SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
_
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
_
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to _________
Commission file number: 1-12110
CAMDEN PROPERTY TRUST
(Exact name of Registrant as specified in its charter)
Texas 76-6088377
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 964-3555
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------------------ ------------------------
Common Shares of Beneficial
Interest, $.01 par value New York Stock Exchange
7.33% Convertible Subordinated
Debentures due 2001 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
Registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X__ No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
The aggregate market value of voting shares of beneficial interest held by
non-affiliates of the registrant was $451,605,448 at March 18, 1997.
The number of common shares of beneficial interest outstanding at March 18,
1997 was 16,705,224.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the year
ended December 31, 1996 are incorporated by reference in Parts II and IV.
Portions of the registrant's Proxy Statement in connection with its Annual
Meeting of Shareholders to be held June 5, 1997 are incorporated by
reference in Part III.
PAGE
<PAGE>
PART I
Item 1. Business
Introduction
Camden Property Trust and its subsidiaries ("Camden" or the "Company")
are engaged in the ownership, development, acquisition, management,
marketing and disposition of multifamily apartment communities in the
Southwest region of the United States. As of December 31, 1996, the
Company owned and operated 48 multifamily properties ("Operating
Properties") containing 17,611 units located in Houston, Dallas/Fort Worth,
Austin, Corpus Christi, El Paso, Phoenix and Tucson. These properties had
a weighted average occupancy rate of 94.0% for the year ended December 31,
1996. The Company is developing five multifamily properties (the
"Development Properties") in Houston, Dallas and Phoenix which will, when
completed, add 1,778 units to its portfolio, and has one site in Denver
which it intends to develop (collectively with the Operating Properties and
the Development Properties, the "Camden Properties").
On December 16, 1996, the Company announced the execution of a
definitive merger agreement pursuant to which Paragon Group, Inc. would be
merged with and into a wholly-owned subsidiary of Camden. Upon
consummation of the merger, the Company will have 35,364 units and
approximately $1.25 billion in total assets. Each share of Paragon will be
exchanged for 0.64 shares of Camden. The exchange ratio is based on
Camden's closing price on December 4, 1996 of $27.75 per share and $17.75
per share for Paragon. If Camden's share price falls below $25.67 per
share during a specified time frame as set forth in the merger agreement,
Paragon has the right to terminate the agreement, subject to Camden's right
to negate such termination right by increasing the exchange ratio so that
Paragon's shareholders receive the same aggregate dollar value of Camden
shares had Camden's share price remained at the $25.67 per share threshold.
Paragon is a fully integrated real estate investment trust ("REIT")
headquartered in Dallas, Texas whose business is the operation, development
and acquisition of multifamily apartment communities in the Southwest,
Midwest, North Carolina and Florida. Paragon is a self-administered and
self-managed REIT that, as of December 31, 1996, owned interests in 57
completed multifamily properties located in six states, with three
additional multifamily properties under construction. Subsequent to
December 31, 1996, three of Paragon's properties were sold and one of
Paragon's construction properties was completed.
The merger with Paragon has been structured as a tax-free transaction
and will be treated as a purchase for accounting purposes. The merger is
subject to the approval of both companies' shareholders. The meetings to
consider the transaction have been scheduled for April 15, 1997. It is
anticipated that the merger will be completed by the end of April 1997.
At December 31, 1996, the Company employed 613 persons approximately
73 of whom were located at the Company's headquarters and 540 of whom were
"on-site" or in regional operating offices. The Company's headquarters are
located at 3200 Southwest Freeway, Suite 1500, Houston, Texas 77027 and its
telephone number is (713) 964-3555.
Operating Strategy
Management believes that producing consistent earnings growth and
developing a strategy for selective investment in favorable markets are
crucial factors to Camden's success. Camden relies heavily on its
sophisticated property management capabilities and innovative operating
strategies in its efforts to produce consistent earnings growth.
Sophisticated Property Management. Management believes the depth of
its organization enables Camden to deliver quality services, thereby
promoting resident satisfaction and improving resident retention, which
reduces operating expenses. Camden manages the Camden Properties utilizing
its staff of professionals and support personnel, including certified
property managers, certified public accountants, experienced apartment
managers and leasing agents, and trained apartment maintenance technicians.
All on-site personnel are trained to deliver high quality services to their
residents. Camden attempts to motivate on-site employees through incentive
compensation arrangements based upon the net operating income produced at
their property, as well as rental rate increases and the level of lease
renewals achieved.
Innovative Operating Strategies. Management believes an intense focus
on operations is necessary to realize consistent, sustained earnings
growth. Ensuring resident satisfaction, increasing rents as market
conditions allow, maximizing rent collections, maintaining property
occupancy at optimal levels and controlling operating costs comprise
Camden's principal strategies to maximize property net operating income.
Lease terms are generally staggered based on vacancy exposure by apartment
type so that lease expirations are better matched to each Camden Property's
seasonal rental patterns. Camden offers leases of six-month to
thirteen-month terms, with individual property marketing plans structured
to respond to local market conditions. In addition, Camden conducts
ongoing customer service surveys to ensure timely responsiveness to
changing resident needs and the highest level of resident satisfaction.
Acquisitions and Dispositions. Camden believes it is well positioned
in its markets with the expertise to take advantage of both acquisition and
development opportunities. This dual capability, combined with what
management believes is a conservative financial structure, affords Camden
the ability to concentrate its growth efforts towards selective acquisition
opportunities and development alternatives.
Several of Camden's core markets are targeted by Camden for continued
acquisitions during 1997. Camden plans to continue diversification of its
investments within its core markets, both geographically and in terms of
the number of units and selection of amenities offered. The broadest
segment of Camden's core markets is comprised of properties which are ten
to fifteen years old. Camden's Operating Properties have an average age of
ten years (calculated on a basis of investment dollars). Camden believes
its demonstrated ability to make physical improvements to acquired
properties, such as new or enhanced landscaping design, new or upgraded
amenities and redesigned building structures, coupled with a strong focus
on property management and marketing, has resulted in attractive yields on
the acquired Camden Properties.
To generate consistent earnings growth, Camden seeks to selectively
dispose of properties and redeploy capital if management determines a
property cannot meet long-term earnings growth expectations. Camden
disposed of five properties containing 1,219 units in 1996. The net
proceeds of $29.8 million from the property dispositions were either
reinvested in acquisitions or developments or were used to retire debt.
New Development. Selective development of new apartment properties in
Camden's core markets will continue to be important to the growth of
Camden's portfolio for the next several years. Camden uses experienced
on-site construction superintendents, operating under the supervision of
project managers and senior management, to control the construction
process. All development decisions are made from the corporate office.
Risks inherent to developing real estate include zoning changes and
environmental matters. There is also the risk that certain assumptions
concerning economic conditions may change during the development process.
Management believes that it understands and effectively manages the risks
associated with development and that the risks of new development are
justified by higher potential yields.
Environmental Matters. Under various federal, state, and local
environmental laws, regulations and ordinances, a current or previous owner
or operator of real estate may be required to investigate and clean up
hazardous or toxic substances, petroleum product releases or ACMs at such
property and may be held liable to a governmental entity or to third
parties for property damage and for investigation and cleanup costs
incurred by such parties in connection with the contamination. The costs
of investigation, remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to
properly remediate the contamination on such property, may adversely affect
the owner's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment
of hazardous or toxic substances at a disposal or treatment facility also
may be liable for the costs of remediation or removal of a release of
hazardous or toxic substances at or from such facility whether or not such
facility is owned or operated by such person. In addition, some
environmental laws create a lien on the contaminated site in favor of the
government for damages and costs it incurs in connection with the
contamination. Finally, the owner of a site may be subject to common law
claims by third parties based on damages and costs resulting from
environmental contamination emanating from a site.
In connection with its acquisitions of properties, the Company's
practice is to obtain Phase I and, if necessary, Phase II environmental
assessments. These Phase I assessments have been carried out in accordance
with accepted industry practices. The Company has also conducted limited
subsurface investigations and tested for radon and lead-based paint where
such procedures have been recommended by the consultants.
Insurance. The Company carries comprehensive liability, fire,
extended coverage and rental loss insurance with respect to all of its
properties, with policy specifications, insured limits and deductibles
customarily carried for similar properties, and carries similar insurance
with respect to any undeveloped parcels (with such exceptions as are
appropriate given the undeveloped nature of such properties).
Financial Strategy
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) borrowing at fixed rates; (iv) borrowing on an unsecured
basis; (v) maintaining a substantial number of unencumbered assets; and
(vi) maintaining a conservative debt service coverage ratio.
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 ("Camden IPO") in July 1993. At December 31, 1996,
the Company's ratio of total debt to total market capitalization was
approximately 32.6% (based on the closing price of $28.63 per common share
of the Company on the New York Stock Exchange composite tape on December
31, 1996). This ratio represents total consolidated debt of the Company
(excluding the Company's 7.33% Convertible Debentures due 2001
["Convertible Debentures"]) as a percentage of the market value of the
Company's common shares (including common shares issuable upon conversion
of the Convertible Debentures, but excluding common shares issuable upon
exercise of outstanding options) plus total consolidated debt (excluding
the Convertible Debentures). The interest coverage ratio was 3.2 times and
3.4 times for 1996 and 1995, respectively. At December 31, 1996 and 1995,
84.3% and 68.6%, respectively, of the Company's properties (based on
invested capital) were unencumbered. After adjusting for the early 1997
retirement of two conventional mortgage loans, this unencumbered property
percentage increased to 90.1%.
Liquidity. The Company intends to meet its short-term liquidity
requirements through cash flows provided by operations, the $150 million
unsecured credit facility (the "Unsecured Credit Facility" or "facility"),
construction loans, and other short-term borrowing arrangements. The
Company intends to use equity capital or senior unsecured debt to refinance
maturing secured debt, borrowings under its facility and other short-term
borrowing arrangements. The Company has commenced under its previously
filed shelf registration statement a $196 million medium-term note program
to be used to provide intermediate or long-term, unsecured publicly-traded
debt, none of which has yet been issued. The Company considers its
ability to generate cash to be sufficient, and expects to be able to meet
future operating requirements and shareholder distributions.
On December 13, 1996, the Company declared its fourth quarter dividend
in the amount of $0.475 per common share, bringing the total dividends for
the year to $1.90 per common share. The fourth quarter distributions were
paid on January 17, 1997 to shareholders of record as of December 30, 1996.
During the first quarter of 1997, the Company announced an increase in the
quarterly dividend rate to $0.49 per common share effective for 1997. The
Company intends to continue shareholder distributions in accordance with
REIT qualification requirements under the federal tax code while
maintaining what management believes to be a conservative payout ratio, and
expects to continue reducing the payout ratio by raising the dividends per
share at a rate which is less than the funds from operations per share
growth rate.
Financial Flexibility. The Company concentrates its growth efforts
toward selective development and acquisition opportunities in its core
markets. During the year ended December 31, 1996, the Company incurred
$56.1 million in development costs and $6.3 million in acquisition costs
for new properties. 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. The $29.8
million in net proceeds received from these asset disposals during 1996
were either reinvested in acquisitions or developments or were used to
retire debt.
The Company funds its developments and acquisitions through a
combination of equity capital, debt securities, conventional mortgage
loans, the Unsecured Credit Facility and other short-term borrowing
arrangements. In the past, the Company had also utilized construction
loans to fund its developments. The Unsecured Credit Facility is subject
to certain restrictions and financial covenants. The facility may be used
for acquisitions, developments and working capital purposes. During 1996,
the Company utilized the facility to retire three secured construction
loans aggregating $26.1 million and later refinanced that amount with
ten-year unsecured notes described below. The facility is currently
structured as a revolving facility until July 1997. The interest rate on
the facility, which is subject to changes in the Company's credit ratings,
was reduced to LIBOR plus 150 basis points or Prime during 1996.
Management is currently negotiating the terms of the facility with its bank
group and expects to be able to extend the maturity date and lower the
interest rate on this facility. Furthermore, management believes it will
continue to be able to extend the maturity date of this facility as needed
in the future. The facility is subject to certain restrictive covenants
including, among others, liquidity, net worth, leverage, capitalization and
cash flow ratios and limitations on capital investments. Such restrictions
also include a limitation on distributions to common shareholders that are
not to exceed 95% of funds from operations except as required to maintain
REIT status. As of December 31, 1996, the Company had $138.0 million
available under its facility.
Subsequent to December 31, 1996, the Company began utilizing
competitively bid short-term borrowings as an alternative to borrowing
under its Unsecured Credit Facility. Such borrowings vary in term and
pricing but have the same covenants as the facility and may be funded
through lenders outside of the facility bank group at rates substantially
below those of the facility. Since there are no commitments in place for
such arrangements, these borrowings cannot exceed the unused portion of the
facility.
On October 16, 1996, the Company completed a common share offering
from its previously filed shelf registration statement selling 1,090,000
shares at a gross price of $25.875 per share. The net proceeds of $27.6
million were used primarily to retire a $25.1 million secured construction
loan.
During 1996, the Company issued from its previously filed shelf
registration statement two issues of senior unsecured notes. The first
issue for an aggregate principal amount of $100 million accrues interest at
a rate of 6.6% per annum, has an average effective annual rate of 6.7%, and
matures within five years. The second issue for an aggregate principal
amount of $75 million accrues interest at a rate of 7.0% per annum, has an
average effective annual rate of 7.2%, and matures within ten years. These
two issues of senior unsecured notes received investment-grade ratings from
Moody's Investors Service, Standard & Poor's and Duff & Phelps. Both
issues pay interest semi-annually and are direct, senior unsecured
obligations of the Company ranking equally with all other unsecured and
unsubordinated indebtedness of the Company. Both issues may be redeemed at
any time at the option of the Company subject to make-whole provisions.
The net proceeds from the first issue of $98.4 million were used to reduce
$93.4 million of indebtedness under the Unsecured Credit Facility, to pay
$4.9 million arising from the early settlement of hedging agreements
related to the indebtedness repaid and to pay $500,000 to extinguish a
bank's option related to a settled hedging agreement. The net proceeds
from the second issue of $73.6 million were used to reduce $64.0 million of
indebtedness under the facility and to repay the Company's only remaining
secured construction loan of $9.4 million.
Subsequent to December 31, 1996, the Company prepaid two of its 8.8%
conventional mortgage loans with outstanding balances at December 31, 1996
of $20.3 million and prepayment penalties of $203,000. The loans were
prepaid by utilizing funds from the lower interest bearing Unsecured Credit
Facility.
At December 31, 1996, a $25 million interest rate hedging agreement
remained in effect and is scheduled to mature in July 2000 with a bank's
option to extend to July 2002. The LIBOR rate on this $25 million hedging
agreement is fixed at 6.1%. The resulting fixed rate is equal to the 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. The differential to be paid or received on the interest rate
hedging agreement is accrued as interest rates change and is recognized
over the life of the agreement as an increase or decrease in interest
expense.
Markets and Competition
Camden's portfolio consists of middle to upper market apartment
properties. Camden has expanded its portfolio since the Camden IPO through
targeted acquisitions and developments in selected high-growth markets. By
combining acquisition, renovation and development capabilities, management
believes it is able to better respond to changing conditions in each
market, thereby reducing market risk and allowing Camden to take advantage
of opportunities as they arise.
At December 31, 1996, 88% of Camden's real estate assets were located
in Texas. Since the Camden IPO, Camden has diversified into other markets
in the Southwest region of the United States, including Phoenix and Tucson,
with additional development properties in Phoenix, Corpus Christi, Austin
and Dallas. At the time of the Camden IPO, approximately 77% of the Camden
Properties (based on the number of units) were located in Houston. At
December 31, 1996, after giving effect to the anticipated completion of the
Development Properties, 40% of the Camden Properties were located in
Houston. The Company intends to further diversify geographically into the
Midwest, North Carolina and Florida through its planned merger with
Paragon.
Camden believes it has benefitted from the strong employment growth
and economic diversification within the State of Texas. Camden also
believes the diversified employment base of the Texas metropolitan areas
where the Camden Properties are located provides significant stability to
Camden's cash flow. For example, the major industries in Houston include
petrochemicals, health care, technology and education. In Dallas, the
major industries include trade, transportation and energy. In Austin, the
major industries include government, education and technology.
Camden believes that there is a limited supply of vacant apartments in
the markets where the Camden Properties are located due to only moderate
new construction of multifamily apartment properties during the last
decade. Camden expects the rate of new apartment construction in these
markets to continue to be restrained in the near future, due to higher
investment yield requirements, continued conservative lending parameters,
restrictions on building relating to political factors, impact fees and
infrastructure assessments and the lack of tax and governmental incentives.
There are numerous housing alternatives that compete with Camden's
Properties in attracting residents. Camden's Properties compete directly
with other multifamily properties and single family homes that are
available for rent in the markets in which Camden's properties are located.
Camden's Properties also compete for residents with the new and existing
owned-home market. The demand for rental housing is driven by economic and
demographic trends. Recent trends in the economics of renting versus home
ownership indicate an increasing demand for rental housing in certain
markets, despite relatively low residential mortgage interest rates.
Rental demand should be strong in areas anticipated to experience
in-migration, due to the younger ages that characterize movers as well as
the relatively high cost of home ownership in higher growth areas. In
addition, management believes that the accelerating growth in the formation
of non-traditional households, which tend to rent, should increase the
demand for apartments.
Disclosure Regarding Forward Looking Statements
The statements contained in Item 1 of 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: the proposed merger with Paragon Group,
Inc., 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.
PAGE
<PAGE>
Item 2. Properties
The Properties
The Camden Properties typically consist of two- and three-story
buildings in a landscaped setting and provide residents with a variety of
amenities. Most of the Camden Properties have, or are expected to have,
one or more swimming pools and a clubhouse and many have whirlpool spas,
tennis courts and controlled-access gates. Many of the units offer
additional features such as fireplaces, vaulted ceilings, microwave ovens,
covered parking, icemakers, washers and dryers and ceiling fans. The
Operating Properties' units average 781 square feet of living area.
Operating Properties
For the year ended December 31, 1996, no single Operating Property
accounted for greater than 4.8% of the Company's total revenues. The
Operating Properties had an average occupancy rate of 94.0% and 93.3% in
1996 and 1995, respectively. Resident leases are generally for six-month
to thirteen-month terms and usually require security deposits. Forty-two
of the Operating Properties have in excess of 200 units, with the largest
having 804 units. Nine of the Operating Properties were constructed by the
Company or its predecessors and placed in service since 1992. Twenty-six
were placed in service between 1982 and 1987, eleven were placed in service
between 1974 and 1981 and one was placed in service in each of 1968 and
1969.
Property Table
The following table sets forth information with respect to the
Company's Operating Properties as of December 31, 1996:
PAGE
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<TABLE>
OPERATING PROPERTIES
<CAPTION>
December 1996 December 1995
Average Monthly Average Monthly
Average
1996 Rental Rates 1995 Rental Rates
Number Year Year Unit
Average -------------- Average --------------
Property of Placed in Renovation Size
Occupancy Per Per Occupancy Per Per
and Location Units Service Commenced (Sq. Ft.)
<F1> Unit Sq Ft <F1> Unit Sq Ft
- ------------------------ ------- ---------- ---------- ---------
- ---------- ---- ----- --------- ---- -----
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
ARIZONA
Phoenix
Scottsdale Legacy<F2> 428 1996 <F3> 1,067
95% $867 $0.81
Tucson
Eastridge 456 1984 1994 559
94 443 0.79 89% $441 $0.79
Oracle Villa 365 1974 1994 1,026
92 713 0.70 87 711 0.69
TEXAS
Austin
Autumn Woods 283 1984 1993 644
95 553 0.86 95 548 0.85
Calibre Crossing 183 1986 1994 705
93 588 0.84 95 595 0.84
Huntingdon 398 1995 <F3> 903
90 814 0.90 94 824 0.91
Quail Ridge 167 1984 1994 859
95 670 0.78 95 659 0.77
Ridgecrest 284 1995 <F3> 851
92 774 0.91 94 774 0.91
South Oaks 430 1980 1993 705
92 571 0.80 95 549 0.77
Corpus Christi
Breakers<F2> 288 1996 <F3> 861
96 747 0.86
Miramar<F4> 244 1994/95 <F3> 722
85 653 0.90 84 629 0.89
Potters Mill 344 1986 1994 775
94 575 0.74 95 552 0.71
Waterford 580 1976/80 1993 767
91 509 0.66 92 484 0.63
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
Dallas/Fort Worth
Cottonwood Ridge 208 1985 1994 829
96 529 0.64 97 508 0.61
Emerald Valley 516 1986 1994 743
95 617 0.83 93 593 0.80
Emerald Village 304 1987 1994 713
96 581 0.82 95 564 0.79
Glen Lakes 424 1979 1992 877
95 696 0.79 92 672 0.77
Ivory Canyon 602 1986 1994 548
95 502 0.92 94 491 0.90
North Dallas Crossing 446 1985 1993/94 730
94 582 0.80 92 567 0.78
Oakland Hills 476 1985 1994 853
95 563 0.66 93 539 0.63
Park at Addison<F2> 456 1996 <F3> 942
90 842 0.89
Pineapple Place 256 1983 1994 652
94 543 0.83 95 526 0.81
Randol Mill Terrace 340 1984 1994 848
93 538 0.64 94 527 0.62
Shadowlake 264 1984 1994 733
92 533 0.73 92 510 0.70
Towne Centre Village 188 1983 1994 735
96 535 0.73 95 514 0.70
Towne Crossing 442 1984 1994 772
94 535 0.69 95 521 0.68
Valley Creek Village 380 1984 1994 855
96 588 0.69 93 567 0.66
Valley Ridge 408 1987 1994 773
94 573 0.74 95 555 0.72
Westview 335 1983 1993 697
94 561 0.81 96 537 0.77
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
El Paso
La Plaza 129 1969 1994 997
98 586 0.59 98 568 0.57
Houston
Bay Crest Village 96 1980 1990 855
91 580 0.68 92 569 0.67
Bay Place 193 1968 1990 856
91 529 0.62 88 509 0.59
Brighton Place 282 1978 1992 749
95 510 0.68 96 488 0.65
Cambridge Place 336 1979 1992 771
95 521 0.68 92 506 0.66
Crossing, The 366 1982 1993 762
96 524 0.69 93 498 0.65
Driscoll Place 488 1983 1991 708
94 437 0.62 91 421 0.60
Eagle Creek 456 1984 1992 639
96 503 0.79 95 498 0.78
Hayes Place 307 1980 1991 746
93 485 0.65 91 472 0.63
Jones Crossing 290 1982 1994 748
96 522 0.70 95 505 0.68
Roseland Place 671 1982 1992 726
97 503 0.69 96 484 0.67
Sierra Pines I & II<F5> 804 1982 1993 766
91 455 0.59 91 437 0.58
Southpoint 244 1981 1993 730
95 542 0.74 96 530 0.73
Stonebridge 204 1993 <F3> 845
96 724 0.86 95 709 0.84
Vanderbilt Square I<F2> 516 1996 <F3> 963
98 989 1.03
Wallingford 462 1980 1993 787
94 533 0.68 93 523 0.66
Wilshire Place 536 1982 1992 761
94 504 0.66 92 497 0.65
Woodland Park 288 1995 <F3> 866
95 745 0.86 96 737 0.85
Wyndham Park 448 1978/81 1991 797
92 474 0.59 92 459 0.58
------ ---
- -- ---- ----- -- ---- -----
TOTAL 17,611 781
94% $588 $0.75 93% $542 $0.71
====== ===
== ==== ===== == ==== =====
<FN>
<F1> Represents average physical occupancy for the year ended.
<F2> 1996 average occupancy calculated from date at which occupancy
exceeded 90% through December 31, 1996.
<F3> These properties were recently constructed by the Company or its
predecessors; accordingly, they have not been
renovated.
<F4> Miramar is a student housing project for Texas A&M at Corpus Christi.
Average occupancy includes summer which is
normally subject to high vacancies.
<F5> Phase II of Sierra Pines was acquired in May 1996, increasing the
total number of units at this property from 404
to 804.
</FN>
/TABLE
<PAGE>
Development Properties
The total budgeted cost of the Development Properties is approximately
$99.4 million, with a remaining cost to complete, as of December 31, 1996,
of approximately $52.7 million. There can be no assurance that the
Company's budget, leasing or occupancy estimates will be attained for the
Development Properties or that their performance will be comparable to
that of the Company's existing portfolio.
Development Property Table
The development property table is incorporated herein by reference
from page 19 of the Company's Annual Report to Shareholders for the year
ended December 31, 1996, which page is filed as Exhibit 13.1 hereto.
Management believes that the Company possesses the development
capabilities and experience to provide a continuing source of portfolio
growth. In making development decisions, management considers a number of
factors, including the size of the property, the season in which leasing
activity will occur and the extent to which delivery of the completed
units will coincide with leasing and occupancy of such units (which is
dependent upon local market conditions). In order to pursue a development
opportunity, the Company currently requires a minimum initial stabilized
target return of 10%-10.5%. This minimum target return is based on
current market rents and projected stabilized expenses, considering the
market and the nature of the prospective development.
Item 3. Legal Proceedings
Neither the Company nor the Camden Properties are presently subject to
any material litigation nor, to the Company's knowledge, is any material
litigation threatened against the Company or the Camden Properties, other
than routine litigation arising in the ordinary course of business and
which is expected to be covered by liability insurance.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of the fiscal year
covered by this Report to a vote of security holders, through the
solicitation of proxies or otherwise.
PAGE
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Information with respect to this Item 5 is incorporated herein by
reference from page 40 of the Company's Annual Report to Shareholders for
the year ended December 31, 1996, which page is filed as Exhibit 13.1
hereto. The number of holders of record of the Company's common shares,
$0.01 par value, as of March 18, 1997, was 436.
Item 6. Selected Financial Data
Information with respect to this Item 6 is incorporated herein by
reference from pages 41 and 42 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996, which pages are filed as
Exhibit 13.1 hereto.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Information with respect to this Item 7 is incorporated herein by
reference from pages 18 through 24 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996, which pages are filed
as Exhibit 13.1 hereto.
Item 8. Financial Statements and Supplementary Data
The Company's financial statements and supplementary financial
information for the years ended December 31, 1996, 1995 and 1994 are
listed in the accompanying Index to Consolidated Financial Statements and
Supplementary Data at F-1 and are incorporated herein by reference from
pages 25 through 40 of the Company's Annual Report to Shareholders for the
year ended December 31, 1996, which pages are filed as Exhibit 13.1
hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PAGE
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
Item 11. Executive Compensation
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
Item 13. Certain Relationships and Related Transactions
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
PAGE
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements:
The Company's financial statements and supplementary financial
information for the years ended December 31, 1996, 1995 and 1994 are
listed in the accompanying Index to Consolidated Financial Statements
and Supplementary Data at F-1 and are incorporated herein by
reference from pages 25 through 40 of the Company's Annual Report to
the Shareholders for the year ended December 31, 1996, which pages
are filed as Exhibit 13.1 hereto.
(2) Financial Statement Schedule:
The financial statement schedule listed in the accompanying Index
to Consolidated Financial Statements and Supplementary Data at page
F-1 is filed as part of this Report.
(3) Index to Exhibits:
Number Title
2.1 Agreement and Plan of Merger, dated as of December 16, 1996,
among the Registrant, Camden Subsidiary, Inc. and Paragon Group,
Inc. Incorporated by reference from Exhibit 99.2 to the
Registrant's Form 8-K filed December 18, 1996 (File No.
1-12110).
3.1 Amended and Restated Declaration of Trust of the Registrant.
Incorporated by reference from Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993
(File No. 1-12110).
3.2 Amended and Restated Bylaws of the Registrant. Incorporated by
reference from Exhibit 3.1 to the Registrant's Form 8-K filed
November 18, 1996 (File No. 1-12110).
4.1 Specimen certificate for Common Shares of beneficial interest.
Incorporated by reference from Exhibit 4.1 to the Registrant's
Registration Statement on Form S-11 filed September 15, 1993
(File No. 33-68736).
4.2 Indenture dated as of April 1, 1994 by and between the
Registrant and The First National Bank of Boston, as Trustee.
Incorporated by reference from Exhibit 4.3 to the Registrant's
Statement on Form S-11 filed April 12, 1994 (File No. 33-76244).
4.3 Form of Convertible Subordinated Debenture Due 2001.
Incorporated by reference from Exhibit 4.3 to the Registrant's
Statement on Form S-11 filed April 12, 1994 (File No. 33-76244).
4.4 Indenture dated as of February 15, 1996 between the Company and
the U.S. Trust Company of Texas, N.A., as Trustee. Incorporated
by reference from Exhibit 4.1 to the Registrant's Form 8-K filed
February 15, 1996 (File No. 1-12110).
4.5 First Supplemental Indenture dated as of February 15, 1996.
Incorporated by reference from Exhibit 4.2 to the Registrant's
Form 8-K filed February 15, 1996 (File No. 1-12110).
4.6 Form of Camden Property Trust 6 5/8% Note due 2001. Incorporated
by reference from Exhibit 4.3 to the Registrant's Form 8-K filed
February 15, 1996 (File No. 1-12110).
4.7 Form of Camden Property Trust 7% Note due 2006. Incorporated by
reference from Exhibit 4.3 to the Registrant's Form 8-K filed
December 2, 1996 (File No. 1-12110).
10.1 Registration Rights Agreement dated July 29, 1993 by and between
the Registrant and Richard J. Campo, D. Keith Oden, Redstone
Richmond, Inc., Gay A. Roane, Walter M. Mischer, Sr. and the
corporations listed on Exhibits A and B thereto. Incorporated by
reference from Exhibit 10.2 to the Registrant's Registration
Statement Form S-11 filed September 15, 1993 (File No. 33-68736).
10.2 Non-competition Agreement dated July 21, 1993 by and between
Centeq Investments Inc. and the Registrant. Incorporated by
reference from Exhibit 10.6 to the Registrant's Registration
Statement on Form S-11 filed September 15, 1993 (File No.
33-68736).
10.3 Form of Indemnification Agreement by and between the Registrant
and certain of its trust managers and executive officers.
Incorporated by reference from Exhibit 10.18 to Amendment No. 1
of the Registrant's Registration Statement on Form S-11 filed
July 9, 1993 (File No. 33-63588).
10.4 Letter Agreement dated July 18, 1993 among Richard J. Campo, G.
Steven Dawson, the Registrant and Apartment Connection, Inc.
Incorporated by reference from Exhibit 10.25 to the Registrant's
Registration Statement on Form S-11 filed September 15, 1993
(File No. 33-68736).
10.5 Camden Property Trust Key Executive Bonus Plan. Incorporated by
reference from Exhibit 10.38 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993 (File No.
1-12110).
10.6 Loan Agreement dated July 28, 1995 between Registrant and
NationsBank of Texas, N.A. Incorporated by reference from
Exhibit 10.1 to the Registrant's Form 10-Q for the quarter ended
June 30, 1995 (File No. 1-12110).
10.7 Amendment and Restatement of the 1993 Share Option Plan of
Camden Property Trust. Incorporated by reference from Exhibit
10.7 to the Registrant's Form 10-K filed March 28, 1996 (File
No. 1-12110).
10.8 Employment Agreement dated July 22, 1996 by and between the
Registrant and Richard J. Campo. Incorporated by reference from
Exhibit 10.1 to the Registrant's Form 8-K filed October 11, 1996
(File No. 1-12110).
10.9 Employment Agreement dated July 22, 1996 by and between the
Registrant and D. Keith Oden. Incorporated by reference from
Exhibit 10.2 to the Registrant's Form 8-K filed October 11, 1996
(File No. 1-12110).
10.10 Voting Agreement, dated December 16, 1996, between Camden,
Paragon and certain major securityholders of Camden. Incorporated
by reference from Exhibit 10.7 to the Registrant's Registration
Statement on Form S-4 filed February 26, 1997 (File No.
333-22411).
10.11 Voting Agreement, dated December 16, 1996, between Camden,
Paragon and certain major securityholders of Paragon.
Incorporated by reference from Exhibit 10.8 to the Registrant's
Registration Statement on Form S-4 filed February 26, 1997 (File
No. 333-22411).
10.12 Stock Purchase Agreement, dated December 16, 1996, between
Apartment Connection, Inc. and Texas Paragon Management Partners
L.P. Incorporated by reference from Exhibit 10.9 to the
Registrant's Registration Statement on Form S-4 filed February
26, 1997 (File No. 333-22411).
10.13* Form of Employment Agreement by and between the Registrant and
certain senior executive officers.
10.14* Camden Property Trust Key Employee Share Option Plan.
10.15* Form of Master Exchange Agreement by and between the Registrant
and certain key employees.
11.1* Statement re Computation of Per Share Earnings.
13.1* Selected pages of the Camden Property Trust Annual Report to
Shareholders for the year ended December 31, 1996.
21.1* Subsidiaries of the Registrant.
23.1* Consent of Deloitte & Touche LLP.
24.1* Powers of Attorney for Richard J. Campo, D. Keith Oden, G.
Steven Dawson, George A. Hrdlicka, F. Gardner Parker and Steven
A. Webster.
27.1* Financial Data Schedule (filed only electronically with the
SEC).
- ------------------
*Filed herewith.
(b) Reports on Form 8-K
Current Report on Form 8-K dated October 10, 1996 was filed which
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 October 21, 1996 was filed which
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 October 31, 1996 was filed which
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 November 19, 1996 was filed which
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 December 16, 1996 was filed which
contained information under Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits).
PAGE
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 26, 1997 CAMDEN PROPERTY TRUST
/s/
By: _______________________
G. Steven Dawson
Senior Vice President - Finance,
Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Name Title Date
*
- ----------------
Richard J. Campo Chairman of the Board of Trust March 26, 1997
Managers and Chief Executive
Officer (Principal Executive
Officer)
*
- ----------------
D. Keith Oden President, Chief Operating March 26, 1997
Officer and Trust Manager
/s/
- ----------------
G. Steven Dawson Senior Vice President Finance, March 26, 1997
Chief Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
*
- ----------------
George A. Hrdlicka Trust Manager March 26, 1997
*
- ----------------
F. Gardner Parker Trust Manager March 26, 1997
*
- ----------------
Steven A. Webster Trust Manager March 26, 1997
*By: /s/
- ----------------
G. Steven Dawson
Attorney-in-Fact
PAGE
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its
subsidiaries required to be included in Item 14(a)(1) are listed below:
Page
CAMDEN PROPERTY TRUST
Independent Auditors' Report (included herein)..........................F-2
Financial Statements (incorporated by reference under Item 8 of
Part II from pages 25 through 40 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996):
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the Years Ended
December 31,1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
The following financial statement supplementary data of the Registrant
and its subsidiaries required to be included in Item 14(a)(2) is listed
below:
Schedule III -- Real Estate and Accumulated Depreciation...............S-1
PAGE
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Camden Property Trust
We have audited the consolidated financial statements of Camden Property
Trust as of December 31, 1996 and 1995, and for each of the three years in
the period ended December 31, 1996; and have issued our report thereon
dated February 21, 1997; such consolidated financial statements and report
are included in your 1996 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the financial
statement schedule of Camden Property Trust, listed in Item 14. This
financial statement schedule is the responsibility of Camden's management.
Our responsibility is to express an opinion based on our audits. In our
opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Houston, Texas
February 21, 1997
PAGE
<PAGE>
<TABLE>
SCHEDULE III
CAMDEN PROPERTY TRUST
REAL ESTATE AND ACCUMULATED
DEPRECIATION
December 31, 1996
(In thousands)
<CAPTION>
Cost
Gross Amount
Capitalized
at Which Carried Date of Dep.
Encum- Initial Cost to Subsequent to at
December 31, 1996 Accum. Construction Life
Description brances Camden Property Trust Acq. or Dev.
<F1> Dep. or Acquired (Years)
- --------------------- ------- ---------------------- ------------
- -------------------------- ------- ------------ -------
Building
and
Property Name Location Land Improvements Land
Building Total
- ------------- -------- -------- ------------
- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
Apartments Texas
Vanderbilt
Square $ $ 9,324 $ 28,247 $ 13 $
9,324 $ 28,260 $ 37,584 $ 1,712 1994-1995 3-35
Other 58,382 69,692 410,525 27,309
69,692 437,834 507,526 50,014 1993-1996 3-35
Apartments Arizona 7,657 55,582 1,649
7,657 57,231 64,888 4,643 1994-1996 3-35
Projects under
development Texas 11,678 12,670
11,678 12,670 24,348 1994-1996
Projects under
development Arizona 1,324 8,143
1,324 8,143 9,467 1995-1996
Projects under
development Colorado 1,951 781
1,951 781 2,732 1994
------- -------- -------- -------
- -------- -------- -------- -------
Total $58,382 $101,626 $515,948 $28,971
$101,626 $544,919 $646,545 $56,369
======= ======== ======== =======
======== ======== ======== =======
<FN>
<F1> The aggregate cost for federal income tax purposes at December 31,
1996 was $653.9 million.
</FN>
</TABLE>
PAGE
<PAGE>
<TABLE>
The changes in total real estate assets for the years ended December 31,
1996, 1995 and 1994 are
as follows:
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Balance, beginning of the period $607,598 $510,324 $296,545
Additions during period:
Acquisitions 6,294 137,777
Development 56,132 91,237 66,245
Improvements 9,578 8,409 9,757
Deductions during period:
Cost of real estate sold (33,057) (2,372)
-------- -------- --------
Balance, end of period $646,545 $607,598 $510,324
======== ======== ========
</TABLE>
<TABLE>
The changes in accumulated depreciation for the years ended December 31,
1996, 1995 and 1994
are as follows:
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance, beginning of the period $36,800 $17,731 $ 3,388
Depreciation 22,946 19,299 14,343
Real estate sold (3,377) (230)
------- ------- -------
Balance, end of period $56,369 $36,800 $17,731
======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 10.13
Employment Agreement
The Employment Agreement (the "Agreement") made this ________ day
of ____________, 199__, by and between Camden Property Trust, a
Texas real estate investment trust, (the "Company") and _________
_____________________, (the "Executive").
WITNESSETH:
WHEREAS the Company is engaged in the business of multifamily
management and development; and
WHEREAS the Executive is experienced and knowledgeable in the
field; and
WHEREAS the Executive shall work as_________________________; and
WHEREAS this agreement shall supersede and replace all prior
employment agreements between the Company and the Executive;
NOW THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties agree as follows:
1. Employment
The Company employs the Executive as________________________
(the "Officer") to perform the duties normally associated
with that office under the control and at the direction of
the Chairman of the Board, Chief Executive Officer and the
President ("Management") and other such duties as may, from
time to time, be assigned and are consistent with the
position.
2. Employment Term
(a) Employment Term
The term of employment shall begin the ____ day of
_______, 199_, (the "Commencement Date"). This agreement
will expire three (3) years after the Commencement Date
or after the expiration of any Renewal Period (the
"Expiration Date"). The term of employment shall
annually be extended by one (1) year (the "Renewal
Period") unless written notification is given by either
party to the other at least six (6) months prior to the
Expiration Date. The Commencement Date through and
including the Expiration Date is hereinafter referred to
as the "Employment Term".
(b) Termination
The Company agrees to employ the Executive for period
beginning on the Commencement Date and continuing
through the earliest of:
(i) death of the Executive; or
(ii) termination of the Executive by Management for
"Disability", as defined below; or
(iii) the discharge of the Executive by Management "For
Cause", as defined below, or any other
termination For Cause; or
(iv) the discharge of the Executive by Management any
reason other than For Cause;
(v) retirement of the Executive under the terms of
the Company's retirement plan as instituted and
amended from time to time by the Board;
(vi) resignation of the Executive "For Good Reason",
as defined below;
(vii) termination of the Agreement due to "Change of
Control", as defined below; or
(viii) the end of the Employment Term.
(c) Disability
The term Disability refers to the physical or mental
incapacity of the Executive that has prevented the
execution of the Duties of the office, as outlined
below, for three (3) consecutive months or for a period
of more than 180 business days in the aggregate in any
18 month period and that, in the determination of the
Management after consultation with a medical doctor
licensed to practice in the State of Texas appointed by
Management and the Executive, may be expected to prevent
the Executive for any period of time thereafter from
devoting substantial time and energies to the Duties of
the office, as outlined below. The Executive agrees to
submit to reasonable requests for medical examinations
to determine whether a Disability exists.
During the period of incapacitation, as provided above,
the salary otherwise payable to the Executive may, at
the absolute discretion of Management, be reduced by the
amount of any disability benefits or payment received by
the Executive pursuant to Company plans, excluding
health insurance benefits or other reimbursement of
medical expenses for the Executive.
(d) For Cause
The term For Cause shall mean any one or more of the
following:
(i) material or repeated violation by the Executive of
the terms of this Agreement or the material or
repeated failure to perform the Duties of the
Office to include material substandard performance
of the Executive in the achievement of written
goals and objectives set by Management for two (2)
consecutive years, other than any such failure
resulting from the Executive's Disability;
(ii) excessive absenteeism not related to illness; or
(iii) the Executive's conviction of or plea of nolo
contendere to a felony or conviction of any other
crime which incarcerates the Executive for a
period of one (1) year or longer; or
(iv) the Executive's commission of fraud, embezzlement,
theft, or other crimes, in any case, whether or
not involving the Company, that, in the reasonable
opinion of Management, render the Executive's
continued employment harmful to the Company; or
(v) the voluntary resignation of the Executive without
the prior consent of Management.
(e) Resignation For Good Reason
The Executive may resign from the Company, if at any
time during the Employment Term, there is the continued
and material failure of the Company to comply with the
covenants and obligations under this Agreement, but only
when:
(i) the Executive notifies the Company detailing the
manner in which the Executive believes the Company
has failed to meet its obligations under this
Agreement; and
(ii) such material failure continues for at least
thirty-two (32) days following the receipt of the
notification by the Company.
The Executive's resignation For Good Reason shall be
effective the last day of the month following the
waiting period, defined above.
(f) Change of Control
A change of control shall be determined to have occurred
when two (2) events occur. The first of which is the
occurrence of one of the following events:
(i) at any time during any twelve (12) month period,
the Company directors in office at the beginning
of such period cease to constitute a majority of
the Company's Board of Directors, disregarding any
vacancies occurring during such period by reasons
of death or disability but deeming any individual
whose election, or nomination for election, to
fill such vacancy to have been in office at the
beginning of such one (1) year prior; and, a
tender offer or exchange is made and consummated
for ownership of securities of the Company
representing twenty-five (25%) percent or more of
the combined voting power of the then outstanding
voting securities;
(ii) a merger or consolidation occurs to which the
Company is party, whether or not the Company is
the surviving entity; or
(iii) the sale of at least fifty (50%) percent of the
Company's assets.
In addition to the occurrence of one (1) of the
preceding events, one (1) of the following events must
occur to trigger a change of control:
(iv) the Executive is required, without the Executive's
consent, to relocate to a different metropolitan
area; or
(v) the Executive is assigned to a lower
organizational level than the level stated in this
Agreement, or substantially diminishes the
Executive's assignment, duties, responsibilities,
or operating authority from those specified in
Section 3, Duties; or
(vi) the Executive is terminated.
3. Duties
The Executive will devote substantially all of his time,
skill, energy, knowledge, and best efforts during the
Employment Term to such duties, and will, faithfully and
diligently endeavor to the best of his ability, further the
best interests of the Company.
At no time shall the Executive be requested to perform
duties that are not commensurate with the duties of a senior
executive of the Company.
4. Location of Employment
The Executive shall be located in or about Houston, Texas.
The Executive shall travel to such geographical locations as
may be appropriate from time to time to carry out the duties
of the office as outlined in Section 3, Duties.
5. Compensation
For all services rendered by the Executive to the Company,
the Company shall pay:
(a) Base Salary
For services rendered, the Company shall pay the
Executive an annual salary of $___________, payable in
arrears monthly or semi-monthly as the Board may elect
from time to time during the Employment Term. Management
shall conduct an annual review of the Executive's base
salary. The Executive shall be entitled to receive
increases in the Base Salary, if any, that may be
determined by Management at its sole discretion. Any
increases to the Executive's Base Salary shall be
effective January 1 for each year of the Employment
Term.
In no event shall the Executive's base salary be
reduced, except as provided for under Section 2(c),
Disability.
(b) Sign-on Bonus
The Board shall grant the Executive, on the Commencement
Date of this Agreement, _____ shares of restricted stock
of the Company. Such shares granted shall vest over the
initial term of this agreement on a pro rata each basis
on the anniversary date of this Agreement.
(c) Omitted
(d) Annual Incentive Compensation
In further consideration of the Executive's service, the
Executive shall be eligible to receive an annual
incentive compensation as determined by the Board.
(e) Long-term Incentive Compensation
In further consideration of the Executive's service, the
Executive shall be eligible to receive a long-term
incentive compensation as determined by the Board.
(f) Taxes
All compensation paid to the Executive shall be subject
to applicable employment and withholding taxes.
The Executive shall be responsible for any taxes
resulting from a determination that any portion of any
benefits supplied to the Executive may be reimbursing
personal as well as business expenses.
6. Employee Benefits
(a) Benefits
The Executive shall receive group health/dental
insurance, life insurance, disability insurance, and
other similar benefits available to the Company's
employees. Benefits may be changed, modified, or
revoked at the sole discretion of the company.
The Executive shall not be deemed to have a vested
interest in any of the Company plans or programs.
The Executive shall receive benefits not generally
provided to Company employees from time to time at the
sole discretion of the Board.
(b) Vacation
The Executive is entitled to receive paid vacation
annually for each year of the Employment Term. Such
vacation shall be taken at such times that are
consistent with the reasonable business needs of the
Company. All vacation shall be subject to the policies
and procedures of the Company.
(c) Fringe Benefits
The Executive shall receive fringe benefits as such
benefits may exist from time to time at the sole
discretion of the Board.
7. Business Expenses
The Executive is authorized to incur reasonable, ordinary
and necessary business expenses in the performance of the
duties outlined above during the Employment Term in
accordance with policies established by Management. The
Executive shall account to the Company for all such
expenses. The Company shall reimburse the Executive or pay
the expenses in accordance with the policies established by
Management.
8. Termination
In the event of termination, the Executive's rights and the
Company's obligations shall terminate except as herein
provided.
In all events, the Company shall be obligated to pay all
salary and benefits accrued to the Executive through and
including the date of termination. Additionally, the
Executive shall be entitled to receive the minimum bonus for
the contract year during which the termination occurs,
prorated through and including the date of termination.
(a) Termination for reason other than For Cause If the
Employment Term is terminated for reasons other than For
Cause, the Executive shall be entitled to receive a
severance payment equal to the annual base salary
currently in effect.
In addition, the Executive shall continue to receive
health and welfare benefits, as received before the
Executive's termination, until the earlier of (a) the
Executive obtaining employment with another company or
(b) the end of the Employment Term, as if the Executive
had not so terminated.
The Executive shall forfeit any and all unvested portion
of any award made to the Executive in respect to any
retirement, pension, profit sharing, long-term
incentive, or other similar such plan(s).
(b) Termination for reason of Death
If the Employment Term is terminated by reason of Death,
the Executive shall be entitled to receive a severance
payment equal to the annual compensation, including
targeted bonus, at the date on which death occurs.
(c) Termination for reason of Disability
If the Employment Term is terminated by reason of
Disability, the Executive shall be entitled to receive a
severance payment equal to the annual compensation,
including targeted bonus, at the date on which
termination due to Disability occurs.
The Executive shall receive, so long as the Disability
continues, to remain eligible for all benefits provided
under any long-term disability program(s) of the Company
in effect at the time of such termination, subject to
the terms and conditions of any such program(s), as may
be amended, changed, modified, or terminated for all
employees of the Company.
(d) Resignation for Good Reason
If the Executive resigns for Good Reason as defined in
Section 2(e), the treatment for the severance payment to
the Executive shall be the same as if the Executive was
terminated for reasons other than For Cause as provided
for in Section 8(a).
(e) Termination due to Change of Control
If the Executive terminates due to Change of Control as
defined in Section 2(f), the Executive shall be entitled
to receive a severance payment equal to ______ times the
average annual base salary of the Executive for the
three (3) most recent taxable years that ended before
the date of termination.
The Executive shall not forfeit any and all deferred
portion of any award made to the Executive in respect to
any retirement, pension, profit sharing, long-term
incentive, or other similar such plan(s).
Notwithstanding the preceding, if and to the extent the
severance payment, either alone or in conjunction with
other payments the Executive has the right to receive
either directly or indirectly from the Company, would
constitute an excess parachute payment (the "Excess
Payment") under Section 280G of the Internal Revenue
Code of 1986, as amended, the Executive agrees that such
cash severance payment shall be reduced by the amount
necessary to prevent any such payments to the Executive
from constituting an Excess Payment as determined in
good faith by the Company.
9. Confidentiality and Non-Competition
All information (the "Confidential Information") includes
all confidential information of the Company and/or its
subsidiaries, including information entrusted to the Company
and/or any of its subsidiaries by third parties, not
otherwise publicly disclosed or available, other than as a
result of wrongful disclosure by the Executive, which,
during the Employment Term:
(i) is disclosed by any of them to the Executive; or
(ii) the Executive had access to otherwise had reason
to know; or
(iii) was developed or discovered by the Executive.
Confidential Information includes, but is not limited to,
whether or not legended or otherwise identified as
"confidential":
(i) property lists, prospective properties lists, and
details of agreement with sellers; and
(ii) acquisition, expansion, marketing, financial, and
other business information and plans; and
(iii) research and development and data related
thereto; and
(iv) other compilations of data; and
(v) computer programs and/or records; and
(vi) sources of supply; and
(vii) confidential information developed by consultants
and contractors; and
(viii) purchasing, operating, and other costs data; and
(ix) employee information; and
(x) manuals, memoranda, projections, minutes, plans,
drawings, designs, formula books and
specifications.
(a) Restriction on Use and Disclosure
The Executive acknowledges that the Confidential
Information is valuable and proprietary to the Company
or to third parties which have entrusted the Company
and/or its subsidiaries, and, except as required by the
Executive's Duties, the Executive shall not
use, publish, disseminate, or otherwise disclose any
Confidential information without prior written consent
of the Company.
(b) Return of Documents
Upon termination of the Executive's employment, the
Executive shall forthwith deliver to the Company all
plans, designs, drawings, specifications, listings,
manuals, records, notebooks, and similar repositories of
or containing Confidential Information, including all
copies, then in the Executive's possession or control,
whether prepared by the Executive or others. Upon such
termination the Executive shall retain no copies of any
such documents.
(c) Restriction on Competitive Employment
The term Business shall mean:
(i) the business of the Company and its subsidiaries
as described in the Company's Registration
Statement on Form S-11, as amended; and
(ii) any other business in which the Company or any of
its subsidiaries is engaged during the Executive's
Employment Term.
The term Territories shall refer to those metropolitan
areas in which the Company owns properties or otherwise
is engaged in the Business, including any areas where
the Company has specific plans to acquire or develop
properties within the following six (6) months following
the date of termination, and all outlying areas located
within a thirty (30) mile radius each such metropolitan
area.
Except as noted in Section 3, Duties, during the
Employment Term and the twelve months (12) months
following the termination of this Agreement (the
"Non-Competition Period"), absent the Company's prior
written approval, the Executive shall not, as
owner, part-owner, shareholder, partner, director,
principal, agent, employee, consultant, or otherwise,
within the Territories, directly or indirectly engage or
participate in activities relating to, or render
services to or invest in any firm or business engaged or
about to become engaged in, the business, provided that
the Executive may:
(i) engage in the activities as noted in Section 3,
Duties;
(ii) make passive investments in an enterprise engaged
in the Business the shares of ownership of which
are publicly traded if the Executive's investment
constitutes less than 2% of the total equity of
such enterprise.
(d) Inducement / Enticement
During the Employment Term and the Non-Competition
Period, the Executive shall not, directly or
indirectly:
(i) induce, or attempt to induce, any employees or
agents or consultants of or to the Company or any
subsidiary of the Company to do anything from
which the Executive is restricted by reason
of Section 9(a) through 9(c), inclusive; or
(ii) offer or aid others to offer employment to anyone
who is an employee, agent or consultant of or to
the Company or an subsidiary of the Company at the
time of termination of the Executive.
(e) Reduction of Non-Competition Period If this Agreement
shall be terminated by the Company pursuant to Section
2(b)(iv), Termination for reason other than For Cause,
the provisions of Sections 9(c) and 9(d) shall terminate
on the first business day following the termination of
the Executive.
Unless other wise provided, the provisions of Sections
9(a) through 9(d), inclusive, shall survive the
termination of this Agreement for the duration of the
Non-Competition Period.
10. Remedies for the Company
The Executive acknowledges that remedy at law for any breach
or attempted breach of the Executive's obligations under
Section 9, Confidentiality and Non-Competition, may be
inadequate, agrees that the Company may be entitled to
specific performance and injunctive and other equitable
remedies in case of any such breach or attempted breach, and
further agrees to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any
such injunctive or other equitable relief.
The Company shall have the right to offset against amounts
to be paid to the Executive pursuant to the terms hereof any
amounts from time to time owing by the Executive to the
Company.
The termination of the Employment Term pursuant to Section
2(a)(iii), Discharge For Cause, shall not be deemed to be a
waiver by the Company of any breach by the Executive of this
Agreement or any other obligation owed the Company, and,
notwithstanding such a termination, the Executive shall be
liable for all damages attributable to such a breach.
11. Remedies for the Executive
In the event the Executive is terminated For Cause and it is
ultimately determined the Company lacked "cause", the:
(i) Executive's termination shall be treated as a
Termination for reason other than For Cause, as it
pertains to Section 8(a); and
(ii) Executive shall reserve the right to seek remedy
for breach of the Agreement by the Company
including, but not limited to, any other such
damages as may be suffered and/or incurred by the
Executive, the Executive's costs incurred during
the dispute, and reasonable attorney's fees in
connection with such dispute; and
(iii) Executive shall receive all payments as defined
under Section 8(a), Termination for reason other
than For Cause, with interest of 8% annually on
all payments considered past due from the date at
which such payment would have been made.
12. No Waiver
No Waiver or non-action by either party with respect to any
breach by the other party of any provision of this
Agreement, nor the waiver or non-action with respect to the
provisions of similar agreement with other employees or the
breach thereof, shall be deemed or construed to be a waiver
of any succeeding breach of such provision, or as a waiver
of the provision itself.
13. Invalid Provisions
Should any portion of this Agreement be adjusted or held
invalid, unenforceable or void, such holding shall not have
the effect to invalidating or voiding the remainder of this
Agreement and the parties hereby agree that the portion so
held invalid, unenforceable, or void shall, if possible, be
deemed amended or reduced in scope, or otherwise be stricken
from this Agreement to the extent required for the purposes
of validity and enforcement thereof.
14. Successor and Assigns
Neither the Executive nor the Company may assign its rights,
duties, or obligations hereunder without consent of the
other.
15. Survival of the Executive's Obligations
The Executive's obligations under Sections 9 and 10 shall
survive regardless of whether or not the Executive's
employment is terminated, voluntarily or involuntarily, by
the employer or the Executive, with or without cause.
16. Survival of the Companies Obligations
The Company's obligations under Sections 8 and 11 shall
survive regardless of whether or not the Executive's
employment is terminated, voluntarily or involuntarily, by
the employer or the Executive, with or without cause.
17. Prior Agreements
This Agreement incorporates the entire agreement between
both parties with respect to the subject matter hereof and
supersedes all prior agreements, documents, or other
instruments with respect to the matters covered herein.
18. Governing Law
This Agreement shall be governed by, and interpreted in
accordance with the provisions of, the law of the State of
Texas, without reference to provisions that refer a matter
to the law of any other jurisdiction. Each party hereto
hereby irrevocably submits itself to the non-exclusive
personal jurisdiction of the Federal and State courts
sitting in Texas.
19. No Oral Modifications
This Agreement may not be changed or terminated orally, and
no change, termination, or waiver of this Agreement or of
any of the provisions herein contained shall be binding
unless made in writing and signed by both parties, and, in
the case of the Company, by a person designated by the
Board.
Without limiting the foregoing, any change or changes, from
time to time, in the Executive's salary or duties or both
shall not be, nor be deemed to be, a change, termination, or
waiver of this Agreement or of any of the provisions herein
contained.
20. Notices
All notices and other communications required or permitted
hereunder shall be made in writing, and shall be deemed
properly given if delivered personally, mailed by certified
mail, postage prepaid and return receipt requested, sent by
facsimile, or sent by Express Mail or Federal Express or
other nationally recognized express delivery service, as
follows:
If to the Company or the Board:
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, TX 77027
Attention: Board of Directors
If to the Executive:
_____________________________
_____________________________
_____________________________
Notice given by hand, Express Mail, Federal Express, or
other such express delivery service shall be effective upon
actual receipt. Notice given by facsimile transmission
shall be effective upon actual receipt of received during
the recipient's normal business hours, or at the beginning
of the recipient's next business day after receipt if not
received during the recipient's normal business hours. All
notices sent by facsimile transmission shall be confirmed
promptly after transmission in writing by certified mail or
personal delivery.
Any party may change any address to which notice shall be
given to it by giving notice as provided above of such
change in address.
21. Executive's Representation and Warranties
The Executive represents and warrants that he/she is legally
free to make and perform this Agreement, that he/she has no
obligation to any other person or entity that would affect
or conflict with any of his obligations hereunder, and that
the complete performance of his obligations hereunder will
not violate any law, regulation, order, or decree of any
governmental or jurisdictional body or contract by which
he/she is bound.
EXECUTED as of the date first written above.
Camden Property Trust
by: ____________________________________
name: ____________________________________
title: ____________________________________
Executive
________________________________________
Name
<PAGE>
EXHIBIT 10.15
MASTER EXCHANGE AGREEMENT
This Agreement is entered into this ____ day of ___________,
199__ by and between _____________________________ ("Recipient")
and Camden Property Trust (the "Company").
WHEREAS, pursuant to the 1993 Share Incentive Plan of Camden
Property Trust (the "Plan"), the Recipient has and will receive
awards of Restricted Shares as shown in Exchange Supplement A
attached hereto which shall vest over time in accordance with the
terms of the Plan and outlined on Exchange Supplement B;
WHEREAS, Recipient desires to exchange his right to receive
the unvested Restricted Shares upon vesting and all other rights
appurtenant thereto for the Rights to Repurchase (as defined
below);
WHEREAS, the Company desires to exchange the Rights to
Repurchase for the return of the Recipient's unvested Restricted
Shares;
NOW, THEREFORE, in consideration of the mutual promises
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Recipient hereby agrees to exchange Recipient's unvested
Restricted Shares (including the right to receive dividends
thereon and the right to vote such shares) for the Rights to
Repurchase as described below.
2. Upon the execution of this Agreement, the Company shall
deposit Recipient's Restricted Shares into a rabbi trust (the
"Trust") established by and for the benefit of the Company.
The Trust shall be administered by an independent trustee who
shall be selected by the Company. Dividends on the Restricted
Shares will accumulate in the Trust and the trustee shall
invest such dividends in marketable securities other than the
Company's securities. The trustee shall have the right to
substitute, from time to time, other marketable securities of
equal value for the marketable securities originally purchased
by the trustee.
3. Upon vesting, Recipient shall have the right to purchase all
or part of the Restricted Shares that Recipient exchanged with
the Trust together with any securities that were purchased with
the accumulated dividends on such Restricted Shares (the
"Rights to Repurchase"). The Rights to Repurchase may be
exercised with regard to vested shares in an amount at least
equal to the lesser of 2,000 shares or the number of shares for
any portion of an Award separately identified in Exchange
Supplement B. Nothing in this Agreement shall be construed as
allowing a Recipient to exercise his Rights to Repurchase to
purchase either the shares or the dividends but not both; that
is, the shares and the related dividends shares must be
purchased together, except as provided in paragraph 6 hereof.
4. The Rights to Repurchase shall vest as shown on Exchange
Supplement B. The Rights to Repurchase shall be exercisable
for a period of 20 years from the applicable vesting date.
5. The exercise price of the Rights to Repurchase shall equal
the sum of (i) 10% of the Fair Market Value of the Restricted
Shares to be purchased by Recipient, as determined on the date
of this Agreement, and (ii) 5% of the amount of dividends
declared and paid with respect to such Restricted Shares.
6. If Recipient's employment or relationship with the Company or
its Affiliates is terminated for any reason before the vesting
of the Repurchase Rights, the Repurchase Rights not theretofore
vested shall terminate on the date of death, disability,
retirement, or the date notice of termination or resignation is
given. Recipient's vested Rights to Repurchase shall be
exercisable for a period of one year from such date.
Thereafter, the unexercised Rights to Repurchase shall
terminate and be of no further force and effect. However, to the
extent that there have been any dividends declared and recorded
and not yet repurchased from the Plan, recipient shall vest in
such dividends and be entitled to repurchase such dividends
separately from the shares, even though such shares have not
vested and the vesting rights in such shares is then expiring.
7. All initial capitalized terms not otherwise defined herein
shall have the meanings set forth in the Plan.
8. This Agreement shall be construed in accordance with the laws
of the State of Texas.
9. To the extent any provision of this Agreement is held to be
unenforceable, illegal or invalid under any current or future
law, such provision shall be fully separable and this Agreement
shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof, the
remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance
therefrom. In lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this
Agreement, a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as
may be possible, and the parties hereto request the court or any
arbitrator to whom disputes relating to this Agreement are
submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 9.
10. To the extent any provisions of this Agreement conflict with
the provisions of any employment agreement entered into between
the Company and Recipient, the terms of the employment
agreement shall control. To the extent that any such
employment agreement provides for the automatic or accelerated
vesting of securities or derivative securities held by the
Recipient upon the occurrence of a change of control, business
combination or other enumerated event, the Restricted Shares
and Rights to Repurchase shall likewise be deemed to be governed
by such provisions and shall likewise vest on the terms and
conditions set forth in such employment agreement.
11. The Rights to Repurchase granted hereunder, to the extent
permitted by law, shall be transferable to Recipient's spouse,
children or grandchildren or to a trust created for their
benefit. The Rights to Repurchase shall not otherwise be
transferable.
12. The Restricted Shares and Rights to Repurchase covered by
this Agreement shall be subject to the adjustment provisions
contained in the Plan (currently Section 7 of the Plan).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
RECIPIENT
___________________________
CAMDEN PROPERTY TRUST
By: ____________________
Name: ____________________
Title: ____________________
<PAGE>
EXHIBIT 10.14
CAMDEN PROPERTY TRUST
KEY EMPLOYEE SHARE OPTION PLAN (KEYSOP)TM
Preamble
Camden Property Trust (the "Employer") hereby establishes the Camden
Property Trust Key Employee Share Option Plan (the "Plan"), effective as of
the date specified herein.
The purpose of the Plan is to provide a vehicle for the payment of
compensation (either salary or bonuses) otherwise payable to the
participating key executives of the Employer, commensurate with their
contributions to the success of the Employer's activities, in a form that
will provide incentives and rewards for meritorious performance and
encourage the recipients' continuance as employees of the Employer.
ARTICLE I
Definitions
As used in this Plan, the following capitalized words and phrases have
the meanings indicated, unless the context requires a different meaning:
1.1 "Beneficiary" means the person or persons designated by a
Participant, or otherwise entitled, to exercise Options after a
Participant's death.
1.2 "Board of Trust Managers" or "Board" means the board of trust
managers of the Employer.
1.3 "Code" means the Internal Revenue Code of 1986, any amendments
thereto, and any regulations on rulings issued thereunder.
1.4 "Committee" means the committee appointed in accordance with
Section 5.1 to determine awards of Options and administer the Plan.
1.5 "Designated Property" means shares of regulated investment
companies or any other property (not including cash, cash equivalents, or
securities of the Employer) designated by the Committee as subject to
purchase through the exercise of an Option.
1.6 "Effective Date" means February 1, 1997
1.7 "Employee" means any individual who is employed by the Employer.
1.8 "Employer" means Camden Property Trust, and any successor thereto.
1.9 "ERISA" means the Employee Retirement Income Security Act of 1974,
any amendments thereto, and any regulations or rulings issued thereunder.
1.10 "Exercise Price" means the price that a Participant must pay in
order to exercise an Option.
1.11 "Grant Date" means, with respect to any Option, the date on which
an Option is awarded to the Participant.
1.12 "Option" means the right of a Participant, granted by the
Employer in accordance with the terms of this Plan, to purchase Designated
Property from the Employer at the Exercise Price established under Section
2.3.
1.13 "Option Agreement" means an agreement executed by the Employer
and by a Participant to whom Options have been awarded, acknowledging the
issuance of the Options and setting forth any terms that are not specified
in this Plan.
1.14 "Participant" means any individual who has received an award of
Options in accordance with Section 2.2 and whose Options have not been
completely exercised. After a Participant's death, his Beneficiary is
considered to be a Participant to the extent necessary to facilitate the
exercise of any Options that continue to be exercisable under the terms of
the Plan. In the event of a Participant's disability or other legal
incapacity, the Participant's legal representative is considered to be a
Participant to the extent necessary to facilitate the exercise of any
Options that are or become exercisable under the terms of the Plan.
1.15 "Plan" means the Camden Property Trust Key Employee Share Option
PlanTM, as set forth herein and as from time to time amended.
1.16 "Plan Year" means the operating year of the Plan, which ends on
January 31st.
1.17 "Termination of Employment" means a Participant's separation from
the service of the Employer (including all subsidiaries or other affiliates
of the Employer that participate in the Plan) by reason of his resignation,
retirement, discharge or death.
1.18 "Trust" means the trust that may be established pursuant to
Article VI to hold the Designated Property that is subject to purchase
through the exercise of an Option.
1.19 "Trust Agreement" means an agreement setting forth the terms of
the Trust established pursuant to Article VI.
1.20 "Trust Fund" means the Designated Property that is subject to an
option that is held in the Trust.
1.21 "Trustee" means the persons or institution acting as trustee of
the Trust.
1.22 Rules of construction
1.22.1 Governing law. The construction and operation of this Plan are
governed by the laws of the State of Texas.
1.22.2 Headings. The headings of Articles, Sections and Subsections
are for reference only and are not to be utilized in construing the Plan.
1.22.3 Gender. Unless clearly inappropriate, all pronouns of whatever
gender refer indifferently to persons or objects of any gender.
1.22.4 Singular and plural. Unless clearly inappropriate, singular
terms refer also to the plural number and vice versa.
1.22.5 Severability. To the extent any provision of this Plan is held
to be unenforceable, illegal or invalid under any current or future law,
such provision shall be fully separable and this Plan shall be construed
and enforced as if such illegal, invalid or unenforceable provision had
never comprised a part thereof, the remaining provisions of this Plan shall
remain in force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance therefrom. In lieu
of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Plan, a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible, and the parties hereto request the court or
any arbitrator to whom disputes relating to the Plan are submitted to
reform the otherwise illegal, invalid or unenforceable provision in
accordance with this Section 1.22.5.
ARTICLE II
Award of Options
2.1 Eligibility for awards. Awards of Options may be made to any
Employee selected by the Committee from the executive officers and other
key employees who occupy senior managerial or professional positions and
who have the capacity of making a substantial contribution to the success
of the Employer. In making this selection and in determining the form and
amount of options the Committee shall consider any factors it deems
relevant, including the individual's functions, responsibilities, value of
services to the Employer and past and potential contributions to the
Employer's profitability and growth.
2.2 Procedure for awarding Options. The recipients of Options are
determined from time to time by the Committee. No Committee member may
take part in any way in determining the amount of any award of Options to
himself. Awards become effective upon the Grant Date. Awards may be made
at any time on or after the Effective Date and prior to the termination of
the Plan.
2.3 Selection of Designated Property and Establishment of Exercise
Price. When an Option is awarded, the Committee will specify the
Designated Property that may be purchased by exercise of the Option and
will fix the Exercise Price. If the Employer acquires Designated Property
specified by an Option Agreement in accordance with Section 2.5 hereunder,
such Designated Property must:
(a) not be subject to any security interest, whether or not
perfected, or to any option or contract under which any
other person may acquire any interest in it; and
(b) be readily tradable on an established market or consist
wholly of interests in property that is readily tradable on
an established market.
Unless otherwise specified in a particular Option Agreement, the Exercise
Price will equal twenty-five percent (25%) of the lesser of the fair market
value of the Designated Property on the Grant Date or the fair market value
on the date that the Option is exercised.
2.4 Effect of dividends and distributions with respect to Designated
Property. The Employer agrees, whenever any dividend is declared on those
shares, to reinvest all dividends and distributions with respect to
Designated Property in additional property of the same kind (or as nearly
the same kind as feasible, if property of the same kind is not available).
Any property acquired through investment or reinvestment will immediately
be subject to an Option in favor of the Participant on terms identical to
those set forth in the pertinent Option Agreement.
2.5 Held in Trust. Upon the grant of an Option, the Employer may
acquire the Designated Property and contribute it to the Trust as soon as
practicable after the Grant Date. At the time contributed to the Trust,
the Designated Property shall not be subject to any security interest,
whether or not perfected, or to any option or contract under which any
other person may acquire any interest in it, except as otherwise provided
in Section 6.2
2.6 Substitution of other property for Designated Property. At any
time after the grant of an Option, the Committee may, in its discretion,
after consultation with the Participant substitute other property of equal
value for Designated Property subject to that option.
ARTICLE III
Exercise of Options
3.1 Period for exercise of Options. Options may be exercised by a
Participant at any time during the period beginning six months after the
Grant Date and ending on the earliest of:
(a) one year after the Participant's termination of employment,
or
(b) twenty years after Grant Date.
If a Participant dies before all of his Options have been exercised, any
Options that remain outstanding may be exercised by his Beneficiary. The
right of a Participant or his Beneficiary to exercise any Option ceases at
the time specified in the Option Agreement or one (1) year after his date
of death, whichever is earlier.
3.2 Procedure for exercising Option. A Participant may exercise all
or a portion of an Option by giving written notice to the Committee and
either tendering payment of the applicable Exercise Price or requesting
that the Committee approve a net exercise in accordance with Section 3.3.
3.3 Net exercise of Option. At a Participant's request, the Committee
may, in its sole discretion, consent to the payment to the Participant, in
lieu of the exercise of an Option, of cash equal to the difference between
(a) the fair market value of the Designated Property subject to the Option
or portion of an Option that he proposes to exercise and (b) the applicable
Exercise Price.
3.4 Inalienability of Options. Except as otherwise provided in
Section 3.5, no Option granted under this Plan may be transferred, assigned
or alienated, except as provided herein, and no Option shall be subject to
execution, attachment or similar process. An Option may be exercised only
by the Participant to whom it was granted, by his Beneficiary after his
death, or the Participant's assignee pursuant to Section 3.5.
3.5 Permitted Transfers. A Participant may at any time prior to
death, assign all or any portion of an Option to:
(a) the Participant's spouse or lineal descendants,
(b) the trustee of a trust for the primary benefit of the
Participant's spouse lineal descendants,
(c) partnership of which the Participant's spouse and
lineal descendants are the only partners, or
(d) a tax exempt organization as described in Section 501(c)(3)of
the Code. Any such assignment will be permitted only if an
assignment is expressly permitted in the Option Agreement, or
approved in writing by the Committee, and the Participant
receives no consideration for the assignment. Any such
assignment will be evidenced by an appropriate written
document executed by the Participant, and delivered to the
Committee on or before the effective date of the assignment.
In the event of such assignment, the spouse, lineal
descendant, trustee, partnership or tax exempt organization
will be entitled to all of the rights of the Participant with
respect to the assigned portion of the Option, and such
portion of the Option, will continue to be subject to all of
the terms, conditions and restrictions applicable to the
Option, as set forth in the Plan and the Option Agreement.
3.6 Delivery of Designated Property. On the date of exercise, or as
soon as practicable thereafter (but in no event later than five business
days after the date of exercise), the Employer will deliver or cause to be
delivered the Designated Property then being purchased to the Participant
(the Participant's Beneficiary pursuant to Section 3.8, or the
Participant's assignee pursuant to Section 3.5). In the event that the
listing, registration or qualification of the Option or the Designated
Property on any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary
as a condition of, or in connection with, the exercise of the Option, then
the Option will not be exercised in whole or in part until such listing,
registration, qualification, consent or approval has been effected or
obtained.
3.7 Tax Withholding. Whenever Designated Property is to be delivered
upon exercise of an Option under the Plan, the Employer will require as a
condition of such delivery (a) the cash payment by the Participant of an
amount sufficient to satisfy all federal, state and local tax withholding
requirements related thereto, (b) the withholding of such amount from any
Designated Property to be delivered to the Participant, (c) the withholding
of such amount from compensation otherwise due to the Participant, or (d)
any combination of the foregoing, at the election of the Participant with
the consent of the Employer. Such election will be made before the date on
which the amount of tax to be withheld is determined by the Employer, and
such election will be irrevocable. With the consent of the Employer, the
Participant may elect a greater amount of withholding, not to exceed the
estimated amount of the Participant's total tax liability with respect to
the delivery of Designated Property under the Plan. Such election will be
made at the same time and in the same manner as provided above.
3.8 Election of Beneficiary.
3.8.1 Designation or Change of Beneficiary by Participant. When
Options are first awarded to a Participant, the Committee will send him a
Beneficiary designation form, on which he may designate one or more
Beneficiaries and successor Beneficiaries. A Participant may change his
Beneficiary designation at any time by filing the prescribed form with the
Committee. The consent of the Participant's current Beneficiary is not
required for a change of Beneficiary, and no Beneficiary has any rights
under this Plan except as are provided by its terms. The rights of a
Beneficiary who predeceases the Participant who designated him immediately
terminate, unless the Participant has specified otherwise.
3.8.2 Beneficiary if no election is made. Unless a different
Beneficiary has been elected in accordance with Section 3.8.1, the
Beneficiary of any Participant who is lawfully married on the date of his
death is his surviving spouse. The Beneficiary of any other Participant
who dies without having designated a Beneficiary is his estate.
ARTICLE IV
Amendment or Termination of the Plan
4.1 Employer's right to amend or terminate Plan. The Board may, at
any time and from time to time, amend, in whole or in part, any of the
provisions of this Plan or may terminate it as a whole or with respect to
any Participant or group of Participants. Any such amendment is binding
upon all Participants and Beneficiaries, the Committee and all other
parties in interest.
4.2 When amendments take effect. A resolution amending or terminating
the Plan becomes effective as of the date specified therein.
4.3 Amendment of Options. An Option Agreement may be amended by the
Committee at any time if the Committee determines that an amendment is
necessary or advisable as a result of:
(a) any addition to or change in the Code or ERISA, a federal or
state securities law or any other law or regulation, which
occurs after the Grant Date and by its terms applies to the
Option,
(b) any substitutions of Designated Property held in trust
pursuant to Section 2.5,
(c) any Plan amendment or termination pursuant to Section 4.1,
provided that the amendment does not materially affect the
terms, conditions and restrictions applicable to the Option,
or
(d) any circumstances not specified in Paragraphs (a), (b), (c),
with the consent of the Participant.
ARTICLE V
Administration
5.1 The Committee. The Plan will be administered by a Committee
consisting of one or more persons appointed by the Board of Trust Managers.
The Committee will act by a majority of its members at the time in office
and may take action either by vote at a meeting or by consent in writing
without a meeting.
(a) The Board may remove any member of the Committee at any time,
with or without cause, and may fill any vacancy. If a
vacancy occurs, the remaining member or members of the
Committee will have full authority to act.
(b) Any member of the Committee may resign by written resignation
delivered to the Board. Any such resignation will become
effective upon its receipt by the Board or on such other date
as agreed to by the Board and the resigning member.
5.2 Powers of the Committee. In carrying out its duties with respect
to the general administration of the Plan, the Committee will have, in
addition to any other powers conferred by the Plan or by law, the following
powers:
(a) to determine eligibility to participate in the Plan and
eligibility to receive Options;
(b) to grant Options, and to determine the form, amount and
timing of such Options;
(c) to determine the terms and provisions of the Option
Agreements, and to modify such Option Agreements as provided
in Section 4.3;
(d) to substitute Designated Property held in Trust as provided
in Section 2.6;
(e) to maintain all records necessary for the administration of
the Plan;
(f) to prescribe, amend, and rescind rules for the administration
of the Plan to the extent not inconsistent with the terms
thereof;
(g) to appoint such individuals and subcommittees as it deems
desirable for the conduct of its affairs and the
administration of the Plan;
(h) to employ counsel, accountants and other consultants to aid
in exercising its powers and carrying out its duties under
the Plan; and
(i) to perform any other acts necessary and proper for the
conduct of its affairs and the administration of the Plan,
except those reserved by the Board.
5.3 Determinations by the Committee. The Committee will interpret and
construe the Plan and the Option Agreements, and its interpretations and
determinations will be conclusive and binding on all Participants,
Beneficiaries and any other persons claiming an interest under the Plan or
any Option Agreement.
5.4 Indemnification of the Committee. The Employer will indemnify and
hold harmless each member of the Committee against any and all expenses and
liabilities arising out of such member's action or failure to act in such
capacity, excepting only expenses and liabilities arising out of such
member's own willful misconduct or gross negligence.
(a) Expenses and liabilities against which a member of the
Committee is indemnified hereunder will include, without
limitation, the amount of any settlement or judgment, costs,
counsel fees and related charges reasonably incurred in
connection with a claim asserted or a proceeding brought
against him or the settlement thereof.
(b) This right of indemnification will be in addition to any
other rights to which any member of the Committee may be
entitled.
(c) The Employer may, at its own expense, settle any claim
asserted or proceeding brought against any member of the
Committee when such settlement appears to be in the best
interests of the Employer, with such member's consent which
will not be unreasonably withheld.
5.5 Expenses of the Committee. The members of the Committee will
serve without compensation for services as such. All expenses of the
Committee will be paid by the Employer.
ARTICLE VI
Trust Provisions
6.1 Establishment of the Trust. A trust may be established to hold
all Designated Property contributed by the Employer pursuant to Section
2.5. Except as otherwise provided in Section 6.2, and Section 12 of the
Trust Agreement, the Trust will be irrevocable and no portion of the Trust
Fund will be used for any purpose other than the delivery of Designated
Property pursuant to the exercise of an Option, and the payment of expenses
of the Plan and Trust.
6.2 Trust Status. The Trust is intended to be a grantor trust, within
the meaning of section 671 of the Code, of which the Employer is the
grantor, and this Plan is to be construed in accordance with that
intention. Notwithstanding any other provision of this Plan, the Trust
Fund will remain the property of the Employer and will be subject to the
claims of its creditors in the event of its bankruptcy or insolvency. No
Participant will have any priority claim on the Trust Fund or any security
interest or other right superior to the rights of a general creditor of the
Employer.
ARTICLE VII
Miscellaneous Provisions
7.1 No Rights of Shareholder. Neither the Participant, a Beneficiary
nor any assignee will be, or will have any of the rights and privileges of,
a stockholder with respect to any Designated Property purchasable or
issuable upon the exercise of an Option, prior to the date of exercise of
such Option.
7.2 No Right to Continued Employment. Nothing contained in the Plan
will be deemed to give any person the right to be retained in the employ of
the Employer, or to interfere with the right of the Employer to discharge
any person at any time without regard to the effect that such discharge
will have upon such person's rights or potential rights, if any, under the
Plan. The provisions of the Plan are in addition to, and not a limitation
on, any rights that a Participant may have against the Employer by reason
of any employment or other agreement with the Employer.
7.3 Notices. Unless otherwise specified in an Option Agreement, any
notice to be provided under the Plan to the Committee will be mailed (by
certified mail, postage prepaid) or delivered to the Committee in care of
the Employer at its executive offices, and any notice to the Participant
will be mailed (by certified mail, postage prepaid) or delivered to the
Participant at the current address shown on the payroll records of the
Employer. No notice will be binding on the Committee until received by the
Committee, and no notice will be binding on the Participant until received
by the Participant.
7.4 Coordination with Employment Agreement: To the extent any
provisions of this Plan conflict with the provisions of any employment
agreement entered into between the Employer and the Participant, the terms
of the employment agreement shall control. To the extent that any such
employment agreement provides for the automatic or accelerated vesting of
securities or derivative securities held by the Participant upon the
occurrence of a change of control, business combination or other enumerated
event, any Option Agreements shall likewise be deemed to be governed by
such provisions and shall likewise vest on the terms on the terms and
conditions set forth in such employment agreement.
IN WITNESS WHEREOF, Camden Property Trust has caused these presents to be
executed by its duly authorized officer by authority of its Board of Trust
Managers this 1st day of February, 1997.
CAMDEN PROPERTY TRUST
/s/
-------------------------
By: G. Steven Dawson
Senior Vice President and
Chief Financial Officer
EXHIBIT 11.1
CAMDEN PROPERTY TRUST
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTIONS>
(In thousands, except per share amounts)
For the Year Ended
December 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
SIMPLE EARNINGS PER SHARE
Weighted Average Common
Shares Outstanding 14,849 14,325 12,188
====== ====== ======
Simple Earnings Per Share $0.59 $0.86 $0.78
====== ====== ======
PRIMARY EARNINGS PER SHARE
Weighted Average Common
Shares Outstanding 14,849 14,325 12,188
Shares Issuable from Assumed
Conversion of:
Common Share Options and
Awards Granted and
Outstanding 91 14 38
Convertible Preferred Shares - 85 85
------ ------ ------
Weighted Average Common Shares
Outstanding, as Adjusted 14,940 14,424 12,311
====== ====== ======
Primary Earnings Per Share $0.58 $0.85 $0.77
====== ====== ======
FULLY DILUTED EARNINGS PER SHARE <F1>
Weighted Average Common Shares
Outstanding 14,849 14,325 12,188
Shares Issuable from Assumed
Conversion of:
Common Share Options and
Awards Granted and
Outstanding 140 36 38
Convertible Preferred Shares - 85 85
Convertible Subordinated
Debentures 1,693 1,881 1,896
------ ------ ------
Weighted Average Common Shares
Outstanding, as Adjusted 16,682 16,327 14,207
====== ====== ======
Fully Diluted Earnings
Per Share $0.71 $0.98 $0.89
====== ====== ======
EARNINGS FOR SIMPLE, PRIMARY AND
FULLY DILUTED COMPUTATION:
Earnings to Common Shareholders
(Simple Earnings Per Share
Computation) $8,709 $12,291 $ 9,502
Dividends on Convertible Preferred
Shares 4 39 20
------- ------- -------
Earnings (Primary Earnings Per
Share Computation) 8,713 12,330 9,522
Interest on Convertible
Subordinated Debentures 2,809 3,297 2,843
Convertible Subordinated Debenture
Cost Amortization 295 334 333
------- ------- -------
Earnings (Fully Diluted Earnings
Per Share Computation) $11,817 $15,961 $12,698
======= ======= =======
<FN>
<F1> Fully diluted earnings per share of beneficial interest is
not dilutive and is not presented in the Consolidated
Statements of Operations.
</FN>
</TABLE>
<PAGE>
EXHIBIT 13.1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the
"Comparative Summary of Selected Financial and Property Data" and the
consolidated financial statements and notes thereto appearing elsewhere in
this annual report. Historical results and trends which might appear
should not be taken as indicative of future operations. 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: the
proposed merger with Paragon Group, Inc., 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.
BUSINESS
Camden Property Trust and its subsidiaries ("Camden" or the "Company")
are engaged in the ownership, development, acquisition, management,
marketing and disposition of multifamily apartment communities in the
Southwest region of the United States. As of December 31, 1996, the
Company owned and operated 48 multifamily properties containing 17,611
units located in Houston, Dallas/Fort Worth, Austin, Corpus Christi, El
Paso, Phoenix and Tucson. These properties had a weighted average
occupancy rate of 94.0% for the year ended December 31, 1996. The Company
is developing five multifamily properties in Houston, Dallas and Phoenix
which will, when completed, add 1,778 units to its portfolio, and has one
site in Denver which it intends to develop.
On December 16, 1996, the Company announced the execution of a
definitive merger agreement pursuant to which Paragon Group, Inc. would be
merged with and into a wholly-owned subsidiary of Camden. The merger will
create the fourth largest multifamily real estate investment trust ("REIT")
with 35,364 units and approximately $1.25 billion in total assets. Each
share of Paragon will be exchanged for 0.64 shares of Camden. The exchange
ratio is based on Camden's closing price on December 4, 1996 of $27.75 per
share and $17.75 per share for Paragon. If Camden's share price falls
below $25.67 per share during a specified time frame as set forth in the
merger agreement, Paragon has the right to terminate the agreement, subject
to Camden's right to negate such termination right by increasing the
exchange ratio so that Paragon's shareholders receive the same aggregate
dollar value of Camden shares had Camden's share price remained at the
$25.67 per share threshold.
Paragon is a fully integrated REIT headquartered in Dallas, Texas
whose business is the operation, development and acquisition of multifamily
apartment communities in the Southwest, Midwest, North Carolina and
Florida. Paragon is a self-administered and self-managed REIT that, as of
December 31, 1996, owned interests in 57 completed multifamily properties
located in six states, with three additional multifamily properties under
construction. Subsequent to December 31, 1996, three of Paragon's
properties were sold and one of Paragon's construction properties was
completed.
The merger with Paragon has been structured as a tax-free transaction
and will be treated as a purchase for accounting purposes. The merger is
subject to the approval of both companies' shareholders. The meetings to
consider the transaction have been scheduled for April 15, 1997. It is
anticipated that the merger will be completed by the end of April 1997.
PAGE
<PAGE>
<TABLE>
Camden's real estate portfolio at December 31, 1996, 1995 and 1994 is summarized as
follows:
<CAPTIONS>
1996 1995 1994
---------------------- ---------------------- ----------------------
Units Projects %<F1> Units Projects %<F1> Units Projects %<F1>
----- -------- ----- ----- -------- ----- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING PROPERTIES
Texas
Houston 6,987 18 36% 6,598 20 33% 6,310 19 34%
Dallas 6,045 16 31 6,065 17 30 6,065 17 33
Austin 1,745 6 9 1,745 6 9 1,063 4 6
Other 1,585 5 8 1,513 5 8 1,524 6 8
------ -- --- ------ -- --- ------ -- ---
Total Texas Operating
Properties 16,362 45 84 15,921 48 80 14,962 46 81
Arizona 1,249 3 7 821 2 4 821 2 5
------ -- --- ------ -- --- ------ -- ---
Total Operating
Properties 17,611 48 91 16,742 50 84 15,783 48 86
------ -- --- ------ -- --- ------ -- ---
PROJECTS UNDER DEVELOPMENT<F2>
Texas
Houston 758 2 4 1,226 3 6 804 2 4
Dallas 732 2 4 920 2 5 456 1 2
Austin 682 2 4
Other 288 1 1 288 1 2
------ -- --- ------ -- --- ------ -- ---
Total Texas Development
Projects 1,490 4 8 2,434 6 12 2,230 6 12
Arizona 288 1 1 716 2 4 428 1 2
------ -- --- ------ -- --- ------ -- ---
Total Projects Under
Development 1,778 5 9 3,150 8 16 2,658 7 14
------ -- --- ------ -- --- ------ -- ---
Total Properties 19,389 53 100% 19,892 58 100% 18,441 55 100%
====== == === ====== == === ====== == ===
<FN>
<F1> Based on units.
<F2> Excludes one project in Denver on which construction had not commenced.
</FN>
</TABLE>
<TABLE>
At December 31, 1996, the Company had five development properties in various stages of
construction as follows:
<CAPTIONS>
Estimated
Number Total Project Estimated Estimated Estimated
of Cost<F1> Percent Completion Stabilization
Property and Location Units ($ millions) Complete<F1> Date Date
- ----------------------------- ------ ------------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C>
The Park at Arrowhead Springs
Phoenix, AZ 288 $16.0 76% 1st Qtr., 1997 4th Qtr., 1997
The Park at Sugar Grove
Houston, TX 380 19.3 88 1st Qtr., 1997 3rd Qtr., 1997
The Park at Centreport
Dallas, TX 268 14.0 15 1st Qtr., 1998 3rd Qtr., 1998
The Park at Buckingham
Dallas, TX 464 25.5 22 1st Qtr., 1998 3rd Qtr., 1998
Vanderbilt Square II
Houston, TX 378 24.6 40 1st Qtr., 1998 3rd Qtr., 1998
----- -----
Total 1,778 $99.4
===== =====
<FN>
<F1> Includes land and preconstruction costs.
</FN>
</TABLE>
PAGE
<PAGE>
In 1993, at the time of the initial public offering, 77% of Camden's
properties (based on the number of units) were located in Houston. At
December 31, 1996, after giving effect to the anticipated completion of the
projects under development, 40% of the Company's properties (based on the
number of units) were located in Houston.
At December 31, 1996 and 1995, the Company's investment in the various
geographic areas was as follows:
(Dollars in thousands)
1996 1995
--------------- ---------------
Texas
Houston $243,575 38% $230,664 38%
Dallas 207,628 32 201,578 33
Austin 65,677 10 64,559 11
Other 52,578 8 57,101 9
-------- --- -------- ---
Total Texas Properties 569,458 88 553,902 91
-------- --- -------- ---
Arizona 74,355 12 51,207 9
Other 2,732 2,489
-------- --- -------- ---
Total Properties $646,545 100% $607,598 100%
======== === ======== ===
The Company intends to further diversify geographically into the Midwest,
North Carolina and Florida through its planned merger with Paragon.
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) borrowing at fixed rates; (iv) borrowing on an unsecured
basis; (v) maintaining a substantial number of unencumbered assets; and
(vi) maintaining a conservative debt service coverage ratio.
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 December 31, 1996, the Company's
ratio of total debt to total market capitalization was approximately 32.6%
(based on the closing price of $28.63 per common share of the Company on
the New York Stock Exchange composite tape on December 31, 1996). This
ratio represents total consolidated debt of the Company (excluding the
Company's 7.33% Convertible Debentures due 2001 ["Convertible Debentures"])
as a percentage of the market value of the Company's common shares
(including common shares issuable upon conversion of the Convertible
Debentures, but excluding common shares issuable upon exercise of
outstanding options) plus total consolidated debt (excluding the
Convertible Debentures). The interest coverage ratio was 3.2 times and 3.4
times for 1996 and 1995, respectively. At December 31, 1996 and 1995,
84.3% and 68.6%, respectively, of the Company's properties (based on
invested capital) were unencumbered. After adjusting for the early 1997
retirement of two conventional mortgage loans, this unencumbered property
percentage increased to 90.1%.
LIQUIDITY. The Company intends to meet its short-term liquidity
requirements through cash flows provided by operations, the $150 million
unsecured credit facility (the "Unsecured Credit Facility" or "facility"),
construction loans, and other short-term borrowing arrangements. The
Company intends to use equity capital or senior unsecured debt to refinance
maturing secured debt, borrowings under its facility and other short-term
borrowing arrangements. The Company is establishing a medium-term note
program to be used to provide intermediate or long-term, unsecured
publicly-traded debt. The Company considers its ability to generate cash
to be sufficient, and expects to be able to meet future operating
requirements and shareholder distributions.
On December 13, 1996, the Company declared its fourth quarter dividend
in the amount of $0.475 per common share, bringing the total dividends for
the year to $1.90 per common share. The fourth quarter distributions were
paid on January 17, 1997 to shareholders of record as of December 30, 1996.
During the first quarter of 1997, the Company announced an increase in the
quarterly dividend rate to $0.49 per common share effective for 1997. The
Company intends to continue shareholder distributions in accordance with
REIT qualification requirements under the federal tax code while
maintaining what management believes to be a conservative payout ratio, and
expects to continue reducing the payout ratio by raising the dividends at a
rate which is less than the funds from operations growth rate.
FINANCIAL FLEXIBILITY. The Company concentrates its growth efforts
toward selective development and acquisition opportunities in its core
markets. During the year ended December 31, 1996, the Company incurred
$56.1 million in development costs and $6.3 million in acquisition costs
for new properties. 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. The $29.8
million in net proceeds received from these asset disposals during 1996
were either reinvested in acquisitions or developments or were used to
retire debt.
The Company funds its developments and acquisitions through a
combination of equity capital, debt securities, conventional mortgage
loans, the Unsecured Credit Facility and other short-term borrowing
arrangements. In the past, the Company had also utilized construction
loans to fund its developments. The Unsecured Credit Facility is subject
to certain restrictions and financial covenants. The facility may be used
for acquisitions, developments and working capital purposes. During 1996,
the Company utilized the facility to retire three secured construction
loans aggregating $26.1 million and later refinanced that amount with
ten-year unsecured notes described below. The facility is currently
structured as a revolving facility until July 1997. The interest rate on
the facility, which is subject to changes in the Company's credit ratings,
was reduced to LIBOR plus 150 basis points or Prime during 1996.
Management is currently negotiating the terms of the facility with its bank
group and expects to be able to extend the maturity date and lower the
interest rate on this facility. Furthermore, management believes it will
continue to be able to extend the maturity date of this facility as needed
in the future. The facility is subject to certain restrictive covenants
including, among others, liquidity, net worth, leverage, capitalization and
cash flow ratios and limitations on capital investments. Such restrictions
also include a limitation on distributions to common shareholders that are
not to exceed 95% of funds from operations except as required to maintain
REIT status. As of December 31, 1996, the Company had $138.0 million
available under its facility.
Subsequent to December 31, 1996, the Company began utilizing
competitively bid short-term borrowings as an alternative to borrowing
under its Unsecured Credit Facility. Such borrowings vary in term and
pricing but have the same covenants as the facility and may be funded
through lenders outside of the facility bank group at rates substantially
below those of the facility. Since there are no commitments in place for
such arrangements, these borrowings cannot exceed the unused portion of the
facility.
On October 16, 1996, the Company completed a common share offering
from its previously filed shelf registration statement selling 1,090,000
shares at a gross price of $25.875 per share. The net proceeds of $27.6
million were used primarily to retire a $25.1 million secured construction
loan.
During 1996, the Company issued from its previously filed shelf
registration statement two issues of senior unsecured notes. The first
issue for an aggregate principal amount of $100 million accrues interest at
a rate of 6.6% per annum, has an average effective annual rate of 6.7%, and
matures within five years. The second issue for an aggregate principal
amount of $75 million accrues interest at a rate of 7.0% per annum, has an
average effective annual rate of 7.2%, and matures within ten years. These
two issues of senior unsecured notes received investment-grade ratings from
Moody's Investors Service, Standard & Poor's, and Duff & Phelps. Both
issues pay interest semi-annually and are direct, senior unsecured
obligations of the Company ranking equally with all other unsecured and
unsubordinated indebtedness of the Company. Both issues may be redeemed at
any time at the option of the Company subject to make-whole provisions.
The net proceeds from the first issue of $98.4 million were used to reduce
$93.4 million of indebtedness under the Unsecured Credit Facility, to pay
$4.9 million arising from the early settlement of hedging agreements
related to the indebtedness repaid and to pay $500,000 to extinguish a
bank's option related to a settled hedging agreement. The net proceeds
from the second issue of $73.6 million were used to reduce $64.0 million of
indebtedness under the facility and to repay the Company's only remaining
secured construction loan of $9.4 million.
Subsequent to December 31, 1996, the Company prepaid two of its 8.8%
conventional mortgage loans with outstanding balances at December 31, 1996
of $20.3 million and prepayment penalties of $203,000. The loans were
prepaid by utilizing funds from the Unsecured Credit Facility.
At December 31, 1996, a $25 million interest rate hedging agreement
remained in effect and is scheduled to mature in July 2000 with a bank's
option to extend to July 2002. The LIBOR rate on this $25 million hedging
agreement is fixed at 6.1%. The resulting fixed rate is equal to the 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. The differential to be paid or received on the interest rate
hedging agreement is accrued as interest rates change and is recognized
over the life of the agreement as an increase or decrease in interest
expense.
FUNDS FROM OPERATIONS
Funds from operations ("FFO") for the year ended December 31, 1996
increased $4.7 million over 1995, primarily due to properties added to the
portfolio and rental growth in the Company's Dallas and Houston markets.
Management considers FFO to be 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 principals), 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. 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 annual report. FFO should not be considered as an alternative to net
income as an indication of the Company's operating performance or to net
cash provided by operating activities as a measure of the Company's
liquidity. A calculation of FFO for the two years ended December 31, 1996
and 1995 follows:
(In thousands)
1996 1995
------- -------
Net income to common shareholders $ 8,709 $12,291
Real estate asset depreciation 22,946 19,299
Gain on sales of properties (115)
Extinguishment of hedges upon debt refinancing 5,351
------- -------
Funds from operations available to common
shareholders 36,891 31,590
Preferred share dividends 4 39
------- -------
Total funds from operations 36,895 31,629
Interest on convertible subordinated debentures 2,809 3,297
Amortization of deferred costs on convertible
debentures 295 334
------- -------
Funds from operations - fully diluted* $39,999 $35,260
======= =======
* Prior to March 1995, the NAREIT definition of FFO required the
add-back of non-real estate depreciation and amortization, such as
loan cost amortization. The amount for fully diluted funds from
operations for 1994 under the pre-March 1995 definition was $28,604.
RESULTS OF OPERATIONS
Changes in revenues and expenses related to the operating properties
from period to period are the result of property acquisitions,
developments, dispositions and improvements in the performance of core
properties in the portfolio. Where appropriate, comparisons are made on a
dollars-per-weighted-average-units basis in order to adjust for such
changes in the number of units owned during each period. Selected weighted
average revenues and expenses per operating unit for the three years ended
December 31, 1996 are as follows:
1996 1995 1994
------ ------ ------
Rental income per unit per month $ 508 $ 469 $ 435
Property operating and maintenance
per unit per year $2,339 $2,260 $2,143
Real estate taxes per unit per year $ 760 $ 700 $ 654
Weighted average number of operating units 17,362 16,412 13,694
1996 COMPARED TO 1995
The changes in operating results from 1995 to 1996 are due to
completion of the development of four properties aggregating 1,688 units,
the acquisition of an adjoining property containing 400 units, the
disposition of five properties containing 1,219 units and an increase in
revenues generated by the stabilized portfolio. The weighted average
number of units increased by 950 units, or 5.8%, from 16,412 to 17,362 for
the years ended December 31, 1995 and 1996, respectively. Total units
owned and operating were 16,742 and 17,611 at December 31, 1995 and 1996,
respectively.
The average rental income increased $39 per unit per month, or 8.3%,
from $469 to $508 for the years ended December 31, 1995 and 1996,
respectively. The increase was primarily due to a 4.7% increase in revenue
growth from the stabilized real estate portfolio that existed throughout
both periods, higher than average rental rates achieved on properties added
to the portfolio, and overall increases in average occupancy from 93.3% in
1995 to 94.0% in 1996.
Other income, which consisted of miscellaneous income earned from the
properties, third-party construction and management fees, and interest
income, increased $822,000 from 1995 to 1996. This 16.4% increase was due
to a larger number of units owned and in operation. Third-party
construction and management fee income totaled $1.0 million and $949,000
for the years ended December 31, 1995, and 1996, respectively.
Property operating and maintenance expenses and real estate taxes
increased $5.2 million, from $48.6 million to $53.8 million for the years
ended December 31, 1995 and 1996, respectively, which represented an annual
increase of $139 per unit. The Company's operating expense ratios
decreased from the prior year primarily as a result of the change in the
property mix due to development and property dispositions. Real estate
taxes increased as a result of increases in valuations of renovated and
developed properties and increases in property tax rates. Operating
expenses from the stabilized real estate portfolio in operation throughout
both periods increased 2.3% which, combined with the revenue increase,
resulted in a 6.8% increase in net operating income from these properties.
General and administrative expenses increased from $2.3 million in
1995 to $2.6 million in 1996, a rate consistent with the overall increase
in revenues.
Interest expense increased 25.4%, from $13.8 million in 1995 to $17.3
million in 1996, due to increased indebtedness related to the property
acquisition, completed developments and renovations, partially offset by
reductions in interest rates, reductions in debt as a result of the equity
offering in October 1996, the conversion of Convertible Debentures and
proceeds from dispositions. Interest capitalized was $5.3 million and $4.1
million for the years ended December 31, 1995 and 1996, respectively.
Depreciation and amortization increased 17.7% from $20.3 million in
1995 to $23.9 million in 1996 primarily due to developments and renovations
partially offset by property dispositions.
1995 COMPARED TO 1994
The weighted average number of units increased by 2,718 units, or
19.8%, from 13,694 units in 1994 to 16,412 units in 1995 as a result of
development. The completion of Woodland Park in the first quarter, The
Huntingdon in the second quarter, and Ridgecrest and the additional phase
of Miramar in the third quarter of 1995 added 1,070 units to the portfolio.
Total units owned and operating were 15,783 and 16,742 at December 31, 1994
and 1995, respectively.
Average rental income increased $34 per unit per month, or 7.8%, from
$435 to $469 from 1994 to 1995. The increase was primarily due to 4.6%
higher average rental rates from the stabilized real estate portfolio that
existed throughout both periods and higher than average rental rates
achieved on properties added to the portfolio.
Other income increased by $1.0 million, from $4.0 million in 1994 to
$5.0 million in 1995. The increase was due to a larger number of units
owned and in operation combined with an increase in third-party
construction and management fee income of $308,000 and related party
interest of $120,000. This increase was offset by $240,000 in interest
income earned from invested excess funds available after the offerings in
April 1994. Third-party construction and property management fee income
totaled $722,000 and $1.0 million for 1994 and 1995, respectively.
Property operating and maintenance expenses and real estate taxes
increased by $10.3 million, from $38.3 million in 1994 to $48.6 million in
1995, representing a $163 per unit annual increase of 5.8%. The Company's
operating expense ratios improved slightly over the prior year primarily as
a result of the Company's increased average rental rates, the installation
of water-saving devices in the Company's Texas properties, energy-efficient
lighting throughout properties in the portfolio and the addition of
higher-margin new properties to the portfolio. Such savings were partially
offset by increases in real estate taxes resulting from increases in
valuations of renovated properties, increases in property tax rates and the
change in the property mix through acquisitions and development. Operating
expenses from the stabilized real estate portfolio in operation throughout
both periods remained fairly level, which together with higher revenues,
resulted in a 7.1% increase in net operating income from these properties.
General and administrative expenses decreased by $311,000, from $2.6
million in 1994 to $2.3 million in 1995. On a per unit basis, the Company
experienced a decrease over the prior year due to the efficiencies of
operating a larger portfolio.
Interest expense increased by $5.0 million, from $8.8 million in 1994
to $13.8 million in 1995, due to increased indebtedness related to
properties acquired in 1994 and completed developments and renovations,
partially offset by reductions in debt as a result of the equity offering
in April 1994 and the conversion of Convertible Debentures. Interest
capitalized was $2.2 million and $5.3 million for the years ended December
31, 1994 and 1995, respectively.
Depreciation and amortization in 1995 increased to $20.3 million from
$16.2 million in 1994 due to acquisitions, completed developments and
renovations.
INFLATION
The Company leases apartments under lease terms generally ranging from
six to thirteen months. Management believes that such short-term lease
contracts lessen the impact of inflation due to the ability to adjust
rental rates to market levels as leases expire.
PAGE
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Shareholders of Camden Property Trust
We have audited the accompanying consolidated balance sheets of Camden
Property Trust as of December 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the management of Camden
Property Trust. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Camden Property Trust at
December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.
/S/
- ---------------------
DELOITTE & TOUCHE LLP
Houston, Texas
February 21, 1997
PAGE
<PAGE>
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
December 31,
--------------------
1996 1995
-------- --------
ASSETS
Real estate assets, at cost
Land $ 86,673 $ 81,544
Buildings and improvements 523,325 471,584
Projects under development, including land 36,547 54,470
-------- --------
646,545 607,598
Less: accumulated depreciation (56,369) (36,800)
-------- --------
590,176 570,798
Accounts receivable -- affiliates 148 369
Notes receivable -- affiliates 3,550 3,477
Deferred financing and other assets, net 4,847 4,839
Cash and cash equivalents 2,366 236
Restricted cash -- escrow deposits 2,423 2,633
-------- --------
Total assets $603,510 $582,352
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Notes payable
Unsecured $185,800 $122,783
Secured 58,382 112,676
Accounts payable 7,512 8,300
Accrued real estate taxes 13,246 11,865
Accrued expenses and other liabilities 7,675 6,276
Distributions payable 7,765 6,623
-------- --------
Total liabilities 280,380 268,523
7.33% Convertible Subordinated Debentures 27,702 44,050
Preferred Shares of Beneficial Interest;
$0.01 par value per share; 85 authorized,
issued and outstanding of Series A cumulative
convertible preferred shares (redeemable at
$23.00 per share) at December 31, 1995 1,950
Shareholders' Equity
Preferred shares of beneficial interest;
$0.01 par value per share; 10,000 shares
authorized; 85 Series A Preferred shares
outstanding at December 31, 1995
Common shares of beneficial interest;
$0.01 par value per share, 100,000 shares
authorized; 16,521 and 14,514 issued and
outstanding at December 31, 1996 and 1995,
respectively 165 145
Additional paid-in capital 348,339 299,808
Distributions in excess of net income (49,515) (29,625)
Unearned restricted share awards (3,561) (2,499)
-------- --------
Total shareholders' equity 295,428 267,829
-------- --------
Total liabilities and shareholders' equity $603,510 $582,352
======== ========
See Notes to Consolidated Financial Statements.
PAGE
<PAGE>
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31,
--------------------------------
1996 1995 1994
-------- ------- -------
Revenues
Rental income $105,785 $92,275 $71,468
Other income 5,821 4,999 3,988
-------- ------- -------
Total revenues 111,606 97,274 75,456
Expenses
Property operating and maintenance 40,604 37,093 29,352
Real estate taxes 13,192 11,481 8,962
General and administrative 2,631 2,263 2,574
Interest 17,336 13,843 8,807
Depreciation and amortization 23,894 20,264 16,239
-------- ------- -------
Total expenses 97,657 84,944 65,934
-------- ------- -------
Income before gain on sales of
properties and extinguishment of
hedges upon debt refinancing 13,949 12,330 9,522
Gain on sales of properties 115
Extinguishment of hedges upon debt
refinancing (5,351)
-------- ------- -------
Net income 8,713 12,330 9,522
Preferred share dividends (4) (39) (20)
-------- ------- -------
Net income to common shareholders $ 8,709 $12,291 $ 9,502
======== ======= =======
Net income per common and common
equivalent share $0.58 $0.85 $0.77
Distributions declared per common share $1.90 $1.84 $1.76
Weighted average number of common and
common equivalent shares outstanding 14,940 14,424 12,311
See Notes to Consolidated Financial Statements.
PAGE
<PAGE>
<TABLE>
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except per share amounts)
<CAPTIONS>
Common Unearned
Shares of Additional Distributions Restricted
Beneficial Paid-in in Excess of Share
Interest Capital Net Income Awards
---------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY, JANUARY 1, 1994 $ 92 $178,575 $ (2,683) $
Net income to common shareholders 9,502
Public offering of 3,450 common shares 34 77,424
Conversion of debentures 16 36,580
Restricted shares issued under benefit plan
(59 shares) 1 1,518 (1,134)
Cash distributions ($1.76 per share) (22,321)
---- -------- -------- --------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1994 143 294,097 (15,502) (1,134)
---- -------- -------- --------
Net income to common shareholders 12,291
Common shares issued under dividend
reinvestment plan 28
Conversion of debentures 1 3,588
Restricted shares issued under benefit plan
(83 shares) 1 2,095 (1,365)
Cash distributions ($1.84 per share) (26,414)
---- -------- -------- --------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1995 145 299,808 (29,625) (2,499)
---- -------- -------- --------
Net income to common shareholders 8,709
Public offering of 1,090 common shares 11 27,580
Common shares issued under dividend
reinvestment plan 31
Conversion of debentures 6 15,814
Restricted shares issued under benefit plan
(82 shares) 1 2,074 (1,062)
Common share options exercised (71 shares) 1 1,272
Conversion of preferred shares 1 1,952
Other (192)
Cash distributions ($1.90 per share) (28,599)
---- -------- -------- -------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1996 $165 $348,339 $(49,515) $(3,561)
==== ======== ======== =======
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE
<PAGE>
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
----------------------------
1996 1995 1994
------- ------- --------
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 8,713 $12,330 $ 9,522
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 23,894 20,264 16,239
Gain on sales of properties (115)
Extinguishment of hedges upon debt
refinancing 5,351
Accretion of discount on unsecured
notes payable 72
Net change in operating accounts 3,352 5,000 7,799
------- ------- --------
Net cash provided by operating
activities 41,267 37,594 33,560
CASH FLOW FROM INVESTING ACTIVITIES
Increase in real estate assets, net of
notes payable assumed (71,288) (96,183) (195,856)
Net proceeds from sales of properties 29,794
Increase in notes receivable for net
advances to affiliates (73) (833) (2,007)
Other (130) 13 (224)
------- ------- --------
Net cash used in investing activities (41,697) (97,003) (198,087)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of common
shares, net 27,591 77,506
Proceeds from issuance of convertible
debentures, net 81,884
Net (decrease) increase in lines
of credit (110,783) 50,759 14,849
Proceeds from notes payable 181,048 39,860 17,595
Extinguishment of hedges upon
debt refinancing (5,351)
Principal reduction on notes payable (61,614) (4,707) (12,042)
Distributions to common shareholders (27,457) (26,071) (19,730)
Payment of loan costs (2,253) (634) (790)
Other 1,379 197 116
------- ------- --------
Net cash provided by financing
activities 2,560 59,404 159,388
------- ------- --------
Net increase (decrease) in cash and
cash equivalents 2,130 (5) (5,139)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 236 241 5,380
------- ------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,366 $ 236 $ 241
======= ======= ========
SUPPLEMENTAL INFORMATION
Cash paid for interest, net of
interest capitalized $15,585 $13,189 $ 7,532
Interest capitalized $ 4,129 $ 5,321 $ 2,167
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Conversion of 7.33% subordinated
debentures to common shares, net $15,820 $ 3,589 $ 36,596
Shares issued under benefit plans, net $ 2,449 $ 2,096 $ 1,519
Conversion of preferred shares and
dividends $ 1,953
Notes payable assumed upon purchase of
assets $ 17,632
See Notes to Consolidated Financial Statements.
PAGE
<PAGE>
CAMDEN PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS
Camden Property Trust is a self-administered and self-managed real
estate investment trust ("REIT") organized on May 25, 1993. Camden
Property Trust and its subsidiaries ("Camden" or the "Company") are engaged
in the ownership, development, acquisition, management, marketing and
disposition of multifamily apartment communities in the Southwest region of
the United States. As of December 31, 1996, the Company owned and operated
54 multifamily properties located in Houston, Dallas/Fort Worth, Austin,
Corpus Christi, El Paso, Phoenix and Tucson, including five properties
under development and one future development property in Denver.
On December 16, 1996, the Company announced the execution of a
definitive merger agreement pursuant to which Paragon Group, Inc. would be
merged with and into a wholly-owned subsidiary of Camden expanding the
Company's geographic focus in 1997 to include the Midwest, North Carolina
and Florida. Each share of Paragon will be exchanged for 0.64 shares of
Camden. The exchange ratio is based on Camden's closing price on December
4, 1996 of $27.75 per share and $17.75 per share for Paragon. If Camden's
share price falls below $25.67 per share during a specified time frame as
set forth in the merger agreement, Paragon has the right to terminate the
agreement, subject to Camden's right to negate such termination right by
increasing the exchange ratio so that Paragon's shareholders receive the
same aggregate dollar value of Camden shares had Camden's share price
remained at the $25.67 per share threshold. The merger has been structured
as a tax-free transaction and will be treated as a purchase for accounting
purposes. The merger is subject to the approval of both companies'
shareholders. The meetings to consider the transaction have been scheduled
for April 15, 1997. It is anticipated that the merger will be completed by
the end of April 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements of
Camden include the assets, liabilities, and operations of the parent
company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements, results of operations during the reporting
periods and related disclosures. Actual results could differ from those
estimates.
Income Recognition. Rental, interest and other income are recognized
as earned.
Rental Operations. Camden owns and operates garden-style multifamily
apartment units that are rented to residents on lease terms ranging from
six to thirteen months, with monthly payments due in advance. None of the
properties are subject to rent control or rent stabilization. Operations
of apartment properties acquired are recorded from the date of acquisition
in accordance with the purchase method of accounting. All operating
expenses, excluding depreciation, associated with occupied units for
properties in the development and leasing phase are expensed against
revenues generated by those units as they become occupied. In management's
opinion, due to the number of tenants, the type and diversity of submarkets
in which the properties operate, and the collection terms, there is no
concentration of credit risk.
Cash and Cash Equivalents. All cash and investments in money market
accounts and other securities with a maturity of three months or less, at
the time of purchase, are considered to be cash and cash equivalents.
Restricted Cash. Restricted cash mainly consists of escrow deposits
held by lenders for property taxes, insurance and replacement reserves.
Substantially all restricted cash is invested in short-term securities.
Real Estate Assets, at Cost. Real estate assets are carried at cost
plus capitalized carrying charges. Expenditures directly related to the
development, acquisition, and improvement of real estate assets are
capitalized at cost as land, buildings and improvements. 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.
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. Non-recurring capital expenditures for such items as
roof replacements are capitalized. The Company capitalized $9.6 million in
1996 and $8.3 million in 1995 of non-recurring renovations and improvements
to extend the economic lives and enhance its multifamily properties.
Carrying charges, principally interest and ad valorem taxes, of land
under development and buildings under construction are capitalized as part
of projects under development and buildings and improvements to the extent
that such charges do not cause the carrying value of the asset to exceed
its net realizable value. Capitalized interest was $4.1 million in 1996,
$5.3 million in 1995 and $2.2 million in 1994. Capitalized ad valorem
taxes were $617,000 in 1996, $551,000 in 1995 and $221,000 in 1994.
All buildings and improvements are depreciated over their remaining
estimated useful lives of 10 to 35 years using the straight line method.
Subsequent expenditures for furnishings, equipment and other normal
recurring items are expensed as incurred. Capital improvements subsequent
to the initial renovation period are depreciated over their expected useful
lives of 3 to 15 years using the straight line method.
Impact of New Accounting Pronouncements. In March 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Standards
No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of ("SFAS No. 121"). SFAS No 121 requires
that certain long-lived assets and intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The adoption of SFAS No. 121 by
the Company in 1996 did not have a material effect on the Company's
financial position or results of operations.
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No.
123"). SFAS No. 123 prescribes a fair value-based method of determining
compensation expense related to stock-based awards granted to employees or
associates. The recognition provisions of SFAS No. 123 are optional;
however, entities electing not to adopt SFAS No. 123 are required to
disclose in annual financial statements issued for fiscal years beginning
after December 15, 1995 pro forma net income and earnings per share as if
SFAS No. 123 had been applied. The Company elected not to adopt the
recognition provisions of SFAS No. 123. See Note 6 for further information
on the Company's 1996 disclosures.
Property Operating and Maintenance Expenses. Property operating and
maintenance expenses included normal repairs and maintenance totaling $8.3
million in 1996, $7.3 million in 1995 and $5.6 million in 1994. In
addition, amounts incurred subsequent to the initial renovation and
rehabilitation periods for recurring expenditures such as carpets,
appliances, and furnishings and equipment which might otherwise be
capitalized, totaled $3.5 million in 1996, $2.8 million in 1995 and $1.9
million in 1994 and were included in expense.
Deferred Financing and Other Assets, Net. Deferred financing and
other assets are amortized ($838,000 in 1996, $871,000 in 1995 and $1.8
million in 1994) over the terms of the related debt or lives of the asset
on the straight line method. Leasehold improvements and equipment are
depreciated on the straight line method over the shorter of the expected
useful lives or the lease term which range from three to ten years.
Accumulated depreciation and amortization was $1.8 million in 1996 and $1.2
million in 1995 for deferred financing, other assets, leasehold
improvements and equipment.
Interest Rate Swap Agreements. The differential to be paid or
received on interest rate swap agreements is accrued as interest rates
change and is recognized over the life of the agreements as an increase or
decrease in interest expense.
Income Taxes and Distributions. Camden intends to maintain its
election as a REIT under the Internal Revenue Code of 1986, as amended. As
a result, the Company generally will not be subject to federal taxation to
the extent it distributes 95% of its REIT taxable income to its
shareholders and satisfies certain other requirements. Accordingly, no
provision for federal income taxes has been included in the accompanying
consolidated financial statements.
Taxable income differs from net income for financial reporting
purposes principally due to the timing of the recognition of depreciation.
Such differences are primarily due to differences in the book/tax basis of
the real estate assets of $7.4 million and differences in methods of
depreciation and lives of the real estate assets. As a result of these
differences, the tax basis of the Company's net real estate assets exceeds
its book basis by $37.1 million and $13.6 million at December 31, 1996 and
1995, respectively.
Shareholders are taxed on distributions declared and must report such
distributions as either ordinary income, short-term gains, long-term gains,
or as return of capital.
A schedule of per share distributions paid by the Company is set forth
in the following table:
Year Ended December 31,
-------------------------
1996 1995 1994
----- ----- -----
Ordinary income $1.03 $1.37 $1.27
Return of capital 0.87 0.47 0.49
----- ----- -----
Total $1.90 $1.84 $1.76
===== ===== =====
Percentage of distributions representing
tax preference items 24.769% 20.119% 17.611%
Net Income Per Share. Net income per common and common equivalent
share of beneficial interest has been computed by dividing net income by
the weighted average number of common and common equivalent shares
outstanding. Common equivalent shares include the weighted average number
of assumed equivalent shares outstanding from convertible preferred shares
of beneficial interest and common share options. Fully diluted net income
per common and common equivalent share of beneficial interest is not
materially dilutive and is not presented.
Reclassifications. Certain reclassifications have been made to
amounts in prior year financial statements to conform with current year
presentations.
3. NOTES PAYABLE
A summary of the Company's notes payable follows:
(In millions)
December 31,
-----------------
1996 1995
------ ------
Unsecured notes:
6 5/8% Senior Notes, due 2001 $ 99.6 $
7% Senior Notes, due 2006 74.2
Credit facility 12.0 122.8
------ ------
185.8 122.8
Secured notes:
Conventional mortgage loans 58.4 59.2
Construction loans 53.5
------ ------
58.4 112.7
------ ------
Total notes payable $244.2 $235.5
====== ======
Floating rate debt included in notes payable $ $ 26.3
====== ======
The Company funds its developments and acquisitions through a
combination of equity capital, debt securities, conventional mortgage
loans, a $150 million unsecured credit facility (the "Unsecured Credit
Facility" or "facility") and other short-term borrowing arrangements. In
the past, the Company had also utilized construction loans to fund its
developments. Subject to certain restrictions and financial covenants, the
facility may be used for acquisitions, developments and working capital
purposes. During 1996, the Company utilized the facility to retire three
secured construction loans aggregating $26.1 million and later refinanced
that amount with ten-year unsecured notes described below. The facility is
currently structured as a revolving facility until July 1997. The interest
rate on the facility, which is subject to changes in the Company's credit
ratings, was reduced to LIBOR plus 150 basis points or Prime during 1996.
Management is currently negotiating the terms of the facility with its bank
group and expects to be able to extend the maturity date and lower the
interest rate on this facility. Furthermore, management believes it will
continue to be able to extend the maturity date of this facility as needed
in the future. The facility is subject to certain restrictive covenants
including, among others, liquidity, net worth, leverage, capitalization and
cash flow ratios and limitations on capital investments. Such restrictions
also include a limitation on distributions to common shareholders that are
not to exceed 95% of funds from operations except as required to maintain
REIT status. As of December 31, 1996, the Company had $138.0 million
available under its facility.
Subsequent to December 31, 1996, the Company began utilizing
competitively bid short-term borrowings as an alternative to borrowing
under its Unsecured Credit Facility. Such borrowings vary in term and
pricing but have the same covenants as the facility and may be funded
through lenders outside of the facility bank group at rates substantially
below those of the facility. Since there are no commitments in place for
such arrangements, these borrowings cannot exceed the unused portion of the
facility.
On October 16, 1996, the Company completed a common share offering
from its previously filed shelf registration statement selling 1,090,000
shares at a gross price of $25.875 per share. The net proceeds of $27.6
million were used primarily to retire a $25.1 million secured construction
loan.
During 1996, the Company issued from its previously filed shelf
registration statement two issues of senior unsecured notes. The first
issue for an aggregate principal amount of $100 million accrues interest at
a rate of 6.6% per annum, has an average effective annual rate of 6.7%, and
matures within five years. The second issue for an aggregate principal
amount of $75 million accrues interest at a rate of 7.0% per annum, has an
average effective annual rate of 7.2%, and matures within ten years. These
two issues of senior unsecured notes received investment-grade ratings from
Moody's Investors Service, Standard & Poor's, and Duff & Phelps. Both
issues pay interest semi-annually and are direct, senior unsecured
obligations of the Company ranking equally with all other unsecured and
unsubordinated indebtedness of the Company. Both issues may be redeemed at
any time at the option of the Company subject to make-whole provisions.
The net proceeds from the first issue of $98.4 million were used to reduce
$93.4 million of indebtedness under the Unsecured Credit Facility, to pay
$4.9 million arising from the early settlement of hedging agreements
related to the indebtedness repaid and to pay $500,000 to extinguish a
bank's option related to a settled hedging agreement. The net proceeds
from the second issue of $73.6 million were used to reduce $64.0 million of
indebtedness under the facility and to repay the Company's only remaining
secured construction loan of $9.4 million.
The fixed rate conventional mortgage loans were secured by eight
multifamily properties containing 3,216 units with a net book value of
$90.3 million at December 31, 1996. The weighted average interest rate on
these loans was 7.5% through July 1996. At that time, the weighted average
interest rate increased to 8.4%. These fixed rate loans amortize principal
over periods ranging from 25 to 30 years, are payable in balloon payments
at final maturities, and require escrow balances for the payment of
insurance, taxes, improvements and repairs.
Subsequent to December 31, 1996, the Company prepaid two of its 8.8%
conventional mortgage loans with outstanding balances at December 31, 1996
of $20.3 million and prepayment penalties of $203,000. The loans were
prepaid by utilizing funds from the Unsecured Credit Facility.
At December 31, 1996, a $25 million interest rate hedging agreement
remained in effect and is scheduled to mature in July 2000 with a bank's
option to extend to July 2002. The LIBOR rate on this $25 million hedging
agreement is fixed at 6.1%. The resulting fixed rate is equal to the 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.
At December 31, 1996, all debt was fixed rate debt earning a weighted
average interest rate of 7.3%.
Scheduled principal repayments on all loans outstanding at December
31, 1996 over the next five years, excluding the loans retired subsequent
to year end, are $17.2 million in 1997, $12.2 million in 1998, $200,000 in
1999, $7.7 million in 2000, $100.3 million in 2001 and $86.3 million
thereafter.
4. CONVERTIBLE SUBORDINATED DEBENTURES
In April 1994, the Company issued $86.3 million aggregate principal
amount of 7.33% Convertible Subordinated Debentures due 2001 (the
"Debentures"). The Debentures are convertible at any time prior to
maturity into common shares of beneficial interest, $0.01 par value, of the
Company at a conversion price of $24.00 per share, subject to adjustment
under certain circumstances. The Debentures will not be redeemable by the
Company prior to maturity, except in certain circumstances intended to
maintain the Company's status as a REIT. Interest on the Debentures is
payable on April 1 and October 1 of each year. The Debentures are
unsecured and subordinated to present and future senior debt and will be
effectively subordinated to all debt and other liabilities of the Company.
As of December 31, 1996, $58.5 million in principal amount of the
Debentures had been converted to 2.4 million common shares. For the
converted Debentures, the earned but unpaid interest was forfeited by the
Debenture holders in accordance with the Indenture. In addition, $2.5
million of unamortized Debenture issue costs have been reclassified to
additional paid-in-capital. Had all these converted Debentures converted
as of the beginning of the period or issuance date, net income per common
and common equivalent share would have been $0.62, $0.85 and $0.78 per
share for the years ended December 31, 1996, 1995 and 1994, respectively.
Deferred Debenture issue costs of $900,000 and $1.7 million remained
outstanding at December 31, 1996 and 1995, respectively, and are being
amortized over the life of the Debentures.
During January 1997, an additional $5.8 million in principal amount of
Debentures had been converted to 240,000 common shares and the related
$175,000 of unamortized Debenture costs had been reclassified to additional
paid-in-capital. Had all converted Debentures converted as of the
beginning of the period, including these Debentures converted in January
1997, net income per common and common equivalent share would have been
$0.62 per share for the year ended December 31, 1996.
5. CONVERTIBLE PREFERRED SHARES
In 1993, the Company issued 84,783 shares of Series A cumulative
convertible preferred shares of beneficial interests in exchange for the
remaining multifamily operations of the Company's predecessor entities.
These operations consisted primarily of asset management and construction
activities. During the first quarter of 1996, the preferred shareholders
elected to convert all of their preferred shares into 85,369 common shares.
6. INCENTIVE AND BENEFIT PLANS
Incentive Plan. The Company has a non-compensatory option plan (the
"Plan") which provides for the issuance of a maximum of 1,450,000 common
shares. Compensation awards that can be granted under the Plan include
various forms of incentive awards including incentive share options,
non-qualified share options and restricted share awards ("Incentive
Awards"). The class of eligible persons that can receive grants of
Incentive Awards under the Plan consists of non-employee trust managers,
key employees, consultants, and directors of subsidiaries as determined by
a committee of the Board of Trust Managers (the "Committee") of the
Company. No Incentive Award may be granted after May 27, 2003.
<PAGE>
Following is a summary of the activity of the Plan for the three years
ended December 31, 1996:
Shares
Available
for
Issuance Options and Restricted Shares
-------- ----------------------------------
Weighted
Average
1996
1996 1996 Price 1995 1994
------- ------- ------ ------- -------
Balance at January 1 579,165 870,835 $23.12 834,900 489,000
Options
Granted 305,975
Exercised (71,450) 22.35
Forfeited 54,650 (54,650) 23.71 (47,175) (18,775)
------- ------- ------ ------- -------
Net Options 54,650 (126,100) 22.94 (47,175) 287,200
------- ------- ------ ------- -------
Restricted Shares
Granted (124,341) 124,341 24.73 90,956 61,050
Forfeited 25,716 (25,716) 24.37 (7,846) (2,350)
------- ------- ------ ------- -------
Net Restricted Shares (98,625) 98,625 24.83 83,110 58,700
------- ------- ------ ------- -------
Balance at December 31 535,190 843,360 $23.34 870,835 834,900
======= ======= ====== ======= =======
Exercisable options at
December 31 533,617 $22.86 406,008 163,000
Vested restricted shares at
December 31 56,781 $23.96 22,806 5,000
Options are exercisable, subject to the terms and conditions of the
Plan, in increments of 33.33% per year on each of the first three
anniversaries of the date of grant. The Plan provides that the exercise
price of an option (other than non-employee trust manager options) will be
determined by the Committee on the day of grant and to date all options
have been granted at an exercise price which equals the fair market value
on the date of grant. Options exercised during 1996 were exercised at
prices ranging from $22.00 to $24.25 per share. At December 31, 1996,
options outstanding were at prices ranging from $21.38 to $26.25 per share.
Such options have a weighted average remaining contractual life of 6.5
years. Subsequent to December 31, 1996, an additional 300,000 of options
having an exercise price of $27.00 per share were granted.
Restricted shares have vesting periods ranging from three to five
years. Subsequent to December 31, 1996, an additional 109,359 of
restricted share awards having a purchase price of $0.01 per share were
granted.
The Company accounts for its Plan under the provisions of APB Opinion
No. 25. The pro forma net income and earnings per share disclosure
requirements of SFAS No. 123 did not impact the Company in 1995 or 1996 due
to the fact that the Company did not grant any option awards from January
1, 1995 through December 31, 1996 and the compensation expense calculated
on the Company's restricted shares under SFAS No. 123 did not materially
differ from the results obtained under APB Opinion No. 25.
401(k) Savings Plan. The Company has a 401(k) savings plan (the
"Savings Plan") which is a voluntary defined contribution plan. Under the
Savings Plan, every employee is eligible to participate beginning on the
earlier of January 1 or July 1 following the date the employee has
completed six months of continuous service with the Company. Each
participant may make contributions to the Savings Plan by means of a
pre-tax salary deferral which may not be less than 1% nor more than 15% of
the participant's compensation. The federal tax code limits the annual
amount of salary deferrals that may be made by any participant. The
Company may make matching contributions on the participant's behalf. A
participant's salary deferral contribution will always be 100% vested and
nonforfeitable. A participant will become vested in the Company's matching
contributions 33.33% after one year of service, 66.67% after two years of
service and 100% after three or more years of service. Expenses under the
Savings Plan were not material.
7. RELATED PARTY TRANSACTIONS
Apartment Connection, Inc. ("ACI") is a nonqualified-REIT subsidiary
that acts as a leasing agent providing tenants for apartment owners in
Houston, including properties owned by the Company. The Company has made
an unsecured working capital revolving line of credit available to ACI
which has been renewed annually. The loan has a maximum commitment of $1.2
million, earns interest at a fixed rate of 7.5% per annum and is payable in
full during July 1997. The loan's outstanding balance was $1.2 million and
$949,000 at December 31, 1996 and 1995, respectively. The loan is used to
fund working capital requirements of ACI in the ordinary course of its
business.
In conjunction with the equity offering in April 1994, the Chief
Executive Officer and Chief Operating Officer of the Company (the
"Executives") each purchased $1 million of common shares at the market
price of such shares. The Compensation Committee determined that it was in
the best interest of the Company that the Executives have greater ownership
interests in the Company. Accordingly, the Compensation Committee
determined that the Company should loan to each Executive 90% of the
purchase price of such common shares or $900,000. These loans have
five-year terms and bear interest at the fixed rate of 7.0%. The loans are
non-recourse, but are secured by a pledge of such common shares, and do not
require any prepayments of principal until maturity. During July 1995, the
Executive's loans were transferred to ACI. ACI obtained a $1.8 million
unsecured loan from the Company with the same interest rate and maturity as
the underlying Executive loans.
During 1995, the Company formed Teleserve, Inc. (formerly Camden
Communications One, Inc.), doing business as CamTel ("CamTel"). CamTel is
a nonqualified-REIT subsidiary that was established to provide fiber optic,
central office switched telecommunications service to residents in the
Company's properties and third parties. The Company has made an unsecured
revolving line of credit available to CamTel with a maximum commitment of
$5.9 million which had an outstanding balance of $585,000 and $44,000 at
December 31, 1996 and 1995, respectively. The loan earns interest at 7.0%,
is payable in full in June 1999 and is used to fund asset additions or
other operating costs. As of December 31, 1996, the Company had invested
$3.8 million in telecommunications equipment for 22 of its properties.
The Company entered into an alliance in 1995 with one of Houston's
cable television operators to provide cable service to the residents of the
Company's properties. The Company, through ACI, made a revolving line of
credit available to an unrelated third party, Cable Leasing, Inc. ("CLI"),
with a maximum commitment of $950,000 to purchase existing and future
distribution systems on a large portion of the Company's Houston
properties. The loan earned interest at 15.5% per annum and required
monthly payments of interest. The loan was secured by the distribution
systems and service agreements on the Company's properties. The
outstanding balance at December 31, 1995 was $728,000. Camden acquired the
assets of CLI on July 31, 1996 for $700,000. CLI used the net proceeds
from the sale to pay off the outstanding balance on the line of credit it
had with the Company through ACI.
The Company had management agreements with investment partnerships in
which the Executives had a combined 1% economic interest, with respect to
two multifamily properties and two high-rise condominium properties owned
by such partnerships. The management agreements provided for the exclusive
right to lease, operate and manage these four properties. The Company also
insured certain aspects of the business operations of the investment
partnerships under the Company's insurance policies. The management
agreements required the Company to be reimbursed for the actual costs
incurred by the Company in making such insurance available. Management
fees earned on the two multifamily properties amounted to $184,000,
$306,000 and $295,000 for the years ended 1996, 1995 and 1994,
respectively. The Company received a $244,000 fee in November 1996 upon
the sale of the two multifamily properties. The management agreements
related to the two high-rise condominium properties provided for a fee of
$33,813 per quarter in the aggregate until the payments of such management
fees was terminated on December 31, 1995. Although the management
agreements were not the result of arm's length negotiations, the Company
believes that they were no more favorable to the owners than the fees that
would have been paid to unaffiliated third parties under similar
circumstances.
8. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
The following disclosure is made for informational purposes only and
does not purport to represent fair values of Camden's financial
instruments. This information is based on estimates determined by using
available market information and appropriate valuation methodologies.
However, considerable judgement is necessary to interpret market data and
develop the related estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that could
be realized upon disposition of the financial instruments. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
Cash and cash equivalents, receivables, accounts payable, accrued
expenses and other liabilities and distributions payable are carried at
amounts which reasonably approximate their fair value.
(In millions)
December 31,
-------------------------------------
1996 1995
----------------- -----------------
Fair Carrying Fair Carrying
Value Amount Value Amount
------ -------- ------ --------
Senior notes $174.6 $173.8 $ $
Credit facility 12.0 12.0 122.8 122.8
Conventional mortgage loans* 61.0 58.4 61.7 59.2
Construction loans 53.5 53.5
* Subsequent to December 31, 1996, two conventional mortgage loans with
carrying amounts of $20.3 million and fair value amounts of $20.6
million were retired utilizing funds from the Unsecured Credit Facility.
The fair value of the senior notes and the conventional mortgage loans
were estimated using discounted cash flows at approximate borrowing rates
available as of the date presented. The fair values of the credit facility
and the construction loans approximate their carrying value. The
conventional mortgage loans were subject to prepayment penalties of
$792,000 at December 31, 1996.
At December 31, 1996, the Company had an outstanding interest rate
swap agreement of $25 million. The Company does not use this instrument
for trading purposes, rather, it has entered into the interest rate swap
agreement to hedge the impact of interest rate fluctuations on $25 million
of floating rate debt. This interest rate swap agreement is valued at an
amount for which it could be settled at December 31, 1996. Settlement
amounts were based upon estimates obtained from dealers. If the Company
had settled the $25 million interest rate swap agreement with a
counterparty at December 31, 1996, the Company would have incurred an
unwind charge of $269,000. At December 31, 1995, the Company had $150
million outstanding in interest rate swap agreements with potential unwind
charges of $6.3 million. See Note 3 for discussion of the early settlement
of certain interest rate swap agreements that occurred during 1996.
The fair value estimates presented herein are based on information
available to management as of December 31, 1996 and 1995. Such amounts
have not been comprehensively revalued for purposes of these financial
statements since that date, and current estimates of fair value may differ
significantly from the amounts presented herein.
9. NET CHANGE IN OPERATING ACCOUNTS
The effect of changes in the operating accounts on cash flows from
operating activities is as follows:
(In thousands)
Year Ended December 31,
----------------------------
1996 1995 1994
------ ------ ------
Decrease (increase) in assets:
Restricted cash - escrow deposits $ 210 $ (68) $ (624)
Accounts receivable - affiliates 221 65 (1)
Other assets 929 (335) (1,446)
Increase (decrease) in liabilities:
Accounts payable (788) 3,143 2,990
Accrued real estate taxes 1,381 1,552 3,508
Accrued expenses and other liabilities 1,399 643 3,372
------ ------ ------
Net change in operating accounts $3,352 $5,000 $7,799
====== ====== ======
10. COMMITMENTS AND CONTINGENCIES
Construction Contracts. As of December 31, 1996, the Company was
obligated for approximately $39.9 million of additional expenditures (a
substantial amount of which is to be provided by debt).
Lease Commitments. At December 31, 1996, Camden had long-term
operating leases covering certain land, office facilities and equipment.
Rental expense totaled $475,000 in 1996, $476,000 in 1995 and $419,000 in
1994. Minimum annual rental commitments for the years ending December 31,
1997 through 2001 are $500,000, $294,000, $56,000, $26,000 and $21,000
respectively, and $534,000 in the aggregate thereafter.
Employment Agreements. The Company has employment agreements with six
of its senior officers, the terms of which expire at various times through
August 20, 1999. Such agreements provide for minimum salary levels as well
as various incentive compensation arrangements, which are payable based on
the attainment of specific goals. The agreements also provide for
severance payments in the event certain situations occur such as
termination without cause or a change of control. The severance payments
vary based on the officer's position and amount to one times the current
salary base for four of the officers and 2.99 times the average annual
compensation over the previous three fiscal years for the two remaining
officers.
Contingencies. Camden is subject to various legal proceedings and
claims that arise in the ordinary course of business. These matters are
generally covered by insurance. While the resolution of these matters
cannot be predicted with certainty, management believes that the final
outcome of such matters will not have a material adverse effect on the
financial position or results of operations of Camden.
11. SUBSEQUENT EVENTS
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 local real
estate market practice, such letters of intent are non-binding, and neither
party to the letter of intent is obligated to pursue negotiations unless
and until a definitive contract is entered into by the parties. Even if
definitive contracts are entered into, the letters of intent and resulting
contracts contemplate that such contracts will provide the purchaser with
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
any property as to which the Company may have entered into a definitive
contract. Further, due diligence periods are frequently extended as
needed. An acquisition or sale becomes probable at the time that the due
diligence period expires and the definitive contract has not been
terminated. The Company is then at risk under an acquisition contract, but
only to the extent of any earnest money deposits associated with the
contract, and is obligated to sell under a sales contract.
The Company is currently in the due diligence period on contracts for
the purchase of land for development or acquisition of properties. No
assurance can be made that the Company will be able to complete the
negotiations or become satisfied with the outcome of the due diligence.
The Company seeks to selectively dispose of assets that are either not
in core markets, 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 or developments or used to retire debt.
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the years ended December 31,
1996 and 1995 are as follows:
(In thousands, except per share amounts)
First Second Third Fourth Total
------- ------- ------- ------- --------
1996:
Revenues $26,590 $27,231 $28,768 $29,017 $111,606
Net income (loss) to common
shareholders (1,750) 3,498 2,801 4,160 8,709
Net income (loss) per common
and common equivalent share (0.12)* 0.24 0.19 0.26 0.58
1995:
Revenues $22,548 $23,498 $25,085 $26,143 $ 97,274
Net income to common share-
holders 3,105 3,099 2,908 3,179 12,291
Net income per common and common
equivalent share 0.22 0.22 0.20 0.22 0.85
* Includes a $(5,351) or $(0.37) per share impact from the extinguishment
of hedges upon debt refinancing.
13. PRICE RANGE OF COMMON SHARES (UNAUDITED)
The high and low sales prices per share of the Company's common
shares, as reported on the New York Stock Exchange composite tape, and
distributions per share declared for the quarters indicated were as
follows:
High Low Distributions
------- ------- -------------
1996:
First $24 3/4 $22 3/4 $0.475
Second 25 21 3/4 0.475
Third 26 1/2 22 3/4 0.475
Fourth 29 1/4 25 5/8 0.475
1995:
First $25 $20 3/4 $0.46
Second 23 5/8 20 1/4 0.46
Third 23 1/4 20 7/8 0.46
Fourth 24 20 1/8 0.46
PAGE
<PAGE>
<TABLE>
CAMDEN PROPERTY TRUST
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
(In thousands, except per share and property data amounts)
<CAPTIONS>
Camden Property Trust Camden Predecessors
---------------------------------------- ---------------------
Years Ended December 31, July 29 to January 1 Year Ended
----------------------------- December to July December
1996 1995 1994 31, 1993 28, 1993 31, 1992
--------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues:
Rental income $105,785 $ 92,275 $ 71,468 $ 16,785 $16,721 $ 20,645
Other income 5,821 4,999 3,988 782 900 988
-------- -------- -------- -------- ------- --------
Total revenues 111,606 97,274 75,456 17,567 17,621 21,633
Expenses:
Property operating and maintenance 40,604 37,093 29,352 6,907 7,380 9,426
Real estate taxes 13,192 11,481 8,962 1,910 1,989 2,560
General and administrative 2,631 2,263 2,574 291 343 503
Interest 17,336 13,843 8,807 1,340 4,364 5,840
Depreciation and amortization 23,894 20,264 16,239 3,572 3,045 4,037
-------- -------- -------- -------- ------- --------
Total expenses 97,657 84,944 65,934 14,020 17,121 22,366
-------- -------- -------- -------- ------- --------
Income before gain on sales and
extinguishment of hedges 13,949 12,330 9,522 3,547 500 (733)
Gain on sales of property 115
Extinguishment of hedges upon debt
refinancing (5,351)
-------- -------- -------- -------- ------- --------
Net income (loss) $ 8,713 $12,330 $ 9,522 $ 3,547 $ 500 $ (733)
======= ========
Preferred share dividends (4) (39) (20)
-------- -------- -------- --------
Net income to common shareholders $ 8,709 $ 12,291 $ 9,502 $ 3,547
======== ======== ======== ========
Net income per common and common
equivalent share $ 0.58 $ 0.85 $ 0.77 $ 0.39
Distributions per common share $ 1.90 $ 1.84 $ 1.76 $ 0.68
Weighted average number of common
and common equivalent shares
outstanding 14,940 14,424 12,311 9,114
BALANCE SHEET DATA (AT END OF PERIOD)
Real estate assets $646,545 $607,598 $510,324 $296,545 $141,391
Accumulated depreciation (56,369) (36,800) (17,731) (3,388) (6,735)
Total assets 603,510 582,352 504,284 304,345 149,500
Notes payable 244,182 235,459 149,547 111,513 102,201
Series A Preferred Shares 1,950 1,950 1,950
Shareholders'/Partners' Equity 295,428 267,829 277,604 175,984 41,209
Common shares outstanding 16,521 14,514 14,273 9,162
OTHER DATA
Cash flows provided by (used in)
Operating activities $ 41,267 $ 37,594 $ 33,560 $ 16,554 $ 1,942 $ 4,289
Investing activities (41,697) (97,003) (198,087) (237,346) (4,297) (79,064)
Financing activities 2,560 59,404 159,388 226,171 1,073 75,630
Funds from operations<F1> 36,895 31,629 25,741 7,119 3,545 3,304
Funds from operations assuming
conversions of convertible
securities 39,999 35,260 28,604 7,119 3,545 3,304
PROPERTY DATA
Number of operating properties
(at end of period) 48 50 48 32 17 16
Number of operating units
(at end of period) 17,611 16,742 15,783 11,064 6,040 5,836
Number of operating units
(weighted average) 17,362 16,412 13,694 7,935 5,996 4,479
Weighted average monthly revenue
per unit $ 536 $ 494 $ 459 $ 434 $ 426 $ 402
Properties under development
(at end of period) 6 9 8 3 1
<FN>
<F1> Management considers FFO to be an appropriate measure of the performance of an equity REIT.
The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as
net income (computed in accordance with generally accepted accounting principles), excluding
gains (or losses) from debt restructuring and sales of property, plus real estate depreciation
and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In
addition, extraordinary or unusual items, along with significant non-recurring events that
materially distort the comparative measure of FFO, should be disregarded in its calculation.
Prior to March 1995, the NAREIT definition of FFO required the add back of non-real estate
depreciation and amortization, such as loan cost amortization. Camden has reported FFO
according to the definitions prescribed by NAREIT for each of the periods presented above. FFO
does not represent cash flows from operating activities as defined by GAAP and should not be
considered as an alternative to net income as an indicator of Camden's operating performance.
FFO is not a measure of liquidity, nor is it indicative of cash available to fund other cash
flow needs, including principal amortization, capital improvements and distributions to
shareholders. Further, FFO as disclosed by other REITs may not be comparable to Camden's
calculation of FFO.
</FN>
</TABLE>
<PAGE>
EXHIBIT 21.1
Names of State of Names Under Which
Subsidiaries Incorporation Business is Done
- ---------------------------- ------------- --------------------------
1. Apartment Connection, Inc. Delaware Apartment Connection, Inc.
2. Camden Acquisition, Inc. Delaware Camden Acquisition, Inc.
3. Camden Bay Crest, Inc. Delaware Camden Bay Crest, Inc.
4. Camden Building, Inc. Delaware Camden Building, Inc.
5. Camden Colorado, Inc. Delaware Camden Colorado, Inc.
6. Camden Development, Inc. Delaware Camden Development, Inc.
7. Camden Glen Lakes, Inc. Delaware Camden Glen Lakes, Inc.
8. Camden Hayes Place, Inc. Delaware Camden Hayes Place, Inc.
9. Camden Roseland Place, Inc. Delaware Camden Roseland Place, Inc.
10. Camden Subsidiary, Inc. Delaware Camden Subsidiary, Inc.
11. Camden Wilshire Place, Inc. Delaware Camden Wilshire Place, Inc.
12. CPT Arizona, Inc. Delaware CPT Arizona, Inc.
13. CPT Texas, Inc. Delaware CPT Texas, Inc.
14. TeleServe, Inc. (formerly Delaware CamTel
Camden Communications
One, Inc.)
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements No. 33-80230 on Form S-8 filed on June 15, 1994, No.
33-83362 filed on September 14, 1994, No. 33-84020 filed on
September 15, 1994, No. 33-84658 filed on October 3, 1994 and No.
33-84536 filed on October 3, 1994, each on Form S-3, No.
333-22411 filed on February 26, 1997 on Form S-4 of Camden
Property Trust of our reports dated February 21, 1997, included
and incorporated by reference in the Annual Report on Form 10-K
of Camden Property Trust for the year ended December 31, 1996,
and to the reference to us under the heading "Experts" in the
Prospectus, which is part of such Registration Statements on
Forms S-3 and Form S-4.
/S/
- ------------------
DELOITTE & TOUCHE LLP
Houston, Texas
March 26, 1997
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby constitute and appoint D. Keith Oden and G. Steven Dawson,
and each of them, each with full power to act without the other,
his true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign an
Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on
Form 10-K for the year ended December 31, 1996 and to sign any
and all amendments to the Annual Report, and to file the same,
with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, full power and authority
to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
Signature
/S/
-------------------
Richard J. Campo
Dated: March 26, 1997
PAGE
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby constitute and appoint Richard J. Campo and G. Steven
Dawson, and each of them, each with full power to act without the
other, his true and lawful attorneys-in-fact and agents, each
with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign
an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST
on Form 10-K for the year ended December 31, 1996 and to sign any
and all amendments to the Annual Report, and to file the same,
with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, full power and authority
to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
Signature
/S/
-------------------
D. Keith Oden
Dated: March 26, 1997
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby constitute and appoint D. Keith Oden and Richard J. Campo,
and each of them, each with full power to act without the other,
his true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign an
Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on
Form 10-K for the year ended December 31, 1996 and to sign any
and all amendments to the Annual Report, and to file the same,
with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, full power and authority
to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
Signature
/S/
-------------------
G. Steven Dawson
Dated: March 26, 1997
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby constitute and appoint D. Keith Oden, Richard J. Campo and
G. Steven Dawson, and each of them, each with full power to act
without the other, his true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities, to sign an Annual Report (the "Annual Report") of
CAMDEN PROPERTY TRUST on Form 10-K for the year ended December
31, 1996 and to sign any and all amendments to the Annual Report,
and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys- infact and
agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or any of them may lawfully do or
cause to be done by virtue hereof.
Signature
/S/
-------------------
George A. Hrdlicka
Dated: March 25, 1997
PAGE
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby constitute and appoint D. Keith Oden, Richard J. Campo and
G. Steven Dawson, and each of them, each with full power to act
without the other, his true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities, to sign an Annual Report (the "Annual Report") of
CAMDEN PROPERTY TRUST on Form 10-K for the year ended December
31, 1996 and to sign any and all amendments to the Annual Report,
and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys- infact and
agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or any of them may lawfully do or
cause to be done by virtue hereof.
Signature
/S/
-------------------
F. Gardner Parker
Dated: March 26, 1997
PAGE
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby constitute and appoint D. Keith Oden, Richard J. Campo and
G. Steven Dawson, and each of them, each with full power to act
without the other, his true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities, to sign an Annual Report (the "Annual Report") of
CAMDEN PROPERTY TRUST on Form 10-K for the year ended December
31, 1996 and to sign any and all amendments to the Annual Report,
and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys- infact and
agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or any of them may lawfully do or
cause to be done by virtue hereof.
Signature
/S/
-------------------
Steven A. Webster
Dated: March 26, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000906345
<NAME> CAMDEN PROPERTY TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 4,789
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 646,545
<DEPRECIATION> 56,369
<TOTAL-ASSETS> 603,510
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<BONDS> 244,182
0
0
<COMMON> 165
<OTHER-SE> 295,263
<TOTAL-LIABILITY-AND-EQUITY> 603,510
<SALES> 0
<TOTAL-REVENUES> 111,606
<CGS> 0
<TOTAL-COSTS> 53,796
<OTHER-EXPENSES> 23,894
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,336
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,709
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0
</TABLE>
