Camden Property Trust — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Camden is a multifamily REIT that owns, operates, develops, and acquires apartment communities. At quarter-end, it owned interests in, operated, or was developing 175 properties with 59,894 homes, including five properties under construction.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / prior period |
|---|---|---|
| Property revenue | $311.4 million | $267.6 million; up 16.4% |
| Net income attributable to common shareholders | $80.7 million | $31.3 million |
| Diluted earnings per share | $0.76 | $0.31 |
| Property net operating income (NOI, non-GAAP) | $201.0 million | $166.6 million; up 20.7% |
| Funds from operations (FFO, non-GAAP) | $160.5 million | $125.8 million |
| Adjusted FFO (AFFO, non-GAAP) | $146.2 million | $113.1 million |
| Net cash from operating activities | $122.3 million | $88.5 million |
Same-store revenue grew 11.1% and same-store NOI grew 15.5%. Management attributed the revenue improvement mainly to a 10.7% increase in average rental rates and higher occupancy. Weighted-average occupancy was 96.9%, versus 95.9% a year earlier. Property expenses rose 9.3% to $110.3 million.
Net income included a $36.4 million gain on the sale of a Maryland property. Deferred compensation investment losses of $7.5 million were offset by an equal benefit in deferred compensation expense; these movements largely offset in reported results.
Cash and cash equivalents were $1.130 billion at March 31, 2022, compared with $613.4 million at December 31, 2021. Total liabilities were $4.176 billion. Unsecured notes payable totaled $3.671 billion, including $500 million drawn on the $900 million credit facility. After letters of credit, $385.4 million was available under the facility. Debt had a weighted-average maturity of approximately 6.5 years; the reported interest coverage ratio was 7.4x.
Cash used in investing activities was $48.9 million, including $90.5 million for development and capital improvements, partly offset by $70.5 million of property-sale proceeds. Financing activities provided $443.1 million, primarily from $500 million of credit-facility borrowings and $26.2 million of ATM share proceeds, partly offset by distributions.
Material changes and transactions
- Common-shareholder net income increased $49.4 million year over year, reflecting stronger property operations and the property-sale gain, partly offset by higher depreciation and amortization.
- Depreciation and amortization increased 21.5% to $113.1 million, mainly due to completed development and repositioning projects and acquisitions made in 2021.
- In Q1, Camden sold one 245-home property for approximately $71.9 million and recorded the $36.4 million gain. It also acquired 15.9 acres in Richmond, Texas, for approximately $7.8 million.
- On April 1, 2022, Camden acquired the remaining interests in two joint-venture funds for approximately $1.1 billion cash, assuming approximately $514 million of existing secured mortgage debt. The funds own 22 communities with 7,247 homes; Camden will consolidate them after the acquisition.
- In April, Camden issued 2.9 million shares in a public offering and received approximately $490.3 million net, which it used to reduce credit-facility borrowings. It also acquired Charlotte land for $32.7 million.
Outlook, risks, and commitments
Management said it expected U.S. economic and employment growth to continue in 2022 and multifamily supply to remain manageable, while cautioning that worsening economic conditions could hurt results. Camden intends to pursue development, redevelopment, repositioning, and selective acquisitions and dispositions, and said it believes liquidity is sufficient for anticipated needs.
Five properties were under construction, with 1,839 planned homes and an estimated $182.3 million of remaining costs to complete. Management estimated next-12-month debt repayments of approximately $387.2 million. The $900 million unsecured credit facility matures in March 2023, subject to extension options; Camden reported compliance with its financial covenants. The company’s quarterly dividend was $0.94 per common share.
Disclosed risks include capital-market volatility, rising interest rates and borrowing costs, debt refinancing and liquidity, short-term lease exposure to falling rents, competition, rent regulation, development and construction risks, weather events, cybersecurity, and maintaining REIT qualification. Management reported no material changes to previously disclosed risk factors, no legal proceedings, and no material changes in market-risk exposure.
Important facts for investors to verify
- Whether rent growth and high occupancy persist, and how operating-cost increases affect same-store NOI.
- The acquisition’s final funding, consolidated debt and liquidity effects, and operating contribution after the April 1 consolidation.
- Development completion costs, schedules, lease-up progress, and returns on the development pipeline.
- Credit-facility refinancing or extension plans ahead of its March 2023 maturity, and the impact of interest rates on floating-rate debt.
- Cash-flow and distribution coverage, including the effect of the $0.94 quarterly dividend and future capital requirements.