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  • 10-K (Feb 15, 2013)
  • 10-K (Feb 17, 2012)
  • 10-K (Feb 24, 2011)
  • 10-K (Feb 25, 2010)
  • 10-K (Feb 20, 2009)

 
Quarterly Reports

 
8-K

 
Other

Camden Property Trust 10-K 2010
Form 10-K
Table of Contents

 
 
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.
 
 

 

 


 

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 Exhibit 12.1
 Exhibit 21.1
 Exhibit 23.1
 Exhibit 24.1
 Exhibit 31.1
 Exhibit 31.2
 Exhibit 32.1

 

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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.

 

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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.

 

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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.

 

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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.

 

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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;

 

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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;

 

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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.

 

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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.

 

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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.

 

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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  

 

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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  

 

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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  

 

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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  

 

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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  
     
(1)  
Represents average physical occupancy for the year except as noted below.
 
(2)  
Properties under lease-up at December 31, 2009.
 
(3)  
Development property stabilized during 2009 — average occupancy calculated from date at which occupancy exceeded 90% through year-end.
 
(4)  
Redevelopment completed during 2009 — average occupancy calculated from date at which occupancy exceeded 90% through year-end.
 
(5)  
Properties under redevelopment at December 31, 2009.
 
(6)  
Miramar is a student housing project for Texas A&M at Corpus Christi. Average occupancy includes summer which is normally subject to high vacancies.
 
(7)  
Properties owned through a joint venture in which we own a 20% interest. The remaining interest is owned by an unaffiliated private pension fund.
 
(8)  
Properties owned through a joint venture in which we own a 20% interest. The remaining interest is owned by an unaffiliated private investor.
 
(9)  
Property owned through a joint venture in which we own a 50% interest. The remaining interest is owned by an unaffiliated private investor.
 
(10)  
Properties owned through a joint venture in which we own a 15% interest. The remaining interest is owned by an unaffiliated private investor.
 
(11)  
Properties owned through a joint venture in which we own a 20% interest. The remaining interest is owned by an unaffiliated private pension fund.
 
(12)  
Properties owned through a joint venture in which we own a 30% interest. The remaining interest is owned by an unaffiliated private investor.
 
(13)  
Property owned through a joint venture in which we own a 72% interest. The remaining interest is owned by an unaffiliated private investor.
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
 

 

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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  
(LINE GRAPH)
                                         
    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  

 

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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.

 

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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  
     
(a)  
Excludes discontinued operations.
 
(b)  
Management considers Funds from Operations (“FFO”) to be an appropriate measure of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”)), excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain noncontrolling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of operating properties and excluding depreciation, FFO can assist in the comparison of the operating performance of a company’s real estate between periods or as compared to different companies.
 
(c)  
Includes discontinued operations.
 
(d)  
Excludes apartment homes owned in joint ventures.
 
(e)  
The 2005 results include the operations of Summit Properties Inc. subsequent to February 28, 2005.

 

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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.

 

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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.

 

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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  
 
                       
     
(1)  
Refer to Note 7, “Investments in Joint Ventures,” of the Notes to Consolidated Financial Statements for further discussion of our joint venture investments.
 
(2)  
Includes Camden Travis Street, a fully-consolidated joint venture, of which we retain a 25% ownership.

 

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Stabilized Communities
We generally consider a property stabilized when 90% occupancy is achieved at the beginning of a period. During the year ended December 31, 2009, stabilization was achieved at seven recently completed development properties as follows:
                         
    Number of     Date of        
    Apartment     Construction     Date of  
Property and Location   Homes     Completion     Stabilization  
                         
Camden Main & Jamboree — joint venture
                       
Irvine, CA
    290       3Q08       1Q09  
 
Camden Cedar Hills
                       
Austin, TX
    208       4Q08       2Q09  
 
Camden Potomac Yard
                       
Arlington, VA
    378       2Q08       3Q09  
 
Camden Summerfield
                       
Landover, MD
    291       2Q08       3Q09  
 
Camden Whispering Oaks
                       
Houston, TX
    274       4Q08       3Q09  
 
Camden College Park — joint venture
                       
College Park, MD
    508       3Q08       3Q09  
 
Camden Orange Court
                       
Orlando, FL
    261       2Q08       4Q09  
Partial Sales and Dispositions to Joint Ventures Included in Continuing Operations
There were no partial sales or dispositions to joint ventures for the years ended December 31, 2009 or 2007.
In March 2008, we sold Camden Amber Oaks, a development community in Austin, Texas, to one of the Funds for approximately $8.9 million. No gain or loss was recognized on the sale. Concurrent with the transaction, we invested approximately $1.9 million in the Fund. In August 2008, we sold Camden South Congress to the same Fund for approximately $44.2 million and recognized a gain of approximately $1.8 million on the sale. In conjunction with the transaction, we invested approximately $2.8 million in the Fund.
Discontinued Operations and Assets Held for Sale
We intend to maintain a long-term strategy of managing our invested capital through the selective sale of properties and to utilize the proceeds to reduce our outstanding debt and leverage ratios and fund investments with higher anticipated growth prospects in our markets. Income from discontinued operations includes the operations of properties, including land, sold during the period or classified as held for sale as of December 31, 2009. The components of earnings classified as discontinued operations include separately identifiable property-specific revenues, expenses, depreciation, and interest expense, if any. Any gain or loss on the disposal of the properties held for sale is also classified as discontinued operations.
During the year ended December 31, 2009, we received net proceeds of approximately $28.0 million and recognized a gain of approximately $16.9 million from the sale to an unaffiliated third party of one operating property with a net book value of approximately $11.3 million, containing 671 apartment homes. During the year ended December 31, 2008, we received net proceeds of approximately $121.7 million and recognized gains of approximately $80.2 million from the sales of eight operating properties, containing 2,392 apartment homes, to unaffiliated third parties. During the year ended December 31, 2007, we received net proceeds of approximately $166.4 million and recognized gains of approximately $106.3 million from the sales of ten operating properties, containing 3,054 apartment homes, to unaffiliated third parties.

 

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During the year ended December 31, 2008, we recognized a gain of approximately $1.1 million from the sale of land adjacent to our regional office in Las Vegas, Nevada. The gain on this sale was not included in discontinued operations as the operations and cash flows of this asset were not clearly distinguished, operationally or for reporting purposes, from the adjacent assets.
There were no sales of undeveloped land during the years ended December 31, 2009 or 2008. During the year ended December 31, 2007, we sold undeveloped land totaling approximately 0.9 acres to unrelated third parties. In connection with these sales, we received net proceeds totaling approximately $6.0 million and recognized gains totaling approximately $0.7 million.
We reclassified the undeveloped land parcels previously included in discontinued operations to continuing operations during December 31, 2009 as management made the decision not to sell these assets after an existing sales contract was terminated. As a result, we adjusted the current and prior period consolidated financial statements to reflect the necessary reclassifications.
Development and Lease-Up Properties
At December 31, 2009, we had one completed consolidated property in lease-up as follows:
                                         
    Number of                     Date of     Estimated  
($ in millions)   Apartment             % Leased at     Construction     Date of  
Property and Location   Homes     Cost Incurred     1/31/10     Completion     Stabilization  
 
Camden Dulles Station
                                       
Oak Hill, VA
    366     $ 72.3       85 %     1Q09       2Q10  
At December 31, 2009, we had one consolidated property under construction as follows:
                                                         
                            Included in             Estimated        
    Number of                     Properties             Date of     Estimated  
($ in millions)   Apartment     Estimated     Cost     Under     % Leased at     Construction     Date of  
Property and Location   Homes     Cost     Incurred     Development     1/31/10     Completion     Stabilization  
 
Camden Travis Street (a)
                                                       
Houston, TX
    253     $ 39.0     $ 29.5     $ 8.6       31%       1Q10       1Q11  
     
(a)  
Camden Travis Street is owned by a consolidated joint venture, of which we retain a 25% ownership
Our consolidated balance sheet at December 31, 2009 included approximately $201.6 million related to properties under development and land. Of this amount, approximately $8.6 million related to Camden Travis Street. Approximately $89.6 million was invested in land for projects we plan to develop, and approximately $103.4 million was invested primarily in land tracts for which future development activities have been put on hold for the foreseeable future.

 

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At December 31, 2009, we had investments in non-consolidated joint ventures which were developing the following multifamily communities:
                                 
            Number of     Total     % Leased  
($ in millions)           Apartment     Cost     At  
Property and Location   Ownership %     Homes     Incurred     1/31/10  
 
Completed Communities (1)
                               
Camden Amber Oaks
                               
Austin, TX
    20 %     348     $ 35.2       80 %
Braeswood Place (2)
                               
Houston, TX
    72 %     340       50.3       64 %
 
                           
Total Completed Communities
            688     $ 85.5          
 
                           
 
                               
Under Construction (1) (2)
                               
Belle Meade
                               
Houston, TX
    30 %     119     $ 36.7       32 %
 
                           
Total Under Construction
            119     $ 36.7          
 
                           
 
                               
 
          Total Acres                
Pre-Development (3)
                               
Lakes at 610
                               
Houston, TX
    30 %     6.1     $ 7.1       N/A  
Town Lake (4)
                               
Austin, TX
    72 %     25.9       40.9          
 
                           
Total Pre-Development
            32.0     $ 48.0          
 
                           
     
(1)  
Properties in lease-up as of December 31, 2009.
 
(2)  
Properties being developed by joint venture partner.
 
(3)  
Properties in pre-development by joint venture partner.
 
(4)  
We have discontinued development activities on this project. An impairment of $13.4 million has been recorded for the year ended December 31, 2009.
Refer to Note 7, “Investments in Joint Ventures” of the Notes to Consolidated Financial Statements for further discussion of our joint venture investments.

 

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Geographic Diversification
At December 31, 2009 and 2008, our investments in various geographic areas, excluding depreciation, investments in joint ventures, and properties held for sale, were as follows:
                                 
(in thousands)   2009     2008  
 
Washington, D.C. Metro
  $ 1,193,269       21.9 %   $ 1,219,866       22.4 %
Southeast Florida
    453,021       8.3       446,629       8.2  
Tampa, Florida
    393,377       7.2       386,816       7.1  
Houston, Texas
    389,848       7.1       377,041       6.9  
Orlando, Florida
    371,862       6.8       364,379       6.7  
Dallas, Texas
    345,814       6.3       337,890       6.2  
Los Angeles/Orange County, California
    332,414       6.1       330,849       6.1  
Atlanta, Georgia
    320,748       5.9       319,047       5.8  
Charlotte, North Carolina
    318,493       5.8       316,387       5.8  
Las Vegas, Nevada
    308,054       5.6       321,782       5.9  
Raleigh, North Carolina
    237,284       4.4       237,023       4.3  
San Diego/Inland Empire, California
    227,108       4.2       226,556       4.1  
Denver, Colorado
    187,544       3.4       186,292       3.4  
Austin, Texas
    154,473       2.8       159,897       2.9  
Phoenix, Arizona
    118,828       2.2       118,003       2.2  
Other
    109,489       2.0       107,377       2.0  
 
                       
Total
  $ 5,461,626       100.0 %   $ 5,455,834       100.0 %
 
                       
Results of Operations
Changes in revenues and expenses related to our operating properties from period to period are due primarily to the performance of stabilized properties in the portfolio, the lease-up of newly constructed properties, acquisitions, and dispositions. Where appropriate, comparisons of income and expense on communities included in continuing operations are made on a dollars-per-weighted average apartment home basis in order to adjust for such changes in the number of apartment homes owned during each period. Selected weighted averages for the years ended December 31 are as follows:
                         
    2009     2008     2007  
Average monthly property revenue per apartment home
  $ 1,034     $ 1,055     $ 1,025  
Annualized total property expenses per apartment home
  $ 4,911     $ 4,852     $ 4,551  
Weighted average number of operating apartment homes owned 100%
    50,272       49,312       47,832  
Weighted average occupancy of operating apartment homes owned 100%
    94.5 %     93.8 %     93.7 %

 

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Property-level operating results
The following tables present the property-level revenues and property-level expenses, excluding discontinued operations, for the year ended December 31, 2009 as compared to 2008 and for the year ended December 31, 2008 as compared to 2007:
                                         
    Apartment     Year Ended        
    Homes     December 31,     Change  
($ in thousands)   at 12/31/09     2009     2008     $     %  
Property revenues
                                       
Same store communities
    42,670     $ 517,823     $ 534,356     $ (16,533 )     (3.1 )%
Non-same store communities
    7,551       96,840       81,034       15,806       19.5  
Development and lease-up communities
    619       4,527       1,213       3,314       273.2  
Dispositions/other
          4,736       7,413       (2,677 )     (36.1 )
 
                             
Total property revenues
    50,840     $ 623,926     $ 624,016     $ (90 )     0 %
 
                             
 
                                       
Property expenses
                                       
Same store communities
    42,670     $ 203,481     $ 199,930     $ 3,551       1.8 %
Non-same store communities
    7,551       37,985       34,201       3,784       11.1  
Development and lease-up communities
    619       2,028       515       1,513       293.8  
Dispositions/other
          3,373       4,636       (1,263 )     (27.2 )
 
                             
Total property expenses
    50,840     $ 246,867     $ 239,282     $ 7,585       3.2 %
 
                             
Same store communities are communities we owned and which were stabilized as of January 1, 2008. Non-same store communities are stabilized communities we have acquired, developed, or re-developed after January 1, 2008. Development and lease-up communities are non-stabilized communities we have acquired or developed after January 1, 2008.
                                         
    Apartment     Year Ended        
    Homes     December 31,     Change  
    at 12/31/08     2008     2007     $     %  
Property revenues
                                       
Same store communities
    40,340     $ 498,875     $ 491,736     $ 7,139       1.5 %
Non-same store communities
    8,469       108,184       88,925       19,259       21.7  
Development and lease-up communities
    2,031       9,444       81       9,363        
Dispositions/other
          7,513       7,577       (64 )     (0.8 )
 
                             
Total property revenues
    50,840     $ 624,016     $ 588,319     $ 35,697       6.1 %
 
                             
 
                                       
Property expenses
                                       
Same store communities
    40,340     $ 188,644     $ 180,277     $ 8,367       4.6 %
Non-same store communities
    8,469       40,395       33,444       6,951       20.8  
Development and lease-up communities
    2,031       5,694       140       5,554        
Dispositions/other
          4,549       3,833       716       18.7  
 
                             
Total property expenses
    50,840     $ 239,282     $ 217,694     $ 21,588       9.9 %
 
                             
Same store communities are communities we owned and which were stabilized as of January 1, 2007. Non-same store communities are stabilized communities we have acquired, developed, or re-developed after January 1, 2007. Development and lease-up communities are non-stabilized communities we have developed or acquired after January 1, 2007.
Same store analysis:
Same store property revenues for the year ended December 31, 2009 decreased approximately $16.5 million, or 3.1%, from 2008. Same store rental revenues decreased approximately $23.9 million, or 5.1%, due to a slight decline in average occupancy and a 4.9% decline in average rental rates for our same store portfolio due to, among other factors, the challenges within the multifamily industry as discussed in the Executive Summary. This decrease was partially offset by an approximate $7.4 million increase in other property revenue primarily due to the continued rollout of Perfect Connection, which provides cable services to our residents, and other utility rebilling programs.

 

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Same store property revenues for the year ended December 31, 2008 increased approximately $7.1 million, or 1.5%, from 2007. Same store property revenues were positively impacted by an approximate $9.0 million in other property revenue primarily due to the continued rollout of Perfect Connection, and other utility rebilling programs. This increase was partially offset by approximately $1.9 million, or 0.4%, due to slight declines in average occupancy and average rental rates for our same store portfolio due to, among other factors, the challenges within the multifamily industry.
Property expenses from our same store communities increased approximately $3.6 million, or 1.8%, for the year ended December 31, 2009, as compared to 2008. This increase in same store property expenses of approximately $83 per apartment home was primarily due to expenses related to our utility rebilling programs discussed above and increases in property insurance costs. These increases were partially offset by lower property taxes resulting from declining rates and valuations at a number of our communities, and lower repairs and maintenance, and marketing and leasing expenses. Excluding the expenses associated with our utility rebilling programs, same store property expenses declined approximately $0.2 million, or 0.1% from 2008.
Property expenses from our same store communities increased approximately $8.4 million, or 4.6%, for the year ended December 31, 2008, as compared to 2007. The increases in same store property expenses were primarily due to real estate taxes and expenses related to our utility rebilling programs discussed above. Real estate taxes increased primarily due to increases in appraisals and taxation rates. Excluding the expenses associated with our utility rebilling programs, same store property expenses for this period increased approximately $2.4 million, or 1.3%.
Non-same store and development and lease-up analysis:
Property revenues from non-same store and development and lease-up communities increased approximately $19.1 million for the year ended December 31, 2009 as compared to 2008 and increased approximately $28.6 million for the year ended December 31, 2008 as compared to 2007. The increases in both periods were primarily due to the completion and lease-up of certain properties in our development pipeline as well as property acquisitions in 2007. See “Development and Lease-Up Properties” for additional detail of occupancy at properties in our development pipeline.
Property expenses from non-same store and development and lease-up communities increased approximately $5.3 million for the year ended December 31, 2009 as compared to 2008 and approximately $12.5 million for 2008 as compared to 2007. The increases in both periods were due to the completion and lease-up of properties in our development pipeline as well as acquisitions completed in 2007.
Dispositions/other property analysis:
Property revenues from dispositions/other decreased approximately $2.7 million and $0.1 million for the year ended December 31, 2009 as compared to 2008 and for the year ended December 31, 2008 as compared to 2007, respectively. The decrease for 2009 as compared to 2008 primarily related to not having any dispositions in 2009 as compared to the sale of one of our communities to one of the Funds in 2008.
Property expenses from dispositions/other decreased approximately $1.3 million and increased approximately $0.7 million for the year ended December 31, 2009 as compared to 2008 and for the year ended December 31, 2008 as compared to 2007, respectively. The decrease in 2009 as compared to 2008 and the increase in 2008 as compared to 2007 were primarily due to insurance costs related to Hurricane Ike in September 2008.
Non-property income
                                                                 
    Year Ended                     Year Ended        
    December 31,     Change     December 31,     Change  
($ in thousands)   2009     2008     $     %     2008     2007     $     %  
Fee and asset management
  $ 8,008     $ 9,167     $ (1,159 )     (12.6 )%   $ 9,167     $ 8,293     $ 874       10.5 %
Interest and other income
    2,826       4,736       (1,910 )     (40.3 )     4,736       9,427       (4,691 )     (49.8 )
Income (loss) on deferred compensation plans
    14,609       (33,443 )     48,052             (33,443 )     7,282       (40,725 )      
 
                                               
Total non-property income (loss)
  $ 25,443     $ (19,540 )   $ 44,983       %   $ (19,540 )   $ 25,002     $ (44,542 )     %
 
                                               

 

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Fee and asset management income, which represents income related to third-party construction and development projects and property management, for the year ended December 31, 2009 decreased approximately $1.2 million as compared to 2008 and increased approximately $0.9 million for the year ended December 31, 2008 as compared to 2007. The decrease for 2009 was primarily related to overall declines in development and construction fees earned on our development joint ventures in 2009 as compared to 2008 due to the completion of the associated construction activities at several joint venture communities in 2008 and 2009. The decrease in 2009 was partially offset by an increase in third-party construction activities in 2009. The increase in 2008 as compared to 2007 was due to increases in management fees earned from one of the Funds partially offset by decreased third-party construction activities in 2008.
Interest and other income decreased approximately $1.9 million for 2009 as compared to 2008 and decreased approximately $4.7 million for 2008 as compared to 2007. Interest income, which primarily relates to interest earned on notes receivable outstanding under our mezzanine financing program, decreased approximately $1.9 million for 2009 as compared to 2008 and decreased approximately $0.8 million for 2008 as compared to 2007. The decreases were primarily due to declines in interest income on our mezzanine loan portfolio related to contractual reductions in interest rates on mezzanine loans for development communities which have reached stabilization, reductions in interest earned on certain variable rate mezzanine notes due to declines in LIBOR, and lower balances of outstanding mezzanine loans. Other income decreased approximately $3.9 million for 2008 as compared to 2007. Other income primarily represents income recognized upon the settlement of legal, insurance and warranty claims, and contract disputes. In 2007, other income included approximately $3.3 million related to settlement of a contract dispute and a gain on sale of technology investments of $0.6 million.
Our deferred compensation plans earned income of approximately $14.6 million in 2009, incurred losses of approximately $33.4 million in 2008, and earned income of approximately $7.3 million in 2007. The changes were related to the performance of the investments held in the deferred compensation plans for plan participants and were directly offset by the expense (benefit) related to these plans, as set forth in the table below.
Other expenses
                                                                 
    Year Ended                     Year Ended        
    December 31,     Change     December 31,     Change  
($ in thousands)   2009     2008     $     %     2008     2007     $     %  
Property management
  $ 18,864     $ 19,910     $ (1,046 )     (5.3 )%   $ 19,910     $ 18,413     $ 1,497       8.1 %
Fee and asset management
    4,878       6,054       (1,176 )     (19.4 )     6,054       4,552       1,502       33.0  
General and administrative
    31,243       31,586       (343 )     (1.1 )     31,586       32,590       (1,004 )     (3.1 )
Interest
    128,296       132,399       (4,103 )     (3.1 )     132,399       115,753       16,646       14.4  
Depreciation and amortization
    174,682       171,814       2,868       1.7       171,814       157,297       14,517       9.2  
Amortization of deferred financing costs
    3,925       2,958       967       32.7       2,958       3,661       (703 )     (19.2 )
Expense (benefit) on deferred compensation plans
    14,609       (33,443 )     48,052             (33,443 )     7,282       (40,725 )      
 
                                               
Total non-property expenses
  $ 376,497     $ 331,278     $ 45,219       13.6 %   $ 331,278     $ 339,548     $ (8,270 )     (2.4 )%
 
                                               
Property management expense, which represents regional supervision and accounting costs related to property operations, decreased approximately $1.0 million for the year ended December 31, 2009 as compared to 2008 and increased approximately $1.5 million for 2008 as compared to 2007. Property management expenses were 3.0%, 3.2%, and 3.1% of total property revenues for the years ended December 31, 2009, 2008, and 2007, respectively.
Fee and asset management expense, which represents expenses related to third-party construction and development projects and property management, decreased approximately $1.2 million for 2009 as compared to 2008 and increased approximately $1.5 million for 2008 as compared to 2007. The decrease for 2009 as compared to 2008 was primarily due to overall declines in development and construction activities related to our development joint ventures in 2009 as compared to 2008 due to the completion of the associated construction activities at several joint venture communities in 2008 and 2009. The increase for 2008 as compared to 2007 was primarily attributable to increased costs associated with one of the Funds partially offset by decreases in our third-party construction activities.

 

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General and administrative expenses decreased approximately $0.3 million during the year ended December 31, 2009 as compared to 2008 and decreased approximately $1.0 million during the year ended December 31, 2008 as compared to 2007, and were 4.9%, 5.0%, and 5.4% of total revenues, excluding income or loss on deferred compensation plans, for the years ended December 31, 2009, 2008, and 2007, respectively. The decrease for 2009 as compared to 2008 was primarily due to various cost-saving initiatives implemented in 2009, and increased expenses in 2008 which did not recur in 2009 associated with the abandonment of potential acquisitions. The decrease was partially offset by $1.6 million in severance payments made in connection with the reduction in force of certain construction and development staff in 2009, and separation costs relating to the retirement of one executive officer during the fourth quarter of 2009. The decrease in general and administrative expenses for the year ended December 31, 2008 as compared to 2007 was primarily due to decreases in salaries, incentive compensation, and legal expenses.
Interest expense decreased approximately $4.1 million during the year ended December 31, 2009 as compared to 2008 and increased approximately $16.6 million during the year ended December 31, 2008 as compared to 2007. The decrease for 2009 as compared to 2008 was primarily due to decreases in indebtedness as a result of early retirement of outstanding debt of approximately $325.0 million during the first six months of 2009. Refer to Note 9, “Notes Payable,” in the Notes to Consolidated Financial Statements for further discussion of our early retirements of outstanding debt. This decrease in interest expense was partially offset by a decrease in capitalized interest of approximately $7.4 million during the year ended December 31, 2009 as compared to 2008 as a result of the completion of units in our development pipeline and our decision in fiscal year 2008 not to continue with five future development projects. The decrease was further offset by higher interest rates on existing indebtedness resulting from paying down amounts outstanding under our unsecured line of credit with proceeds from our $420 million credit facility entered into in April 2009 and our $380 million credit facility entered into in September 2008. The increase for 2008 as compared to 2007 was primarily due to the higher interest rates relating to the $380 million credit facility entered into in September 2008, decreased capitalized interest of approximately $4.9 million, and increased amounts outstanding on our line of credit, partially offset by our repurchases and early retirement of outstanding debt, and a decline in interest rates on our floating rate debt.
Depreciation and amortization expense increased approximately $2.9 million during the year ended December 31, 2009 as compared to 2008 and increased approximately $14.5 million during the year ended December 31, 2008 as compared to 2007. The increases were primarily due to completion of new development and capital improvements placed in service each year as compared to the previous year.
Amortization of deferred financing costs increased approximately $1.0 million during the year ended December 31, 2009 as compared to 2008 and decreased approximately $0.7 million during the year ended December 31, 2008 as compared to 2007. The increase for 2009 was primarily due to the amortization of our financing costs incurred upon the extension of our unsecured credit facility in October 2009, and financing costs related to our $380 million credit facility completed in September 2008 and our $420 million credit facility completed in April 2009. This increase was partially offset by the repurchase and retirement of certain series of notes during 2009. The decrease for 2008 was primarily due to certain deferred financing costs becoming fully amortized partially offset by the financing costs incurred on entering into our $380 million credit facility in September 2008.
Our deferred compensation plans incurred expenses of approximately $14.6 million in 2009, earned a benefit of approximately $33.4 million in 2008, and incurred expenses of approximately $7.3 million in 2007. The changes were related to the performance of the investments held in the deferred compensation plans for plan participants and were directly offset by the income (loss) related to these plans, as discussed above.

 

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Other
                                                                 
    Year Ended                     Year Ended        
    December 31,     Change     December 31,     Change  
(in thousands)   2009     2008     $     %     2008     2007     $     %  
 
                                                               
Gain on sale of properties, including land
  $     $ 2,929     $ (2,929 )     (100.0 )%   $ 2,929     $     $ 2,929       100.0 %
Gain (loss) on early retirement of debt
    (2,550 )     13,566       (16,116 )     (118.8 )     13,566             13,566       100.0  
Impairment associated with land development activities
    (85,614 )     (51,323 )     (34,291 )     (66.8 )     (51,323 )     (1,447 )     (49,876 )      
Equity in income (loss) of joint ventures
    695       (1,265 )     1,960       (154.9 )     (1,265 )     1,526       (2,791 )     (182.9 )
Income tax expense — current
    (967 )     (843 )     (124 )     (14.7 )     (843 )     (3,052 )     2,209       72.4  
Gain on sale of properties, including land, totaled approximately $2.9 million for the year ended December 31, 2008 due to gains on the partial sale of properties to one of the Funds and a gain on the sale of a land parcel in Las Vegas, Nevada to an unaffiliated third party. There was no gain on sale of properties, including land, for the years ended December 31, 2009 or 2007.
Loss on early retirement of debt was approximately $2.6 million for the year ended December 31, 2009 due to the repurchase and retirement of approximately $325.0 million of various unsecured and secured notes from unrelated third parties for approximately $327.5 million during the first two quarters of 2009. Gain on early retirement of debt was approximately $13.6 million for the year ended December 31, 2008 due to the repurchases and retirements of debt, including a tender offer for certain series of outstanding debt which resulted in the repurchase and retirement of approximately $108.3 million of debt from unrelated third parties for approximately $100.6 million, and the repurchases and retirements of approximately $82.7 million of various series of other outstanding debt from unrelated third parties for approximately $75.7 million. The gain (loss) on early retirement of debt for these transactions also includes reductions for the write-off of applicable loan costs. There was no gain (loss) on early retirement of debt for the year ended December 31, 2007.
The impairment associated with land development activities for the year ended December 31, 2009 of approximately $85.6 million includes approximately $72.2 million related to land holdings for eight projects, and approximately $13.4 million related to a land development joint venture we have put on hold for the foreseeable future. The impairment associated with land development activities for the year ended December 31, 2008 of approximately $51.3 million reflects impairments in the value of land holdings for several potential development projects we no longer plan to pursue, including approximately $48.6 million related to land holdings for five projects we no longer plan to develop, approximately $1.6 million in the value of a land parcel held for future development, and approximately $1.1 million for costs capitalized for a potential joint venture development we no longer plan to pursue. The impairment associated with land development activities for the year ended December 31, 2007 of approximately $1.4 million reflects impairment in the value of one potential development project we no longer plan to pursue. These impairment charges for land are the difference between each parcel’s estimated fair value and the carrying value, which includes pursuit and other costs.
Equity in income (loss) of joint ventures increased approximately $2.0 million for the year ended December 31, 2009 as compared to 2008, and decreased approximately $2.8 million for the year ended December 31, 2008 as compared to 2007. The increase for 2009 as compared to 2008 was primarily the result of certain properties owned by development joint ventures reaching or nearing stabilization in 2009 partially offset by declining earnings at our stabilized operating joint ventures due to declines in rental income. The decrease in 2008 as compared to 2007 was primarily due to the increase in joint ventures under development in 2008 as compared to the prior period. Additionally, in 2008 we incurred expenses of approximately $0.4 million associated with the abandonment of potential joint venture acquisitions, which were not incurred in 2009 or 2007.
We had current income tax expense of approximately $1.0 million, $0.8 million, and $3.1 million for the tax years ended December 31, 2009, 2008, and 2007, respectively. The increase in taxes in 2009 as compared to 2008 primarily relate to an increase in state income taxes. Income tax expense decreased $2.2 million for the year ended December 31, 2008 as compared to 2007, primarily attributable to lower gains on property dispositions in states with high income tax rates and changes in state tax laws affecting one of our operating partnerships.

 

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Funds from Operations (“FFO”)
Management considers FFO to be an appropriate measure of the financial performance of an equity REIT. The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”)), excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain noncontrolling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of operating properties and depreciation, FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies.
To facilitate a clear understanding of our consolidated historical operating results, we believe FFO should be examined in conjunction with net income attributable to common shareholders as presented in the consolidated statements of income and comprehensive income and data included elsewhere in this report. FFO is not defined by GAAP and should not be considered as an alternative to net income attributable to common shareholders as an indication of our operating performance. Additionally, FFO as disclosed by other REITs may not be comparable to our calculation.
Reconciliations of net income attributable to common shareholders to diluted FFO for the years ended December 31 are as follows:
                         
(in thousands)   2009     2008     2007  
Funds from operations
                       
Net income (loss) attributable to common shareholders (1)
  $ (50,800 )   $ 70,973     $ 148,457  
Real estate depreciation and amortization, including discontinued operations
    170,480       171,009       161,064  
Adjustments for unconsolidated joint ventures
    7,800       7,103       4,934  
Gain on sale of properties, including land and discontinued operations, net of taxes
    (16,887 )     (83,117 )     (105,098 )
Income (loss) allocated to noncontrolling interests
    (646 )     3,617       17,796  
 
                 
Funds from operations — diluted
  $ 109,947     $ 169,585     $ 227,153  
 
                 
 
                       
Weighted average shares — basic
    62,359       55,272       58,135  
Incremental shares issuable from assumed conversion of:
                       
Common share options and share awards granted
    55       114       482  
Common units
    2,852       3,142       3,503  
 
                 
Weighted average shares — diluted
    65,266       58,528       62,120  
 
                 
     
(1)  
Includes an $85.6 million, $51.3 million and $1.4 million impairment associated with land development activities for the years ended December 31, 2009, 2008 and 2007, respectively.
Liquidity and Capital Resources
Financial Condition and Sources of Liquidity
We intend to maintain a strong balance sheet and preserve our financial flexibility, which we believe should enhance our ability to identify and capitalize on investment opportunities as they become available. We intend to maintain what management believes is a conservative capital structure by:
   
extending and sequencing the maturity dates of our debt where practicable;
   
managing interest rate exposure using what management believes to be prudent levels of fixed and floating rate debt;
   
maintaining what management believes to be conservative coverage ratios; and
   
using what management believes to be a prudent combination of debt and common and preferred equity.

 

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Our interest expense coverage ratio, net of capitalized interest, was approximately 2.6, 2.6, and 3.0 times for the years ended December 31, 2009, 2008, and 2007, respectively. Our interest expense coverage ratio is calculated by dividing interest expense for the period into the sum of property revenues and expenses, non-property income, other expenses, income from discontinued operations, depreciation, amortization, and interest expense. At December 31, 2009, 2008, and 2007, approximately 72.8%, 78.3%, and 81.6%, respectively, of our properties (based on invested capital) were unencumbered. Our weighted average maturity of debt, including our line of credit, was 5.6 years at December 31, 2009.
Due to the instability experienced during the current economic downturn, we believe the timing and strength of an economic recovery is unclear and these conditions may not improve quickly. 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, selectively disposing of properties when feasible, and controlling and reducing construction and overhead costs.
Our primary source of liquidity is cash flow generated from operations. Other sources include the availability under our unsecured credit facility and other short-term borrowings, secured mortgage debt, proceeds from dispositions of properties and other investments, and access to the capital markets. We believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash needs during 2010 including:
   
normal recurring operating expenses;
   
current debt service requirements;
   
recurring capital expenditures;
   
initial funding of property developments, acquisitions, joint venture investments, and notes receivable; and
   
the minimum dividend payments required to maintain our REIT qualification under the Code.
Factors which could increase or decrease our future liquidity include but are not limited to current volatility in capital and credit markets, sources of financing, our ability to complete asset sales, the effect our debt level and decreases in credit ratings could have on our costs of funds and our ability to access capital markets, and changes in operating costs resulting from a weakened economy, all of which could adversely impact occupancy and rental rates and our liquidity.
Cash Flows
Certain sources and uses of cash, such as the level of discretionary capital expenditures, and repurchases of debt and common shares are within our control and are adjusted as necessary based upon, among other factors, market conditions. The following is a discussion of our cash flows for the years ended December 31, 2009 and 2008.
Net cash provided by operating activities was approximately $217.7 million during the year ended December 31, 2009 as compared to approximately $217.0 during the year ended December 31, 2008. The slight increase was primarily due to lower interest expense offset by lower net operating income in 2009 as compared to 2008, and the timing of payments relating to accounts payable and accrued expenses.
Net cash used in investing activities during the year ended December 31, 2009 totaled approximately $69.5 million as compared to approximately $37.4 million during the year ended December 31, 2008. Cash outflows for property development, acquisition, and capital improvements were approximately $72.8 million during 2009 as compared to approximately $199.3 million during 2008. This decrease was due to the timing of completions of communities in our development pipeline and a reduction in construction and development activity in 2009 as compared to 2008. Cash inflows from sales of properties and partial sales of assets to joint ventures were approximately $28.1 million for the year ended December 31, 2009 as compared to approximately $176.0 million for the year ended December 31, 2008. Additionally, cash outflows for investments in joint ventures were $23.2 million for the year ended December 31, 2009 as compared to $10.4 million in 2008; this increase in cash outflows was primarily a result of our $22.2 million equity investment in one of our joint ventures during the third quarter 2009.

 

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Net cash used in financing activities totaled approximately $91.4 million during the year ended December 31, 2009 as compared to approximately $173.1 million during 2008. During the year ended December 31, 2009, we used a total of approximately $648.7 million of cash to repay outstanding notes payable consisting of approximately $169.9 million of outstanding notes payable stemming from our April 2009 tender offer, the early retirement of outstanding debt consisting of approximately $139.1 million of secured notes, and approximately $18.2 million of senior unsecured notes. The remaining outstanding notes payable payments were primarily for maturing secured and unsecured notes payable of approximately $176.5 million, and payments of all remaining amounts outstanding on our unsecured line of credit. Also in 2009, $152.7 million was used for distributions paid to common shareholders, perpetual preferred unit holders, and noncontrolling interest holders. The cash outflows were offset by cash receipts of $420 million from a secured credit facility entered into during the second quarter, approximately $20.8 million from secured notes payable relating to a construction loan for a consolidated joint venture and net proceeds of approximately $272.1 million from the completion of our equity offering in May 2009. In 2008, we used $173.1 million of cash in financing activities primarily to repay approximately $379.2 million of outstanding notes payable consisting of approximately $100.6 million of outstanding notes payable in our December 2008 tender offer, approximately $75.7 million of various series of other outstanding debt, and approximately $201.9 million of maturing secured notes payable. Net cash used in financing activities for 2008 was also attributable to distributions paid to common shareholders, perpetual preferred unit holders, and noncontrolling interest holders of approximately $172.3 million and approximately $33.1 million of common share repurchases, offset by proceeds from notes payable and increases in our unsecured line of credit of approximately $385.9 million and $30.0 million, respectively.
Financial Flexibility
We have a $600 million unsecured credit facility which matures in January 2011. The scheduled interest rate is based on spreads over the London Interbank Offered Rate (“LIBOR”) or the prime rate. The scheduled interest rate spreads 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 $300 million or the remaining amount available under the line of credit. The line of credit is subject to customary financial covenants and limitations, all of which we are in compliance.
Our line of credit provides us with the ability to issue up to $100 million in letters of credit. While our issuance of letters of credit does not increase our borrowings outstanding under our line, it does reduce the amount available. At December 31, 2009, we had outstanding letters of credit totaling approximately $9.2 million, and had approximately $590.8 million available under our unsecured line of credit.
As an alternative to our unsecured line of credit, from time to time we may 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. We expect such borrowings, if any, will vary in term and pricing and will typically be priced at interest rates below those available from the unsecured line of credit.
During the quarter ended June 30, 2009, we filed a shelf registration statement with the SEC which became automatically effective upon filing and allows us to offer, from time to time, an unlimited amount of common shares, preferred shares, debt securities, or warrants. Our declaration of trust provides we may issue up to 110 million shares of beneficial interest, consisting of 100 million common shares and 10 million preferred shares. During the quarter ended June 30, 2009, we issued approximately 10.4 million common shares at $27.50 per share in a public equity offering, resulting in net proceeds of approximately $272.1 million. As of December 31, 2009, we had approximately 77.0 million common shares and no preferred shares outstanding.
We believe our ability to access capital markets is enhanced by our senior unsecured debt ratings by Moody’s and Standard and Poor’s, which are currently Baa1 and BBB, respectively, with stable outlooks, as well as by our ability to borrow on a secured basis from Fannie Mae or Freddie Mac. However, we may not be able to maintain our current credit ratings and may not be able to borrow on a secured or unsecured basis in the future. The capital and credit markets have been experiencing continued volatility and disruption. 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. 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.

 

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On April 17, 2009, we, as guarantor, and five separate subsidiaries as borrowers entered into a $420 million secured credit facility agreement. The facility has a ten-year term with a fixed annual interest rate of 5.12% and monthly payments of interest only and matures on May 1, 2019. We have entered into standard nonrecourse carveout guarantees. The obligations of the Borrowers under the credit agreement are secured by cross-collateralized first priority mortgages on 11 of our multifamily communities. We used the proceeds from this credit facility to repurchase outstanding debt, repay maturing debt, prepay mortgage debt, pay down amounts outstanding under our revolving line of credit, and general corporate purposes.
Future Cash Requirements and Contractual Obligations
One of our principal long-term liquidity requirements includes the repayment of maturing debt, including any future borrowings under our unsecured line of credit. During 2010, approximately $141.6 million of unsecured debt, including scheduled principal amortizations, are scheduled to mature. See Note 9, “Notes Payable,” of the Notes to Consolidated Financial Statements for further discussion of scheduled maturities. Additionally, approximately $9.5 million remains to be funded for one development project owned by a consolidated joint venture and we expect substantially all of the remaining expenditures to be funded from an existing construction loan. We intend to meet our long-term liquidity requirements through cash flows generated from operations, draws on our unsecured credit facility, proceeds from property dispositions and secured mortgage notes, and the use of debt and equity offerings under our automatic shelf registration statement.
In order for us to continue to qualify as a REIT, we are required 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. In December 2009, we announced our Board of Trust Managers had declared a dividend distribution of $0.45 per share to our common shareholders of record as of December 21, 2009. The dividend was subsequently paid on January 18, 2010. We paid equivalent amounts per unit to holders of the common operating partnership units. When aggregated with previous 2009 dividends, this distribution to common shareholders and holders of common operating partnership units equates to an annual dividend rate of $2.05 per share or unit for the year ended December 31, 2009.
The following table summarizes our known contractual cash obligations as of December 31, 2009:
                                                         
(in millions)   Total     2010     2011     2012     2013     2014     Thereafter  
Debt maturities (1)
  $ 2,625.2     $ 141.6     $ 153.2     $ 761.9     $ 227.2     $ 10.1     $ 1,331.2  
Interest payments (2)
    692.3       130.6       119.3       108.4       74.4       63.4       196.2  
Non-cancelable lease payments
    12.3       2.5       2.4       2.0       1.9       1.8       1.7  
Postretirement benefit obligations
    2.9       0.2       0.2       0.2       0.2       0.2       1.9  
Construction contracts
    9.5       9.5                                  
 
                                         
 
  $ 3,342.2     $ 284.4     $ 275.1     $ 872.5     $ 303.7     $ 75.5     $ 1,531.0  
 
                                         
     
(1)  
Includes our line of credit and scheduled principal amortizations.
 
(2)  
Includes contractual interest payments for our line of credit, senior unsecured notes, medium-term notes, and secured notes. Interest payments on hedged loans were calculated based on the interest rates effectively fixed by the interest rate swap agreements. The interest payments on certain secured notes with floating interest rates and our line of credit were calculated based on the interest rates in effect as of December 31, 2009 or the most recent practicable date.
Off-Balance Sheet Arrangements
The joint ventures in which we have an interest have been funded in part with secured, third-party debt. We are also committed to additional funding under mezzanine loans provided to joint ventures. We have guaranteed no more than our proportionate interest, totaling approximately $57.0 million, of five loans utilized for construction and development activities for our joint ventures and our commitment to fund additional amounts under the mezzanine loans was an aggregate of approximately $7.3 million at December 31, 2009.
Inflation
Substantially all of our apartment leases are for a term generally ranging from six to fifteen months. In an inflationary environment, we may realize increased rents at the commencement of new leases or upon the renewal of existing leases. We believe the short-term nature of our leases generally minimizes our risk from the adverse effects of inflation.

 

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Critical Accounting Policies
The preparation of our financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date, and the amounts of revenues and expenses recognized during the reporting period. These estimates are based on historical experience and other assumptions believed to be reasonable under the circumstances. The following is a discussion of our critical accounting estimates. For a discussion of all of our significant accounting policies, see Note 2 to the accompanying consolidated financial statements.
Use of Estimates. In the application of GAAP, management is required to make estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, results of operations during the reporting periods, and related disclosures. Our more significant estimates include estimates supporting our impairment analysis related to the carrying values of our real estate assets, estimates of the useful lives of our assets, estimates related to the valuation of our investments in joint ventures and mezzanine financing, and estimates of expected losses of variable interest entities. These estimates are based on historical experience and other assumptions believed to be reasonable under the circumstances. Future events rarely develop exactly as forecasted, and the best estimates routinely require adjustment.
Principles of Consolidation. We may enter into various joint venture agreements with unrelated third parties to hold or develop real estate assets. We must determine for each of these joint ventures whether to consolidate the entity or account for our investment under the equity or cost basis of accounting. Investments acquired or created are evaluated based on the accounting guidance relating to variable interest entities (“VIEs”), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation (primarily using a voting interest model) under the remaining consolidation guidance relating to real estate. If we are the general partner in a limited partnership, or manager of a limited liability company, we also consider the consolidation guidance relating to the rights of limited partners or non-managing members, as the case may be, to assess whether any rights held by the limited partners, or non-managing members, as the case may be, overcome the presumption of control by us. We evaluate our accounting for investments on a quarterly basis or when a reconsideration event (as defined in GAAP) with respect to our investments occurs. The analysis required to identify VIEs and primary beneficiaries is complex and requires substantial management judgment. Accordingly, we believe the decisions made to choose an appropriate accounting framework are critical.
Asset Impairment. Long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists if estimated future undiscounted cash flows associated with long-lived assets are not sufficient to recover the carrying value of such assets. We consider projected future discounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. When impairment exists, the long-lived asset is adjusted to its fair value. While we believe our estimates of future cash flows are reasonable, different assumptions regarding a number of factors, including market rents, economic conditions, and occupancies could significantly affect these estimates. In estimating fair value, management uses appraisals, management estimates, and discounted cash flow calculations that maximize inputs from a marketplace participant’s perspective. During the quarter ended December 31, 2009, we recognized a $72.2 million impairment charge to the previous carrying value of $109.9 million for land holdings for eight future projects we have put on hold for the foreseeable future. Additionally, we recognized a $13.4 million impairment charge relating to a land development joint venture we have put on hold for the foreseeable future. This development joint venture had a previous carrying value of approximately $8.9 million. The impairment also included exit costs associated with this joint venture. The estimates of fair value are based on what we believe to be marketplace participant expectations, and consider, among other things, the highest and best use of the land (for example, as a multifamily development, or single-family townhome construction), estimated timeframe and current estimates of construction and development costs, estimates of expected market rents and expenses upon completion of development, expected lease-up periods, and expected net operating income (or yield) that a marketplace participant would expect to receive from the developed project. We utilized opinions of value from third-parties to supplement our estimates. There were no significant market-based transactions that have occurred during the previous twelve months for the land parcels that were analyzed.
In addition, we evaluate our investments in joint ventures and mezzanine construction financing and if, with respect to investments, we believe there is an other than temporary decline in market value, or if, with respect to mezzanine loans, it is probable we will not collect all scheduled amounts due in accordance with the terms, we will record an impairment charge based on these evaluations. In general, we provide mezzanine loans to affiliated joint ventures constructing or operating multifamily assets. While we believe it is currently probable we will collect all scheduled amounts due with respect to these mezzanine loans, current market conditions with respect to credit markets and real estate market fundamentals inject a significant amount of uncertainty into the environment and any further adverse economic or market development may cause us to re-evaluate our conclusions, and could result in material impairment charges with respect to our mezzanine loans.

 

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The value of our properties under development depends on market conditions, including estimates of the project start date as well as estimates of demand for multifamily communities. We have reviewed market trends and other marketplace information and have incorporated this information as well as our current outlook into the assumptions we use in our impairment analyses. Due to, among other factors, the judgment and assumptions applied in the impairment analyses and the fact limited market information regarding the value of comparable land exists at this time, it is possible actual results could differ substantially from those estimated.
We believe the carrying value of our operating real estate assets, properties under development, and land is currently recoverable. However, if market conditions deteriorate beyond our current expectations or if changes in our development strategy significantly affect any key assumptions used in our fair value calculations, we may need to take material charges in future periods for impairments related to existing assets. Any such material non-cash charges would have an adverse effect on our consolidated financial position and results of operations.
Cost Capitalization. Real estate assets are carried at cost plus capitalized carrying charges. Carrying charges are primarily interest and real estate taxes which are capitalized as part of properties under development. Capitalized interest is generally based on our weighted average unsecured interest rate. Most transaction and restructuring costs associated with the acquisition of real estate assets are expensed. Expenditures directly related to the development and improvement of real estate assets are capitalized at cost as land and buildings and improvements. Indirect development costs, including salaries and benefits and other related costs directly attributable to the development of properties are also capitalized. All construction and carrying costs are capitalized and reported in the balance sheet as properties under development until the apartment homes are substantially completed. Upon substantial completion of the apartment homes, the total cost for the apartment homes and the associated land is transferred to buildings and improvements and land, respectively. Included in capitalized costs are management’s estimates of indirect costs associated with our development and redevelopment activities. The estimates used by management require judgment, and accordingly we believe cost capitalization to be a critical accounting estimate.
Recent Accounting Pronouncements
Recent Accounting Pronouncements. In June 2009, the Financial Accounting Standards Board (“FASB”) issued the Codification. Effective July 1, 2009, the Codification is the single source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. We adopted the Codification during the third quarter of 2009 and the adoption did not materially impact our financial statements, however our references to accounting literature within our notes to the consolidated financial statements have been revised to conform to the Codification classification.
In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which provides alternatives to measuring the fair value of liabilities when a quoted price for an identical liability traded in an active market does not exist. The alternatives include using the quoted price for the identical liability when traded as an asset or the quoted price of a similar liability or of a similar liability when traded as an asset, in addition to valuation techniques based on the amount an entity would pay to transfer the identical liability (or receive to enter into an identical liability). We adopted ASU 2009-05 effective October 1, 2009 and the adoption did not have a material impact on our financial statements.
In December 2009, the FASB issued ASU 2009-16, “Transfers and Servicing (Topic 860) — Accounting for Transfers of Financial Assets,” which codified the previously issued Statement of Financial Accounting Standards (“SFAS”) 166, “Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140.” ASU 2009-16 modifies the financial components approach, removes the concept of a qualifying special purpose entity, and clarifies and amends the derecognition criteria for determining whether a transfer of a financial asset or portion of a financial asset qualifies for sale accounting. The ASU also requires expanded disclosures regarding transferred assets and how they affect the reporting entity. ASU 2009-16 is effective for us beginning January 1, 2010. Our adoption of ASU 2009-16 will not have a material effect on our financial statements.

 

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In December 2009, the FASB issued ASU 2009-17, “Consolidations (Topic 810) — Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which codified the previously issued SFAS 167, “Amendments to FASB Interpretation No. 46R.” ASU 2009-17 changes the consolidation analysis for VIEs and requires a qualitative analysis to determine the primary beneficiary of the VIE. The determination of the primary beneficiary of a VIE is based on whether the entity has the power to direct matters which most significantly impact the activities of the VIE and has the obligation to absorb losses, or the right to receive benefits, of the VIE which could potentially be significant to the VIE. The ASU requires an ongoing reconsideration of the primary beneficiary and also amends the events triggering a reassessment of whether an entity is a VIE. ASU 2009-17 requires additional disclosures for VIEs, including disclosures about a reporting entity’s involvement with VIEs, how a reporting entity’s involvement with a VIE affects the reporting entity’s financial statements, and significant judgments and assumptions made by the reporting entity to determine whether it must consolidate the VIE. ASU 2009-17 is effective for us beginning January 1, 2010. Our adoption of ASU 2009-17 will not have a material effect on our financial statements.
In January 2010, the FASB issued ASU 2010-01, “Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash.” The ASU clarifies when the stock portion of a distribution allows shareholders to elect to receive cash or stock, with a potential limitation on the total amount of cash which all shareholders could elect to receive in the aggregate, the distribution would be considered a share issuance as opposed to a stock dividend and the share issuance would be reflected in earnings per share prospectively. We adopted ASU 2010-01 effective October 1, 2009 and the adoption did not have an impact on our financial statements.
In January 2010, the FASB issued ASU 2010-02, “Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary — a Scope Clarification.” The ASU clarifies the scope of Subtopic 810-10 applies to a subsidiary or group of assets considered to be a business or nonprofit activity, a subsidiary considered to be a business or nonprofit activity which is transferred to an equity method investee or joint venture, and an exchange of a group of assets considered to be a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture). ASU 2010-02 further clarifies the scope of Subtopic 810-10 does not apply to sales of in substance real estate or conveyances of oil and gas mineral rights, even if these transfers involve businesses. The ASU also expands the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets. For entities who have previously adopted the noncontrolling interests guidance included in Subtopic 810-10, ASU 2010 is effective for interim or annual periods ending on or after December 15, 2009 and should be applied retrospectively to the first period in which the noncontrolling interests guidance was adopted. As we adopted the noncontrolling interests guidance on January 1, 2009, we also adopted ASU 2010-02 effective January 1, 2009 and the adoption did not have an impact on our financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks inherent in our operations. These risks generally arise from transactions entered into in the normal course of business. We believe our primary market risk exposure relates to interest rate risk. We do not enter into derivatives or other financial instruments for trading or speculative purposes.
The table below provides information about our assets and our liabilities sensitive to changes in interest rates as of December 31, 2009 and 2008:
                                                                 
    December 31, 2009     December 31, 2008  
            Weighted                             Weighted              
            Average     Weighted                     Average     Weighted        
            Maturity     Average                     Maturity     Average        
    Amount     (in years)     Interest     % Of     Amount     (in years)     Interest     % Of  
    (in millions)     (1)     Rate     Total     (in millions)     (1)     Rate     Total  
Fixed rate debt (2)
  $ 2,396.8       5.2       5.5 %     91.3 %   $ 2,467.3       4.4       5.5 %     87.1 %
Variable rate debt
    228.4       10.1       1.2       8.7       365.1       11.5       2.7       12.9  
     
(1)  
Excludes balances outstanding under our unsecured line of credit, which are included in variable rate debt.
 
(2)  
Includes a $500 million term loan entered into in 2007 and $14.9 million of a construction loan entered into in 2008 which are effectively fixed by the use of an interest rate swap (see discussion below).
We have historically used variable rate indebtedness available under our revolving credit facility to initially fund acquisitions and our development pipeline. To the extent we utilize our revolving credit facility thereby increasing our variable rate indebtedness, our exposure to increases in interest rates will also increase.

 

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For fixed rate debt, interest rate changes affect the fair market value but do not impact net income attributable to common shareholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income attributable to common shareholders and cash flows, assuming other factors are held constant. Holding other variables constant, a one percentage point variance in interest rates would change the unrealized fair market value of the fixed rate debt by approximately $100.7 million. The net income attributable to common shareholders and cash flows impact on the next year resulting from a one percentage point variance in interest rates on floating rate debt, excluding debt effectively fixed by interest rate swap agreements described below, would be approximately $2.2 million, holding all other variables constant. We currently use interest rate hedges to reduce the impact of interest rate fluctuations on certain variable indebtedness, not for trading or speculative purposes. Under the hedge agreements:
   
we agree to pay a counterparty the interest that would have been incurred on a fixed principal amount at a fixed interest rate; and
   
the counterparty agrees to pay us the interest rate that would have been incurred on the same principal amount at an assumed floating interest rate tied to a particular market index.
As of December 31, 2009, the effect of our hedge agreements was to fix the interest rate on approximately $514.9 million of our variable rate debt. Had the hedge agreements not been in place during 2009, our annual interest costs would have been approximately $22.6 million lower, based on balances and reported interest rates through the year as the variable interest rates were less than the effective interest rates on the associated hedge agreements. Additionally, if the variable interest rates on this debt had been 100 basis points higher through 2009 and the hedge agreements not been in place, our annual interest cost would have been approximately $5.4 million higher. Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. We believe we minimize our credit risk on these transactions by dealing with major, creditworthy financial institutions. As part of our on-going control procedures, we monitor the credit ratings of counterparties and our exposure to any single entity, thus minimizing credit risk concentration. We believe the likelihood of realized losses from counterparty non-performance is remote.
Item 8. Financial Statements and Supplementary Data
Our response to this item is included in a separate section at the end of this report beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures. We carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Securities Exchange Act (“Exchange Act”) Rules 13a-15(e) and 15d-15(e). Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded the disclosure controls and procedures as of the end of the period covered by this report are effective to ensure information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized, and reported within the periods specified in the Securities and Exchange Commission’s rules and forms.
Changes in internal controls. There were no changes in our internal control over financial reporting (identified in connection with the evaluation required by paragraph (d) in Rules 13a-15 and 15d-15 under the Exchange Act) during our most recent fiscal quarter which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as follows:
A process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
   
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
   
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
   
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on our assessment, management concluded our internal control over financial reporting is effective as of December 31, 2009.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report regarding the effectiveness of our internal controls over financial reporting, which is included herein.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trust Managers and Shareholders of
Camden Property Trust
Houston, Texas
We have audited the internal control over financial reporting of Camden Property Trust and subsidiaries (the “Company”) as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of trust managers, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and the board of trust managers of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules of the Company as of and for the year ended December 31, 2009 and our report dated February 25, 2010 expressed an unqualified opinion on those financial statements and financial statement schedules and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 25, 2010

 

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Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Information with respect to this Item 10 is incorporated by reference from our Proxy Statement, which we expect to file on or before March 23, 2010 in connection with the Annual Meeting of Shareholders to be held May 3, 2010.
Item 11. Executive Compensation
Information with respect to this Item 11 is incorporated by reference from our Proxy Statement, which we expect to file on or before March 23, 2010 in connection with the Annual Meeting of Shareholders to be held May 3, 2010.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information with respect to this Item 12 is incorporated by reference from our Proxy Statement, which we expect to file on or before March 23, 2010 in connection with the Annual Meeting of Shareholders to be held May 3, 2010.
Equity Compensation Plan Information
                         
                    Number of securities  
                    remaining available for  
    Number of securities to be     Weighted-average     future issuance under  
    issued upon exercise of     exercise price of     equity compensation plans  
    outstanding options,     outstanding options,     (excluding securities  
    warrants and rights     warrants and rights     reflected in column (a))  
Plan Category   (a)     (b)     (c)  
Equity compensation plans approved by security holders
    4,826,757     $ 39.00       1,640,099  
Equity compensation plans not approved by security holders
                 
 
                 
Total
    4,826,757     $ 39.00       1,640,099  
 
                 
Item 13. Certain Relationships and Related Transactions and Director Independence
Information with respect to this Item 13 is incorporated herein by reference from our Proxy Statement, which we expect to file on or before March 23, 2010 in connection with the Annual Meeting of Shareholders to be held May 3, 2010.
Item 14. Principal Accounting Fees and Services
Information with respect to this Item 14 is incorporated herein by reference from our Proxy Statement, which we expect to file on or before March 23, 2010 in connection with the Annual Meeting of Shareholders to be held May 3, 2010.

 

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PART IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this report:
         
(1) Financial Statements:
       
 
       
    F-1  
 
       
    F-2  
 
       
    F-3  
 
       
    F-5  
 
       
    F-7  
 
       
    F-9  
 
       
(2) Financial Statement Schedules:
       
 
       
    S-1  
 
       
    S-7  
 
       
All other schedules have been omitted since the required information is presented in the financial statements and the related notes or is not applicable.
(3) Index to Exhibits:
The following exhibits are filed as part of or incorporated by reference into this report:
             
            Filed Herewith or
Exhibit No.   Description   Incorporated Herein by Reference (1)
       
 
   
  2.1    
Agreement and Plan of Merger, dated October 4, 2004, among Camden Property Trust, Camden Summit, Inc. and Summit Properties Inc.
  Current Report on Form 8-K filed on October 5, 2004
       
 
   
  2.2    
Amendment No. 1 to Agreement and Plan of Merger, dated October 6, 2004, among Camden Property Trust, Camden Summit, Inc. and Summit Properties Inc.
  Exhibit 2.1 to Form 8-K filed on October 6, 2004
       
 
   
  2.3    
Amendment No. 2 to Agreement and Plan of Merger, dated January 24, 2005, among Camden Property Trust, Camden Summit, Inc. and Summit Properties Inc.
  Exhibit 2.1 to Form 8-K filed on January 25, 2005
       
 
   
  3.1    
Amended and Restated Declaration of Trust of Camden Property Trust
  Exhibit 3.1 to Form 10-K for the year ended December 31, 1993
       
 
   
  3.2    
Amendment to the Amended and Restated Declaration of Trust of Camden Property Trust
  Exhibit 3.1 to Form 10-Q for the quarter ended June 30, 1997

 

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            Filed Herewith or
Exhibit No.   Description   Incorporated Herein by Reference (1)
       
 
   
  3.3    
Second Amended and Restated Bylaws of Camden Property Trust
  Exhibit 3.3 to Form 10-K for the year ended December 31, 1997
       
 
   
  3.4    
Amendment to Second Amended and Restated Bylaws of Camden Property Trust
  Exhibit 99.2 to Form 8-K filed on May 4, 2006
       
 
   
  4.1    
Specimen certificate for Common Shares of Beneficial Interest
  Form S-11 filed on September 15, 1993 (Registration No. 33-68736)
       
 
   
  4.2    
Indenture dated as of February 15, 1996 between Camden Property Trust and the U.S. Trust Company of Texas, N.A., as Trustee
  Exhibit 4.1 to Form 8-K filed on February 15, 1996
       
 
   
  4.3    
First Supplemental Indenture dated as of February 15, 1996 between Camden Property Trust and U.S. Trust Company of Texas, N.A., as Trustee
  Exhibit 4.2 to Form 8-K filed on February 15, 1996
       
 
   
  4.4    
Form of Indenture for Senior Debt Securities dated as of February 11, 2003 between Camden Property Trust and SunTrust Bank, as Trustee
  Exhibit 4.1 to Form S-3 filed on February 12, 2003 (Registration No. 333-103119)
       
 
   
  4.5    
First Supplemental Indenture dates as of May 4, 2007 between the Company and U.S. Bank National Association, as successor to SunTrust Bank, as trustee
  Exhibit 4.2 to Form 8-K filed on May 7, 2007
       
 
   
  4.6    
Indenture dated as of February 11, 2003 between the Company and U.S. Bank National Association, as successor to SunTrust Bank, as trustee.
  Exhibit 4.1 to Form 8-K filed on May 7, 2007
       
 
   
  4.7    
Registration Rights Agreement, dated as of February 23, 1999, between Camden Property Trust and the unitholders named therein
  Exhibit 99.3 to Form 8-K filed on March 10, 1999
       
 
   
  4.8    
Form of Amendment to Registration Rights Agreement, dated as of December 1, 2003, between Camden Property Trust and the unitholders named therein
  Exhibit 4.8 to Form 10-K for the year ended December 31, 2003
       
 
   
  4.9    
Form of Registration Rights Agreement between Camden Property Trust and the holders named therein
  Form S-4 filed on November 24, 2004 (Registration No. 333-120733)
       
 
   
  4.10    
Form of Statement of Designation of Series B Cumulative Redeemable Preferred Shares of Beneficial Interest
  Exhibit 4.1 to Form 8-K filed on March 10, 1999
       
 
   
  4.11    
Form of Amendment to Statement of Designation of Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, effective as of December 31, 2003
  Exhibit 4.10 to Form 10-K for the year ended December 31, 2003
       
 
   
  4.12    
Form of Camden Property Trust 7.625% Note due 2011
  Exhibit 4.4 to Form 8-K filed on February 20, 2001
       
 
   
  4.13    
Form of Camden Property Trust 6.75% Note due 2010
  Exhibit 4.3 to Form 8-K filed on September 17, 2001
       
 
   
  4.14    
Form of Camden Property Trust 5.875% Note due 2012
  Exhibit 4.3 to Form 8-K filed on November 25, 2002
       
 
   
  4.15    
Form of Camden Property Trust 5.375% Note due 2013
  Exhibit 4.2 to Form 8-K filed on December 9, 2003
       
 
   
  4.16    
Form of Camden Property Trust 4.375% Note due 2010
  Exhibit 4.2 to Form 8-K filed on December 20, 2004
       
 
   
  4.17    
Form of Camden Property Trust 5.00% Note due 2015
  Exhibit 4.2 to Form 8-K filed on June 7, 2005

 

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            Filed Herewith or
Exhibit No.   Description   Incorporated Herein by Reference (1)
       
 
   
  4.18    
Form of Camden Property Trust 5.700% Notes due 2017
  Exhibit 4.3 to Form 8-K filed on May 7, 2007
       
 
   
  4.19    
Indenture dated as of August 7, 1997 between Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.) and First Union National Bank
  Exhibit 4.1 to Camden Summit Partnership, L.P.’s Form 8-K filed on August 11, 1997 (File No. 000-22411)
       
 
   
  4.20    
Supplemental Indenture No. 1, dated as of August 12, 1997, between Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.) and First Union National Bank
  Exhibit 4.1 to Camden Summit Partnership, L.P.’s Form 8-K/A-1 filed on August 18, 1997 (File No. 000-22411)
       
 
   
  4.21    
Supplemental Indenture No. 2, dated as of December 17, 1997, between Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.) and First Union National Bank
  Exhibit 4.1 to Camden Summit Partnership, L.P.’s Form 8-K/A-1 filed on December 17, 1997 (File No. 000-22411)
       
 
   
  4.22    
Supplemental Indenture No. 3, dated as of May 29, 1998, between Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.) and First Union National Bank
  Exhibit 4.2 to Camden Summit Partnership, L.P.’s Form 8-K filed on June 2, 1998 (File No. 000-22411)
       
 
   
  4.23    
Supplemental Indenture No. 4, dated as of April 20, 2000, between Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.) and First Union National Bank
  Exhibit 4.2 to Camden Summit Partnership, L.P.’s Form 8-K filed on April 28, 2000 (File No. 000-22411)
       
 
   
  4.24    
Supplemental Indenture No. 5, dated as of June 21, 2005, among Camden Summit Partnership, L.P., Camden Property Trust and Wachovia Bank, N.A.
  Exhibit 99.1 to Form 8-K filed on June 23, 2005
       
 
   
  4.25    
Form of Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.) 8.50% Medium-Term Note due 2010
  Exhibit 10.2 to Summit Property Inc.’s Form 10-Q for the quarter ended September 30, 2000 (File No. 001-12792)
       
 
   
  4.26    
Form of Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.) 7.703% Medium-Term Note due 2011
  Exhibit 10.3 to Summit Property Inc.’s Form 10-Q for the quarter ended June 30, 2001 (File No. 001-12792)
       
 
   
  10.1    
Form of Indemnification Agreement between Camden Property Trust and certain of its trust managers and executive officers
  Form S-11 filed on July 9, 1993 (Registration No. 33-63588)
       
 
   
  10.2    
Second Amended and Restated Employment Agreement dated July 11, 2003 between Camden Property Trust and Richard J. Campo
  Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2003
       
 
   
  10.3    
Second Amended and Restated Employment Agreement dated July 11, 2003 between Camden Property Trust and D. Keith Oden
  Exhibit 10.2 to Form 10-Q for the quarter ended June 30, 2003
       
 
   
  10.4    
Form of First Amendment to Second Amended and Restated Employment Agreements, effective as of January 1, 2008, between Camden Property Trust and each of Richard J. Campo and D. Keith Oden.
  Exhibit 99.1 to Form 8-K filed on November 30, 2007
       
 
   
  10.5    
Second Amendment to Second Amended and Restated Employment Agreement, dated as of March 14, 2008 between Camden Property Trust and D. Keith Oden.
  Exhibit 99.1 to Form 8-K filed on March 18, 2008
       
 
   
  10.6    
Form of Employment Agreement by and between Camden Property Trust and certain senior executive officers
  Exhibit 10.13 to Form 10-K for the year ended December 31, 1996
       
 
   
  10.7    
Form of First Amendment to Employment Agreement, effective as of January 1, 2008, between the Company and each of H. Malcolm Stewart, Dennis M. Steen, and Steven K. Eddington.
  Exhibit 99.1 to Form 8-K filed on November 30, 2007

 

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            Filed Herewith or
Exhibit No.   Description   Incorporated Herein by Reference (1)
       
 
   
  10.8    
Second Amended and Restated Employment Agreement, dated November 3, 2008, between Camden Property Trust and H. Malcolm Stewart
  Exhibit 99.1 to Form 8-K filed on November 4, 2008
       
 
   
  10.9    
Second Amended and Restated Camden Property Trust Key Employee Share Option Plan (KEYSOPTM), effective as of January 1, 2008
  Exhibit 99.5 to Form 8-K filed on November 30, 2007
       
 
   
  10.10    
Amendment No. 1 to Second Amended and Restated Camden Property Trust Key Employee Share Option Plan, effective as of January 1, 2008
  Exhibit 99.1 to Form 8-K filed on December 8, 2008
       
 
   
  10.11    
Distribution Agreement dated March 20, 1997 among Camden Property Trust and the Agents listed therein relating to the issuance of Medium Term Notes
  Exhibit 1.1 to Form 8-K filed on March 21, 1997
       
 
   
  10.12    
Form of Amended and Restated Master Exchange Agreement between Camden Property Trust and certain key employees
  Exhibit 10.7 to Form 10-K for the year ended December 31, 2003
       
 
   
  10.13    
Form of Amended and Restated Master Exchange Agreement between Camden Property Trust and certain trust managers
  Exhibit 10.8 to Form 10-K for the year ended December 31, 2003
       
 
   
  10.14    
Form of Amended and Restated Master Exchange Agreement between Camden Property Trust and certain key employees
  Exhibit 10.9 to Form 10-K for the year ended December 31, 2003
       
 
   
  10.15    
Form of Master Exchange Agreement between Camden Property Trust and certain trust managers
  Exhibit 10.10 to Form 10-K for the year ended December 31, 2003
       
 
   
  10.16    
Form of Amendment No. 1 to Amended and Restated Master Exchange Agreement (Trust Managers) effective November 27, 2007
  Exhibit 99.3 to Form 8-K filed on November 30, 2007
       
 
   
  10.17    
Form of Amendment No. 1 to Amended and Restated Master Exchange Agreement (Key Employees) effective November 27, 2007
  Exhibit 99.4 to Form 8-K filed on November 30, 2007
       
 
   
  10.18    
Form of Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P.
  Exhibit 10.1 to Form S-4 filed on February 26, 1997 (Registration No. 333-22411)
       
 
   
  10.19    
First Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of February 23, 1999
  Exhibit 99.2 to Form 8-K filed on March 10, 1999
       
 
   
  10.20    
Form of Second Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of August 13, 1999
  Exhibit 10.15 to Form 10-K for the year ended December 31, 1999
       
 
   
  10.21    
Form of Third Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of September 7, 1999
  Exhibit 10.16 to Form 10-K for the year ended December 31, 1999
       
 
   
  10.22    
Form of Fourth Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of January 7, 2000
  Exhibit 10.17 to Form 10-K for the year ended December 31, 1999
       
 
   
  10.23    
Form of Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of December 1, 2003
  Exhibit 10.19 to Form 10-K for the year ended December 31, 2003
       
 
   
  10.24    
Amended and Restated Limited Liability Company Agreement of Sierra-Nevada Multifamily Investments, LLC, adopted as of June 29, 1998 by Camden Subsidiary, Inc. and TMT-Nevada, L.L.C.
  Exhibit 99.1 to Form 8-K filed on July 15, 1998

 

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            Filed Herewith or
Exhibit No.   Description   Incorporated Herein by Reference (1)
       
 
   
  10.25    
Amended and Restated Limited Liability Company Agreement of Oasis Martinique, LLC, adopted as of October 23, 1998 among Oasis Residential, Inc. and the persons named therein
  Exhibit 10.59 to Oasis Residential, Inc.’s Form 10-K for the year ended December 31, 1997 (File No. 001-12428)
       
 
   
  10.26    
Exchange Agreement, dated as of October 23, 1998, by and among Oasis Residential, Inc., Oasis Martinique, LLC and the holders listed therein
  Exhibit 10.60 to Oasis Residential, Inc.’s Form 10-K for the year ended December 31, 1997 (File No. 001-12428)
       
 
   
  10.27    
Contribution Agreement, dated as of February 23, 1999, by and among Belcrest Realty Corporation, Belair Real Estate Corporation, Camden Operating, L.P. and Camden Property Trust
  Exhibit 99.1 to Form 8-K filed on March 10, 1999
       
 
   
  10.28    
Amended and Restated 1993 Share Incentive Plan of Camden Property Trust
  Exhibit 10.18 to Form 10-K for the year ended December 31, 1999
       
 
   
  10.29    
Camden Property Trust 1999 Employee Share Purchase Plan
  Exhibit 10.19 to Form 10-K for the year ended December 31, 1999
       
 
   
  10.30    
Amended and Restated 2002 Share Incentive Plan of Camden Property Trust
  Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2002
       
 
   
  10.31    
Amendment to Amended and Restated 2002 Share Incentive Plan of Camden Property Trust
  Exhibit 99.1 to Form 8-K filed on May 4, 2006
       
 
   
  10.32    
Amendment to Amended and Restated 2002 Share Incentive Plan of Camden Property Trust, effective as of January 1, 2008
  Exhibit 99.1 to Form 8-K filed on July 29, 2008
       
 
   
  10.33    
Camden Property Trust Short Term Incentive Plan
  Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2002
       
 
   
  10.34    
Amended and Restated Camden Property Trust Non-Qualified Deferred Compensation Plan, effective as of January 1, 2008
  Exhibit 99.6 to Form 8-K filed on November 30, 2007
       
 
   
  10.35    
Amendment No. 1 to Amended and Restated Camden Property Trust Non-Qualified Deferred Compensation Plan, effective as of January 1, 2008
  Exhibit 99.2 to Form 8-K filed on July 29, 2008
       
 
   
  10.36    
Amendment No. 2 to Amended and Restated Camden Property Trust Non-Qualified Deferred Compensation Plan, effective as of January 1, 2008
  Exhibit 99.2 to Form 8-K filed on December 8, 2008
       
 
   
  10.37    
Form of Second Amended and Restated Agreement of Limited Partnership of Camden Summit Partnership, L.P. among Camden Summit, Inc., as general partner, and the persons whose names are set forth on Exhibit A thereto
  Exhibit 10.4 to Form S-4 filed on November 24, 2004 (Registration No. 333-120733)
       
 
   
  10.38    
Form of Tax, Asset and Income Support Agreement among Camden Property Trust, Camden Summit, Inc., Camden Summit Partnership, L.P. and each of the limited partners who has executed a signature page thereto
  Exhibit 10.5 to Form S-4 filed on November 24, 2004 (Registration No. 333-120733)
       
 
   
  10.39    
Form of Amended and Restated Credit Agreement dated January 14, 2005 among Camden Property Trust, Bank of America, N.A., as administrative agent, J.P. Morgan Chase Bank, N.A., as syndication agent, Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as the documentation agents, and the Lenders named therein
  Exhibit 99.1 to Form 8-K filed on January 18, 2005
       
 
   
  10.40    
Form of First Amendment to Credit Agreement, dated as of January 18, 2006, among Camden Property Trust and Bank of America, N.A. on behalf of itself and the Lenders
  Exhibit 99.1 to Form 8-K filed on January 20, 2006

 

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            Filed Herewith or
Exhibit No.   Description   Incorporated Herein by Reference (1)
       
 
   
  10.41    
Form of Credit Agreement dated as of August 17, 2007 among Camden Property Trust, Bank of America, N.A., as administrative agent and JPMorgan Chase Bank, N.A., as syndication agent.
  Exhibit 99.1 to Form 8-K filed on August 21, 2007
       
 
   
  10.42    
Form of Credit Agreement dated as of October 4, 2007 among Camden Property Trust, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, and the financial institutions and other entities designated as “Lenders” on Schedule I thereto.
  Exhibit 99.1 to Form 8-K filed on October 10, 2007
       
 
   
  10.43    
Employment Agreement dated February 15, 1999, by and among William B. McGuire, Jr., Summit Properties Inc. and Summit Management Company, as restated on August 24, 2001
  Exhibit 10.1 to Summit Properties Inc.’s Form 10-Q for the quarter ended September 30, 2001 (File No. 000-12792)
       
 
   
  10.44    
Noncompetition Agreement between Summit Properties Inc. and William F. Paulsen
  Exhibit 10.5 to Summit Properties Inc.’s Form 10-Q for the quarter ended March 31, 2000 (File No. 001-12792)
       
 
   
  10.45    
Noncompetition Agreement between Summit Properties Inc. and William B. McGuire, Jr.
  Exhibit 10.7 to Summit Properties Inc.’s Form 10-Q for the quarter ended March 31, 2000 (File No. 001-12792)
       
 
   
  10.46    
Amendment Agreement, dated as of June 19, 2004, among William B. McGuire, Jr., Summit Properties Inc. and Summit Management Company
  Exhibit 10.8.2 to Summit Properties Inc.’s Form 10-Q for the quarter ended June 30, 2004 (File No. 001-12792)
       
 
   
  10.47    
Amendment Agreement, dated as of June 19, 2004, among William F. Paulsen, Summit Properties Inc. and Summit Management Company
  Exhibit 10.8.2 to Summit Properties Inc.’s Form 10-Q for the quarter ended June 30, 2004 (File No. 001-12792)
       
 
   
  10.48    
Separation Agreement, dated as of February 28, 2005, between Camden Property Trust and William B. McGuire, Jr.
  Exhibit 99.1 to Form 8-K filed on April 28, 2005
       
 
   
  10.49    
Separation Agreement, dated as of February 28, 2005, between Camden Property Trust and William F. Paulsen
  Exhibit 99.2 to Form 8-K filed on April 28, 2005
       
 
   
  10.50    
Agreement and General Release, executed on December 28, 2009, between Camden Property Trust and Steven Eddington
  Exhibit 99.1 to Form 8-K filed on December 28, 2009
       
 
   
  10.51    
Credit Agreement dated July 28, 2003 by and among Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.), Summit Sweetwater, LLC, Summit Shiloh, LLC, Summit Grandview, LLC, Summit Portofino Place, LTD., and L.J. Melody & Company
  Exhibit 10.1 to Camden Summit Partnership, L.P.’s Form 10-Q for the quarter ended June 30, 2003 (File No. 000-22411)
       
 
   
  10.52    
Distribution Agreement, dated as of April 20, 2000, by and among Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.), Summit Properties Inc. and the Agents listed therein
  Camden Summit Partnership, L.P.’s Form 8-K filed on April 28, 2000 (File No. 000-22411)
       
 
   
  10.53    
First Amendment to Distribution Agreement, dated as of May 8, 2001, among Camden Summit Partnership, L.P. (f/k/a Summit Properties Partnership, L.P.), Summit Properties Inc. and the Agents named therein
  Exhibit 10.2 to Summit Properties Inc.’s Form 10-Q for the quarter ended March 31, 2001 (File No. 000-22411)
       
 
   
  10.54    
Master Credit Agreement, dated as of September 24, 2008, among CSP Community Owner, LLC, CPT Community Owner, LLC, and Red Mortgage Capital, Inc. (2)
  Exhibit 10.1 to Form 10-Q for the quarter ended September 30, 2008

 

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            Filed Herewith or
Exhibit No.   Description   Incorporated Herein by Reference (1)
       
 
   
  10.55    
Form of Master Credit Facility Agreement, dated as of April 17, 2009, among Summit Russett, LLC, 2009 CPT Community Owner, LLC, 2009 CUSA Community Owner, LLC, 2009 CSP Community Owner LLC, and 2009 COLP Community Owner, LLC, as borrowers, Camden Property Trust, as guarantor, and Red Mortgage Capital, Inc., as lender. (2)
  Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2009
       
 
   
  12.1    
Statement Regarding Computation of Ratios
  Filed Herewith
       
 
   
  21.1    
List of Significant Subsidiaries
  Filed Herewith
       
 
   
  23.1    
Consent of Deloitte & Touche LLP
  Filed Herewith
       
 
   
  24.1    
Powers of Attorney for Richard J. Campo, D. Keith Oden, William R. Cooper, Scott S. Ingraham, Lewis A. Levey, William B. McGuire, Jr., F. Gardner Parker, William F. Paulsen, Steven A. Webster, and Kelvin R. Westbrook
  Filed Herewith
       
 
   
  31.1    
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act
  Filed Herewith
       
 
   
  31.2    
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act
  Filed Herewith
       
 
   
  32.1    
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  Filed Herewith
     
(1)  
Unless otherwise indicated, all references to reports or registration statements are to reports or registration statements filed by Camden Property Trust (File No. 1-12110).
 
(2)  
Portions of the exhibit have been omitted pursuant to a request for confidential treatment.

 

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Camden Property Trust has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  CAMDEN PROPERTY TRUST
 
 
February 25, 2010  By:   /s/ Michael P. Gallagher    
    Michael P. Gallagher   
    Vice President - Chief Accounting Officer   

 

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Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of Camden Property Trust and in the capacities and on the dates indicated.
         
Name   Title   Date
 
       
/s/ Richard J. Campo
 
Richard J. Campo
  Chairman of the Board of Trust Managers and Chief Executive Officer (Principal Executive Officer)   February 25, 2010
 
       
/s/ D. Keith Oden
 
D. Keith Oden
  President and Trust Manager    February 25, 2010
 
       
/s/ Dennis M. Steen
 
Dennis M. Steen
  Senior Vice President-Finance and Chief Financial Officer (Principal Financial Officer)   February 25, 2010
 
       
/s/ Michael P. Gallagher
 
Michael P. Gallagher
  Vice President — Chief Accounting Officer (Principal Accounting Officer)   February 25, 2010
 
       
*
 
William R. Cooper
  Trust Manager    February 25, 2010
 
       
*
 
Scott S. Ingraham
  Trust Manager    February 25, 2010
 
       
*
 
Lewis A. Levey
  Trust Manager    February 25, 2010
 
       
*
 
William B. McGuire, Jr.
  Trust Manager    February 25, 2010
 
       
*
 
F. Gardner Parker
  Trust Manager    February 25, 2010
 
       
*
 
William F. Paulsen
  Trust Manager    February 25, 2010
 
       
*
 
Steven A. Webster
  Trust Manager    February 25, 2010
 
       
*
 
Kelvin R. Westbrook
  Trust Manager    February 25, 2010
         
*By:
  /s/ Dennis M. Steen    
 
 
 
Dennis M. Steen
   
 
  Attorney-in-fact    

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trust Managers and Shareholders of
Camden Property Trust
Houston, Texas
We have audited the accompanying consolidated balance sheets of Camden Property Trust and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Camden Property Trust and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, on January 1, 2009, the Company changed its method of accounting for noncontrolling interests and retrospectively adjusted all periods presented in the consolidated financial statements.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2010 expressed an unqualified opinion on the Company’s internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 25, 2010

 

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CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
                 
    December 31,  
(in thousands, except per share amounts)   2009     2008  
Assets
               
Real estate assets, at cost
               
Land
  $ 747,921     $ 744,059  
Buildings and improvements
    4,512,124       4,447,587  
 
           
 
    5,260,045       5,191,646  
Accumulated depreciation
    (1,149,056 )     (981,049 )
 
           
Net operating real estate assets
    4,110,989       4,210,597  
Properties under development, including land
    201,581       264,188  
Investments in joint ventures
    43,542       15,106  
Properties held for sale, including land
          20,653  
 
           
Total real estate assets
    4,356,112       4,510,544  
 
               
Accounts receivable — affiliates
    36,112       37,000  
Notes receivable
               
Affiliates
    45,847       58,109  
Other
          8,710  
Other assets, net
    102,114       103,013  
Cash and cash equivalents
    64,156       7,407  
Restricted cash
    3,658       5,559  
 
           
Total assets
  $ 4,607,999     $ 4,730,342  
 
           
 
               
Liabilities and equity
               
Liabilities
               
Notes payable
               
Unsecured
  $ 1,645,926     $ 2,103,187  
Secured
    979,273       729,209  
Accounts payable and accrued expenses
    74,420       82,575  
Accrued real estate taxes
    23,241       23,600  
Distributions payable
    33,025       42,936  
Other liabilities
    145,176       149,554  
 
           
Total liabilities
    2,901,061       3,131,061  
 
               
Commitments and contingencies
               
 
               
Perpetual preferred units
    97,925       97,925  
 
               
Equity
               
Common shares of beneficial interest; $0.01 par value per share; 100,000 shares authorized; 79,543 and 68,770 issued; 76,996 and 66,028 outstanding at December 31, 2009 and 2008, respectively
    770       660  
Additional paid-in capital
    2,525,656       2,237,703  
Distributions in excess of net income attributable to common shareholders
    (492,571 )     (312,309 )
Notes receivable secured by common shares
    (101 )     (295 )
Treasury shares, at cost (12,897 and 12,925 shares, respectively)
    (462,188 )     (463,209 )
Accumulated other comprehensive loss
    (41,155 )     (51,056 )
 
           
Total common equity
    1,530,411       1,411,494  
Noncontrolling interests
    78,602       89,862  
 
           
Total equity
    1,609,013       1,501,356  
 
           
Total liabilities and equity
  $ 4,607,999     $ 4,730,342  
 
           
See Notes to Consolidated Financial Statements.

 

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CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                         
    Year Ended December 31,  
(in thousands, except per share amounts)   2009     2008     2007  
 
                       
Property revenues
                       
Rental revenues
  $ 537,422     $ 547,718     $ 525,497  
Other property revenues
    86,504       76,298       62,822  
 
                 
Total property revenues
    623,926       624,016       588,319  
Property expenses
                       
Property operating and maintenance
    175,788       168,981       155,276  
Real estate taxes
    71,079       70,301       62,418  
 
                 
Total property expenses
    246,867       239,282       217,694  
Non-property income
                       
Fee and asset management
    8,008       9,167       8,293  
Interest and other income
    2,826       4,736       9,427  
Income (loss) on deferred compensation plans
    14,609       (33,443 )     7,282  
 
                 
Total non-property income (loss)
    25,443       (19,540 )     25,002  
Other expenses
                       
Property management
    18,864       19,910       18,413  
Fee and asset management
    4,878       6,054       4,552  
General and administrative
    31,243       31,586       32,590  
Interest
    128,296       132,399       115,753  
Depreciation and amortization
    174,682       171,814       157,297  
Amortization of deferred financing costs
    3,925       2,958       3,661  
Expense (benefit) on deferred compensation plans
    14,609       (33,443 )     7,282  
 
                 
Total other expenses
    376,497       331,278       339,548  
Income from continuing operations before gain on sale of properties, including land, gain (loss) on early retirement of debt, impairment associated with land development activities, and equity in income (loss) of joint ventures
    26,005       33,916       56,079  
Gain on sale of properties, including land
          2,929        
Gain (loss) on early retirement of debt
    (2,550 )     13,566        
Impairment associated with land development activities
    (85,614 )     (51,323 )     (1,447 )
Equity in income (loss) of joint ventures
    695       (1,265 )     1,526  
 
                 
Income (loss) from continuing operations before income taxes
    (61,464 )     (2,177 )     56,158  
Income tax expense — current
    (967 )     (843 )     (3,052 )
 
                 
Income (loss) from continuing operations
    (62,431 )     (3,020 )     53,106  
Income from discontinued operations
    1,341       4,847       13,558  
Gain on sale of discontinued operations, including land, net of tax
    16,887       80,198       107,039  
 
                 
Net income (loss)
    (44,203 )     82,025       173,703  
Less (income) loss allocated to noncontrolling interests from continuing operations
    403       (4,052 )     (4,729 )
Less income allocated to noncontrolling interests from discontinued operations
                (13,517 )
Less income allocated to perpetual preferred units
    (7,000 )     (7,000 )     (7,000 )
 
                 
Net income (loss) attributable to common shareholders
  $ (50,800 )   $ 70,973     $ 148,457  
 
                 
See Notes to Consolidated Financial Statements.

 

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CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                         
    Year Ended December 31,  
(In thousands, except per share amounts)   2009     2008     2007  
Earnings per share — basic
                       
Income (loss) from continuing operations attributable to common shareholders
  $ (1.09 )   $ (0.26 )   $ 0.70  
Income from discontinued operations, including gain on sale, attributable to common shareholders
    0.29       1.54       1.84  
 
                 
Net income attributable to common shareholders
  $ (0.80 )   $ 1.28     $ 2.54  
 
                 
Earnings per share — diluted
                       
Income (loss) from continuing operations attributable to common shareholders
  $ (1.09 )   $ (0.26 )   $ 0.68  
Income from discontinued operations, including gain on sale, attributable to common shareholders
    0.29       1.54       1.82  
 
                 
Net income attributable to common shareholders
  $ (0.80 )   $ 1.28     $ 2.50  
 
                 
Distributions declared per common share
  $ 2.05     $ 2.80     $ 2.76  
 
                       
Weighted average number of common shares outstanding
    62,359       55,272       58,135  
Weighted average number of common shares and dilutive equivalent common shares outstanding
    62,359       55,272       59,125  
 
                       
Net income (loss) attributable to common shareholders
                       
Income (loss) from continuing operations
  $ (62,431 )   $ (3,020 )   $ 53,106  
Less (income)loss allocated to noncontrolling interests from continuing operations
    403       (4,052 )     (4,729 )
Less income allocated to perpetual preferred units
    (7,000 )     (7,000 )     (7,000 )
 
                 
Income (loss) from continuing operations attributable to common shareholders
    (69,028 )     (14,072 )     41,377  
Income from discontinued operations, including gain on sale
    18,228       85,045       120,597  
Less income allocated to noncontrolling interests from discontinued operations
                (13,517 )
 
                 
Income from discontinued operations attributable to common shareholders
    18,228       85,045       107,080  
 
                 
Net income (loss) attributable to common shareholders
  $ (50,800 )   $ 70,973     $ 148,457  
 
                 
 
                       
Consolidated Statements of Comprehensive Income (Loss)
                       
Net income (loss)
  $ (44,203 )   $ 82,025     $ 173,703  
Other comprehensive income (loss)
                       
Unrealized loss on cash flow hedging activities
    (12,291 )     (44,386 )     (15,781 )
Reclassification of net (gains) losses on cash flow hedging activities
    22,192       9,317       (342 )
Gain on postretirement obligations
          136        
 
                 
Comprehensive income (loss)
    (34,302 )     47,092       157,580  
Less (income) loss allocated to noncontrolling interests from continuing operations
    403       (4,052 )     (4,729 )
Less income allocated to noncontrolling interests from discontinued operations
                (13,517 )
Less income allocated to perpetual preferred units
    (7,000 )     (7,000 )     (7,000 )
 
                 
Comprehensive income (loss) attributable to common shareholders
  $ (40,899 )   $ 36,040     $ 132,334  
 
                 
See Notes to Consolidated Financial Statements.

 

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CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF EQUITY
                                                                         
    Common Shareholders                      
                            Notes                                    
    Common                     receivable             Accumulated                      
    shares of             Distributions     secured by             other                      
    beneficial     Additional     in excess of     common     Treasury     comprehensive     Noncontrolling             Perpetual  
(in thousands, except per share amounts)   interest     paid-in capital     net income     shares     shares, at cost     loss     interests     Total equity     preferred units  
Equity, January 1, 2007
  $ 650     $ 2,183,622     $ (213,665 )   $ (2,036 )   $ (234,215 )   $     $ 125,586     $ 1,859,942     $ 97,925  
Net income
                    148,457                               18,246       166,703       7,000  
Other comprehensive loss
                                            (16,123 )             (16,123 )        
Common shares issued under dividend reinvestment plan
            38                                               38          
Net share awards
    2       9,346                       (64 )                     9,284          
Employee share purchase plan
            817                       562                       1,379          
Repayment of employee notes receivable, net
                            86                               86          
Share awards placed into deferred plans (151 shares)
    (2 )     2                                                        
Common share options exercised (96 shares)
    1       4,333                                               4,334          
Conversions and redemptions of operating partnership units (266 shares)
    3       11,473                                       (11,785 )     (309 )        
Common shares repurchased (3,604 shares)
                                    (200,157 )                     (200,157 )        
Cumulative effect of a change in accounting principle
                    (2,496 )                                     (2,496 )        
Noncontrolling interests issued in connection with real estate contribution
                                                    282       282          
Distributions on perpetual preferred units
                                                                    (7,000 )
Cash distributions ($2.76 per share)
                    (159,321 )                             (10,302 )     (169,623 )        
 
                                                     
Equity, December 31, 2007
  $ 654     $ 2,209,631     $ (227,025 )   $ (1,950 )   $ (433,874 )   $ (16,123 )   $ 122,027     $ 1,653,340     $ 97,925  
 
                                                     
Net income
                    70,973                               4,052       75,025       7,000  
Other comprehensive loss
                                            (34,933 )             (34,933 )        
Common shares issued under dividend reinvestment plan
            7                                               7          
Net share awards
    3       10,218                                               10,221          
Employee share purchase plan
            142                       740                       882          
Repayment of employee notes receivable, net
                            1,655                               1,655          
Share awards placed into deferred plans (147 shares)
    (2 )     2                                                        
Common share options exercised (45 shares)
            2,155                                               2,155          
Conversions and redemptions of operating partnership units (464 shares)
    5       15,548                                       (18,610 )     (3,057 )        
Common shares repurchased (695 shares)
                                    (30,075 )                     (30,075 )        
Purchase of noncontrolling interests
                                                    (8,573 )     (8,573 )        
Distributions on perpetual preferred units
                                                                    (7,000 )
Cash distributions ($2.80 per share)
                    (156,257 )                             (9,034 )     (165,291 )        
 
                                                     
Equity, December 31, 2008
  $ 660     $ 2,237,703     $ (312,309 )   $ (295 )   $ (463,209 )   $ (51,056 )   $ 89,862     $ 1,501,356     $ 97,925  
 
                                                     
See Notes to Consolidated Financial Statements

 

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CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF EQUITY
                                                                         
    Common Shareholders                      
                            Notes                                    
    Common                     receivable             Accumulated                      
    shares of             Distributions     secured by             other                      
    beneficial     Additional     in excess of     common     Treasury     comprehensive     Noncontrolling             Perpetual  
(in thousands, except per share amounts)   interest     paid-in capital     net income     shares     shares, at cost     loss     interests     Total equity     preferred units  
Equity, December 31, 2008
  $ 660     $ 2,237,703     $ (312,309 )   $ (295 )   $ (463,209 )   $ (51,056 )   $ 89,862     $ 1,501,356     $ 97,925  
 
                                                     
Net income (loss)
                    (50,800 )                             (403 )     (51,203 )     7,000  
Other comprehensive income
                                            9,901               9,901          
Common shares issued (10,350 shares)
    104       272,008                                               272,112          
Common shares issued under dividend reinvestment plan
            4                                               4          
Net share awards
    2       10,157                                               10,159          
Employee share purchase plan
            105                       1,027                       1,132          
Repayment of employee notes receivable, net
                            194                               194          
Share awards placed into deferred plans (195 shares)
    2       (2 )                                                      
Common share options exercised (19 shares)
            1,275                                               1,275          
Conversions and redemptions of operating partnership units (139 shares)
    2       3,759                                       (3,777 )     (16 )        
Common shares repurchased
                                    (6 )                     (6 )        
Purchase of noncontrolling interests
            647                                       (748 )     (101 )        
Distributions on perpetual preferred units
                                                                    (7,000 )
Cash distributions ($2.05 per share)
                    (129,462 )                             (6,332 )     (135,794 )        
 
                                                     
Equity, December 31, 2009
  $ 770     $ 2,525,656     $ (492,571 )   $ (101 )   $ (462,188 )   $ (41,155 )   $ 78,602     $ 1,609,013     $ 97,925  
 
                                                     
See Notes to Consolidated Financial Statements.

 

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CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
                         
    Year Ended December 31,  
(in thousands)   2009     2008     2007  
Cash flows from operating activities
                       
Net income (loss)
  $ (44,203 )   $ 82,025     $ 173,703  
Adjustments to reconcile net income (loss) to net cash from operating activities
                       
Depreciation and amortization, including discontinued operations
    172,415       169,151       157,137  
Gain on sale of discontinued operations
    (16,887 )     (80,198 )     (107,039 )
Impairment associated with land development activities
    85,614       51,323       1,447  
Loss (gain) on early retirement of debt
    2,550       (13,566 )      
Share-based compensation
    9,053       7,663       7,547  
Distributions of income from joint ventures
    5,664       5,392       5,406  
Amortization of deferred financing costs
    3,925       2,975       3,689  
Equity in (income) loss of joint ventures
    (695 )     1,265       (1,526 )
Accretion of discount on unsecured notes payable
    628       571       590  
Gain on sale of technology investments
                (623 )
Gain on sale of properties, including land
          (2,929 )      
Interest on notes receivable — affiliates
    (437 )     (3,688 )     (4,112 )
Net change in operating accounts
    61       (3,026 )     (13,113 )
 
                 
Net cash from operating activities
  $ 217,688     $ 216,958     $ 223,106  
 
                 
 
                       
Cash flows from investing activities
                       
Acquisition of operating properties
  $     $     $ (83,031 )
Development and capital improvements
    (72,779 )     (199,269 )     (417,789 )
Proceeds from sales of properties, including land and discontinued operations
    28,078       123,513       171,757  
Proceeds from partial sales of assets to joint ventures
          52,509        
Investments in joint ventures
    (23,159 )     (10,444 )     (6,015 )
Distributions of investments from joint ventures
    162       1,058       6,525  
Issuance of notes receivable — other
                (8,710 )
Payments received on notes receivable — other
    8,710       2,855       1,000  
Increase in notes receivable — affiliates
    (7,332 )     (3,487 )     (3,154 )
Other
    (3,196 )     (4,109 )     (7,381 )
 
                 
Net cash from investing activities
  $ (69,516 )   $ (37,374 )   $ (346,798 )
 
                 
See Notes to Consolidated Financial Statements.

 

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CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
                         
    Year Ended December 31,  
(in thousands)   2009     2008     2007  
Cash flows from financing activities
                       
Proceeds from issuance of common shares
  $ 272,112     $     $  
Proceeds from notes payable
    440,840       385,927       807,990  
Repayment of notes payable
    (503,705 )     (379,213 )     (213,376 )
Net (decrease) increase in unsecured line of credit and short-term borrowings
    (145,000 )     30,000       (91,000 )
Distributions to common shareholders, perpetual preferred units, and noncontrolling interests
    (152,687 )     (172,332 )     (178,142 )
Common share options exercised
    619       1,729       3,795  
Repurchase of common shares and units
    (21 )     (33,133 )     (200,467 )
Payment of deferred financing costs
    (5,124 )     (4,321 )     (5,113 )
Repayment of notes receivable secured by common shares
    208       1,679       190  
Net decrease (increase) in accounts receivable — affiliates
    909       (929 )     (1,452 )
Other
    426       (2,481 )     1,130  
 
                 
Net cash from financing activities
  $ (91,423 )   $ (173,074 )   $ 123,555  
 
                 
Net increase (decrease) in cash and cash equivalents
    56,749       6,510       (137 )
Cash and cash equivalents, beginning of year
    7,407       897       1,034  
 
                 
Cash and cash equivalents, end of year
  $ 64,156     $ 7,407     $ 897  
 
                 
Supplemental information
                       
Cash paid for interest, net of interest capitalized
  $ 134,266     $ 136,172     $ 114,531  
Cash paid for income taxes
    1,654       1,651       2,555  
Supplemental schedule of non-cash investing and financing activities
                       
Distributions declared but not paid
  $ 33,025     $ 42,937     $ 42,693  
Accrual associated with construction and capital expenditures
    5,189       24,167       40  
Conversion of operating partnership units to common shares
    3,753       15,793       11,638  
Debt disposed of through disposition
          14,010        
Value of shares issued under benefit plans, net of cancellations
    6,653       10,766       15,381  
Contribution of real estate assets to joint ventures
          10,523        
Noncontrolling interests issued in connection with real estate contribution
                532  
Conversion of mezzanine notes to joint venture equity
    18,496              
See Notes to Consolidated Financial Statements.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description 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. Our multifamily apartment communities are referred to as “communities,” “multifamily communities,” “properties,” or “multifamily properties” in the following discussion. 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.
2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Principles of Consolidation. Our consolidated financial statements include our accounts and the accounts of other subsidiaries and joint ventures (including partnerships and limited liability companies) over which we have control. All intercompany transactions, balances, and profits have been eliminated in consolidation. Investments acquired or created are evaluated based on the accounting guidance relating to variable interest entities (“VIEs”), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation (primarily using a voting interest model) under the remaining consolidation guidance relating to real estate. If we are the general partner in a limited partnership, or manager of a limited liability company, we also consider the consolidation guidance relating to the rights of limited partners or non-managing members, as the case may be, to assess whether any rights held by the limited partners, or non-managing members, as the case may be, overcome the presumption of control by us.
Upon the January 1, 2009 adoption of revised provisions regarding classification of noncontrolling interests within the Consolidation Topic of the Accounting Standards Codification (the “Codification”), we reclassified minority interest balances relating to (i) the common units in Camden Operating, L.P., Oasis Martinique, LLC, and Camden Summit Partnership, L.P. and (ii) other minority interests in a consolidated real estate joint venture into our consolidated equity accounts and these are now classified as noncontrolling interests. The noncontrolling interests totaled approximately $78.6 million and $89.9 million at December 31, 2009 and 2008, respectively. Additionally, income allocated to noncontrolling interests and perpetual preferred u