Camden Property Trust (CPT)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 1-12110

CAMDEN PROPERTY TRUST

(Exact name of registrant as specified in its charter)

Texas		76-6088377
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
3 Greenway Plaza, Suite 1300
Houston, Texas		77046
(Address of principle executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (713) 354-2500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Shares of Beneficial Interest, $.01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o Not applicable þ*

* As of February 25, 2010, the registrant has not been phased in to the interactive data requirements.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in the Rule 12b-2 of the Act). Yes o No þ

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $1,739,721,564 based on a June 30, 2009 share price of $27.60.

On February 19, 2010, 64,530,986 common shares of the registrant were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement in connection with its Annual Meeting of Shareholders to be held May 3, 2010 are incorporated by reference in Part III.

 

 

TABLE OF CONTENTS

		Page
PART I
Item 1. Business			1
Item 1A. Risk Factors			3
Item 1B. Unresolved Staff Comments			10
Item 2. Properties			10
Item 3. Legal Proceedings			14
Item 4. Reserved			14
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			15
Item 6. Selected Financial Data			17
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			36
Item 8. Financial Statements and Supplementary Data			37
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			37
Item 9A. Controls and Procedures			37
Item 9B. Other Information			40
PART III
Item 10. Directors, Executive Officers and Corporate Governance			40
Item 11. Executive Compensation			40
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			40
Item 13. Certain Relationships and Related Transactions, and Director Independence			40
Item 14. Principal Accounting Fees and Services			40
PART IV
Item 15. Exhibits and Financial Statement Schedules			41
SIGNATURES			48
Exhibit 12.1
Exhibit 21.1
Exhibit 23.1
Exhibit 24.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

PART I

Item 1. Business

General Development of Business

Formed on May 25, 1993, Camden Property Trust, a Texas real estate investment trust (“REIT”), is engaged in the ownership, development, construction, and management of multifamily apartment communities. Unless the context requires otherwise, “we,” “our,” “us,” and the “Company” refer to Camden Property Trust and its consolidated subsidiaries. Our multifamily apartment communities are referred to as “communities,” “multifamily communities,” “properties,” or “multifamily properties” in the following discussion.

Our executive offices are located at 3 Greenway Plaza, Suite 1300, Houston, Texas 77046 and our telephone number is (713) 354-2500. Our website is located at www.camdenliving.com. On our website, we make available free of charge our annual, quarterly, and current reports, and amendments to such reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). We also make available, free of charge on our website, our Guidelines on Governance, Code of Business Conduct and Ethics, Code of Ethical Conduct for Senior Financial Officers, and the charters of each of our Audit, Compensation, Nominating, and Corporate Governance Committees.

Our annual, quarterly, and current reports, proxy statements, and other information are electronically filed with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please contact the SEC at 1-800-SEC-0330 for further information about the operation of the SEC’s Public Reference Room. The SEC also maintains a website at www.sec.gov which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Financial Information about Segments

We are engaged in the ownership, development, construction, and management of multifamily apartment communities. As each of our communities has similar economic characteristics, residents, amenities, and services, our operations have been aggregated into one reportable segment. See our consolidated financial statements and notes included thereto in Item 15 of this Annual Report on Form 10-K for certain information required by Item 1.

Narrative Description of Business

As of December 31, 2009, we owned interests in, operated, or were developing 185 multifamily properties comprising 63,658 apartment homes across the United States. We had 372 apartment homes under development at two of our multifamily properties, including 119 apartment homes at one multifamily property owned through a nonconsolidated joint venture and 253 apartment homes at one multifamily property owned through a consolidated joint venture, in which we own an interest. In addition, we own other land parcels we may develop into multifamily apartment communities.

Operating Strategy

We believe producing consistent earnings growth through property operations, development and acquisitions, achieving market balance, and recycling capital are crucial factors to our success. We rely heavily on our sophisticated property management capabilities and innovative operating strategies to help us maximize the earnings potential of our communities.

Real Estate Investments and Market Balance. We believe we are well positioned in our current markets and have the expertise to take advantage of new opportunities as they arise. These capabilities, combined with what we believe is a conservative financial structure, should allow us to concentrate our growth efforts toward selective opportunities to enhance our strategy of having a geographically diverse portfolio of assets which meet the requirements of our residents.

We have historically focused our operating strategy on capturing greater market share, selectively disposing of properties, and redeploying capital in new multifamily communities while also maintaining a strong balance sheet. We have also historically evaluated acquisition opportunities as they arose, some of which were consummated and contributed to our growth and profitability.

We continue to operate in our core markets which we believe provides an advantage due to economies of scale. We believe, where possible, it is best to operate with a strong base of properties in order to benefit from the personnel allocation and the market strength associated with managing several properties in the same market. However, consistent with our goal of generating sustained earnings growth, we intend to selectively dispose of properties and redeploy capital for various strategic reasons, including if we determine a property cannot meet long-term earnings growth expectations.

During 2008 and 2009, a number of factors adversely affecting demand for and rents received by our multifamily communities were intense and pervasive across the United States, and the conditions within the multifamily industry have become progressively more challenging. A prolonged recession, high inventory levels of single-family homes and condominiums in the markets in which we operate, overall weak consumer confidence, and high unemployment, among other factors, have persisted and, in some cases, accelerated in 2009. We believe the effects of these factors on the multifamily industry have been further magnified by high levels of home foreclosures, liquidity disruptions in the financial markets, continued job losses, and a lack of job growth. Our average apartment lease term is approximately twelve months. The impact of an economic downturn affects us quickly due to the short-term nature of our leases because our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.

Based on these market conditions and our belief these conditions will continue in the near future, we are cautious regarding expected performance and expect a decline in property revenues during 2010 as compared to 2009. However, positive impacts on our performance may result from reductions in the U.S. home ownership rate, more stringent lending criteria for prospective home-buyers, and long-term growth prospects for population, employment, and household formations in our markets. However, there can be no assurance any of these factors will develop, continue or positively impact our operating results. We have noted a recent increase in issuances of debt and equity by REITs at more attractive rates. While this may be a positive sign, we are uncertain if this level of activity will increase or continue.

During the near term, we plan to continue to focus primarily on strengthening our capital and liquidity position by generating positive cash flows from operations, reducing outstanding debt and leverage ratios, and controlling and reducing overhead costs.

Subject to market conditions, we intend to continue to look for opportunities to acquire existing communities through our investment in and management of our discretionary investment funds, the Camden Multifamily Value Add Fund, L.P. and a related co-investment partnership (the “Funds”). Until the earlier of (i) December 31, 2011 or (ii) such time as 90% of their committed capital is invested, subject to two one-year extensions, the Funds will be our exclusive investment vehicles for acquiring fully developed multifamily properties, subject to certain exceptions.

Sophisticated Property Management. We believe the depth of our organization enables us to deliver quality services, promote resident satisfaction, and retain residents, thereby reducing operating expenses. We manage our properties utilizing a staff of professionals and support personnel, including certified property managers, experienced apartment managers and leasing agents, and trained apartment maintenance technicians. Our on-site personnel are trained to deliver high quality services to our residents. We strive to motivate our on-site employees through incentive compensation arrangements based upon property operational results, rental rate increases, and level of lease renewals achieved.

Operations. We believe an intense focus on operations is necessary to realize consistent, sustained earnings growth. Ensuring resident satisfaction, increasing rents as market conditions allow, maximizing rent collections, maintaining property occupancy at optimal levels, and controlling operating costs comprise our principal strategies to maximize property financial results. We believe our web-based property management and revenue management systems strengthen on-site operations and allow us to quickly adjust rental rates as local market conditions change. Lease terms are generally staggered based on vacancy exposure by apartment type so lease expirations are matched to each property’s seasonal rental patterns. We generally offer leases ranging from six to fifteen months, with an average lease of twelve months, and with individual property marketing plans structured to respond to local market conditions. In addition, we conduct ongoing customer service surveys to ensure timely response to residents’ changing needs and a high level of satisfaction.

Investments in Joint Ventures. We have entered into, and may continue in the future to enter into, joint ventures through which we own an indirect economic interest of less than 100% of the community or communities owned directly by the joint venture. See Note 7, “Investments in Joint Ventures,” and Note 14, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements for further discussion of our investments in joint ventures.

Competition

There are numerous housing alternatives which compete with our communities in attracting residents. Our properties compete directly with other multifamily properties as well as with condominiums and single-family homes which are available for rent or purchase in the markets in which our communities are located. This competitive environment could have a material adverse effect on our ability to lease apartment homes at our present communities or any newly developed or acquired community, as well as on the rents charged.

Employees

At December 31, 2009, we had approximately 1,750 employees, including executive, administrative, and community personnel.

Qualification as a Real Estate Investment Trust

As of December 31, 2009, we met the qualification of a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, we, with the exception of our taxable REIT subsidiaries, will not be subject to federal income tax to the extent we continue to meet certain requirements of the Code.

Item 1A. Risk Factors

In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition, or results of operations could be materially adversely affected by any of these risks. Please note additional risks not presently known to us or which we currently consider immaterial may also impair our business and operations.

Risks Associated with Real Estate, Real Estate Capital, and Credit Markets

Volatility in capital and credit markets could adversely impact us.

The capital and credit markets have been experiencing volatility and disruption, which has caused the spreads on prospective debt financings to fluctuate and potentially make it more difficult to borrow money. If current levels of market disruption and volatility continue or worsen, we may not be able to obtain new debt financing or refinance our existing debt on favorable terms or at all, which would adversely affect our liquidity and our ability to make distributions to shareholders. This market turmoil and tightening of credit have led to an increased lack of consumer confidence and widespread reduction of business activity generally, which have adversely impacted and may continue to adversely impact us, including our ability to acquire and dispose of assets and continue our development pipeline.

We could be negatively impacted by the condition of Fannie Mae or Freddie Mac.

Fannie Mae and Freddie Mac are a major source of financing for secured multifamily rental real estate. We and other multifamily companies depend heavily on Fannie Mae and Freddie Mac to finance growth by purchasing or guaranteeing apartment loans. In September 2008, the U.S. government assumed control of Fannie Mae and Freddie Mac and placed both companies into a government conservatorship under the Federal Housing Finance Agency. In December 2009, the Obama administration pledged to cover unlimited losses through 2012 for both companies, lifting an earlier cap of $400 billion. Since that time, the chairman of the House Financial Services Committee has called for a new system for providing money for mortgages and the elimination of Fannie Mae and Freddie Mac. A decision by the government to eliminate Fannie Mae or Freddie Mac or reduce their acquisitions or guarantees of apartment loans may adversely affect interest rates, capital availability, and the development of multifamily communities. Governmental actions could also make it easier for individuals to finance loans for single-family homes, which would make renting a less attractive option and adversely affect our occupancy or rental rates.

Unfavorable changes in economic conditions could adversely impact occupancy or rental rates.

Weakened economic conditions, including decreased job growth and job losses, have affected and continue to significantly affect apartment home occupancy and rental rates. Significant decreases in occupancy or rental rates in the markets in which we operate, in turn, may have a material adverse impact on our cash flows and operating results. The risks which may affect conditions in these markets include the following:

•

changes in the national, regional, and local economic climates;

•

local conditions, such as an oversupply of apartments or other housing available for rent, or a reduction in demand for apartments in the area;

•

declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants;

•

changes in market rental rates;

•

declines in mortgage interest rates, making alternative housing more affordable;

•

government or builder incentives which enable first time have buyers to put little or no money down, making alternative housing options more attractive;

•

a continued economic downturn which simultaneously affects one or more of our geographical markets; and

•

increased operating costs, if these costs cannot be passed through to residents.

We may experience a decrease in rental revenues, an increase in operating expenses, or a combination of both, which may adversely affect our results of operations and our ability to satisfy our financial obligations and pay distributions to shareholders.

Short-term leases expose us to the effects of declining market rents.

Substantially all of our apartment leases are for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.

We face risks associated with land holdings and related activities.

We hold land for future development and may in the future acquire additional land holdings. The risks inherent in purchasing, owning, and developing land increase as demand for apartments, or rental rates, decrease. Real estate markets are highly uncertain and, as a result, the value of undeveloped land has fluctuated significantly and may continue to fluctuate as a result of changing market conditions. In addition, carrying costs can be significant and can result in losses or reduced margins in a poorly performing project. As a result, we hold certain land and may in the future acquire additional land in our development pipeline at a cost we may not be able to recover fully or upon which we cannot build and develop a profitable multifamily community. Under current market conditions, in 2009 we recorded impairment charges on land holdings for eight developments, and a land development joint venture we have put on hold for the foreseeable future. We may have future impairments of our land and related activities. These impairment charges are based on estimates of fair value. Given the current environment, the amount of market information available to estimate fair value is less than usual; if additional market information becomes available in future periods we may take additional impairment charges in the future.

Difficulties of selling real estate could limit our flexibility.

We intend to evaluate the potential disposition of assets that may no longer help us meet our objectives. When we decide to sell an asset, we may encounter difficulty in finding buyers in a timely manner as real estate investments generally cannot be disposed of quickly, especially when market conditions are poor. These difficulties have been exacerbated in the current credit environment because buyers have experienced difficulty in obtaining the necessary financing. These factors may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions and may also limit our ability to utilize sales proceeds as a source of liquidity, which would adversely affect our ability to make distributions to shareholders or repay debt. In addition, in order to maintain our status as a REIT, the Code imposes restrictions on our ability to sell properties held fewer than two years, which may cause us to incur losses thereby reducing our cash flows and adversely impacting our ability to make distributions to shareholders or repay debt.

Compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial cost.

The Americans with Disabilities Act (“ADA”), the Fair Housing Amendments Act of 1988 (“FHAA”), and other federal, state, and local laws generally require public accommodations and apartment homes be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the government or the award of damages to private litigants. These laws may require us to modify our existing properties. These laws may also restrict renovations by requiring improved access to such buildings by disabled persons or may require us to add other structural features which increase our construction costs. Legislation or regulations adopted in the future may impose further burdens or restrictions on us with respect to improved access by disabled persons. We may incur unanticipated expenses which may be material to our financial condition or results of operations to comply with ADA, FHAA, and other federal, state, and local laws, or in connection with lawsuits brought by the government or private litigants.

Competition could limit our ability to lease apartments or increase or maintain rental income.

There are numerous housing alternatives which compete with our properties in attracting residents. Our properties compete directly with other multifamily properties as well as condominiums and single family homes which are available for rent or purchase in the markets in which our properties are located. This competitive environment could have a material adverse effect on our ability to lease apartment homes at our present properties or any newly developed or acquired property, as well as on the rents charged.

Risks Associated with Our Operations

Development and construction risks could impact our profitability.

Although we expect lower levels of development activity in 2010, as compared to prior years, in the long term we intend to continue to develop and construct multifamily apartment communities for our portfolio. Our development and construction activities may be exposed to a number of risks which may increase our construction costs including the following:

•

inability to obtain, or delays in obtaining, necessary zoning, land-use, building, occupancy, and other required permits and authorizations;

•

increased materials, labor, problems with subcontractors, or other costs due to errors and omissions which occur in the design or construction process;

•

inability to obtain financing with favorable terms for the development of a community;

•

inability to complete construction and lease-up of a community on schedule;

•

incurring costs related to the abandonment of development opportunities which we have pursued and subsequently deemed unfeasible; and

•

inability to successfully implement our development and construction strategy could adversely affect our results of operations and our ability to satisfy our financial obligations and pay distributions to shareholders.

We also serve as the general contractor on a limited number of development and construction projects for properties owned by unrelated third parties pursuant to guaranteed maximum price contracts. The terms of these contracts require us to estimate the time and costs to complete a project, and we assume the risk that the time and costs associated with our performance may be greater than was anticipated. As a result, our profitability on guaranteed maximum price contracts is dependent on our ability to accurately predict these factors. The time and costs may be affected by a variety of factors, including those listed above, many of which are beyond our control. In addition, the terms of these contracts generally require a warranty period, which may have durations of up to ten years, during which we may be required to repair, replace, or rebuild a project in the event of a material defect.

Our acquisition strategy may not produce the cash flows expected.

Subject to the requirements of the Funds, we may acquire additional operating properties on a select basis. Our acquisition activities are subject to a number of risks, including the following:

•

we may not be able to successfully integrate acquired properties into our existing operations;

•

our estimates of the costs of repositioning or redeveloping the acquired property may prove inaccurate;

•

the expected occupancy and rental rates may differ from the actual results; and

•

we may not be able to obtain adequate financing.

With respect to acquisitions of operating companies, we may not be able to identify suitable candidates on terms acceptable to us or may not achieve expected returns and other benefits as a result of integration challenges, such as personnel and technology.

Competition could adversely affect our ability to acquire properties.

We expect other real estate investors, including insurance companies, pension and investment funds, private investors, and other apartment REITs, will compete with us to acquire additional operating properties. This competition could increase prices for the type of properties we would likely pursue and adversely affect our ability to acquire these properties or the profitability of such properties upon acquisition.

Losses from catastrophes may exceed our insurance coverage.

We carry comprehensive property and liability insurance on our properties, which we believe is of the type and amount customarily obtained on similar real property assets. We intend to obtain similar coverage for properties we acquire or develop in the future. However, some losses, generally of a catastrophic nature such as losses from floods, hurricanes, or earthquakes, may be subject to coverage limitations. We exercise our discretion in determining amounts, coverage limits, and deductible provisions of insurance to maintain appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment, as well as the anticipated future revenues from the property. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also may reduce the feasibility of using insurance proceeds to replace a property after it has been damaged or destroyed.

Investments through joint ventures involve risks not present in investments in which we are the sole investor.

We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including the possibility the other joint venture partner may have business goals which are inconsistent with ours, be in a position to take action or withhold consent contrary to our requests, or become insolvent and require us to assume and fulfill the joint venture’s financial obligations. We and our joint venture partner may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire our joint venture partner’s interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement.

We face risks associated with investments in and management of discretionary funds.

We have formed the Funds which, through wholly-owned subsidiaries, we manage as the general partner and advisor. We have committed to invest 20% of the total equity interest in each of the Funds, up to $75 million in the aggregate. As of December 31, 2009, each of the Funds had total capital commitments of $187.5 million or $375 million in the aggregate. There are risks associated with the investment in and management of the Funds, including the following:

•

investors in the Funds may fail to make their capital contributions when due and, as a result, the Funds may be unable to execute their investment objectives;

•

the general partner of the Funds, our wholly-owned subsidiary, has unlimited liability for the third-party debts, obligations, and liabilities of the Funds pursuant to partnership law;

•

investors in the Funds (other than us), by majority vote, may remove our subsidiary as the general partner of the Funds with or without cause and the Funds’ advisory boards, by a majority vote of their members, may remove our subsidiary as the general partner of the Funds at any time for cause;

•

while we have broad discretion to manage the Funds and make investment decisions on behalf of the Funds, the investors or the advisory boards must approve certain matters, and as a result we may be unable to cause the Funds to make certain investments or implement certain decisions we consider beneficial;

•

we are permitted to acquire land and develop communities outside of the Funds, but are generally prohibited from acquiring fully developed multifamily properties outside of the Funds until the earlier of (i) December 31, 2011 or (ii) such time as 90% of the Funds’ committed capital is invested, subject to certain exceptions;

•

our ability to redeem all or a portion of our investments in the Funds is subject to significant restrictions; and

•

we may be liable if the Funds fail to comply with various tax or other regulatory matters.

We depend on our key personnel.

Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. There is substantial competition for qualified personnel in the real estate industry, and the loss of several of our key personnel could have an adverse effect on us.

Changes in laws and litigation risks could affect our business.

As a large publicly-traded owner of multifamily properties, we may become involved in legal proceedings, including consumer, employment, tort, or commercial litigation, which if decided adversely to or settled by us, could result in liability which is material to our financial condition or results of operations.

Tax matters, including failure to qualify as a REIT, could have adverse consequences.

We may not continue to qualify as a REIT in the future. The Internal Revenue Service may challenge our qualification as a REIT for prior years and new legislation, regulations, administrative interpretations, or court decisions may change the tax laws or the application of the tax laws with respect to qualification as a REIT or the federal tax consequences of such qualification.

For any taxable year we fail to qualify as a REIT and do not qualify under statutory relief provisions:

•

we would be subject to federal income tax on our taxable income at regular corporate rates, including any applicable alternative minimum tax;

•

we would be disqualified from treatment as a REIT for the four taxable years following the year in which we failed to qualify, thereby reducing our net earnings available for operations, including any distributions to shareholders, as we would be required to pay significant income taxes for the year or years involved; and

•

our ability to expand our business and raise capital would be impaired, which may adversely affect the value of our common shares.

We may face other tax liabilities in the future which may impact our cash flow. These potential tax liabilities may be calculated on our income or property values at either the corporate or individual property levels. Any additional tax expense incurred would decrease the cash available for distribution to our shareholders.

Risks Associated with Our Indebtedness and Financing

Insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders.

Substantially all of our income is derived from rental and other income from our multifamily communities. As a result, our performance depends in large part on our ability to collect rent from residents which could be negatively affected by a number of factors, including the following:

•

delay in resident lease commencements;

•

decline in occupancy;

•

failure of residents to make rental payments when due;

•

the attractiveness of our properties to residents and potential residents;

•

our ability to adequately manage and maintain our communities;

•

competition from other available apartments and housing alternatives; and

•

changes in market rents.

Cash flow could be insufficient to meet required payments of principal and interest with respect to debt financing. In order for us to continue to qualify as a REIT we must meet a number of organizational and operational requirements, including a requirement to distribute annual dividends to our shareholders equal to a minimum of 90% of our REIT taxable income, computed without regard to the dividends paid deduction and our net capital gains. This requirement limits the cash flow available to meet required principal payments on our debt.

We have significant debt, which could have important adverse consequences.

As of December 31, 2009, we had outstanding debt of approximately $2.6 billion. This indebtedness could have important consequences, including:

•

if a property is mortgaged to secure payment of indebtedness, and if we are unable to meet our mortgage obligations, we could sustain a loss as a result of foreclosure on the mortgaged property;

•

our vulnerability to general adverse economic and industry conditions is increased; and

•

our flexibility in planning for, or reacting to, changes in business and industry is limited.

The mortgages on our properties subject to secured debt, our unsecured credit facility, and the indentures under which our unsecured debt was issued contain customary restrictions, requirements, and other limitations, as well as certain financial and operating covenants including maintenance of certain financial ratios. Maintaining compliance with these provisions could limit our financial flexibility. A default in these provisions, if uncured, could require us to repay the indebtedness, which could severely affect our liquidity and increase our financing costs.

We may be unable to renew, repay, or refinance our outstanding debt.

We are subject to the risk that indebtedness on our properties or our unsecured indebtedness will not be renewed, repaid, or refinanced when due or the terms of any renewal or refinancing will not be as favorable as the existing terms of such indebtedness. If we are unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of the properties on disadvantageous terms, which might result in losses to us. Such losses could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose on the property, appoint a receiver and exercise rights under an assignment of rents and leases, or pursue other remedies, all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Code.

Variable rate debt is subject to interest rate risk.

We have mortgage debt with varying interest rates dependent upon various market indexes. In addition, we have a revolving credit facility bearing interest at a variable rate on all amounts drawn on the facility. We may incur additional variable rate debt in the future. Increases in interest rates on variable rate debt would increase our interest expense, unless we make arrangements which hedge the risk of rising interest rates, which would adversely affect net income and cash available for payment of our debt obligations and distributions to shareholders.

We may incur losses on interest rate hedging arrangements.

Historically, we have entered into agreements to reduce the risks associated with changes in interest rates, and we may continue to do so in the future. Although these agreements may partially protect against rising interest rates, they may also reduce the benefits to us if interest rates decline. If a hedging arrangement is not indexed to the same rate as the indebtedness which is hedged, we may be exposed to losses to the extent which the rate governing the indebtedness and the rate governing the hedging arrangement change independently of each other. Additionally, nonperformance by the other party to the hedging arrangement may subject us to increased credit risks.

Issuances of additional debt may adversely impact our financial condition.

Our capital requirements depend on numerous factors, including the occupancy rates of our apartment properties, dividend payment rates to our shareholders, development and capital expenditures, costs of operations, and potential acquisitions. If our capital requirements vary materially from our plans, we may require additional financing earlier than anticipated. If we issue more debt, we could become more leveraged, resulting in increased risk of default on our obligations and an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future.

Failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets.

Moody’s and Standard & Poor’s, the major debt rating agencies, routinely evaluate our debt and have given us ratings of Baa1 and BBB, respectively, with stable outlooks, on our senior unsecured debt. These ratings are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow and earnings. In light of the difficulties in the real estate industry and the volatile financial markets, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity, and access to capital markets.

Risks Associated with Our Shares

Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders.

For us to maintain our qualification as a REIT, we must have 100 or more shareholders during the year and not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term “individuals” includes a number of specified entities. To minimize the possibility of us failing to qualify as a REIT under this test, our declaration of trust includes restrictions on transfers of our shares and ownership limits. The ownership limits, as well as our ability to issue other classes of equity securities, may delay, defer, or prevent a change in control. These provisions may also deter tender offers for our common shares which may be attractive to you or limit your opportunity to receive a premium for your shares which might otherwise exist if a third party were attempting to effect a change in control transaction.

Our share price will fluctuate.

Stock markets in general and our common shares have experienced continued price volatility over the past year. The market price and volume of our common shares may continue to be subject to significant fluctuations due not only to general stock market conditions but also to the risk factors discussed in this report and the following:

•

operating results which vary from the expectations of securities analysts and investors;

•

investor interest in our property portfolio;

•

the reputation and performance of REITs;

•

the attractiveness of REITs as compared to other investment vehicles;

•

the results of our financial condition and operations;

•

the perception of our growth and earnings potential;

•

dividend payment rates;

•

increases in market interest rates, which may lead purchasers of our common shares to demand a higher yield; and

•

changes in financial markets and national economic and general market conditions.

We may reduce dividends on our equity securities.

On December 7, 2009, we announced our Board of Trust Managers had declared a fourth quarter dividend of $0.45 per common share, totaling $2.05 per share for the year ended December 31, 2009. In order for us to continue to qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute annual dividends to our shareholders equal to a minimum of 90% of our REIT taxable income, computed without regard to the dividends paid deduction and our net capital gains. However, in the event of, among other factors, continued material future deterioration in business conditions, or continuing tightening in the credit markets, our Board of Trust Managers may decide to reduce our dividend while ensuring compliance with the requirements of the Code related to REIT qualification.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Properties

Our properties typically consist of mid-rise buildings or two and three story buildings in a landscaped setting and provide residents with a variety of amenities. Most of the properties have one or more swimming pools and a clubhouse and many have whirlpool spas, weight room facilities, and controlled-access gates. Many of the apartment homes offer additional features such as fireplaces, vaulted ceilings, microwave ovens, covered parking, icemakers, washers and dryers, and ceiling fans.

Operating Properties (including properties held through joint ventures)

The 183 operating properties in which we owned interests and operated at December 31, 2009 averaged 918 square feet of living area per apartment home. For the year ended December 31, 2009, no single operating property accounted for greater than 1.7% of our total revenues. Our operating properties had a weighted average occupancy rate of 93.3% and 93.9% for 2009 and 2008, respectively. Resident lease terms generally range from six to fifteen months with an average lease term of twelve months. One hundred and fifty-nine of our operating properties have over 200 apartment homes, with the largest having 904 apartment homes. Our operating properties have an average age of 10.4 years (calculated on the basis of investment dollars). Our operating properties were constructed and placed in service as follows:

Year Placed in Service		Number of Operating Properties
2001-2009		49
1996-2000		57
1991-1995		19
1986-1990		39
1980-1985		14
Prior to 1980		5

Property Table

The following table sets forth information with respect to our operating properties at December 31, 2009:

OPERATING PROPERTIES		Year Placed		Average Apartment				Number of				2009 Average
Property and Location		In Service		Size (Sq. Ft.)				Apartments				Occupancy (1)
ARIZONA
Phoenix
Camden Copper Square		2000			786				332				91.5	%
Camden Fountain Palms (8)		1986/1996			1,050				192				88.9
Camden Legacy		1996			1,067				428				93.1
Camden Pecos Ranch (8)		2001			924				272				93.7
Camden San Paloma		1993/1994			1,042				324				92.2
Camden Sierra (8)		1997			925				288				90.5
Camden Towne Center (8)		1998			871				240				90.9
Camden Vista Valley		1986			923				357				90.1
CALIFORNIA
Los Angeles/Orange County
Camden Crown Valley		2001			1,009				380				95.0
Camden Harbor View		2004			975				538				94.3
Camden Main & Jamboree (3) (12)		2008			1,011				290				92.3
Camden Martinique		1986			794				714				92.6

OPERATING PROPERTIES		Year Placed		Average Apartment				Number of				2009 Average
Property and Location		In Service		Size (Sq. Ft.)				Apartments				Occupancy (1)
Camden Parkside (8)		1972			836				421				92.7
Camden Sea Palms		1990			891				138				94.2
San Diego/Inland Empire
Camden Old Creek		2007			1,037				350				93.9
Camden Sierra at Otay Ranch		2003			962				422				94.0
Camden Tuscany		2003			896				160				93.6
Camden Vineyards		2002			1,053				264				89.6
COLORADO
Denver
Camden Caley		2000			925				218				94.8
Camden Centennial		1985			744				276				93.2
Camden Denver West (9)		1997			1,015				320				94.8
Camden Highlands Ridge		1996			1,149				342				95.0
Camden Interlocken		1999			1,022				340				96.1
Camden Lakeway		1997			932				451				93.6
Camden Pinnacle		1985			748				224				93.2
WASHINGTON DC METRO
Camden Ashburn Farms		2000			1,062				162				95.6
Camden Clearbrook		2007			1,048				297				96.7
Camden College Park (3) (12)		2008			942				508				79.8
Camden Dulles Station (2)		2009			984				366			Lease-Up
Camden Fair Lakes		1999			1,056				530				95.4
Camden Fairfax Corner		2006			934				488				95.2
Camden Fallsgrove		2004			996				268				97.0
Camden Grand Parc		2002			674				105				96.1
Camden Lansdowne		2002			1,006				690				94.8
Camden Largo Town Center		2000/2007			1,027				245				90.1
Camden Monument Place		2007			856				368				93.8
Camden Potomac Yard (3)		2008			835				378				84.2
Camden Roosevelt		2003			856				198				96.3
Camden Russett		2000			992				426				94.4
Camden Silo Creek		2004			975				284				96.4
Camden Summerfield (3)		2008			957				291				84.8
Camden Westwind		2006			1,036				464				95.3
FLORIDA
Southeast Florida
Camden Aventura		1995			1,108				379				93.9
Camden Brickell		2003			937				405				94.4
Camden Doral		1999			1,120				260				96.0
Camden Doral Villas		2000			1,253				232				96.7
Camden Las Olas		2004			1,043				420				94.5
Camden Plantation		1997			1,201				502				94.4
Camden Portofino		1995			1,112				322				95.1
Orlando
Camden Club		1986			1,077				436				94.1
Camden Hunter’s Creek		2000			1,075				270				94.8
Camden Lago Vista		2005			955				366				93.8
Camden Landings		1983			748				220				93.9
Camden Lee Vista		2000			937				492				92.9
Camden Orange Court		2008			812				261				78.9
Camden Renaissance		1996/1998			899				578				92.9
Camden Reserve		1990/1991			824				526				93.6
Camden World Gateway		2000			979				408				93.1
Tampa/St. Petersburg
Camden Bay		1997/2001			943				760				93.8
Camden Bay Pointe		1984			771				368				91.7
Camden Bayside		1987/1989			748				832				93.6
Camden Citrus Park		1985			704				247				92.1
Camden Lakes		1982/1983			732				688				91.7
Camden Lakeside		1986			729				228				92.1
Camden Live Oaks		1990			1,093				770				94.7
Camden Preserve		1996			942				276				93.8
Camden Providence Lakes		1996			1,024				260				93.3
Camden Royal Palms		2006			1,017				352				92.0

OPERATING PROPERTIES		Year Placed		Average Apartment				Number of				2009 Average
Property and Location		In Service		Size (Sq. Ft.)				Apartments				Occupancy (1)
Camden Westshore		1986			728				278				93.6
Camden Woods		1986			1,223				444				92.5
GEORGIA
Atlanta
Camden Brookwood		2002			912				359				93.2
Camden Dunwoody		1997			1,007				324				93.8
Camden Deerfield		2000			1,187				292				94.5
Camden Midtown Atlanta		2001			935				296				93.1
Camden Peachtree City		2001			1,027				399				94.2
Camden River		1997			1,103				352				93.2
Camden Shiloh		1999/2002			1,143				232				93.5
Camden St. Clair		1997			999				336				93.2
Camden Stockbridge		2003			1,009				304				91.7
Camden Sweetwater		2000			1,151				308				92.1
KENTUCKY
Louisville
Camden Brookside (10)		1987			732				224				92.8
Camden Meadows (10)		1987/1990			746				400				95.3
Camden Oxmoor (10)		2000			903				432				96.0
Camden Prospect Park (10)		1990			916				138				94.7
MISSOURI
Kansas City
Camden Passage (10)		1989/1997			834				596				95.2
St. Louis
Camden Cedar Lakes (10)		1986			852				420				92.3
Camden Cove West (10)		1990			828				276				95.8
Camden Cross Creek (10)		1973/1980			947				591				95.2
Camden Westchase (10)		1986			945				160				95.7
NEVADA
Las Vegas
Camden Bel Air		1988/1995			943				528				92.7
Camden Breeze		1989			846				320				93.2
Camden Canyon		1995			987				200				95.6
Camden Commons		1988			936				376				91.0
Camden Cove		1990			898				124				93.1
Camden Del Mar		1995			986				560				93.2
Camden Fairways		1989			896				320				94.4
Camden Hills		1991			439				184				90.8
Camden Legends		1994			792				113				93.4
Camden Palisades		1991			905				624				92.2
Camden Pines (8)		1997			982				315				93.8
Camden Pointe		1996			983				252				93.0
Camden Summit (8)		1995			1,187				234				94.7
Camden Tiara (8)		1996			1,043				400				93.7
Camden Vintage		1994			978				368				92.3
Oasis Bay (11)		1990			876				128				92.5
Oasis Crossings (11)		1996			983				72				94.4
Oasis Emerald (11)		1988			873				132				91.2
Oasis Gateway (11)		1997			1,146				360				91.9
Oasis Island (11)		1990			901				118				92.1
Oasis Landing (11)		1990			938				144				92.7
Oasis Meadows (11)		1996			1,031				383				90.7
Oasis Palms (11)		1989			880				208				90.7
Oasis Pearl (11)		1989			930				90				94.7
Oasis Place (11)		1992			440				240				89.9
Oasis Ridge (11)		1984			391				477				85.3
Oasis Sierra (11)		1998			923				208				94.0
Oasis Springs (11)		1988			838				304				89.5
Oasis Vinings (11)		1994			1,152				234				90.7
NORTH CAROLINA
Charlotte
Camden Ballantyne		1998			1,045				400				93.2
Camden Cotton Mills		2002			905				180				95.3
Camden Dilworth		2006			857				145				95.4

OPERATING PROPERTIES		Year Placed		Average Apartment				Number of				2009 Average
Property and Location		In Service		Size (Sq. Ft.)				Apartments				Occupancy (1)
Camden Fairview		1983			1,036				135				96.1
Camden Forest		1989			703				208				89.3
Camden Foxcroft (4)		1979			940				156				92.0
Camden Grandview		2000			1,057				266				95.4
Camden Habersham		1986			773				240				93.0
Camden Park Commons		1997			861				232				92.4
Camden Pinehurst		1967			1,147				407				93.1
Camden Sedgebrook		1999			972				368				93.3
Camden Simsbury		1985			874				100				93.9
Camden South End Square		2003			882				299				93.1
Camden Stonecrest		2001			1,098				306				93.2
Camden Touchstone		1986			899				132				94.9
Raleigh
Camden Crest		2001			1,013				438				93.9
Camden Governor’s Village		1999			1,046				242				92.4
Camden Lake Pine		1999			1,066				446				93.9
Camden Manor Park		2006			966				484				94.5
Camden Overlook		2001			1,060				320				94.7
Camden Reunion Park		2000/2004			972				420				92.9
Camden Westwood		1999			1,027				354				94.5
PENNSYLVANIA
Camden Valleybrook		2002			992				352				94.7
TEXAS
Austin
Camden Amber Oaks (2) (7)		2009			862				348			Lease-Up
Camden Cedar Hills (3)		2008			911				208				91.1
Camden Gaines Ranch		1997			955				390				92.6
Camden Huntingdon		1995			903				398				93.7
Camden Laurel Ridge		1986			702				183				92.9
Camden Ridgecrest		1995			855				284				93.7
Camden South Congress (7)		2001			975				253				93.8
Camden Stoneleigh		2001			908				390				94.2
Corpus Christi
Camden Breakers		1996			868				288				94.2
Camden Copper Ridge		1986			775				344				94.4
Camden Miramar (6)		1994-2004			482				778				84.4
Dallas/Fort Worth
Camden Addison (8)		1996			942				456				93.5
Camden Buckingham		1997			919				464				94.8
Camden Centreport		1997			911				268				93.3
Camden Cimarron		1992			772				286				94.5
Camden Farmers Market		2001/2005			932				904				93.9
Camden Gardens		1983			652				256				93.8
Camden Glen Lakes		1979			877				424				93.9
Camden Legacy Creek		1995			831				240				95.5
Camden Legacy Park		1996			871				276				94.4
Camden Oasis		1986			548				602				86.6
Camden Springs		1987			713				304				92.1
Camden Valley Creek		1984			855				380				93.4
Camden Valley Park (5)		1986			743				516			Redevelopment
Camden Valley Ridge		1987			773				408				93.1
Camden Westview		1983			697				335				91.4
Houston
Camden Braeswood Place (2) (13)		2009			1,042				340			Lease-Up
Camden Baytown		1999			844				272				93.3
Camden City Centre		2007			932				379				94.3
Camden Creek		1984			639				456				93.5
Camden Greenway		1999			861				756				95.4
Camden Holly Springs (8)		1999			934				548				94.4
Camden Midtown		1999			844				337				96.3
Camden Oak Crest		2003			870				364				95.5
Camden Park (8)		1995			866				288				96.9
Camden Plaza (12)		2007			915				271				92.5
Camden Royal Oaks		2006			923				236				91.0

OPERATING PROPERTIES		Year Placed		Average Apartment				Number of				2009 Average
Property and Location		In Service		Size (Sq. Ft.)				Apartments				Occupancy (1)
Camden Steeplechase		1982			748				290				92.7
Camden Stonebridge		1993			845				204				96.7
Camden Sugar Grove (8)		1997			921				380				94.0
Camden Vanderbilt		1996/1997			863				894				95.8
Camden Whispering Oaks (3)		2008			934				274				87.5

Item 3. Legal Proceedings

For discussion regarding legal proceedings, see Note 14, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements.

Item 4. Reserved

 

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The high and low closing prices per share of our common shares, as reported on the New York Stock Exchange composite tape under the symbol “CPT,” and distributions per share declared for the quarters indicated are as follows:

		High				Low				Distributions
2009 Quarters:
First		$	30.63			$	17.56			$	0.70
Second			30.99				21.71				0.45
Third			42.73				25.10				0.45
Fourth			44.01				35.24				0.45
2008 Quarters:
First		$	54.65			$	42.18			$	0.70
Second			55.35				44.08				0.70
Third			54.87				41.79				0.70
Fourth			44.95				18.96				0.70

		Years Ended December 31,
Index		2005				2006				2007				2008				2009
Camden Property Trust			119.1				157.5				107.5				75.1				108.9
FTSE NAREIT Equity			112.2				151.5				127.7				79.5				101.8
S&P 500			104.9				121.5				128.2				80.7				102.1
Russell 2000			104.6				123.8				121.8				80.7				102.6

As of February 19, 2010, there were 723 shareholders of record and approximately 18,835 beneficial owners of our common shares.

In April 2007, our Board of Trust Managers approved a program to repurchase up to $500 million of our common equity securities through open market purchases, block purchases, and privately negotiated transactions. Under this program, we repurchased 4.3 million shares for a total of approximately $230.2 million through December 31, 2009. The remaining dollar value of our common equity securities authorized to be repurchased under the program was approximately $269.8 million as of December 31, 2009. There were no repurchases of our equity securities during the quarter ended December 31, 2009.

See Part III, Item 12, for a description of securities authorized for issuance under equity compensation plans.

Item 6. Selected Financial Data

The following table provides selected financial data relating to our historical financial condition and results of operations as of and for each of the years ended December 31, 2005 through 2009. This data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes. Prior year amounts have been reclassified for discontinued operations and adoption of new accounting standards.

COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA

		Year Ended December 31,
(in thousands, except per share amounts and property data)		2009				2008				2007				2006				2005(e)
Operating Data (a)
Total property revenues		$	623,926			$	624,016			$	588,319			$	561,029			$	485,696
Total property expenses			246,867				239,282				217,694				211,336				184,862
Total non-property income (loss)			25,443				(19,540	)			25,002				35,530				50,912
Total other expenses			376,497				331,278				339,548				345,908				338,520
Income (loss) from continuing operations attributable to common shareholders			(69,028	)			(14,072	)			41,377				119,238				146,726
Net income (loss) attributable to common shareholders			(50,800	)			70,973				148,457				232,846				199,086
Income (loss) from continuing operations attributable to common shareholders per share:
Basic		$	(1.09	)		$	(0.26	)		$	0.70			$	2.07			$	2.79
Diluted			(1.09	)			(0.26	)			0.68				2.01				2.61
Net income attributable to common shareholders per share
Basic		$	(0.80	)		$	1.28			$	2.54			$	4.08			$	3.80
Diluted			(0.80	)			1.28				2.50				3.93				3.55
Distributions declared per common share		$	2.05			$	2.80			$	2.76			$	2.64			$	2.54
Balance Sheet Data (at end of year)
Total real estate assets, at cost		$	5,505,168			$	5,491,593			$	5,527,403			$	5,141,467			$	5,039,007
Total assets			4,607,999				4,730,342				4,890,760				4,586,050				4,487,799
Notes payable			2,625,199				2,832,396				2,828,095				2,330,976				2,633,091
Perpetual preferred units			97,925				97,925				97,925				97,925				97,925
Equity			1,609,013				1,501,356				1,653,340				1,859,942				1,494,001
Other Data
Cash flows provided by (used in):
Operating activities		$	217,688			$	216,958			$	223,106			$	231,569			$	200,845
Investing activities			(69,516	)			(37,374	)			(346,798	)			(52,067	)			(207,561	)
Financing activities			(91,423	)			(173,074	)			123,555				(180,044	)			6,039
Funds from operations — diluted (b)			109,947				169,585				227,153				237,790				195,290
Property Data
Number of operating properties (at the end of year) (c)			183				181				182				186				191
Number of operating apartment homes (at end of year) (c)			63,286				62,903				63,085				63,843				65,580
Number of operating apartment homes (weighted average) (c)(d)			50,608				51,277				53,132				55,850				55,056
Weighted average monthly total property revenue per apartment home		$	1,034			$	1,055			$	1,025			$	970			$	888
Properties under development (at end of period)			2				5				11				11				9

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report. Historical results and trends which might appear in the consolidated financial statements should not be interpreted as being indicative of future operations.

We consider portions of this report to be “forward-looking” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to our expectations for future periods. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions, or other items relating to the future; forward-looking statements are not guarantees of future performances, results, or events. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance our expectations will be achieved. Any statements contained herein which are not statements of historical fact should be deemed forward-looking statements. Reliance should not be placed on these forward-looking statements as they are subject to known and unknown risks, uncertainties, and other factors beyond our control and could differ materially from our actual results and performance.

Factors that may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include, but are not limited to, the following:

•

volatility in capital and credit markets could adversely impact us;

•

we could be negatively impacted by the condition of Fannie Mae or Freddie Mac;

•

unfavorable changes in economic conditions could adversely impact occupancy or rental rates;

•

short-term leases expose us to the effects of declining market rents;

•

we face risks associated with land holdings and related activities;

•

difficulties of selling real estate could limit our flexibility;

•

compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial cost;

•

competition could limit our ability to lease apartments or increase or maintain rental income;

•

development and construction risks could impact our profitability;

•

our acquisition strategy may not produce the cash flows expected;

•

competition could adversely affect our ability to acquire properties;

•

losses from catastrophes may exceed our insurance coverage;

•

investments through joint ventures involve risks not present in investments in which we are the sole investor;

•

we face risks associated with investments in and management of discretionary funds;

•

we depend on our key personnel;

•

changes in laws and litigation risks could affect our business;

•

tax matters, including failure to qualify as a REIT, could have adverse consequences;

•

insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders;

•

we have significant debt, which could have important adverse consequences;

•

we may be unable to renew, repay, or refinance our outstanding debt;

•

variable rate debt is subject to interest rate risk;

•

we may incur losses on interest rate hedging arrangements;

•

issuances of additional debt may adversely impact our financial condition;

•

failure to maintain our current credit ratings could adversely affect our cost of funds, related margins, liquidity, and access to capital markets;

•

share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders;

•

our share price will fluctuate; and

•

we may reduce dividends on our equity securities.

These forward-looking statements represent our estimates and assumptions as of the date of this report, and we assume no obligation to update or supplement forward-looking statements because of subsequent events.

Executive Summary

During 2008 and 2009, a number of factors adversely affecting the demand for and rents received by our multifamily communities were intense and pervasive across the United States, and the conditions within the multifamily industry have become progressively more challenging. A prolonged recession, high inventory levels of single-family homes and condominiums in the markets in which we operate, overall weak consumer confidence, and high unemployment, among other factors, have persisted and, in some cases, accelerated in 2009. We believe the effects of these factors on the multifamily industry have been further magnified by high levels of home foreclosures, liquidity disruptions in the financial markets, continued job losses, and lack of job growth. Our average apartment lease term is approximately twelve months. The impact of an economic downturn affects us quickly due to the short-term nature of our leases because our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.

Based on these market conditions and our belief these conditions will continue in the near future, we are cautious regarding expected performance and expect a decline in property revenues during 2010 as compared to 2009. However, positive impacts on our performance may result from reductions in the U.S. home ownership rate, more stringent lending criteria for prospective home-buyers, and long-term growth prospects for population, employment, and household formations in our markets, although there can be no assurance any of these factors will develop, continue or positively impact our operating results. We have noted a recent increase in issuances of debt and equity by REITs at more attractive rates. While this may be a positive sign, we are uncertain if this level of activity will increase or continue.

During the near term, we plan to continue to primarily focus on strengthening our capital and liquidity position by generating positive cash flows from operations, reducing outstanding debt and leverage ratios, and controlling and reducing overhead costs.

We review our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Our impairment evaluations take into consideration the current and anticipated economic climate. Based on our evaluations, we recorded significant impairment charges in the fourth quarter of 2009 for land holdings for eight future projects and a land development joint venture we have put on hold for the foreseeable future.

We currently have five wholly-owned land parcels held for future development we plan to develop. However, the commencement of future developments may continue to be impacted by macroeconomic issues, multifamily market conditions, and other factors. We will continue to evaluate future development starts based on market, economic and capital market conditions. However, if current conditions persist, there can be no assurance we will not have further impairments in the future.

Subject to market conditions, we intend to continue to look for opportunities to acquire existing communities through our investment in and management of our Funds. Until the earlier of (i) December 31, 2011 or (ii) such time as 90% of their committed capital is invested, subject to two one-year extensions, the Funds will be our exclusive investment vehicles for acquiring fully developed multifamily properties, subject to certain exceptions.

Property Portfolio

Our multifamily property portfolio, excluding land and joint venture properties which we do not manage, is summarized as follows:

		December 31, 2009								December 31, 2008
		Apartment								Apartment
		Homes				Properties				Homes				Properties
Operating Properties
Las Vegas, Nevada			8,016				29				8,016				29
Houston, Texas			6,289				16				6,620				16
Dallas, Texas			6,119				15				6,119				15
Washington, D.C. Metro			6,068				17				5,702				16
Tampa, Florida			5,503				12				5,503				12
Charlotte, North Carolina			3,574				15				3,574				15
Orlando, Florida			3,557				9				3,557				9
Atlanta, Georgia			3,202				10				3,202				10
Raleigh, North Carolina			2,704				7				2,704				7
Southeast Florida			2,520				7				2,520				7
Los Angeles/Orange County, California			2,481				6				2,481				6
Austin, Texas			2,454				8				2,106				7
Phoenix, Arizona			2,433				8				2,433				8
Denver, Colorado			2,171				7				2,171				7
San Diego/Inland Empire, California			1,196				4				1,196				4
Other			4,999				13				4,999				13
Total Operating Properties			63,286				183				62,903				181
Properties Under Development
Houston, Texas			372				2				712				3
Washington, D.C. Metro			—				—				366				1
Austin, Texas			—				—				348				1
Total Properties Under Development			372				2				1,426				5
Total Properties			63,658				185				64,329				186
Less: Joint Venture Properties (1)
Las Vegas, Nevada			4,047				17				4,047				17
Houston, Texas (2)			2,199				7				2,199				7
Phoenix, Arizona			992				4				992				4
Los Angeles/Orange County, California			711				2				711				2
Austin, Texas			601				2				601				2
Washington, D.C. Metro			508				1				508				1
Dallas, Texas			456				1				456				1
Denver, Colorado			320				1				320				1
Other			3,237				9				3,237				9
Total Joint Venture Properties			13,071				44				13,071				44
Total Properties Owned 100%			50,587				141				51,258				142