Camden Property Trust — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Camden is a U.S. multifamily REIT; at year-end it owned, operated or was developing 178 communities with 60,652 apartment homes. This is an annual filing, not a stand-alone fourth-quarter report.
Financial and operating performance
| Metric | 2022 | 2021 |
|---|---|---|
| Property revenue | $1,422.8 million | $1,143.6 million |
| Net income attributable to common shareholders | $653.6 million | $303.9 million |
| Diluted EPS | $6.04 | $2.96 |
| Property NOI | $924.7 million | $726.6 million |
| Funds from operations (FFO) | $719.6 million | $559.4 million |
| Adjusted FFO (AFFO) | $628.9 million | $485.7 million |
| Net cash from operating activities | $744.7 million | $577.5 million |
- Property revenue rose 24.4%; same-store revenue increased 11.2%, including a 12.4% rise in average rental rates. Same-store NOI grew 14.6% to $753.2 million; same-store NOI margin was approximately 65.8%, versus 63.8% in 2021.
- Stabilized occupancy averaged approximately 96%, down from 97%; average monthly rent per home rose to $1,881 from $1,671.
- Reported net income included a $474.1 million gain from remeasuring Camden’s previously held joint-venture interests after acquiring the remaining interests. FFO excludes this gain and gains on property sales.
- Interest expense increased 16.6% to $113.4 million, and depreciation and amortization increased 37.2% to $577.0 million, primarily reflecting acquired properties and completed development.
- Investing cash outflow was $1.46 billion, chiefly for the joint-venture acquisition and $449.4 million of development and capital improvements. Financing cash inflow was $109.9 million. Year-end cash and cash equivalents were $10.7 million ($17.4 million including restricted cash).
Capital structure and liquidity
- Total notes payable were $3.68 billion at year-end, up from $3.17 billion; this included $515.0 million of secured debt assumed in the acquisition. Fixed-rate debt was 84.6% of debt, weighted-average debt maturity was 6.4 years, and interest coverage was 7.4 times.
- Approximately $1.1 billion was available under the $1.2 billion revolving credit facility; $42 million was drawn and $300 million was outstanding under the term loan. The facility matures in 2026, with extension options. Management reported covenant compliance.
- Management considered approximately $500 million of debt repayments over the next 12 months manageable. Scheduled cash interest was estimated at $111.1 million for 2023.
- Camden issued 2.9 million shares in an April 2022 offering for net proceeds of approximately $490.3 million and sold shares through prior ATM programs. A new $500 million ATM authorization remained unused and available at filing; no shares had been repurchased under the $500 million repurchase authorization.
Material changes, outlook and risks
- On April 1, 2022, Camden acquired the remaining 68.7% of two funds for approximately $1.1 billion cash, assuming about $515 million of secured debt. The funds held 22 communities and 7,247 homes; their consolidation materially expanded reported property revenue and expenses.
- Management attributed strong same-store revenue growth to job growth, favorable renter demographics, demand and manageable new supply. It expected supply to remain manageable in 2023, while cautioning that weaker economic conditions could harm results. The filing provides no specific 2023 earnings, FFO or same-store growth guidance.
- Six communities totaling 1,950 homes were under construction, with an estimated $306.7 million remaining to complete. For 2023, Camden expected $190–$200 million of that construction spending, $85–$105 million to start new developments, $93–$97 million for repositioning and other revenue-enhancing work, and $96–$100 million of recurring capital expenditures.
- The Board declared a $1.00 per-share first-quarter 2023 dividend. If repeated for the rest of 2023, the annualized rate would be $4.00; future dividends remain at the Board’s discretion. The 2022 declared dividend was $3.76 per share.
- Key risks include higher interest rates and refinancing costs, rent declines or reduced occupancy, rent-control regulation, construction cost and schedule overruns, development and land impairments, severe weather, cybersecurity events, REIT qualification and access to capital. A 100-basis-point increase in variable rates would have increased 2022 annual interest costs by approximately $5.7 million.
- Camden disclosed antitrust lawsuits alleging rent-fixing involving revenue-management software and multifamily owners/operators; it disputes the claims and says the outcome and any potential loss cannot currently be estimated. Hurricane Ian caused approximately $1.0 million of expenses with no insurance recovery. No impairment charges were recorded in 2022.
- Deloitte issued unqualified opinions on the financial statements and internal controls. Management and the auditor identified the development-asset impairment assessment and the joint-venture acquisition gain valuation as critical audit matters.
Investor verification priorities
- Separate recurring operating performance from the $474.1 million acquisition remeasurement gain and compare FFO/AFFO with GAAP earnings.
- Review post-acquisition leverage, variable-rate exposure, debt maturities and the assumptions behind management’s liquidity assessment.
- Track rent growth, occupancy and expenses as market conditions and apartment supply evolve.
- Monitor construction costs, delivery and lease-up timing, and the returns expected from the development pipeline.
- Follow the antitrust litigation, its potential financial exposure, and any developments affecting rent-management practices.