Texas Property Code, the Trust is a business trust for
purposes of the Texas Property Code, and accordingly the officers and the Trust
Managers of the Trust shall not be held to the standards for trust management
and investment set forth in the Texas Trust Code.
ARTICLE SEVENTEEN
No Trust Manager or officer of the Trust shall be liable to the Trust for
any act, omission, loss, damage, or expense arising from the performance of his
duty under the Trust save only for his own willful misfeasance or malfeasance
or negligence. In discharging their duties to the Trust, Trust Managers and
officers of the Trust shall be entitled to rely upon experts and other matters
as provided in the Trust's Bylaws.
ARTICLE EIGHTEEN
The number of Trust Managers shall be fixed from time to time by the Trust
Managers as provided in the Bylaws of the Trust. Each Trust Manager shall serve
until his successor is elected and qualified or until his death, retirement,
resignation or removal. In the event of any increase or decrease in the
authorized number of Trust Managers, each Trust Manager then serving as such
shall nevertheless continue as a Trust Manager until the expiration of his
current term, or his prior death, retirement, resignation or removal.
A Trust Manager may be removed by the vote of the holders of two-thirds of
the outstanding Shares at a special meeting of the shareholders called for such
purpose pursuant to the Trust's Bylaws.
ARTICLE NINETEEN
(a) From and after the Initial Public Offering (as hereinafter defined),
no person may own more than 9.8% of the outstanding Shares (the limitation on
the ownership of outstanding Shares is referred to in this Article Nineteen as
the "Ownership Limit" and the 9.8% threshold is referred to in this Article
Nineteen as the "Percentage Limit"), and no Securities (as hereinafter defined)
shall be accepted, purchased, or in any manner acquired by any person if such
issuance or transfer would result in that person's ownership of Shares
exceeding the Percentage Limit. For purposes of determining if the Ownership
Limit is exceeded by a person, Convertible Securities (as hereinafter defined)
owned by such person shall be treated as if the Convertible Securities owned by
such person had been converted into Shares if the effect of such treatment
would be to increase the ownership percentage of such person in the Trust. The
Ownership Limit shall not apply (i) to acquisitions of Securities by any person
that has made a tender offer for all outstanding Shares of the Trust (including
Convertible Securities) in conformity with applicable federal securities laws,
(ii) to the acquisition of Securities of the Trust by an underwriter in a
public offering of Securities of the Trust, or in any transaction involving the
issuance of Securities by the Trust, in which a majority of the Trust Managers
determines that the underwriter or other person or party initially acquiring
such Securities will timely distribute such Securities to or among others so
that, following such distribution, none of such
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<PAGE> 14
Securities will be Excess Securities (as hereinafter defined), or (iii) to the
acquisition of Securities pursuant to the exercise of employee share options.
(b) Nothing in this Article Nineteen shall preclude the settlement of any
transaction in Securities entered into through the facilities of the New York
Stock Exchange. If any Securities are accepted, purchased, or in any manner
acquired by any person resulting in a violation of paragraph (a) or (e) hereof,
such issuance or transfer shall be valid only with respect to such amount of
Securities issued or transferred as does not result in a violation of paragraph
(a) or (e) hereof, and such acceptance, purchase or acquisition shall be void
ab initio with respect to the amount of Securities that results in a violation
of paragraph (a) or (e) hereof (the "Excess Securities"), and the intended
transferee of such Excess Securities shall acquire no rights in such Excess
Securities except as set forth in paragraph (d) below.
(c) Ownership of Securities is conditional upon the owner or prospective
owner having provided to the Trust definitive written information respecting
his ownership of Securities. Failure to provide such information, upon
reasonable request, shall result in the Securities so owned being treated as
Excess Securities pursuant to paragraph (b) hereof for so long as such failure
continues.
(d) The Excess Securities, and the owners thereof, shall have the
following characteristics, rights and powers:
(i) Upon any purported transfer that results in Excess Securities pursuant
to paragraphs (a) or (e) of this Article Nineteen, such Excess Securities shall
be deemed to have been transferred to the Trust, as trustee of a trust for the
exclusive benefit of such beneficiary or beneficiaries to whom an interest in
such Excess Securities may later be transferred pursuant to subparagraph (v) of
this paragraph (d). Any such Excess Securities so held in trust shall be issued
and outstanding stock of the Trust. The purported transferee shall have no
rights in such Excess Securities except as provided in subparagraph (v) of this
paragraph (d).
(ii) Excess Securities shall not be entitled to any dividends, interest
payments or other distributions. Any dividend or distribution paid prior to the
discovery by the Trust that the Securities have become Excess Securities shall
be repaid to the Trust upon demand.
(iii) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of, or any distribution of the assets of, the Trust,
each holder of Excess Securities shall be entitled to receive, ratably with
each other holder of Securities and Excess Securities, that portion of the
assets of the Trust available for distribution to its shareholders as the
number of shares of the Excess Securities held by such holder bears to the
total number of shares of Securities and Excess Securities then outstanding.
The Trust, as holder of the Excess Securities in trust, or if the Trust shall
have been dissolved, any trustee of such trust appointed by the Trust prior to
its dissolution, shall distribute ratably to the beneficiaries of such trust,
when determined, any such assets received in respect of the Excess Securities
in any liquidation, dissolution or winding up of, or any distribution of the
assets of, the Trust.
(iv) The holders of shares of Excess Securities shall not be entitled to
vote on any matters (except as required by law).
(v) Except as otherwise provided in this Article Nineteen, Excess
Securities shall not be transferable. The purported transferee may freely
designate a beneficiary of an interest in the trust (representing the number of
shares of Excess Securities held by the trust attributable to a purported
transfer that resulted in the Excess Securities), if (A) the shares of Excess
Securities held in the trust would not be
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<PAGE> 15
Excess Securities in the hands of such beneficiary and (B) the purported
transferee does not receive a price from such beneficiary that reflects a price
per share for such Excess Securities that exceeds (x) the price per share such
purported transferee paid for the Securities in the purported transfer that
resulted in the Excess Securities, or (y) if the purported transferee did not
give value for such Excess Securities (through a gift, devise or other
transaction), a price per share equal to the Market Price on the date of the
purported transfer that resulted in the Excess Securities. Upon such transfer
of an interest in the trust, the corresponding shares of Excess Securities in
the trust shall be automatically exchanged for an equal number of shares of the
applicable Securities and such Securities shall be transferred of record to the
transferee of the interest in the trust if such Securities would not be Excess
Securities in the hands of such transferee. Prior to any transfer of any
interest in the trust, the purported transferee must give advance notice to the
Trust of the intended transfer and the Trust must have waived in writing its
purchase rights under subparagraph (vi) of this paragraph (d). Notwithstanding
the foregoing, if a purported transferee receives a price for designating a
beneficiary of an interest in the trust that exceeds the amounts allowable
under the foregoing provisions of this subparagraph (v), such purported
transferee shall pay, or cause such beneficiary to pay, such excess to the
Trust.
(vi) Excess Securities shall be deemed to have been offered for sale to
the Trust, or its designee, at a price per share equal to the lesser of (A) the
price per share in the transaction that created such Excess Securities (or, in
the case of a devise or gift, the Market Price at the time of such devise or
gift) and (B) the Market Price on the date the Trust, or its designee, accepts
such offer. The Trust shall have the right to accept such offer for a period of
90 days after the later of (x) the date of the transfer which resulted in such
Excess Securities and (y) the date the Trust Managers determine in good faith
that a transfer resulting in Excess Securities has occurred.
(e) Any sale, transfer, gift, assignment, devise or other disposition of
Shares (a "transfer") that, if effective, would result in (i) the Shares being
owned by less than 100 persons (determined without reference to any rules of
attribution) shall be void ab initio as to the Shares which would otherwise be
beneficially owned by the transferee, (ii) the Trust being "closely held"
within the meaning of Section 856(h) of the Internal Revenue Code of 1986, as
amended (the "Code"), shall be void ab initio as to the transfer of the Shares
that would cause the Trust to be "closely held" within the meaning of Section
856(h) of the Code, and (iii) the disqualification of the Trust as a REIT shall
be void ab initio as to the transfer of the Shares that would cause the Trust
to be disqualified as a REIT, and, in the case of each of clauses (i), (ii) and
(iii) of this paragraph (e), the intended transferee shall acquire no rights in
such- Shares except as set forth in paragraph (d) above.
(f) For purposes of this Article Nineteen:
(i) The term "Convertible Securities" means any securities of the Trust
that are convertible into Shares.
(ii) The term "individual" shall mean any natural person and those
organizations treated as natural persons in Section 542(a) of the Code.
(iii) The term "Initial Public Offering" means the initial sale of Common
Shares to the public pursuant to the Trust's first effective registration
statement for such Common Shares filed under the Securities Act of 1933, as
amended.
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<PAGE> 16
(iv) The term "Market Price" means the last reported sales price of Common
Shares reported on the New York Stock Exchange on the trading day immediately
preceding the relevant date, or if the Common Shares are not then traded on the
New York Stock Exchange, the last reported sales price of the Common Shares on
the trading day immediately preceding the relevant date as reported on any
exchange or quotation system over which the Common Shares may be traded, or if
the Common Shares are not then traded over any exchange or quotation system,
then the market price of the Common Shares on the relevant date as determined
in good faith by the Trust Managers.
(v) The term "ownership" (including "own" or "owns") of Shares means
beneficial ownership. Beneficial ownership, for this purpose shall be defined
in accordance with or by reference to Sections 856, 542 and 544 of the Code
Internal Revenue Code of 1986, as amended (the "Code").
(vi) The term "Person" includes an individual, corporation, partnership,
association, joint stock company, trust, unincorporated association or other
entity and also includes a "group" as that term is defined in Section 13(d)(3)
of the Exchange Act.
(vii) The term "REIT" means a "real estate investment trust" in accordance
with the provisions of Sections 856 through 860 of the Code and applicable
Treasury Regulations.
(viii) The term "Securities" means Shares and Convertible Securities.
(g) If any of the restrictions on transfer set forth in this Article
Nineteen are determined to be void, invalid or unenforceable by virtue of any
legal decision, statute, rule or regulation, then the intended transferee of
any Excess Securities may be deemed, at the option of the Trust, to have acted
as an agent on behalf of the Trust in acquiring the Excess Securities and to
hold the Excess Securities on behalf of the Trust.
(h) Subject to the provisions of the first sentence of paragraph (b)
hereof, nothing herein contained shall limit the ability of the Trust to impose
or to seek judicial or other imposition of additional restrictions if deemed
necessary or advisable to protect the Trust and the interests of its security
holders by preservation of the Trust's status as a qualified real estate
investment trust under the Code.
(i) All persons who own 5% or more of the Trust's outstanding Shares
during any taxable year of the Trust shall file with the Trust an affidavit
setting forth the number of Shares during such taxable year (i) owned directly
(held of record by such person or by a nominee or nominees of such person) and
(ii) owned indirectly (by reason of Sections 542, 544 and 856 of the Code or
for purposes of Rule 13(d) of the Exchange Act) by the person filing the
affidavit. The affidavit to be filed with the Trust shall set forth all the
information required to be reported (i) in returns of shareholders under income
tax regulation 1.857-9 or similar provisions of any successor regulation and
(ii) in reports to be filed under Section 13(d) of the Exchange Act. The
affidavit or an amendment to a previously filed affidavit shall be filed with
the Trust annually within 60 days after the close of the Trust's taxable year.
A person shall have satisfied the requirements of this paragraph (i) if the
person furnishes to the Trust the information in such person's possession after
such person has made a good faith effort to determine the Shares it indirectly
owns and to acquire the information required by income tax regulation 1.857-9
or similar provisions of any successor regulation.
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(j) The affirmative vote of the holders of not less than 80% of all
outstanding Shares of the Trust entitled to vote in the election of Trust
Managers, considered for purposes of this Article Nineteen as one class, shall
be required to amend, alter, change, repeal or rescind any provision of this
Article Nineteen or to adopt any provisions inconsistent with this Article
Nineteen.
ARTICLE TWENTY
Upon resolution adopted by the Trust Managers, the Trust shall be entitled
to purchase, directly or indirectly, its own Shares, provided that following
such repurchase the Trust would continue to be able to pay its debts as they
become due in the ordinary course of its business.
ARTICLE TWENTY-ONE
The Trust Managers shall determine at least annually that the total fees
and expenses of the Trust are reasonable and in accordance with the provisions
of the Trust's Bylaws pertaining to such fees and expenses.
ARTICLE TWENTY-TWO
This Declaration of Trust may be amended from time to time by the
affirmative vote of the holders of at least two-thirds of the outstanding
Shares, except that (i) Article Eleven hereof (relating to the prohibition
against engaging in non-real estate investment trust businesses); (ii) Article
Thirteen hereof (relating to the approval of Business Combinations); (iii)
Article Nineteen hereof (relating to Share ownership requirements) and (iv)
this Article Twenty-Two may not be amended or repealed, and provisions
inconsistent therewith and herewith may not be adopted, except by the
affirmative vote of the holders of at least 80% of the outstanding Shares.
ARTICLE TWENTY-THREE
If any provision of this Declaration of Trust or any application of any
such provision is determined to be invalid by any federal or state court having
jurisdiction over the issue, the validity of the remaining provisions shall not
be affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court.
IN WITNESS WHEREOF, the undersigned Trust Managers do hereby execute this
Restated and Amended Declaration of Trust as of the 19th day of July, 1993.
/s/ RICHARD J. CAMPO
----------------------------------
Richard J. Campo
/s/ D. KEITH ODEN
----------------------------------
D. Keith Oden
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<PAGE> 1
EXHIBIT 10.3
CAMDEN DEVELOPMENT, INC.
1997 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
1.01. Purpose. The Camden Development, Inc. 1997 Employee Stock Purchase
Plan (the "Plan") provides a method whereby employees, officers and directors
of Camden Development, Inc., Camden Property Trust, a Texas real estate
investment trust, and any Subsidiary Corporations (hereinafter referred to,
unless the context otherwise requires, as the "Company") will have an
opportunity to acquire a proprietary interest in Camden Property Trust through
the purchase of common shares of beneficial interest, par value $0.01 per share
("Common Shares"), of Camden Property Trust.
ARTICLE II
DEFINITIONS
2.01. Participant. "Participant" means any person who is customarily
employed on a regular, full-time basis by the Company and is regularly
scheduled to work 30 or more hours per week and any officer or director.
2.02. Subsidiary Corporation. "Subsidiary Corporation" shall mean any
present or future corporation which (i) would be a "subsidiary corporation" of
Camden Property Trust as that term is defined in 424 of the Code and (ii) is
designated as a participant in the Plan by the Committee.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01. Initial eligibility. Any Participant who shall have completed one
calendar months' employment and shall be employed by the Company on the date
his/her participation in the Plan is to become effective shall be eligible to
participate in offerings under the Plan which commence on or after such one
month period has concluded.
3.02. Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no person shall be allowed to participate in the Plan:
(a) if, immediately after such participation, Participant would own
Common Shares, and/or hold outstanding options to purchase Common Shares,
possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company
<PAGE> 2
(for purposes of this paragraph, the rules of Paragraph 424(d) of the Code
shall apply in determining stock ownership of any employee); or
(b) is such Participant's rights to purchase Common Shares under all
employee stock purchase plans of the Company accrues at a rate which
exceeds $25,000 in fair market value of the Common Shares (determined at
the time of Plan enrollment) for each calendar year in which such purchase
right is outstanding.
3.03. Commencement of Participation. An eligible employee, officer or
director may become a Participant by completing an authorization for a payroll
or director's fee deduction or quarterly contribution on the form provided by
the Company and filing it with the Human Resources Department on or before the
date set therefor, which date shall be prior to the Offering Commencement Date
for the Offering (as such terms are defined below). Payroll or director's fee
deductions for a Participant shall commence on the applicable Offering
Commencement Date when Participant's authorization for a deduction becomes
effective and shall end on the Offering Termination Date of the Offering to
which such authorization is applicable unless sooner terminated by the
participant as provided in Article VIII.
ARTICLE IV
OFFERINGS
4.01. The Plan will be implemented by offerings of the Camden Property
Trust's Common Shares (the "Offerings") in six-month Offerings commencing,
respectively, on January 1 and July 1 of such year and terminating on June 30
and December 31 of such year, respectively. As used in the Plan, "Offering
Commencement Date" means the January 1 or July 1, as the case may be, on which
the particular Offering begins and "Offering Termination Date" means the June
30 or December 31, as the case may be, an which the particular Offering
terminates.
ARTICLE V
PAYROLL OR DIRECTOR'S FEE DEDUCTIONS OR QUARTERLY CONTRIBUTIONS
5.01. Amount of Deduction. At the time a Participant files an
authorization for deduction or contribution, Participant shall elect to have
deductions made from his/her pay on each pay day or periodic director's fees or
make quarterly contributions, during the time he/she is a Participant in an
Offering; provided, however, that in no event may such deductions or
contributions total less than $10.00 per deduction or contribution.
5.02. Participant's Account. All payroll or director's fee deductions and
quarterly contributions shall be credited to Participant's account under the
Plan. A Participant may not make any other separate cash payment into such
account except when on leave of absence and then only as provided in 5.04.
<PAGE> 3
5.03. Changes in Payroll Deductions. A Participant may discontinue his/her
participation in the Plan as provided in Article VIII, but no other change can
be made during an Offering and, specifically, a Participant may not alter the
amount of his/her payroll or director's fee deductions for that Offering.
5.04. Leave of Absence. If a Participant goes on a leave of absence, such
Participant shall have the right to elect: (a) to withdraw the balance in his
or her account pursuant to 7.02, (b) to discontinue contributions to the Plan
but remain a Participant in the Plan, or (c) to remain a Participant in the
Plan during such leave of absence, authorizing deductions to be made from
payments by the Company to the Participant during such leave of absence and
undertaking to make cash payments to the Plan at the end of each payroll period
to the extent that amounts payable by the Company to such Participants are
insufficient to meet such Participant's authorized Plan deductions.
ARTICLE VI
SHARE PRICE
6.01. Share Price. The price of Common Shares purchased with Participant
contributions made during such Offering for a Participant therein shall be the
lower of-
(a) 85% of the closing price of the Common Shares on the Offering
Commencement Date or the nearest prior business day on which trading of
Common Shares occurred on the New York Stock Exchange; or
(b) 85% of the closing price of the Common Shares on the Offering
Termination Date or the nearest prior business day on which trading of
Common Shares occurred on the New York Stock Exchange.
ARTICLE VII
PURCHASE OF SHARES
7.01. Automatic Exercise. Unless a Participant gives written notice to the
Company as hereinafter provided, his/her purchase of Common Shares with payroll
deductions made during any Offering will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering, for
the purchase of the number of full and/or fractional Common Shares which the
accumulated payroll deductions in Participant's account at that time will
purchase at the applicable price.
7.02. Withdrawal of Account. By written notice to the Human Resources
Department, at any time prior to the Offering Termination Date applicable to
any Offering, a
<PAGE> 4
Participant may elect to withdraw all the accumulated contributions in his/her
account at such time.
7.03. Delivery of Common Shares. Shares purchased under the Plan will be
held in the custody of the Plan Administrator in book entry form. The Plan
Administrator may hold the shares purchased under the Plan in stock
certificates in nominee names and may commingle shares held in its custody in a
single account or stock certificate, without identification as to individual
employees. A Participant may by written notice instruct the Plan Administrator
to have all or part of the whole shares in his/her account reissued in the
Participant's own name and have the certificate delivered to the Participant.
7.04. Shareholder Rights. Any dividends paid on shares held by the Plan
Administrator for a Participant automatically will be reinvested in additional
Common Shares to the extent possible, unless the Participant directs otherwise,
in which case all such dividends will be transmitted to the Participant. The
Plan Administrator will deliver to each Participant who purchases shares under
the Plan, as promptly as practicable by mail or otherwise, all notices of
meetings, proxy statements, proxies and other materials distributed by the
Company to its shareholders.
ARTICLE VIII
WITHDRAWAL
8.01. In General. As indicated in 7.02, a Participant may withdraw
deductions or contributions credited to his/her account under the Plan at any
time by giving written notice to the Human Resources Department. All of the
Participant's quarterly contributions, payroll or director's fee deductions
credited to his/her account will be paid to Participant promptly after receipt
of his/her notice of withdrawal, and no further deductions will be made from
his/her pay during such Offering. The Company may, at its option, treat any
attempt to borrow by a Participant on the security of his/her accumulated
contributions as an election, under 3.02, to withdraw such contributions.
8.02. Effect on Subsequent Participation. A Participant's withdrawal from
any Offering will not have any effect upon his/her eligibility to participate
in any succeeding Offering or in any similar plan which may hereafter be
adopted by the Company.
8.03. Termination of Employment. Upon termination of the Participant's
employment for any reason, including retirement (but excluding death while in
the employ of the Company or continuation of a leave of absence for a period
beyond 90 days), the contributions or deductions credited to his/her account
will be returned to him/her, or, in the case of death subsequent to the
termination of employment, to the person or persons entitled thereto under
11.01.
<PAGE> 5
8.04. Termination of Employment Due to Death. Upon termination of the
Participant's employment because of his/her death, Participant's beneficiary
(as defined in 11.01) shall have the right to elect, by written notice given to
the Human Resources Department prior to the earlier of the Offering Termination
Date or the expiration of a period of sixty (60) days commencing with the date
of the death of the Participant, either:
(a) to withdraw all of the contributions or deductions credited to
the Participant's account under the Plan, or
(b) to exercise the Participant's right of purchase of Common Shares
on the Offering Termination Date next following the date of the
Participant's death for the purchase of the number of full Common Shares
which the accumulated contributions in the Participant's account at the
date of the Participant's death will purchase at the applicable option
price, and any excess in such account will be returned to said
beneficiary, without interest.
In the event that no such written notice of election shall be duly
received by the Human Resources Department, the beneficiary shall automatically
be deemed to have elected, pursuant to paragraph (b), to exercise the
Participant's right to purchase.
8.05 Leave of Absence. A Participant on leave of absence shall, subject to
the election made by such Participant pursuant to 5.04, continue to be a
Participant in the Plan so long as such Participant is on continuous leave of
absence. A Participant who has been on leave of absence for more than 90 days
shall not be entitled to participate in any offering commencing after the 90th
day of such leave of absence. Notwithstanding any other provisions of the Plan,
unless a Participant on leave of absence returns to regular full-time
employment with the Company at the termination of such leave of absence, such
Participant's participation in the Plan shall terminate.
ARTICLE IX
INTEREST
9.01. Payments of Interest. No interest will be paid or allowed on any
money paid into the Plan or credited to the account of any Participant.
ARTICLE X
STOCK
10.01. Participant's Interest in Stock. The Participant will have no
interest in Common Shares covered by his/her Plan participation until such
shares have been purchased.
<PAGE> 6
10.02. Registration of Common Shares. Stock to be delivered to a
Participant under the Plan will be registered in the name of the Participant,
or, if the Participant so directs by written notice to the Human Resources
Department prior to the Offering Termination Date applicable thereto, in the
names of the Participant and one such other person as may be designate by the
Participant, as joint tenants with rights of survivorship or as tenants by the
entireties, to the extent permitted by applicable law.
ARTICLE XI
MISCELLANEOUS
11.01. Designation of Beneficiary. A Participant may file a written
designation of a beneficiary who is to receive any shares and/or cash. Such
designation of beneficiary may be changed by the participant at any time by
written notice to the Human Resources Department. Upon the death of a
Participant and upon receipt by the Company of proof of identify and existence
of the Participant's death by a beneficiary validly designated by him under the
Plan, the Company shall deliver such shares and/or cash to such beneficiary. In
the event of the death of Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such shares and/or cash to the
executor or administration of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents of the Participant as the Company may
designate. No beneficiary shall, prior to the death of the Participant by whom
he has been designated, acquire any interest in the stock or cash credited to
the Participant under the Plan.
11.02. Transferability. Neither payroll deductions credited to a
Participant's account nor any rights with regard to the right to purchase or to
receive Common Shares under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution or pursuant to a Qualified Domestic Relations
Order. Any such attempted assignment, transfer, pledge or other disposition
shall be without effect, except that the Company may treat such act as an
election to withdraw funds in accordance with 7.02.
11.03. Use of Funds. All contributions or deductions received or held by
the Company under this Plan may be used by the Company for any corporate
purpose and the Company shall not be obligated to segregate such contributions
or deductions.
11.04. Adjustment Upon Changes in Capitalization. (a) If, during any Plan
period, the outstanding Common Shares of the Company have increased, decreased,
changed into, or been exchanged for a different number of kind or shares of
securities of the Company through reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split or similar transaction,
appropriate and proportionate adjustments may be made by the Board of Trust
Managers in the number and/or kind of shares which are subject to purchase and
on the
<PAGE> 7
price applicable to such outstanding options. No adjustments shall be made for
stock dividends. For the purposes of this Paragraph, any distribution of shares
to shareholders in an amount aggregating 20% or more of the outstanding shares
shall be deemed a stock split and any distributions of shares aggregating less
than 20% of the outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, Plan participants will thereafter be entitled to receive
at the next Offering Termination Date upon the exercise of such option for each
share as to which such option shall be exercised, as nearly as reasonably may
be determined, the cash, securities and/or property which a holder of one
Common Share was entitled to receive upon and at the time of such transaction.
The Board of Trust Managers shall take such steps in connection with such
transactions as the Board shall deem necessary to assure that the provisions of
this 11.04 shall thereafter be applicable, as nearly as reasonably may be
determined, in relation to the said cash, securities and/or property as to
which such holder of such option might thereafter be entitled to receive.
11.05. Amendment and Termination. The Board of Trust Managers shall have
complete power and authority to terminate or amend the Plan at any time.
11.06 Effective Date. The Plan shall become effective as of July 1, 1997.
11.07 No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of any employee or class of employees to
purchase any Common Shares under the Plan, or create in any employee or class
of employees any right with respect to continuation of employment by the
Company, and it shall not be deemed to interfere in any way with the Company's
right to terminate, or otherwise modify, an employee's employment at any time.
11.08. Effect of Plan. The provisions of the Plan shall, in accordance
with its terms, be binding upon, and inure to the benefit of, all successors of
each Participant in the Plan, including, without limitation, such employee's
estate and the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such employee.
11.09. Governing Law. The law of the State of Texas will govern all
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
<PAGE> 1
EXHIBIT 11.1
CAMDEN PROPERTY TRUST
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SIMPLE EARNINGS PER SHARE
Weighted Average Common Shares Outstanding 26,432 14,463 21,476 14,460
======== ======== ======== ========
Simple Earnings Per Share $ 0.24 $ 0.24 $ 0.49 $ 0.12
======== ======== ======== ========
PRIMARY EARNINGS PER SHARE
Weighted Average Common Shares Outstanding 26,432 14,463 21,476 14,460
Shares Issuable from Assumed Conversion of:
Common Share Options and Awards Granted and Outstanding 231 48 211 52
-------- -------- -------- --------
Weighted Average Common Shares Outstanding, as Adjusted 26,663 14,511 21,687 14,512
======== ======== ======== ========
Primary Earnings Per Share $ 0.24 $ 0.24 $ 0.48 $ 0.12
======== ======== ======== ========
FULLY DILUTED EARNINGS PER SHARE(*)
Weighted Average Common Shares Outstanding 26,432 14,463 21,476 14,460
Shares Issuable from Assumed Conversion of:
Common Share Options and Awards Granted and Outstanding 370 88 306 85
Operating Partnership Units 2,349 1,180
Convertible Subordinated Debentures 482 1,830 727 1,833
-------- -------- -------- --------
Weighted Average Common Shares Outstanding, as Adjusted 29,633 16,381 23,689 16,378
======== ======== ======== ========
Fully Diluted Earnings Per Share $ 0.24 $ 0.26 $ 0.49 $ 0.21
======== ======== ======== ========
EARNINGS FOR SIMPLE, PRIMARY AND FULLY
DILUTED COMPUTATION:
Earnings to Common Shareholders (Simple Earnings
Per Share Computation) $ 6,429 $ 3,498 $ 10,493 $ 1,748
Dividends on Convertible Preferred Shares 4
-------- -------- -------- --------
Earnings (Primary Earnings Per Share Computation) 6,429 3,498 10,493 1,752
Minority Interest in Operating Partnership 597 597
Interest on Convertible Subordinated Debentures 133 756 429 1,563
Convertible Subordinated Debenture Cost Amortization 22 80 64 159
-------- -------- -------- --------
Earnings (Fully Diluted Earnings Per Share Computation) $ 7,181 $ 4,334 $ 11,583 $ 3,474
======== ======== ======== ========
</TABLE>
* Fully diluted earnings per share of beneficial interest is not dilutive
and is not presented in the Consolidated Statement of Operations.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,462
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,303,996
<DEPRECIATION> 74,363
<TOTAL-ASSETS> 1,265,718
<CURRENT-LIABILITIES> 0
<BONDS> 567,726
0
0
<COMMON> 270
<OTHER-SE> 568,262
<TOTAL-LIABILITY-AND-EQUITY> 1,265,718
<SALES> 0
<TOTAL-REVENUES> 83,544
<CGS> 0
<TOTAL-COSTS> 38,322
<OTHER-EXPENSES> 18,530
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,276
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,493
<EPS-PRIMARY> .48
<EPS-DILUTED> .00
</TABLE>
