Business Context and Reporting Period
Company: Camden Property Trust
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2001
Business Overview: Camden is a real estate investment trust (REIT) organized in 1993, operating as a single business segment focused on the ownership, development, construction, and management of multifamily apartment communities. As of year-end 2001, the company owned interests in, operated, or was developing 147 properties containing 52,147 apartment homes across nine states in the Sunbelt and Midwestern markets.
Key Financial Metrics
Real Estate Assets:
- Total real estate assets (carrying value): $2,736.5 million
- Total encumbrances (debt secured by real estate): $283.2 million
- Accumulated depreciation: $422.2 million
Development Pipeline:
- Total budgeted cost for development properties: $162.0 million
- Remaining cost to complete (as of Dec 31, 2001): $115.8 million
- Consolidated financial statements include $143.6 million related to properties under development.
Operational Metrics:
- Weighted average occupancy rate (operating properties): 94.2%
- Average apartment size: 849 square feet
- Average monthly rental rate: $777
- Employees: 1,750
Capital Structure:
- Common shares outstanding (March 15, 2002): 40,993,198
- Aggregate market value of voting shares held by non-affiliates (March 15, 2002): $1,518.9 million
Note: Specific revenue, net income, cash flow, and margin figures are incorporated by reference from the Annual Report to Shareholders (Exhibit 13.1) and are not explicitly detailed in the provided text.
Material Changes and Portfolio Activity
Portfolio Growth and Composition:
- Additions: The company added $20.6 million in acquisitions (other than Oasis) and $76.6 million in development costs during 2001. Improvements totaled $26.7 million.
- Dispositions: The company sold real estate with a cost basis of $11.1 million during the period.
- Development Status: Two newly developed properties (1,000 homes) were in lease-up, and two properties (802 homes) were under development at year-end.
Strategic Initiatives:
- Implemented a strategic brand initiative in 2001, rebranding all communities under the "Camden" flagship name with a "Living Excellence" promise.
- Continued rebalancing the portfolio to limit any single market to no more than 12% of total net operating income.
Outlook, Risks, and Contingencies
Management Outlook:
- Management targets a minimum initial stabilized return of 9.0%-10.0% for new development opportunities.
- Strategy focuses on selective development and acquisitions in high-growth markets while maintaining a conservative financial structure.
Legal Proceedings and Contingencies:
- Fair Housing Act Litigation: A consent decree was executed on January 30, 2001, regarding a lawsuit filed by the Justice Department alleging violations of the Fair Housing Act concerning nine properties. The company is ordered to make retrofits and implement educational programs over five years. Management believes the costs will not have a material impact on financial statements.
- Environmental Matters: The company is liable for hazardous substance removal costs under various laws. While Phase I assessments have been conducted, there is no assurance that all liabilities are known or that prior owners did not create unknown conditions.
Risks:
- Forward-looking statements are subject to risks including economic conditions, failure to qualify as a REIT, cost of capital, and competitor actions.
- Insurance coverage may not be sufficient to cover catastrophic losses (e.g., floods, earthquakes) or replacement costs due to inflation and building code changes.
Investor Verification Checklist
- Financial Performance: Verify 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 this 10-K text.
- Debt Obligations: Review the full debt schedule in the financial statements to understand maturity profiles and interest rates beyond the $283.2 million in encumbrances listed in Schedule III.
- Development Costs: Confirm the $115.8 million remaining cost to complete for development projects and assess the risk of budget overruns.
- Legal Compliance: Monitor the progress and costs associated with the five-year Fair Housing Act consent decree.
- Occupancy Trends: Analyze the 94.2% occupancy rate in the context of local market conditions and the impact of the two properties currently in lease-up.