CPT

Business Context and Reporting Period

Company: Camden Property Trust
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: September 30, 2002
Business Overview: A real estate investment trust (REIT) engaged in the ownership, development, construction, and management of multifamily communities. As of September 30, 2002, the company owned or operated 149 properties containing 53,542 apartment homes across nine states. Approximately 24% of units were held in an operating partnership.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue: Total revenues remained relatively flat at $313.6 million for the nine months ended September 30, 2002, compared to $313.8 million in the prior year period. Rental income increased slightly to $280.2 million from $280.1 million, offset by a decrease in fee and asset management income ($3.4 million vs. $5.5 million) due to reduced third-party construction fees.
• Profitability: Net income to common shareholders decreased significantly to $36.3 million from $51.2 million in the prior year. This decline was primarily driven by a reduction in "Equity in income of joint ventures" ($0.4 million vs. $8.4 million), as the prior year included significant gains from the sale of joint venture properties.
• Occupancy and Rates: Weighted average occupancy decreased to 92.2% from 94.6% in the prior year. Rental income per apartment home per month declined 2.5% to $668 from $686, attributed to higher concessions and vacancy rates.
• Expenses: Property operating and maintenance expenses increased 5.3% to $83.9 million. Interest expense remained stable at $52.7 million, though gross interest costs decreased slightly due to lower rates on floating debt, offset by higher average debt balances.
• Balance Sheet: Total real estate assets increased to $2.52 billion from $2.40 billion, reflecting acquisitions and development. Total debt increased to $1.39 billion from $1.21 billion.

Guidance, Outlook, and Management Commentary

• Portfolio Strategy: Management intends to rebalance the portfolio to limit any single market to no more than 12% of net operating income. They plan to selectively dispose of assets that are capital intensive or have lower growth projections, with a target to dispose of up to $125 million in assets.
• Development Pipeline: Three properties are currently under development (Camden Harbor View, Camden Vineyards, Camden Oak Crest) with an aggregate estimated cost of $186.4 million. Additional land development projects are in the planning phase.
• Liquidity and Capital Resources: In August 2002, the company replaced its credit facility with a new $500 million unsecured line of credit maturing in 2006. As of September 30, 2002, $264.7 million was available under this line. The company also has $285.5 million available under its shelf registration.
• Dividends: A quarterly dividend of $0.635 per share was declared for the third quarter, equating to an annualized rate of $2.54 per share.
• Risks: Forward-looking statements are subject to risks including changes in economic conditions, interest rates, and the company's ability to maintain REIT qualification.

Investor Verification Checklist

• Occupancy Trends: Verify the sustainability of the 92.2% occupancy rate and the impact of increased concessions on future rental growth.
• Joint Venture Income: Confirm the volatility of earnings due to the significant drop in joint venture income compared to the prior year's one-time gains.
• Debt Maturity Profile: Review the scheduled debt repayments, noting $87 million due in 2003 and $234 million in 2004, to assess refinancing risks.
• Asset Dispositions: Monitor progress on the plan to dispose of up to $125 million in assets to fund growth and debt reduction.
• Development Costs: Track the $186.4 million development pipeline against available liquidity and financing capacity.