Business Context and Reporting Period
Company: Camden Property Trust
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2002
Business Overview: Camden is a Real Estate Investment Trust (REIT) organized in Texas, operating as a single business segment focused on the ownership, development, construction, and management of multifamily apartment communities. As of year-end 2002, the company owned interests in, operated, or was developing 147 properties containing 52,274 apartment homes across nine states in the Sunbelt and Midwestern markets.
Key Financial Metrics
Note: Specific revenue, net income, and cash flow figures are incorporated by reference from the Annual Report to Shareholders and are not explicitly detailed in the provided text. The following metrics are derived from the Schedule III Real Estate and Accumulated Depreciation table and narrative disclosures.
- Total Real Estate Assets (Gross): $3,020,584,000 (as of Dec 31, 2002).
- Accumulated Depreciation: $498,776,000 (as of Dec 31, 2002).
- Properties Under Development: $285.6 million included in consolidated financial statements ($156.8 million under construction; $128.8 million in land held for future development).
- Development Budget: Total budgeted cost for development properties is approximately $250.4 million, with a remaining cost to complete of $39.5 million.
- Occupancy Rate: Weighted average occupancy for operating properties was 92% for 2002 (down from 94% in 2001).
- Market Capitalization: Aggregate market value of non-affiliate equity was $1,394,340,062 (based on June 28, 2002 share price of $37.03).
- Shares Outstanding: 39,259,503 common shares (as of March 14, 2003).
Material Changes vs. Prior Period
- Asset Growth: Total real estate assets increased from $2,736,474,000 in 2001 to $3,020,584,000 in 2002.
- Acquisitions: The company added $245,836,000 in real estate assets through acquisitions in 2002, a significant increase compared to $20,634,000 in 2001.
- Development Activity: Development additions totaled $128,312,000 in 2002, up from $76,562,000 in 2001.
- Dispositions: The company sold real estate with a cost basis of $123,771,000 in 2002, compared to $11,106,000 in 2001.
- Occupancy: Weighted average occupancy declined slightly from 94% in 2001 to 92% in 2002.
Guidance, Outlook, Risks, and Contingencies
Management Commentary and Strategy
Management emphasizes consistent earnings growth through sophisticated property management, resident satisfaction, and selective investment in favorable markets. The company has implemented a "Living Excellence" brand initiative across all communities. The strategy includes selective development and acquisitions, with a target initial stabilized return of 8% to 10% for new developments. The company intends to rebalance its portfolio to limit any single market to no more than 12% of total net operating income.
Risks and Contingencies
- Legal Proceedings: A consent decree was executed in January 2001 regarding a Justice Department lawsuit alleging Fair Housing Act violations related to nine properties (seven currently owned). The company is required to make retrofits and implement educational programs over five years. Costs have been accrued and are not considered material.
- Environmental: The company faces potential liability for hazardous substance remediation under federal and state laws, though Phase I site assessments have been conducted on all properties.
- Development Risks: Risks include zoning changes, environmental matters, and economic condition shifts during the construction process.
- Forward-Looking Statements: Results may differ due to economic conditions, interest rates, capital costs, and competitor actions.
Investor Verification Checklist
- Verify the specific revenue, net income, and funds from operations (FFO) figures in the Annual Report to Shareholders (Exhibit 13.1), as they are not explicitly listed in the 10-K text provided.
- Review the detailed debt structure and interest rates in the Financial Statements (Exhibit 13.1), as specific debt balances are not itemized in the provided text.
- Confirm the status of the $39.5 million remaining cost to complete for development projects and the timeline for stabilization.
- Assess the impact of the 2% decline in occupancy rates on future cash flows and rental rate growth.
- Monitor the progress of the Fair Housing Act consent decree retrofits to ensure no unexpected material costs arise.