SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number: 1-12110
CAMDEN PROPERTY TRUST
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 76-6088377
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
3 Greenway Plaza, Suite 1300, Houston, Texas 77046
(Address of Principal Executive Offices) (Zip Code)
(713) 354-2500
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
As of July 31, 2000, there were 38,234,795 shares of Common Shares of Beneficial
Interest, $0.01 par value per share, outstanding.
<PAGE> 1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
2000 1999
---------------- ---------------
(Unaudited)
<S> <C> <C>
Real estate assets, at cost:
Land $ 362,735 $ 354,833
Buildings and improvements 2,192,795 2,122,793
--------------- --------------
2,555,530 2,477,626
Less: accumulated depreciation (301,384) (253,545)
--------------- --------------
Net operating real estate assets 2,254,146 2,224,081
Properties under development, including land 154,133 178,539
Investment in joint ventures 21,090 21,869
--------------- --------------
Total real estate assets 2,429,369 2,424,489
Accounts receivable - affiliates 2,508 2,228
Notes receivable:
Affiliates 1,800 1,800
Other 40,742 34,442
Other assets, net 24,883 14,744
Cash and cash equivalents 3,012 5,517
Restricted cash 5,183 4,712
--------------- --------------
Total assets $ 2,507,497 $ 2,487,932
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable:
Unsecured $ 872,821 $ 820,623
Secured 341,960 344,467
Accounts payable 20,474 20,323
Accrued real estate taxes 20,738 24,485
Accrued expenses and other liabilities 34,482 33,987
Distributions payable 28,970 27,114
--------------- --------------
Total liabilities 1,319,445 1,270,999
Minority Interests:
Units convertible into perpetual preferred shares 149,815 132,679
Units convertible into common shares 61,971 64,173
--------------- -------------
Total minority interests 211,786 196,852
7.33% Convertible Subordinated Debentures 2,547 3,406
Shareholders' Equity:
Convertible preferred shares of beneficial interest 42 42
Common shares of beneficial interest 449 448
Additional paid-in capital 1,310,938 1,303,645
Distributions in excess of net income (152,489) (132,198)
Unearned restricted share awards (12,138) (8,485)
Less: treasury shares, at cost (173,083) (146,777)
--------------- --------------
Total shareholders' equity 973,719 1,016,675
--------------- --------------
Total liabilities and shareholders' equity $ 2,507,497 $ 2,487,932
=============== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 2
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- -------------------------
2000 1999 2000 1999
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues
Rental income $ 91,660 $ 83,695 $ 181,178 $ 165,829
Other property income 6,613 5,420 12,976 10,579
------------ ---------- ----------- -----------
Total property income 98,273 89,115 194,154 176,408
Equity in income of joint ventures 223 428 480 944
Fee and asset management 1,217 1,273 2,926 2,223
Other income 1,614 596 2,481 672
------------ ---------- ----------- -----------
Total revenues 101,327 91,412 200,041 180,247
------------ ---------- ----------- -----------
Expenses
Property operating and maintenance 28,274 26,563 55,980 52,139
Real estate taxes 10,044 9,303 20,034 18,504
General and administrative 3,626 2,376 6,765 4,799
Interest 17,605 14,044 34,189 27,518
Depreciation and amortization 25,244 21,486 49,843 42,838
------------ ---------- ----------- -----------
Total expenses 84,793 73,772 166,811 145,798
------------ ---------- ----------- -----------
Income before gain on sales of properties and minority interests 16,534 17,640 33,230 34,449
Gain on sales of properties 1,933 720
------------ ---------- ----------- -----------
Income before minority interests 16,534 17,640 35,163 35,169
Minority interests
Distributions on units convertible into perpetual preferred shares (3,190) (2,119) (6,408) (2,981)
Income allocated to units convertible into common shares (407) (340) (799) (958)
------------ ---------- ----------- -----------
Total minority interests (3,597) (2,459) (7,207) (3,939)
------------ ---------- ----------- -----------
Net income 12,937 15,181 27,956 31,230
Preferred share dividends (2,343) (2,343) (4,686) (4,686)
------------ ---------- ----------- -----------
Net income to common shareholders $ 10,594 $ 12,838 $ 23,270 $ 26,544
============ ========== =========== ===========
Basic earnings per share $ 0.28 $ 0.31 $ 0.61 $ 0.63
Diluted earnings per share $ 0.27 $ 0.30 $ 0.58 $ 0.61
Distributions declared per common share $ 0.5625 $ 0.520 $ 1.125 $ 1.040
Weighted average number of common shares outstanding 37,927 41,243 38,210 42,038
Weighted average number of common and common dilutive 41,146 44,320 41,361 45,093
equivalent shares outstanding
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 3
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 27,956 $ 31,230
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 49,843 42,838
Equity in income of joint ventures, net of cash received 779 711
Gain on sale of properties (1,933) (720)
Income allocated to units convertible into common shares 799 958
Accretion of discount on unsecured notes payable 198 128
Net change in operating accounts (5,088) (13,062)
------------ ------------
Net cash provided by operating activities 72,554 62,083
CASH FLOW FROM INVESTING ACTIVITIES
Increase in real estate assets (73,536) (101,681)
Net proceeds from sale of properties 20,056 4,825
Increase in investment in joint ventures (1,336)
Increase in notes receivable (6,300)
Other (783) (1,110)
------------ ------------
Net cash used in investing activities (60,563) (99,302)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase (decrease) in unsecured lines of credit and short-term
borrowings 52,000 (182,000)
Proceeds from notes payable 253,380
Proceeds from issuance of preferred units, net 17,136 97,926
Repayment of notes payable (2,507) (12,825)
Distributions to shareholders and minority interests (55,605) (52,311)
Repurchase of common shares and units convertible into common shares (26,306) (63,270)
Other 786 408
------------ ------------
Net cash (used in) provided by financing activities (14,496) 41,308
------------ ------------
Net (decrease) increase in cash and cash equivalents (2,505) 4,089
Cash and cash equivalents, beginning of period 5,517 5,647
------------ ------------
Cash and cash equivalents, end of period $ 3,012 $ 9,736
============ ============
SUPPLEMENTAL INFORMATION
Cash paid for interest, net of interest capitalized $ 34,070 $ 23,414
Interest capitalized 8,067 8,182
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Fair value adjustment from the acquisition of Oasis:
Fair value of assets acquired $ 835
Liabilities assumed 835
Conversion of 7.33% subordinated debentures to common shares, net $ 859 40
Value of shares issued under benefit plans, net 6,125 3,478
Conversion of operating partnership units to common shares 292
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 4
CAMDEN PROPERTY TRUST
Notes to Consolidated Financial Statements
(Unaudited)
1. Interim Unaudited Financial Information
The accompanying interim unaudited financial information has been prepared
according to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted according to such rules and
regulations, although management believes that the disclosures are adequate to
make the information presented not misleading. In the opinion of management, all
adjustments and eliminations, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of Camden Property Trust as
of June 30, 2000 and the results of operations and cash flows for the three and
six months ended June 30, 2000 and 1999 have been included. The results of
operations for such interim periods are not necessarily indicative of the
results for the full year.
Business
Camden Property Trust is a real estate investment trust which reports as a
single business segment with activities related to the ownership, development,
construction and management of multifamily apartment communities in the
Southwest, Southeast, Midwest and Western regions of the United States. At June
30, 2000, we owned interests in, operated or were developing 158 multifamily
properties containing 55,935 apartment homes located in nine states. Three of
our multifamily properties, including the expansion of an existing operating
property, containing 1,151 apartment homes were under development at June 30,
2000. Five of our newly developed multifamily properties containing 2,560
apartment homes were in lease-up at June 30, 2000. Additionally, we have several
sites which we intend to develop into multifamily apartment communities.
Property Update
During the first six months of 2000, we completed construction on four
properties totaling 1,474 apartment homes: The Park at Caley in Denver, The Park
at Lee Vista in Orlando, The Park at Oxmoor in Louisville, and The Park at
Arizona Center in Phoenix. The Park at Caley in Denver stabilized during the
second quarter, and stabilization is expected to occur at the remaining
properties over the next three quarters. Additionally, construction continued at
two properties totaling 1,000 apartment homes: The Park at Farmers Market in
Dallas and The Park at Crown Valley in Mission Viejo, California. We also began
constructing Miramar Phase IV which will add an additional 151 units to an
existing operating property located in Corpus Christi, Texas. Initial occupancy
has begun in Dallas and is expected to begin in the third quarter of 2000 in
Mission Viejo and Corpus Christi.
During the first six months of 2000, we sold a mini-storage facility
located in Las Vegas and several parcels of undeveloped land. The land sales
consisted of 2.9 acres located in downtown Dallas and 38.5 acres located in
Houston which were sold for commercial and retail development. These parcels of
land are adjacent to our urban land development projects located in those
cities. Additionally, we sold a 19.5 acre tract of land located in Las Vegas
which we acquired in our merger with Oasis Residential, Inc. Net proceeds from
these sales were approximately $20.1 million. We used the proceeds to reduce
indebtedness outstanding under our unsecured line of credit.
Subsequent to June 30, 2000, due diligence ended on sales agreements
totaling $134.5 million for eleven properties containing a total of 3,599
apartment homes. Three properties are located in each of Houston, Dallas, and
<PAGE> 5
Las Vegas, and one property is located in each of St. Louis and El Paso.
Although no assurance can be made that we will complete the sales, we currently
expect to close these sales in the third and fourth quarters of 2000 and
anticipate using the proceeds from these sales to reduce balances outstanding
under the unsecured line of credit.
Real Estate Assets at Cost
We capitalized $13.7 million and $14.7 million in the six months ended June
30, 2000 and 1999, respectively, of renovation and improvement costs which we
believe should extend the economic lives and enhanced the earnings of our
multifamily properties.
Property Operating and Maintenance Expenses
Property operating and maintenance expenses included normal repairs and
maintenance totaling $7.2 million and $14.3 million for the three and six months
ended June 30, 2000, compared to $6.9 million and $13.4 million for the three
and six months ended June 30, 1999.
Common Share Dividend Declaration
In June 2000, we announced that our Board of Trust Managers had declared a
dividend on our common shares of $0.5625 per share for the second quarter of
2000 which was paid on July 17, 2000 to all common shareholders of record as of
June 30, 2000. We paid an equivalent amount per unit to holders of common
operating partnership units. This distribution to common shareholders and
holders of common operating partnership units equates to an annualized dividend
rate of $2.25 per share or unit.
Preferred Share Dividend Declaration
In June 2000, we announced that our Board of Trust Managers had declared a
quarterly dividend on our preferred shares of $0.5625 per share payable August
15, 2000 to all preferred shareholders of record as of June 30, 2000.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities, which requires recognition of all
derivatives as either assets or liabilities in the financial statements and
measurement of those instruments at fair value. The initial effective date of
SFAS No. 133 was delayed, and is now effective for all quarters of all fiscal
beginning after June 15, 2000. Management believes that the adoption of SFAS No.
133 will not have a material impact on our consolidated financial statements.
<PAGE> 6
Earnings Per Share
The following table presents information necessary to calculate basic
and diluted earnings per share for the three and six months ended June 30, 2000
and 1999:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Basic earnings per share:
Weighted average common shares outstanding 37,927 41,243 38,210 42,038
=========== =========== =========== ===========
Basic earnings per share $ 0.28 $ 0.31 $ 0.61 $ 0.63
=========== =========== =========== ===========
Diluted earnings per share:
Weighted average common shares outstanding 37,927 41,243 38,210 42,038
Shares issuable from assumed conversion of:
Common share options and awards granted 670 419 602 394
Common minority interest units 2,549 2,658 2,549 2,661
----------- ----------- ----------- -----------
Weighted average common shares outstanding, as adjusted 41,146 44,320 41,361 45,093
=========== =========== =========== ===========
Diluted earnings per share $ 0.27 $ 0.30 $ 0.58 $ 0.61
=========== =========== =========== ===========
Earnings for basic and diluted computation:
Net income $ 12,937 $ 15,181 $ 27,956 $ 31,230
Less: Preferred share dividends (2,343) (2,343) (4,686) (4,686)
----------- ----------- ----------- -----------
Net income to common shareholders
(Basic earnings per share computation) 10,594 12,838 23,270 26,544
Income allocated to operating partnership units 407 340 799 958
----------- ----------- ----------- -----------
Net income to common shareholders, as adjusted
(Diluted earnings per share computation) $ 11,001 $ 13,178 $ 24,069 $ 27,502
=========== =========== =========== ===========
</TABLE>
Reclassifications
Certain reclassifications have been made to amounts in prior period
financial statements to conform with current year presentations.
2. Notes Receivable
We have entered into agreements with unaffiliated third parties to develop,
construct, and manage five multifamily projects containing a total of 1,517
apartment homes. We are providing financing for a portion of each project in the
form of notes receivable which mature through 2005. These notes earn interest at
10% annually and are secured by second liens on the assets and partial
guarantees by the third party owners. We expect these notes to be repaid from
operating cash flow or proceeds from the sale of the individual properties. At
June 30, 2000, these notes had principal balances totaling $38.3 million. We
anticipate funding up to an aggregate of $53 million in connection with these
projects. We earn fees for managing the development, construction and eventual
operations of these properties. We have begun construction on these projects,
and initial occupancy has begun during the second quarter 2000. We have the
option to purchase these properties in the future at a price to be determined
based upon the property's performance and an agreed valuation model.
Additionally, we have a $2.4 million note receivable which bears interest
at 15% and matures in June 2001.
<PAGE> 7
3. Notes Payable
The following is a summary of our indebtedness:
(In millions)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------------- ----------------
<S> <C> <C>
Senior Unsecured Notes:
6.73% - 7.28% Notes, due 2001-2006 $ 523.3 $ 523.1
6.68% - 7.63% Medium Term Notes, due 2000 - 2009 181.5 181.5
Unsecured Lines of Credit and Short-Term Borrowings 168.0 116.0
----------------- ----------------
872.8 820.6
Secured Notes - Mortgage loans (5.75% - 8.63%), due 2001 - 2028 342.0 344.5
----------------- ----------------
Total notes payable $ 1,214.8 $ 1,165.1
================= ================
</TABLE>
In August 1999, we entered into a line of credit with 14 banks for a total
commitment of $375 million, which is scheduled to mature in August 2002. The
scheduled interest rate on the line of credit is based on a spread over LIBOR or
Prime. The scheduled interest rates are subject to change as our credit ratings
change. Advances under the line of credit may be priced at the scheduled rates,
or we may enter into bid rate loans with participating banks at rates below the
scheduled rates. These bid rate loans have terms of six months or less and may
not exceed the lesser of $187.5 million or the remaining amount available under
the line of credit. The line of credit is subject to customary financial
covenants and limitations. Subsequent to June 30, 2000, the scheduled maturity
on the line of credit was in the process of being extended to August 2003.
During September 1999, we executed three interest rate swap agreements
totaling $70 million which are scheduled to mature in October 2000. These swaps
are being used as a hedge of interest rate exposure on our $90 million
medium-term notes issued in October 1998 which mature in October 2000.
Currently, the interest rate on the medium term notes is fixed at 7.23%. The
interest rates on the swaps are reset monthly based on the one-month LIBOR rate
plus a spread which resulted in a weighted average effective interest rate on
the swaps of 7.49% for the six months ended June 30, 2000.
At June 30, 2000, the weighted average interest rate on floating rate debt
was 7.33%.
<PAGE> 8
4. Net Change in Operating Accounts
The effect of changes in the operating accounts on cash flows from
operating activities is as follows:
(In thousands)
Six Months Ended
June 30,
--------------------------
2000 1999
----------- -----------
Decrease (increase) in assets:
Accounts receivable - affiliates $ 183 $ (372)
Other assets, net (7,987) (8,576)
Restricted cash (471) (1,064)
Increase (decrease) in liabilities:
Accounts payable 152 (6,191)
Accrued real estate taxes (3,747) (2,632)
Accrued expenses and other liabilities 6,782 5,773
----------- -----------
Net change in operating accounts $ (5,088) $ (13,062)
=========== ===========
5. Preferred Units
In January 2000, our operating partnership issued $17.5 million of 8.25%
Series C Cumulative Redeemable Perpetual Preferred Units. Distributions on the
preferred units are payable quarterly in arrears. The preferred units are
redeemable for cash by the operating partnership on or after the fifth
anniversary of issuance at par plus the amount of any accumulated and unpaid
distributions. The preferred units are convertible after 10 years by the holder
into our 8.25% Series C Cumulative Redeemable Perpetual Preferred Shares. The
preferred units are subordinate to present and future debt.
6. Restricted Share and Option Awards
During the first six months of 2000, we granted 252,640 restricted shares
in lieu of cash compensation to certain key employees and non-employee trust
managers. The restricted shares were issued based on the market value of our
common shares at the date of grant and have vesting periods of up to five years.
We also granted 14,000 options with an exercise price equal to the market value
of our common shares on the date of grant. The options become exercisable in
equal increments over three years, beginning on the first anniversary of the
grant. During the six month period ended June 30, 2000, previously granted
options to purchase 704,341 shares became exercisable and 118,174 restricted
shares vested.
7. Common Share Repurchase Program
In 1998 and 1999, the Board of Trust Managers authorized us to repurchase
or redeem up to $200 million of our common equity securities through open market
purchases and private transactions. As of June 30, 2000, we had repurchased
6,687,626 common shares and redeemed 105,814 units that were convertible into
common shares for a total cost of $173.1 million and $2.9 million, respectively.
8. Convertible Preferred Shares
The 4,165,000 preferred shares pay a cumulative dividend quarterly in
arrears in an amount equal to $2.25 per share per annum. The preferred shares
generally have no voting rights and have a liquidation preference of $25 per
share plus accrued and unpaid distributions. The preferred shares are
convertible at the option of the holder at any time into common shares at a
conversion rate of 0.7701 of a common share for each preferred share, subject to
adjustment in certain circumstances. The preferred shares are not redeemable
prior to April 30, 2001.
<PAGE> 9
9. Executive Loan Guaranty Agreements
In 1999 and 2000, our Board of Trust Managers approved a plan which
permitted six of our senior executive officers to complete the purchase of $23.0
million of our common shares in open market transactions. The purchases were
funded with unsecured full recourse personal loans made to each of the
executives by a third party lender. The loans mature in five years, bear
interest at market rates and require interest to be paid quarterly. In order to
facilitate the employee share purchase transactions, we entered into a guaranty
agreement with the lender for payment of all indebtedness, fees and liabilities
of the officers to the lender. Simultaneously, we entered into a reimbursement
agreement with each of the executive officers whereby each executive officer has
indemnified us and absolutely and unconditionally agreed to reimburse us should
any amounts ever be paid by us pursuant to the terms of the guaranty agreement.
The reimbursement agreements require the executives to pay interest from the
date any amounts are paid by us until repayment by the officer. We have not had
to perform under the guaranty agreement.
10. Contingencies
In April 1998, we acquired Oasis Residential, Inc. Prior to this time,
Oasis had been contacted by certain regulatory agencies with regards to alleged
failures to comply with the Fair Housing Amendments Act (the "Fair Housing Act")
as it pertained to nine properties (seven of which we currently own) constructed
for first occupancy after June 30, 1991. On February 1, 1999, the Justice
Department filed a lawsuit against us and several other defendants in the United
States District Court for the District of Nevada alleging (1) that the design
and construction of these properties violates the Fair Housing Act and (2) that
we, through the merger with Oasis, had discriminated in the rental of dwellings
to persons because of handicap. The complaint requests an order that (i)
declares that the defendants' policies and practices violate the Fair Housing
Act; (ii) enjoins us from (a) failing or refusing, to the extent possible, to
bring the dwelling units and public use and common use areas at these properties
and other covered units that Oasis had designed and/or constructed into
compliance with the Fair Housing Act, (b) failing or refusing to take such
affirmative steps as may be necessary to restore, as nearly as possible, the
alleged victims of the defendants' alleged unlawful practices to positions they
would have been in but for the discriminatory conduct and (c) designing or
constructing any covered multi-family dwellings in the future that do not
contain the accessibility and adaptability features set forth in the Fair
Housing Act; and requires us to pay damages, including punitive damages, and a
civil penalty.
With any acquisition, we plan for and undertake renovations needed to
correct deferred maintenance, life/safety and Fair Housing matters. We are
currently engaged in settlement negotiations with the Justice Department to
resolve this lawsuit. While the final estimate of costs and expenses associated
with the resolution of this matter has not yet been determined, management does
not expect the amount to be material.
11. Subsequent Events
In the ordinary course of our business, we issue letters of intent
indicating a willingness to negotiate for the purchase or sale of multifamily
properties or development land. In accordance with the local real estate market
practice, such letters of intent are non-binding, and neither party to the
letter of intent is obligated to pursue the transaction unless and until a
definitive contract is entered into by the parties. The letters of intent and
any resulting definitive contracts provide the purchaser with time to evaluate
the properties and conduct due diligence and during which periods the purchaser
will have the ability to terminate the contracts without penalty or forfeiture
of any deposit or earnest money. There can be no assurance that definitive
contracts will be entered into with respect to any properties covered by letters
of intent or that we will acquire or sell any property as to which we may have
entered into a definitive contract. Further, due diligence periods are
frequently extended as needed. An acquisition or sale becomes probable at the
time that the due diligence period expires and the definitive contract has not
<PAGE> 10
been terminated. We are then at risk under an acquisition contract, but only to
the extent of any earnest money deposits associated with the contract, and are
obligated to sell under a sales contract.
We are currently in the due diligence period on contracts for the purchase
of land for development. No assurance can be made that we will complete the
purchases or will be satisfied with the outcome of the due diligence.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Overview
The following discussion should be read in conjunction with all of the
financial statements and notes appearing elsewhere in this report as well as the
audited financial statements appearing in our 1999 Annual Report to
Shareholders. Where appropriate, comparisons are made on a dollars
per-weighted-average-unit basis in order to adjust for changes in the number of
apartment homes owned during each period. The statements contained in this
report that are not historical facts are forward-looking statements, and actual
results may differ materially from those included in the forward-looking
statements. These forward-looking statements involve risks and uncertainties
including, but not limited to, the following: changes in general economic
conditions, changes in financial markets and interest rates, our failure to
qualify as a real estate investment trust ("REIT") and environmental
uncertainties and natural disasters.
Business
Camden Property Trust is a real estate investment trust which reports as a
single business segment with activities related to the ownership, development,
construction and management of multifamily apartment communities in the
Southwest, Southeast, Midwest and Western regions of the United States. At June
30, 2000, we owned interests in, operated or were developing 158 multifamily
properties containing 55,935 apartment homes located in nine states. Three of
our multifamily properties, including the expansion of an existing operating
property, containing 1,151 apartment homes were under development at June 30,
2000. Five our newly developed multifamily properties containing 2,560 apartment
homes were in lease-up at June 30, 2000. Additionally, we have several sites
which we intend to develop into multifamily apartment communities.
<PAGE> 11
Property Portfolio
Our multifamily property portfolio, excluding land held for future
development is summarized as follows:
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
---------------------------- ----------------------------
Apartment Apartment
Homes Properties % (a) Homes Properties % (a)
--------- ---------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating Properties
Texas
Houston 8,258 19 17% 8,258 19 16%
Dallas (b) 9,381 26 18 9,381 26 18
Austin 1,745 6 4 1,745 6 4
Other 1,641 5 3 1,641 5 3
--------- ---------- ------- --------- ---------- ------
Total Texas Operating Properties 21,025 56 42 21,025 56 41
Arizona 2,658 8 5 2,326 7 5
California 1,272 3 3 1,272 3 3
Colorado (b) 2,529 8 4 2,312 7 4
Florida (c) 7,827 17 16 7,335 17 15
Kentucky 1,448 5 3 1,016 4 2
Missouri 3,327 8 7 3,327 8 7
Nevada (b) 11,963 41 14 11,963 41 14
North Carolina (b) 2,735 10 4 2,735 10 4
--------- ---------- ------- --------- ---------- ------
Total Operating Properties 54,784 156 98 53,311 153 95
--------- ---------- ------- --------- ---------- ------
Properties Under Development
Texas
Dallas 620 1 1 620 1 1
Other (d) 151
--------- ---------- ------- --------- ---------- ------
Total Texas Properties Under Development 771 1 1 620 1 1
Arizona 332 1 1
California 380 1 1 380 1 1
Colorado 218 1
Florida 492 1 1
Kentucky 432 1 1
--------- ---------- ------- --------- ---------- ------
Total Properties Under Development 1,151 2 2 2,474 6 5
--------- ---------- ------- --------- ---------- ------
Total Properties 55,935 158 100% 55,785 159 100%
========= ========== ======= ========= ========== ======
Less: Joint Venture
Apartment Homes (b) 6,503 6,504
--------- ---------
Total Apartment Homes
- Owned 100% 49,432 49,281
========= =========
</TABLE>
(a) Based on number of apartment homes owned 100%
(b) The figures include properties held in joint ventures as follows: one
property with 708 apartment homes in Dallas and two properties with 556
apartment homes in North Carolina in which we own a 44% interest, the
remaining interest is owned by unaffiliated private investors; one
property with 320 apartment homes (321 apartment homes at December 31,
1999) in Colorado in which we own a 50% interest, the remaining interest
is owned by an unaffiliated private investor; and 19 properties with 4,919
apartment homes in Nevada owned through Sierra-Nevada Multifamily
Investment, LLC which we own a 20% interest, the remaining interest is
owned by an unaffiliated private pension fund.
(c) Includes the combination of operations at January 1, 2000 of two adjacent
properties.
(d) Property under development is the fourth phase of an existing operating
property located in Corpus Christi, Texas.
<PAGE> 12
At June 30, 2000, we had five completed properties under lease-up as
follows:
<TABLE>
<CAPTION>
Product Number of % Leased Estimated
Type Apartment at 7/31/00 Date of Date of
Property and Location Homes Completion Stabilization
----------------------------------------- ------------ -------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
The Park at Holly Springs
Houston, TX Garden 548 89% 3Q99 4Q00
The Park at Greenway
Houston, TX Urban 756 86% 4Q99 3Q00
The Park at Lee Vista
Orlando, FL Garden 492 74% 1Q00 1Q01
The Park at Oxmoor
Louisville, KY Garden 432 75% 1Q00 1Q01
The Park at Arizona Center
Phoenix, AZ Urban 332 45% 1Q00 1Q01
</TABLE>
At June 30, 2000, we had three development properties in various stages of
construction as follows:
<TABLE>
<CAPTION>
Product Number of Estimated Estimated Estimated
Type Apartment Cost Date of Date of
Property and Location Homes ($ millions) Completion Stabilization
----------------------------------------- ------------------- ----------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
In Lease-Up
The Park at Farmers Market, Phase I
Dallas, TX Urban 620 $ 51.1 1Q01 4Q01
Under Construction
Miramar Phase IV
Corpus Christi, TX Garden 151 3.1 3Q00 3Q00
The Park at Crown Valley
Mission Viejo, CA Garden 380 44.1 1Q01 4Q01
---------- ----------
Total for three development properties 1,151 $ 98.3
========== ===========
</TABLE>
We stage our construction to allow leasing and occupancy during the
construction period which we believe minimizes the duration of the lease-up
period following completion of construction. Our accounting policy related to
properties in the development and leasing phase is that all operating expenses,
excluding depreciation, associated with occupied apartment homes are expensed
against revenues generated by those apartment homes as they become occupied. All
construction and carrying costsare capitalized and reported on the balance sheet
in "Properties under development, including land" until individual buildings are
completed. Upon completion of each building, the total cost of that building and
the associated land is transferred to "Land" and "Buildings and improvements"
and the assets are depreciated over their estimated useful lives using the
straight-line method of depreciation. Upon achieving 90% occupancy, or generally
one year from opening the leasing office (with some allowances for larger than
average properties), whichever occurs first, all apartment homes are considered
operating and we begin expensing all items that were previously considered as
carrying costs.
Properties under development in our consolidated financial statements
includes additional land held for development totaling $87.5 million at June 30,
2000. Included in this amount is $65.3 million related to the development of
three urban land projects located in Dallas, Houston and Long Beach, California.
<PAGE> 13
Comparison of the Quarter Ended June 30, 2000 and June 30, 1999
Earnings before interest, depreciation and amortization increased $6.2
million, or 11.7%, from $53.2 million to $59.4 million for the three months
ended June 30, 1999 and 2000, respectively. The weighted average number of
apartment homes for the second quarter of 2000 increased by 2,194 apartment
homes, or 4.9%, from 45,178 to 47,372. Total operating properties were 133 and
126 at June 30, 2000 and 1999, respectively. The 47,372 weighted average
apartment homes and the 133 operating properties exclude the impact of our
ownership interest in properties owned in joint ventures.
Our apartment communities generate rental revenue and other income through
the leasing of apartment homes. Revenues from our rental operations comprised
97% of our total revenues for the quarters ended June 30, 2000 and 1999. Our
primary financial focus for our apartment communities is net operating income.
Net operating income represents total property revenues less property operating
and maintenance expenses, including real estate taxes. Net operating income for
the quarters ended June 30, 2000 and 1999 totaled $60.0 million and $53.2
million, respectively.
Rental income for the quarter ended June 30, 2000 increased $8.0 million,
or 9.5%, over the quarter ended June 30, 1999. Rental income per apartment home
per month increased $27, or 4.4%, from $618 to $645 for the second quarters of
1999 and 2000, respectively. The increase was primarily due to increased revenue
growth from the stabilized real estate portfolio and higher average rental rates
on the completed development properties. Overall average occupancy increased
slightly from 93.4% for the quarter ended June 30, 1999 to 93.7% for the quarter
ended June 30, 2000.
Other property income increased $1.2 million from $5.4 million to $6.6
million for the three months ended June 30, 1999 and 2000, respectively, which
represents a monthly increase of $7 per apartment home. The increase in other
property income was due primarily to increases from revenue sources such as
telephone, cable and water.
Other income increased $1.0 million for the quarter ended June 30, 2000
compared to the same period in 1999. This increase was due to interest earned on
our notes receivable.
Property operating and maintenance expenses increased $1.7 million or 6.4%,
from $26.6 million to $28.3 million, but decreased as a percent of total
property income from 29.8% to 28.8% for the quarters ended June 30, 1999 and
2000, respectively. The increase in operating expense was due to a larger number
of apartment homes in operation. Our operating expense ratios decreased
primarily as a result of operating efficiencies generated by our newly developed
properties.
Real estate taxes increased $740,000 from $9.3 million to $10.0 million for
the second quarters of 1999 and 2000, respectively, which represents an annual
increase of $24 per apartment home. The increase was primarily due to increases
in the valuations of renovated and developed properties and increases in
property tax rates.
General and administrative expenses increased $1.3 million from $2.4
million to $3.6 million, and increased as a percent of revenues from 2.6% to
3.6% for the quarters ended June 30, 1999 and 2000 respectively. The increase
was primarily due to increases in incentive-based compensation expense,
including the vesting of outstanding performance-based compensation related to
the gain on land development sales, and expenses related to marketing and
information technology functions.
Interest expense increased from $14.0 million to $17.6 million primarily
due to interest on new development and debt incurred to repurchase our shares
under the common share repurchase program. Interest capitalized was $3.9 million
and $4.3 million for the quarters ended June 30, 2000 and 1999, respectively.
<PAGE> 14
Depreciation and amortization increased from $21.5 million to $25.2
million. This increase was due primarily to increased development and
renovations activity.
Comparison of the Six Months Ended June 30, 2000 and June 30, 1999
Earnings before interest, depreciation and amortization increased $12.5
million, or 11.9%, from $104.8 million to $117.3 million for the six months
ended June 30, 1999 and 2000, respectively. The weighted average number of
apartment homes for the first six months of 2000 increased by 2,184 apartment
homes, or 4.9%, from 44,960 to 47,144. Total operating properties were 133 and
126 at June 30, 2000 and 1999, respectively. The weighted average apartment
homes and the number of operating properties exclude the impact of our ownership
interest in properties owned in joint ventures.
Revenues from our rental operations comprised 97% and 98% of our total
revenues for the six months ended June 30, 2000 and 1999, respectively. Net
operating income for the six months ended June 30, 2000 and 1999 totaled $118.1
million and $105.8 million, respectively.
Rental income for the six months ended June 30, 2000 increased $15.3
million, or 9.3%, over the six months ended June 30, 1999. Rental income per
apartment home per month increased $26, or 4.2%, from $615 to $641 for the first
six months of 1999 and 2000, respectively. The increase was primarily due to
increased revenue growth from the stabilized real estate portfolio and higher
average rental rates on the completed development properties.
Other property income increased $2.4 million from $10.6 million to $13.0
million for the six months ended June 30, 1999 and 2000, respectively, which
represents a monthly increase of $7 per apartment home. The increase in other
property income was due primarily to increases from revenue sources such as
telephone, cable and water.
Other income for the six months ended June 30, 2000 increased $1.8 million
over the same period in 1999. This increase was primarily due to interest earned
on our notes receivable.
Property operating and maintenance expenses increased $3.8 million or 7.4%,
from $52.1 million to $56.0 million, but decreased as a percent of total
property income from 29.6% to 28.8%, for the six months ended June 30, 1999 and
2000, respectively. The increase in operating expense was due to a larger number
of apartment homes in operation. Our operating expense ratios decreased
primarily as a result of operating efficiencies generated by our newly developed
properties.
Real estate taxes increased $1.5 million from $18.5 million to $20.0
million for the first six months of 1999 and 2000, respectively, which
represents an annual increase of $27 per apartment home. The increase was
primarily due to increases in the valuations of renovated and developed
properties and increases in property tax rates.
General and administrative expenses increased $2.0 million from $4.8
million to $6.8 million, and increased as a percent of revenues from 2.7% to
3.4%, for the six months ended June 30, 1999 and 2000 respectively. The increase
was primarily due to increases in incentive-based compensation expense,
including the vesting of outstanding performance-based compensation related to
the gain on land development sales, and expenses related to marketing and
information technology functions.
Interest expense increased from $27.5 million to $34.2 million primarily
due to interest on new development and debt incurred to repurchase our shares
under the common share repurchase program. Interest capitalized was $8.1 million
and $8.2 million for the six months ended June 30, 2000 and 1999, respectively.
<PAGE> 15
Depreciation and amortization increased from $42.8 million to $49.8
million. This increase was due primarily to increased development and
renovations activity.
Gains on sale of properties for the six months ended June 30, 2000 totaled
$1.9 million due to the sale of a mini-storage facility in Las Vegas and the
sale of approximately 61 acres of undeveloped land located in Las Vegas, Dallas
and Houston. Gains on sales of properties for the six months ended June 30, 1999
related to the sale of a 126 unit complex located in Louisville, KY.
Liquidity and Capital Resources
Financial Structure
We intend to continue maintaining what management believes to be a
conservative capital structure by:
(i) using what management believes is a prudent combination of debt
and common and preferred equity;
(ii) extending and sequencing the maturity dates of our debt where
possible;
(iii) managing interest rate exposure using fixed rate debt and
hedging where management believes it is appropriate;
(iv) borrowing on an unsecured basis in order to maintain a
substantial number of unencumbered assets; and
(v) maintaining conservative coverage ratios.
The interest expense coverage ratio, net of capitalized interest, was 3.4
times and 3.8 times for the six months ended June 30, 2000 and 1999,
respectively, and 3.4 times and 3.8 times for the quarters ended June 30, 2000
and 1999, respectively. At June 30, 2000 and 1999, 76.3% and 74.6%,
respectively, of our properties (based on invested capital) were unencumbered.
Liquidity
We intend to meet our short-term liquidity requirements through cash flows
provided by operations, our unsecured line of credit discussed in the financial
flexibility section and other short-term borrowings. We expect that our ability
to generate cash will be sufficient to meet our short-term liquidity needs,
which include:
(i) normal operating expenses;
(ii) current debt service requirements;
(iii) recurring capital expenditures;
(iv) property developments;
(v) common share repurchases; and
(vi) distributions on our common and preferred equity.
We consider our long-term liquidity requirements to be the repayment of
maturing secured debt and borrowings under our unsecured line of credit and
funding of acquisitions. We intend to meet our long-term liquidity requirements
through the use of common and preferred equity capital, senior unsecured debt
and property dispositions.
We intend to concentrate our growth efforts toward selective development
and acquisition opportunities in our current markets, and through the
acquisition of existing operating portfolios and the development of properties
in selected new markets. We are developing three properties at an aggregate
expected cost of approximately $98.3 million, $82.2 million of which was
<PAGE> 16
incurred at June 30, 2000. We fund our developments and acquisitions through a
combination of equity capital, partnership units, medium-term notes,
construction loans, other debt securities and the unsecured line of credit. We
also seek to selectively dispose of assets that management believes have a lower
projected net operating income growth rate than the overall portfolio, or no
longer conform to our operating and investment strategies. We expect that any
such sales should generate capital for acquisitions and new developments or for
debt reduction.
Net cash provided by operating activities totaled $72.6 million for the six
months ended June 30, 2000, an increase of $10.5 million, or 16.9%, over the
same period in 1999. This increase was primarily due to an increase of $12.4
million in net operating income from the real estate portfolio for the six
months ended June 30, 2000 as compared to the six months ended June 30, 1999.
Additionally, liabilities increased $3.2 million for the six months ended June
30, 2000, versus a decrease of $3.1 million for the same period in 1999.
We used $60.6 million in net cash for investing activities for the six
months ended June 30, 2000 compared to $99.3 million for the same period in
1999. Total real estate assets, before accumulated depreciation, increased $52.7
million and $94.1 million for the six months ended June 30, 2000 and 1999,
respectively. For the six months ended June 30, 2000, net cash flows used for
investing activities related to property development totaled $59.8 million, and
we spent $13.7 million for capital improvements during that same period. Also,
notes receivable from third parties increased $6.3 million. These cash uses were
partially offset by $20.1 million in net proceeds received from property
dispositions during 2000. For the six months ended June 30, 1999, net cash spent
on property development and capital improvements were $87.0 million and $14.7
million, respectively. Additionally, we received $4.8 million in net proceeds
for property dispositions during the six months ended June 30, 1999.
Net cash used in financing activities totaled $14.5 million for the six
months ended June 30, 2000 compared to net cash provided by financing activities
of $41.3 million for the six months ended June 30, 1999. During the six months
ended June 30, 2000, we paid distributions totaling $55.6 million and we
repurchased $26.3 million common shares and units convertible into common
shares. These payments were funded by the issuance of $17.5 million of preferred
units, which are discussed in the "Financial Flexibility" section, and an
increase in borrowings under our line of credit of $52.0 million. During the six
months ended June 30, 1999, we paid $52.3 million for distributions and
repurchased $63.3 million common shares and units convertible into common
shares. Additionally, during the six months ended June 30, 1999, we issued
$100.0 million of preferred units and $254.5 million in senior unsecured notes.
The proceeds from these issuances were used to pay down borrowings under our
line of credit, which decreased $182.0 million for the six months ended June 30,
1999.
In 1998 and 1999, the Board of Trust Managers authorized us to repurchase
or redeem up to $200 million of our common equity securities through open market
purchases and private transactions. As of June 30, 2000, we had repurchased
6,687,626 common shares and redeemed 105,814 units that were convertible into
common shares for a total cost of $173.1 million and $2.9 million, respectively.
Subsequent to June 30, 2000, due diligence ended on sales agreements
totaling $134.5 million for eleven properties containing a total of 3,599
apartment homes. Three properties are located in each of Houston, Dallas, and
Las Vegas, and one property is located in each of St. Louis and El Paso.
Although no assurance can be made that we will complete the sales, we currently
expect to close these sales in the third and fourth quarters of 2000 and
anticipate using the proceeds from these sales to reduce balances outstanding
under the unsecured line of credit.
In June 2000, we announced that our Board of Trust Managers had declared a
dividend on our common shares of $0.5625 per share for the second quarter of
2000 which was paid on July 17, 2000 to all common shareholders of record as of
<PAGE> 17
June 30, 2000. We paid an equivalent amount per unit to holders of the common
operating partnership units. This distribution to common shareholders and
holders of common operating partnership units equates to an annualized dividend
rate of $2.25 per share or unit.
In June 2000, we declared a quarterly dividend on our preferred shares of
$0.5625 per share payable August 15, 2000 to all preferred shareholders of
record as of June 30, 2000.
As of June 30, 2000, we had senior unsecured debt totaling $872.8 million
and secured mortgage loans totaling $342.0 million. Our indebtedness had a
weighted average maturity of 5.5 years as of June 30, 2000. Scheduled principal
repayments on all notes payable outstanding at June 30, 2000 is as follows (in
000's):
Year Amount
---- ------
2000 $ 104,749
2001 167,465
2002 208,434
2003 125,482
2004 235,297
2005 and thereafter 373,354
-------------
Total $ 1,214,781
=============
The scheduled principal repayments in 2000 include $102.0 million senior
unsecured medium-term notes, which were issued in October 1998 and which we
expect to repay from the unsecured line of credit.
Financial Flexibility
In August 1999, we entered into a line of credit with 14 banks for a total
commitment of $375 million which is scheduled to mature in August 2002. The
scheduled interest rate on the line of credit is currently based on a spread
over LIBOR or Prime. The scheduled interest rates are subject to change as our
credit ratings change. Advances under the line of credit may be priced at the
scheduled rates, or we may enter into bid rate loans with participating banks at
rates below the scheduled rates. These bid rate loans have terms of six months
or less and may not exceed the lesser of $187.5 million or the remaining amount
available under the line of credit. The line of credit is subject to customary
financial covenants and limitations. Subsequent to June 30, 2000, the scheduled
maturity on the line of credit was in the process of being extended to August
2003.
As an alternative to our unsecured line of credit, we from time to time
borrow using competitively bid unsecured short-term notes with lenders who may
or may not be a part of the unsecured line of credit bank group. Such borrowings
vary in term and pricing and are typically priced at interest rates below those
available under the unsecured line of credit.
As of June 30, 2000, we had $207 million available under the unsecured line
of credit and $750 million available under our universal shelf registration. We
have significant unencumbered real estate assets which we believe could be sold
or used as collateral for financing purposes should other sources of capital not
be available.
In January 2000, our operating partnership issued $17.5 million of 8.25%
Series C Cumulative Redeemable Perpetual Preferred Units. Distributions on the
preferred units are payable quarterly in arrears. The preferred units are
redeemable for cash by the operating partnership on or after the fifth
anniversary of issuance at par plus the amount of any accumulated and unpaid
distributions. The preferred units are convertible after 10 years by the holder
into our 8.25% Series C Cumulative Redeemable Perpetual Preferred Shares. The
preferred units are subordinate to present and future debt.
<PAGE> 18
During September 1999, we executed three interest rate swap agreements
totaling $70 million which are scheduled to mature in October 2000. These swaps
are being used as a hedge of interest rate exposure on our $90 million
medium-term notes issued in October 1998 which mature in October 2000.
Currently, the interest rate on the medium term notes is fixed at 7.23%. The
interest rates on the swaps are reset monthly based on the one-month LIBOR rate
plus a spread which resulted in a weight average effective interest rate on the
swaps of 7.49% for the six months ended June 30, 2000.
At June 30, 2000, the weighted average interest rate on floating rate debt
was 7.33%.
Funds from Operations
Management considers FFO to be an appropriate measure of performance of an
equity REIT. The National Association of Real Estate Investment Trusts currently
defines FFO as net income (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from debt restructuring and
sales of property, plus real estate depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Our definition
of diluted FFO assumes conversion at the beginning of the period of all dilutive
convertible securities, including minority interests, which are convertible into
common equity.
We believe that in order to facilitate a clear understanding of our
consolidated historical operating results, FFO should be examined in conjunction
with net income as presented in the consolidated financial statements and data
included elsewhere in this report. FFO is not defined by generally accepted
accounting principles. FFO should not be considered as an alternative to net
income as an indication of our operating performance or to net cash provided by
operating activities as a measure of our liquidity. Further, FFO as disclosed by
other REITs may not be comparable to our calculation. Our diluted FFO for the
three and six months ended June 30, 2000 increased $1.2 million and $1.5 million
over the three and six months ended June 30, 1999, respectively. On a per share
basis, diluted FFO for the three and six months ended June 30, 2000 increased
approximately 10.1% and 11.0%, respectively, over the same periods in 1999. The
increase in diluted FFO was due to a $6.7 million and $12.4 million increase in
net operating income from our real estate portfolio for the three and six months
ended June 30, 2000 compared to the same periods in 1999. These increases were
offset by increases in interest on debt which was used to fund developments and
repurchase shares under our common share repurchase program, and dividends on
preferred shares.
<PAGE> 19
The calculation of basic and diluted FFO for the three and six months ended
June 30, 2000 and 1999 follows:
(In thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- ------------------------
2000 1999 2000 1999
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Funds from operations:
Net income to common shareholders $ 10,594 $ 12,838 $ 23,270 $ 26,544
Real estate depreciation 24,500 21,109 48,302 42,073
Real estate depreciation from unconsolidated ventures 809 801 1,618 1,626
Gain on sales of properties (1,933) (720)
---------- ---------- ----------- ----------
Funds from operations - basic 35,903 34,748 71,257 69,523
Preferred share dividends 2,343 2,343 4,686 4,686
Income allocated to units convertible into common shares 407 340 799 958
Interest on convertible subordinated debentures 53 66 97 132
Amortization of deferred costs on convertible debentures 5 6 11 12
---------- ---------- ----------- ----------
Funds from operations - diluted $ 38,711 $ 37,503 $ 76,850 $ 75,311
========== ========== =========== ==========
Weighted average shares - basic 37,927 41,243 38,210 42,038
Common share options and awards granted 670 419 602 394
Preferred shares 3,207 3,207 3,207 3,207
Minority interest units 2,549 2,658 2,549 2,661
Convertible subordinated debentures 110 149 118 149
---------- ---------- ----------- ----------
Weighted average shares - diluted 44,463 47,676 44,686 48,449
========== ========== =========== ==========
</TABLE>
Inflation
We lease apartments under lease terms generally ranging from six to
thirteen months. Management believes that such short-term lease contracts lessen
the impact of inflation due to our ability to adjust rental rates to market
levels as leases expire.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
No material changes have occurred since our Annual Report on Form 10-K for
the year ended December 31, 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
<PAGE> 20
Item 4. Submission of Matters to a Vote of Security Holders
Our Annual Meeting of Shareholders was held on May 4, 2000.
(1) The shareholders elected all eight of the nominees for Trust
Manager by the following vote:
<TABLE>
<CAPTION>
Broker
Affirmative Negative Abstentions Non-Voters
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Richard J. Campo 36,902,469 2,015,203 0 0
William R. Cooper 36,902,559 2,015,113 0 0
George A. Hrdlicka 36,902,311 2,015,361 0 0
Lewis A. Levey 36,902,136 2,015,536 0 0
D. Keith Oden 36,902,102 2,015,570 0 0
F. Gardner Parker 36,902,719 2,014,953 0 0
Steven A. Webster 36,902,544 2,014,128 0 0
Scott S. Ingraham 36,902,439 2,015,233 0 0
</TABLE>
(2) The shareholders approved an amendment to the Amended and Restated
1993 Share Incentive Plan by the following vote:
<TABLE>
<CAPTION>
Broker
Affirmative Negative Abstentions Non-Voters
----------- -------- ----------- ----------
<S> <C> <C> <C>
16,360,070 10,330,614 155,292 0
</TABLE>
(3) The shareholders approved and adopted the Employee Share Purchase
Plan by the following vote:
<TABLE>
<CAPTION>
Broker
Affirmative Negative Abstentions Non-Voters
----------- -------- ----------- ----------
<S> <C> <C> <C>
26,363,282 377,308 105,416 0
</TABLE>
<PAGE> 21
(4) The shareholders ratified the appointment of Deloitte and Touche
LLP as our independent auditors for the year ending December
31, 2000 by the following vote:
<TABLE>
<CAPTION>
Broker
Affirmative Negative Abstentions Non-Voters
----------- -------- ----------- ----------
<S> <C> <C> <C>
38,813,197 43,546 60,928 0
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (filed only electronically with
the Commission)
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the registrant during
the quarter for which this report is filed.
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on our behalf by the
undersigned thereunto duly authorized.
CAMDEN PROPERTY TRUST
/s/ G. Steven Dawson August 4, 2000
-------------------------------------------- --------------------------------
G. Steven Dawson Date
Chief Financial Officer,
Sr. Vice President of Finance and Secretary
/s/ Dennis M. Steen August 4, 2000
-------------------------------------------- --------------------------------
Dennis M. Steen Date
Chief Accounting Officer,
Vice President - Controller and Treasurer
