Business Context and Reporting Period
Company: Camden Property Trust (REIT)
Reporting Period: Quarter ended March 31, 1998
Business Overview: Camden owns, develops, and manages multifamily apartment communities in the Southwest, Southeast, Midwest, and Western U.S. As of March 31, 1998, the portfolio included 109 properties with 38,460 units. Nine properties (3,791 units) were under development, and two newly developed properties (732 units) were in lease-up.
Key Financial Metrics
| Metric | Q1 1998 | Q1 1997 |
|---|---|---|
| Total Revenues | $58,592,000 | $29,472,000 |
| Net Income to Common Shareholders | $8,961,000 | $4,064,000 |
| Diluted Earnings Per Share (EPS) | $0.27 | $0.24 |
| Funds From Operations (FFO) | $23,948,000 | $10,877,000 |
| Net Cash Provided by Operating Activities | $9,745,000 | $3,563,000 |
| Total Debt (Notes Payable) | $535.9 million | $480.8 million |
| Cash and Cash Equivalents | $4,208,000 | $6,468,000 |
| Weighted Avg. Units | 33,009 | 17,825 |
| Avg. Rental Income/Unit/Month | $554 | $523 |
| Occupancy Rate | 93.3% | 93.2% |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 98.8% year-over-year, driven primarily by the April 1997 acquisition of Paragon Group, Inc., which doubled the portfolio size, and the completion of new developments.
- Profitability: Net income to common shareholders rose 120% to $8.96 million. Basic EPS increased to $0.28 from $0.25.
- Expense Increases: Property operating expenses and real estate taxes increased $11.7 million due to the larger portfolio. Interest expense rose to $7.75 million from $4.19 million due to increased indebtedness from acquisitions and development, partially offset by lower average interest rates.
- Depreciation: Depreciation and amortization more than doubled to $14.49 million, reflecting the expanded asset base.
- Cash Flow: Net cash provided by operating activities increased to $9.75 million, while net cash used in investing activities surged to $50.55 million due to significant capital expenditures on real estate assets.
Guidance, Outlook, and Risks
- Acquisition of Oasis Residential: On April 8, 1998 (subsequent to the reporting period), Camden completed a tax-free merger with Oasis Residential, Inc. This transaction added 52 completed properties and approximately $484 million in assumed debt, expanding the portfolio to over 54,000 units upon completion of developments.
- Dividends: The Board declared a quarterly common dividend of $0.505 per share (annualized $2.02) and a preferred dividend of $0.5625 per share on Series A shares issued in the Oasis merger.
- Development Pipeline: The Company announced plans for 13 additional development projects with an aggregate cost of approximately $370 million.
- Liquidity and Capital Structure: The Company maintains a conservative debt-to-market capitalization ratio of approximately 34.4%. It has $42 million available under its Unsecured Credit Facility and significant unused capacity in its shelf registration and medium-term note programs.
- Risks: Forward-looking statements are subject to risks including changes in economic conditions, interest rate fluctuations, and the ability to secure financing. The Company is also monitoring Year 2000 compliance risks for internal systems and third-party vendors.
Investor Verification Checklist
- Oasis Merger Integration: Verify the final allocation of purchase price and the impact of the $484 million debt assumption on future interest coverage ratios.
- Development Costs: Confirm the funding sources for the announced $370 million in new development projects and the timeline for stabilization.
- Debt Maturities: Review the schedule for the $75 million "Reset Notes" maturing in May 2002 and the Unsecured Credit Facility maturing in July 2000.
- FFO Calculation: Note that FFO is a non-GAAP measure; verify the reconciliation to Net Income provided in the filing.
- Third-Party Transaction: Monitor the planned transfer of 5,119 Las Vegas units into a limited liability corporation where Camden will retain a 20% minority interest.