CPT Camden Property Trust

Camden Property Trust (NYSE:CPT) announced that its funds from operations ("FFO") for the second quarter of 2006 totaled $0.89 per diluted share or $53.4 million, as compared to $0.80 per diluted share or $47.0 million for the same period in 2005. FFO for the six months ended June 30, 2006 totaled $1.77 per diluted share or $105.2 million, as compared to $1.88 per diluted share or $101.5 million for the same period in 2005. FFO for the six months ended June 30, 2005 included a $0.45 per diluted share impact from the sale of technology investments, and a $0.26 per diluted share charge for transaction compensation and merger expenses relating to Camden's merger with Summit Properties Inc. ("Summit"). Net Income ("EPS") The Company reported net income ("EPS") of $34.6 million or $0.61 per diluted share for the second quarter of 2006, as compared to $21.9 million or $0.39 per diluted share for the same period in 2005. EPS for the three months ended June 30, 2006 included a $0.43 per diluted share impact from gain on sale of properties and discontinued operations, as compared to a $0.39 per diluted share impact for the same period in 2005. For the six months ended June 30, 2006, net income totaled $76.0 million or $1.36 per diluted share, as compared to $188.5 million or $3.53 per diluted share for the same period in 2005. EPS for the six months ended June 30, 2006 included a $0.96 per diluted share impact from gain on sale of land, joint venture properties and discontinued operations. EPS for the six months ended June 30, 2005 included a $3.12 per diluted share impact from gain on sale of properties and discontinued operations, $0.45 per diluted share income from the sale of technology investments, and a $0.26 per diluted share charge for transaction compensation and merger expenses relating to Camden's merger with Summit Properties Inc. A reconciliation of net income to FFO is included in the financial tables accompanying this press release. Same-Property Results For the 50,732 apartment homes included in consolidated same-property results, second quarter 2006 same-property net operating income ("NOI") growth was 8.7% compared to the second quarter of 2005, with revenues increasing 7.5% and expenses increasing 5.5%. On a sequential basis, second quarter 2006 same-property NOI increased 1.7% compared to first quarter 2006, with revenues increasing 1.7% and expenses increasing 1.7% compared to the prior quarter. On a year-to-date basis, 2006 same-property NOI increased 9.5%, with revenue growth of 7.9% and expense growth of 5.3% compared to the same period in 2005. Same-property physical occupancy levels for the combined portfolio averaged 95.7% during the second quarter of 2006, compared to 95.3% in the second quarter of 2005 and 96.0% in the first quarter of 2006. The Company defines same-property communities as communities owned by either Camden or Summit and stabilized as of January 1, 2005, excluding properties held for sale. A reconciliation of net income to net operating income and same-property net operating income is included in the financial tables accompanying this press release. Development Activity As of June 30, 2006, Camden had two completed apartment communities in lease-up: Camden Dilworth in Charlotte, NC, an $18.0 million project that is currently 94% leased; and Camden Westwind in Ashburn, VA, a $97.6 million project that is currently 58% leased. Camden announced two new development starts during the quarter: Camden Summerfield in Frederick, MD, with 291 apartment homes; and Camden Orange Court in Orlando, FL, with 261 apartment homes. Total budgeted costs for those projects are $68.0 million and $49.0 million, respectively, with initial occupancy expected to occur in late 2007 and early 2008 respectively. The Company's current development pipeline includes 11 wholly-owned communities with 3,901 apartment homes and a total budgeted cost of $721.0 million, and two joint venture communities with 561 apartment homes and a total budgeted cost of $150.0 million. Of those 13 communities, five are currently in lease-up. Camden Fairfax Corner in Fairfax, VA is currently 81% leased; Camden Manor Park in Raleigh, NC is currently 57% leased; Camden Clearbrook in Frederick, MD is currently 31% leased; Camden Royal Oaks in Houston, TX is currently 23% leased; and Camden Old Creek in San Marcos, CA is currently 4% leased. Acquisition/Disposition Activity During the quarter, Camden disposed of three wholly-owned apartment communities: Camden Pass, a 456-home apartment community in Tucson, AZ, for $20.3 million; Camden Trails, a 264-home apartment community in Dallas, TX, for $8.8 million; and Camden Wilshire, a 536-home apartment community in Houston, TX, for $20.4 million. Gain on sale of those three properties totaled $23.7 million. In addition, the Company sold a 4.7 acre parcel of undeveloped land in College Park, MD for a gain of $0.8 million. Subsequent to quarter-end, the company acquired Camden Stoneleigh, a 390-home apartment community in Austin, TX for $35.3 million, and disposed of Camden Oaks, a 446-home apartment community in Dallas, TX, for $19.2 million. The Company also sold Summit Hollow, a 232-home joint venture apartment community in Charlotte, NC for $15.5 million subsequent to quarter-end. Camden's pro-rata share of that disposition totaled $3.9 million. Properties and Land Held for Sale At June 30, 2006, Camden had three operating communities consisting of 1,260 apartment homes classified as held for sale. These properties included: Camden Oaks, a 446-home apartment community in Dallas, TX; Camden Crossing, a 366-home apartment community in Houston, TX; and Camden Wyndham, a 448-home apartment community in Houston, TX. The Company also had 13.9 acres of undeveloped land in Southeast Florida, Dallas, TX and Long Beach, CA classified as held for sale at quarter-end. Subsequent to quarter-end, the Company disposed of Camden Oaks. Earnings Guidance Camden raised its earnings guidance for 2006 FFO. Full-year 2006 FFO is now expected to be $3.60 to $3.75 per diluted share. The Company also provided guidance of $0.93 to $0.97 per diluted share for third quarter 2006 FFO. EPS is expected to be $1.87 to $2.02 per diluted share for full-year 2006, and $0.28 to $0.32 per diluted share for the third quarter of 2006, excluding any future gains from operating property sales. The Company's 2006 earnings guidance is based on projections of same-property revenue growth between 5.75% and 6.75%, same-property expense growth between 4.5% and 5.5%, same-property NOI growth between 7.0% and 8.0%, acquisitions of $100 to $200 million, dispositions of $200 to $400 million and future development starts of $150 to $200 million. Camden updates its earnings guidance to the market on a quarterly basis. A reconciliation of expected net income to expected FFO is included in the financial tables accompanying this press release. Conference Call The Company will hold a conference call on Friday, August 4, 2006 at 10:00 a.m. Central Time to review its second quarter results and discuss its outlook for future performance. To participate in the call, please dial 877-407-0782 (domestic) or 201-689-8567 (international) by 9:50 a.m. Central Time and request the Camden Property Trust Second Quarter 2006 Earnings Call, or join the live webcast of the conference call by accessing the Investor Relations section of the Company's website at www.camdenliving.com. Supplemental financial information is available in the Investor Relations section of the Company's website under Earnings Releases or by calling Camden's Investor Relations Department at 800-922-6336. Forward-Looking Statements In addition to historical information, this press release contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which Camden operates, management's beliefs, and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. About Camden Camden Property Trust is a real estate company engaged in the ownership, development, acquisition, management and disposition of multifamily apartment communities. Camden owns interests in and operates 185 properties containing 63,449 apartment homes across the United States. Upon completion of 13 properties under development, the Company's portfolio will increase to 67,911 apartment homes in 198 properties. For additional information, please contact Camden's Investor Relations Department at 800-922-6336 or 713-354-2787 or access our website at www.camdenliving.com. -0- *T CAMDEN OPERATING RESULTS (In thousands, except per share and property data amounts) ---------------------------------------------------------------------- (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ OPERATING DATA 2006 2005 2006 2005 (a) ------------------------------ ------------------ ------------------ Property revenues Rental revenues $137,591 $123,442 $272,380 $226,224 Other property revenues 13,582 11,056 26,306 20,446 ------------------ ------------------ Total property revenues 151,173 134,498 298,686 246,670 Property expenses Property operating and maintenance 40,520 36,259 79,495 68,437 Real estate taxes 16,296 15,225 32,726 27,847 ------------------ ------------------ Total property expenses 56,816 51,484 112,221 96,284 Non-property income Fee and asset management 3,120 1,834 5,597 9,140 Sale of technology investments - - - 24,199 Interest and other income 3,611 1,265 4,364 4,488 Income on deferred compensation plans 2,331 2,095 2,381 2,118 ------------------ ------------------ Total non-property income 9,062 5,194 12,342 39,945 Other expenses Property management 4,966 3,922 9,192 7,142 Fee and asset management 3,238 1,043 4,604 2,991 General and administrative 8,036 6,558 15,450 11,834 Transaction compensation and merger expenses - 261 - 14,085 Interest 31,379 28,584 62,416 52,085 Depreciation and amortization 41,242 44,182 78,295 75,840 Amortization of deferred financing costs 909 796 1,956 2,017 Expense on deferred compensation plans 2,331 2,095 2,381 2,118 ------------------ ------------------ Total other expenses 92,101 87,441 174,294 168,112 ------------------ ------------------ Income from continuing operations before gain on sale of properties, equity in income of joint ventures and minority interests 11,318 767 24,513 22,219 Gain on sale of properties, including land 810 - 1,309 132,117 Equity in income of joint ventures 569 245 2,886 355 Minority interests: Distributions on perpetual preferred units (1,750) (1,750) (3,500) (3,528) Original issuance costs on redeemed perpetual preferred units - - - (365) Income allocated to common units and other minority interests (1,182) (570) (2,536) (1,703) ------------------ ------------------ Income (loss) from continuing operations 9,765 (1,308) 22,672 149,095 Income from discontinued operations 1,165 1,447 3,031 3,329 Gain on sale of discontinued operations 23,652 21,724 51,044 36,115 Income from discontinued operations allocated to common units - (11) (722) (23) ------------------ ------------------ Net income $34,582 $21,852 $76,025 $188,516 ================== ================== PER SHARE DATA ------------------------------ Net income - basic $0.62 $0.41 $1.38 $3.78 Net income - diluted 0.61 0.39 1.36 3.53 Income (loss) from continuing operations - basic 0.17 (0.02) 0.41 2.99 Income (loss) from continuing operations - diluted 0.17 (0.03) 0.41 2.80 Weighted average number of common and common equivalent shares outstanding: Basic 55,506 53,873 54,901 49,909 Diluted 56,683 55,538 56,083 53,916 PROPERTY DATA ------------------------------ Total operating properties (end of period) (b) 186 191 186 191 Total operating apartment homes in operating properties (end of period) (b) 63,737 65,992 63,737 65,992 Total operating apartment homes (weighted average) 56,533 56,296 56,855 53,476 Total operating apartment homes - excluding discontinued operations (weighted average) 54,772 52,759 54,575 49,826 (a) The Company's 2005 financial results include the results of Summit subsequent to February 28, 2005. (b) Includes joint ventures and properties held for sale. Note: Please refer to the following pages for definitions and reconciliations of all non-GAAP financial measures presented in this document. CAMDEN FUNDS FROM OPERATIONS (In thousands, except per share and property data amounts) ---------------------------------------------------------------------- (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ FUNDS FROM OPERATIONS 2006 2005 2006 2005 (a) ------------------------------ ------------------ ------------------ Net income $34,582 $21,852 $76,025 $188,516 Real estate depreciation and amortization from continuing operations 40,579 43,575 76,978 74,606 Real estate depreciation from discontinued operations - 1,430 346 2,857 Adjustments for unconsolidated joint ventures 764 1,297 1,545 1,965 Income from continuing operations allocated to common units 1,130 572 2,433 1,705 Income from discontinued operations allocated to common units - 11 722 23 (Gain) on sale of operating properties - - - (132,117) (Gain) on sale of discontinued operations (23,652) (21,724) (51,044) (36,104) (Gain) on sale of joint venture properties - - (1,763) - ------------------ ------------------ Funds from operations - diluted $53,403 $47,013 $105,242 $101,451 ================== ================== PER SHARE DATA ------------------------------ Funds from operations - diluted $0.89 $0.80 $1.77 $1.88 Cash distributions 0.66 0.64 1.32 1.27 Weighted average number of common and common equivalent shares outstanding: FFO - diluted 60,083 58,407 59,539 53,916 PROPERTY DATA ------------------------------ Total operating properties (end of period) (b) 186 191 186 191 Total operating apartment homes in operating properties (end of period) (b) 63,737 65,992 63,737 65,992 Total operating apartment homes (weighted average) 56,533 56,296 56,855 53,476 Total operating apartment homes - excluding discontinued operations (weighted average) 54,772 52,759 54,575 49,826 (a) The Company's 2005 financial results include the results of Summit subsequent to February 28, 2005. (b) Includes joint ventures and properties held for sale. Note: Please refer to the following pages for definitions and reconciliations of all non-GAAP financial measures presented in this document. CAMDEN BALANCE SHEETS (In thousands) -------------- ------------------------------------------------------- (Unaudited) Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2006 2006 2005 2005 2005 ------------------------------------------------------- ASSETS Real estate assets, at cost Land $697,690 $664,219 $646,854 $660,748 $657,433 Buildings and improvements 4,074,737 3,892,700 3,840,969 3,881,682 3,839,732 ------------------------------------------------------- 4,772,427 4,556,919 4,487,823 4,542,430 4,497,165 Accumulated depreciation (786,208) (732,984) (716,650) (713,991) (694,120) ------------------------------------------------------- Net operating real estate assets 3,986,219 3,823,935 3,771,173 3,828,439 3,803,045 Properties under development, including land 427,500 419,843 372,976 377,787 368,022 Investments in joint ventures 8,270 8,199 6,096 6,937 11,830 Properties held for sale 55,562 188,477 172,112 51,741 39,930 ------------------------------------------------------- Total real estate assets 4,477,551 4,440,454 4,322,357 4,264,904 4,222,827 Accounts receivable - affiliates 33,408 33,361 34,084 35,313 35,084 Notes receivable Affiliates 23,327 22,531 11,916 11,505 11,108 Other 9,211 13,264 13,261 24,865 32,283 Other assets, net (a) 111,636 102,269 99,516 100,080 101,475 Cash and cash equivalents 49,700 1,256 1,576 1,076 6,432 Restricted cash 5,194 5,269 5,089 5,829 6,375 ------------------------------------------------------- Total assets $4,710,027 $4,618,404 $4,487,799 $4,443,572 $4,415,584 ======================================================= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Notes payable Unsecured $1,940,693 $2,118,403 $2,007,164 $1,903,094 $1,860,107 Secured 620,592 623,250 625,927 661,723 672,557 Accounts payable and accrued expenses 117,301 116,215 108,979 102,231 104,216 Accrued real estate taxes 31,280 17,818 26,070 39,740 29,510 Other liabilities (b) 99,460 98,327 88,811 84,835 62,753 Distributions payable 43,031 40,612 38,922 38,933 39,513 ------------------------------------------------------- Total liabil- ities 2,852,357 3,014,625 2,895,873 2,830,556 2,768,656 Commitments and contingencies Minority interests Perpetual preferred units 97,925 97,925 97,925 97,925 97,925 Common units 106,217 113,034 112,637 115,190 118,119 Other minority interests 10,555 10,512 10,461 10,425 9,878 ------------------------------------------------------- Total minority interests 214,697 221,471 221,023 223,540 225,922 Shareholders' equity Common shares of beneficial interest 649 610 608 607 606 Additional paid-in capital 2,172,616 1,908,099 1,902,595 1,899,713 1,895,018 Distributions in excess of net income (293,386) (289,482) (295,074) (273,609) (236,954) Employee notes receivable (2,035) (2,046) (2,078) (2,087) (2,084) Treasury shares, at cost (234,871) (234,873) (235,148) (235,148) (235,580) ------------------------------------------------------- Total share- holders' equity 1,642,973 1,382,308 1,370,903 1,389,476 1,421,006 ------------------------------------------------------- Total liabil- ities and share- holders' equity $4,710,027 $4,618,404 $4,487,799 $4,443,572 $4,415,584 ======================================================= (a) includes: net deferred charges of: $13,120 $14,079 $13,061 $13,757 $14,266 value of in place leases of: $431 $1,156 $1,363 $10,561 $18,995 (b) includes: deferred revenues of: $4,408 $4,843 $2,008 $2,152 $2,300 above/below market leases of: $13 $51 $90 $889 $1,675 distrib- utions in excess of invest- ments in joint ventures of: $12,701 $11,556 $11,256 $18,730 $7,446 CAMDEN NON-GAAP FINANCIAL MEASURES DEFINITIONS & RECONCILIATIONS (In thousands, except per share amounts) ---------------------------------------------------------------------- (Unaudited) This document contains certain non-GAAP financial measures that management believes are useful in evaluating an equity REIT's performance. Camden's definitions and calculations of non-GAAP financial measures may differ from those used by other REITs, and thus may not be comparable. The non-GAAP financial measures should not be considered as an alternative to net income as an indication of our operating performance, or to net cash provided by operating activities as a measure of our liquidity. FFO --- The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as net income computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains or losses from depreciable operating property sales, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Camden's definition of diluted FFO also assumes conversion of all dilutive convertible securities, including minority interests, which are convertible into common equity. The Company considers FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of operating properties and excluding depreciation, FFO can help one compare the operating performance of a company's real estate between periods or as compared to different companies. A reconciliation of net income to FFO is provided below: Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2006 2005 2006 2005 -------------------- -------------------- Net income $34,582 $21,852 $76,025 $188,516 Real estate depreciation and amortization from continuing operations 40,579 43,575 76,978 74,606 Real estate depreciation from discontinued operations - 1,430 346 2,857 Adjustments for unconsolidated joint ventures 764 1,297 1,545 1,965 Income from continuing operations allocated to common units 1,130 572 2,433 1,705 Income from discontinued operations allocated to common units - 11 722 23 (Gain) on sale of operating properties - - - (132,117) (Gain) on sale of discontinued operations (23,652) (21,724) (51,044) (36,104) (Gain) on sale of joint venture properties - - (1,763) - -------------------- -------------------- Funds from operations - diluted $53,403 $47,013 $105,242 $101,451 ==================== ==================== Weighted average number of common and common equivalent shares outstanding: EPS diluted 56,683 55,538 56,083 53,916 FFO diluted 60,083 58,407 59,539 53,916 Net income per common share - diluted $0.61 $0.39 $1.36 $3.53 FFO per common share - diluted $0.89 $0.80 $1.77 $1.88 Expected FFO ------------ Expected FFO is calculated in a method consistent with historical FFO, and is considered an appropriate supplemental measure of expected operating performance when compared to expected net income (EPS). A reconciliation of the ranges provided for expected net income per diluted share to expected FFO per diluted share is provided below: 3Q06 Range 2006 Range Low High Low High -------------------- -------------------- Expected net income per share - diluted $0.28 $0.32 $1.87 $2.02 Expected real estate depreciation 0.61 0.61 2.44 2.44 Expected adjustments for unconsolidated joint ventures 0.01 0.01 0.05 0.05 Expected income allocated to common units 0.02 0.02 0.10 0.10 Expected (gain) on sale of properties held in joint ventures 0.00 0.00 (0.03) (0.03) Expected (gain) on sale of properties and properties held for sale 0.00 0.00 (0.83) (0.83) -------------------- -------------------- Expected FFO per share - diluted $0.93 $0.97 $3.60 $3.75 Note: This table contains forward-looking statements. Please see the paragraph regarding forward-looking statements earlier in this document. Net Operating Income (NOI) -------------------------- NOI is defined by the Company as total property income less property operating and maintenance expenses less real estate taxes. The Company considers NOI to be an appropriate supplemental measure of operating performance to net income because it reflects the operating performance of our communities without allocation of corporate level property management overhead or general and administrative costs. A reconciliation of net income to net operating income is provided below: Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2006 2005 2006 2005 -------------------- -------------------- Net income $34,582 $21,852 $76,025 $188,516 Fee and asset management (3,120) (1,834) (5,597) (9,140) Sale of technology investments - - - (24,199) Interest and other income (3,611) (1,265) (4,364) (4,488) Income on deferred compensation plans (2,331) (2,095) (2,381) (2,118) Property management expense 4,966 3,922 9,192 7,142 Fee and asset management expense 3,238 1,043 4,604 2,991 General and administrative expense 8,036 6,558 15,450 11,834 Transaction compensation and merger expenses - 261 - 14,085 Interest expense 31,379 28,584 62,416 52,085 Depreciation and amortization 41,242 44,182 78,295 75,840 Amortization of deferred financing costs 909 796 1,956 2,017 Expense on deferred compensation plans 2,331 2,095 2,381 2,118 Gain on sale of properties, including land (810) - (1,309) (132,117) Equity in income of joint ventures (569) (245) (2,886) (355) Distributions on perpetual preferred units 1,750 1,750 3,500 3,528 Original issuance costs on redeemed perpetual preferred units - - - 365 Income allocated to common units and other minority interests 1,182 570 2,536 1,703 Income from discontinued operations (1,165) (1,447) (3,031) (3,329) Gain on sale of discontinued operations (23,652) (21,724) (51,044) (36,115) Income from discontinued operations allocated to common units - 11 722 23 -------------------- -------------------- Net Operating Income (NOI) $94,357 $83,014 $186,465 $150,386 "Same Property" Communities $83,908 $77,187 $166,386 $135,252 Non-"Same Property" Communities 7,963 4,431 16,100 7,938 Development and Lease-Up Communities 1,908 - 2,819 - Dispositions/Other 578 1,396 1,160 7,196 -------------------- -------------------- Net Operating Income (NOI) $94,357 $83,014 $186,465 $150,386 EBITDA ------ EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, including net operating income from discontinued operations, excluding equity in income of joint ventures, gain on sale of real estate assets, and income allocated to minority interests. The Company considers EBITDA to be an appropriate supplemental measure of operating performance to net income because it represents income before non-cash depreciation and the cost of debt, and excludes gains or losses from property dispositions. A reconciliation of net income to EBITDA is provided below: Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2006 2005 2006 2005 -------------------- -------------------- Net income $34,582 $21,852 $76,025 $188,516 Interest expense 31,379 28,584 62,416 52,085 Amortization of deferred financing costs 909 796 1,956 2,017 Depreciation and amortization 41,242 44,182 78,295 75,840 Distributions on perpetual preferred units 1,750 1,750 3,500 3,528 Original issuance costs on redeemed perpetual preferred units - - - 365 Income allocated to common units and other minority interests 1,182 570 2,536 1,703 Real estate depreciation from discontinued operations - 1,430 346 2,857 Gain on sale of properties, including land (810) - (1,309) (132,117) Equity in income of joint ventures (569) (245) (2,886) (355) Gain on sale of discontinued operations (23,652) (21,724) (51,044) (36,115) Income from discontinued operations allocated to common units - 11 722 23 -------------------- -------------------- EBITDA $86,013 $77,206 $170,557 $158,347 *T