Camden Property Trust (NYSE: CPT) — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual report; the filing does not present standalone fourth-quarter financial results in the supplied text.
Business context
Camden is a U.S. multifamily REIT engaged in owning, operating, developing, redeveloping, acquiring, and constructing apartment communities. At year-end, it owned interests in, operated, or was developing 174 properties with 59,104 apartment homes, including seven properties under construction. Its portfolio is concentrated across 14 U.S. markets; Houston was its largest operating market by apartment count.
Financial and operating performance
| Metric | 2020 | 2019 |
|---|---|---|
| Property revenue | $1,043.8 million | $1,028.5 million |
| Net income attributable to common shareholders | $123.9 million | $219.6 million |
| Diluted earnings per share | $1.24 | $2.22 |
| Funds from operations (FFO) | $495.7 million | $505.4 million |
| Adjusted FFO (AFFO) | $418.2 million | $433.2 million |
| Property net operating income (NOI) | $649.0 million | $662.1 million |
| Cash from operating activities | $519.3 million | $555.6 million |
- Same-store revenue increased 1.1%, but same-store NOI declined 0.4% as expenses rose 3.8%. Higher average rental rates supported revenue, while lower occupancy, increased bad debt, and waived fees weighed on results.
- Average stabilized occupancy was 95% versus 96% in 2019. Average monthly rental revenue per apartment home was $1,599 versus $1,562.
- Cash used in investing activities was $429.6 million, primarily for development and capital improvements; cash from financing activities was $307.3 million. Year-end cash and cash equivalents were $420.4 million, compared with $23.2 million a year earlier.
- Total notes payable were $3.17 billion, up from $2.52 billion. Weighted-average debt interest rate was 3.6%, and weighted-average debt maturity was 8.4 years. The $900 million unsecured credit facility had $888 million available; all consolidated properties were unencumbered.
- The 2020 common distribution was $3.32 per share. The board declared a first-quarter 2021 dividend of $0.83 per share; future dividends remain subject to board discretion.
Material changes versus 2019
- Net income attributable to common shareholders fell $95.7 million. The filing cites $49.5 million less in gains from operating-property sales, $30.9 million higher depreciation and amortization, $10.8 million higher interest expense, and COVID-related costs; the comparison was partly offset by the absence of the $12.0 million 2019 early-debt-retirement loss.
- Operating cash flow decreased $36.3 million. Management attributed the decline to operating-account timing, lower rental prepayments, higher interest payments, and pandemic effects.
- Debt increased following the April 2020 issuance of $750 million of 2.80% senior notes due 2030. In October, Camden replaced a $100 million term loan due 2022 with a $40 million two-year floating-rate loan and cash on hand.
- Camden acquired no operating properties in 2020, acquired development land in Durham and Raleigh, North Carolina, and sold a small adjacent Raleigh land parcel. The 2019 comparison included four operating-property acquisitions and two consolidated-property sales.
Outlook, risks, and unusual items
- Management said it could not reliably estimate the pandemic’s ultimate effects and warned that weak consumer confidence, unemployment, rent-collection restrictions, and recession concerns could reduce occupancy, rents, and property revenue in 2021 and beyond. It collected approximately 98.6% of same-store scheduled rents for fourth-quarter 2020; January collections were approximately 96.9%.
- During 2020, Camden reported a $14.8 million COVID-related impact, including resident relief payments, operating-property expenses and employee relief costs. The resident assistance included $9.1 million paid to residents at wholly owned communities and $1.3 million at joint-venture communities; operating-property expenses included $2.8 million of essential-worker bonuses.
- At year-end, seven consolidated projects totaling 2,254 homes were under construction, with estimated remaining costs of $325.4 million. Management expected to spend $220–$240 million in 2021 to complete these projects, plus $65–$75 million to start new development, $58–$62 million on repositioning and revenue-enhancing work, and $70–$74 million on recurring capital expenditures.
- Management stated liquidity was sufficient for reasonably anticipated 2021 needs and that no debt was scheduled to mature through 2021. Key risks include pandemic-related rent and leasing pressures, development cost and completion risks, rent regulation, interest rates and refinancing, cybersecurity, and potential real-estate impairment. The filing reported no impairment charges in 2020 and no legal proceedings under Item 3; ordinary-course claims were described separately as not expected to materially affect the financial statements.
- Senior unsecured debt ratings were A3 (Moody’s), A- (Fitch), and A- (S&P), each with a stable outlook. The company disclosed LIBOR transition uncertainty. Auditors issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- Whether rent collections, delinquency, bad debt, and occupancy recover or deteriorate after the reported January 2021 collection figures.
- Whether same-store rent growth can outpace property expense growth, particularly real estate taxes, insurance, utilities, and repairs.
- Whether construction schedules, lease-up assumptions, and the stated remaining project costs hold, and whether planned 2021 capital spending is funded as expected.
- Debt refinancing, floating-rate exposure, credit-facility availability, and the costs and terms of any LIBOR replacement.
- Dividend sustainability in light of operating cash flow, development commitments, debt service, and required REIT distributions.