Business Context and Reporting Period
Company: Camden Property Trust
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 1996
Business Overview: Camden owns, develops, and manages multifamily apartment communities in the Southwest and Mountain regions of the U.S. As of March 31, 1996, the portfolio consisted of 49 operating properties with 16,737 units and a weighted average occupancy rate of 94.1%. The Company is actively developing four properties (1,552 units) and planning three additional developments (1,010 units).
Key Financial Metrics
| Metric | Q1 1996 | Q1 1995 |
|---|---|---|
| Total Revenues | $26,590,000 | $22,548,000 |
| Net Income (Loss) | $(1,746,000) | $3,115,000 |
| Net Income (Loss) to Common Shareholders | $(1,750,000) | $3,105,000 |
| Funds from Operations (FFO) - Fully Diluted | $9,632,000 | $8,555,000 |
| Net Cash from Operating Activities | $2,305,000 | $2,898,000 |
| Total Debt (Notes Payable + Convertible Debentures) | $286,371,000 | $279,553,000* |
| Cash and Cash Equivalents | $442,000 | $205,000 |
| Dividends Declared per Common Share | $0.475 | $0.460 |
*Note: Q1 1995 debt figure derived from balance sheet data provided for Dec 31, 1995 ($235.5M notes + $44.05M debentures) as Q1 1995 balance sheet is not explicitly detailed in the text, though Q1 1995 cash flow indicates financing activity.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 17.9% to $26.6 million, driven by a 9.8% increase in average rental income per unit ($494 vs. $450) and the addition of 804 units from completed developments (Vanderbilt Square and The Breakers).
- Net Loss: The Company reported a net loss of $1.75 million compared to a net income of $3.1 million in the prior year. This reversal was primarily due to a $5.35 million non-cash charge for the extinguishment of hedges upon debt refinancing.
- Portfolio Turnover: The Company disposed of three properties (809 units) for a gain of $195,000, while adding 1,586 units through development since March 1995.
- Expense Increases: Interest expense rose 36.2% to $4.1 million due to increased indebtedness for development, partially offset by lower interest rates. Property operating expenses increased $1.8 million.
Guidance, Outlook, and Risks
- Dividend Policy: Management declared a quarterly dividend of $0.475 per share, a 3.3% annualized increase over 1995. The Company intends to increase dividends annually at a rate less than its Funds from Operations (FFO) growth rate.
- Capital Structure: The Company issued $100 million in senior unsecured notes (6.625% interest) to reduce reliance on its unsecured credit facility and settle hedging agreements. The debt-to-market capitalization ratio stands at approximately 39%.
- Development Pipeline: Four projects are under development with estimated completion dates ranging from Q2 1996 to Q1 1997. Three additional properties are planned for future development.
- Risks and Contingencies:
- Acquisition/Sale Uncertainty: The Company has letters of intent for various property acquisitions and sales, but these are non-binding. No assurance exists that definitive contracts will be executed or that due diligence will be successful.
- Interest Rate Risk: While the Company utilizes hedging agreements ($50 million currently in effect) to manage floating rate debt, it remains exposed to interest rate fluctuations on unhedged portions of its debt.
Investor Verification Checklist
- Debt Refinancing Impact: Verify the long-term benefit of the $100 million note issuance versus the immediate $5.35 million hedge extinguishment charge.
- Occupancy Trends: Monitor the stabilization rates of newly completed properties (Vanderbilt Square and The Breakers), which were at 75% and 68% occupancy respectively at quarter-end.
- Development Costs: Review the budgeted costs for the 1,552 units currently under development ($88.7 million total) to ensure no significant overruns.
- FFO vs. Net Income: Confirm that the reported FFO of $9.6 million accurately reflects operational performance given the non-cash nature of the net loss.
- Subsequent Events: Note the acquisition of a 400-unit property in Houston on May 1, 1996, which was not included in the March 31 balance sheet.