CPT Camden Property Trust

Camden Property Trust (NYSE: CPT) today announced operating results for the three and six months ended June 30, 2009.

“We are pleased to report that Camden’s second quarter operating results were better than expected,” said Richard J. Campo, Chairman and Chief Executive Officer. “Funds from operations (“FFO”) for the second quarter totaled $0.78 per diluted share, excluding a $0.06 per diluted share non-recurring charge related to early retirement of secured debt which was not included in prior guidance. We are also pleased to announce that we are maintaining the midpoint of both our FFO and same-property net operating income (“NOI”) guidance.”

Funds From Operations

FFO for the second quarter of 2009 totaled $0.72 per diluted share or $46.6 million, as compared to $0.94 per diluted share or $54.9 million for the same period in 2008. FFO for the six months ended June 30, 2009 totaled $1.60 per diluted share or $98.2 million, as compared to $1.83 per diluted share or $107.2 million for the same period in 2008. FFO for the three and six months ended June 30, 2009 included a $0.06 per diluted share impact from losses related to early retirement of secured debt, partially offset by a $0.02 per share impact from gains related to early retirement of unsecured debt which was included in prior guidance. FFO for the three and six months ended June 30, 2008 included a $0.04 per diluted share impact from gains related to early retirement of debt.

Net Income Attributable to Common Shareholders (“EPS”)

The Company reported net income attributable to common shareholders (“EPS”) of $18.3 million or $0.30 per diluted share for the second quarter of 2009, as compared to $17.3 million or $0.31 per diluted share for the same period in 2008. EPS for the three months ended June 30, 2009 included a $0.27 per diluted share impact from gain on sale of discontinued operations, and a $0.04 per diluted share impact from losses related to early retirement of debt. EPS for the three months ended June 30, 2008 included a $0.15 per diluted share impact from gain on sale of discontinued operations, and a $0.04 per diluted share impact from gains related to early retirement of debt.

For the six months ended June 30, 2009, net income attributable to common shareholders totaled $24.5 million or $0.41 per diluted share, as compared to $32.2 million or $0.57 per diluted share for the same period in 2008. EPS for the six months ended June 30, 2009 included a $0.29 per diluted share impact from gain on sale of discontinued operations, and a $0.04 per diluted share impact from losses related to early retirement of debt. EPS for the six months ended June 30, 2008 included a $0.28 per diluted share impact from gain on sale of properties including discontinued operations, and a $0.04 per diluted share impact from gains related to early retirement of debt.

A reconciliation of net income attributable to common shareholders to FFO is included in the financial tables accompanying this press release.

Same-Property Results

For the 42,670 apartment homes included in consolidated same-property results, second quarter 2009 same-property NOI declined 7.7% compared to the second quarter of 2008, with revenues declining 2.3% and expenses increasing 7.1%. On a sequential basis, second quarter 2009 same-property NOI declined 2.4% compared to the first quarter of 2009, with revenues declining 0.1% and expenses increasing 3.8% compared to the prior quarter. On a year-to-date basis, 2009 same-property NOI declined 5.8%, with revenues declining 1.4% and expenses increasing 6.3% compared to the same period in 2008. Same-property physical occupancy levels for the portfolio averaged 94.2% during the second quarter of 2009, compared to 94.6% in the second quarter of 2008 and 93.6% in the first quarter of 2009.

The Company defines same-property communities as communities owned and stabilized as of January 1, 2008, excluding properties held for sale and communities under redevelopment. A reconciliation of net income attributable to common shareholders to net operating income and same-property net operating income is included in the financial tables accompanying this press release.

Development Activity

During the second quarter, the Company completed lease-up on Camden Cedar Hill in Austin, TX. As of June 30, 2009, construction had been completed on all of Camden’s wholly-owned development projects, with no material obligations remaining to fund. The Company currently has five wholly-owned apartment communities completed and in lease-up: Camden Potomac Yard in Arlington, VA, a $104.8 million project that is currently 84% leased; Camden Summerfield in Landover, MD, a $62.6 million project that is currently 93% leased; Camden Orange Court in Orlando, FL, a $45.5 million project that is currently 81% leased; Camden Whispering Oaks in Houston, TX, a $27.4 million project that is currently 92% leased; and Camden Dulles Station in Oak Hill, VA, a $72.2 million project that is currently 67% leased. The Company also had two joint venture communities which were completed and in lease-up: Camden College Park in College Park, MD, a $127.9 million project that is currently 84% leased; and Camden Amber Oaks in Austin, TX, a $35.0 million project that is currently 62% leased.

The Company has one joint venture community currently under construction and in lease-up: Braeswood Place in Houston, TX, a $48.6 million joint venture project that is currently 43% leased. Camden has two additional joint venture communities currently under construction in Houston, TX: Camden Travis Street, a $39.0 million project, and Belle Meade, a $33.2 million project. Both projects are scheduled for initial occupancy later in 2009.

Disposition Activity

On June 30, 2009, the Company disposed of Camden West Oaks, a 671-home apartment community in Houston, TX for a total of $28.7 million, resulting in a gain on sale of $16.9 million.

Equity Offering

During the second quarter, Camden completed a public offering of 10,350,000 common shares at a price of $27.50 per share. The Company received approximately $272.1 million in net proceeds from the offering after deducting the underwriting discount and expenses of the offering.

Debt Repurchases & Retirements

During the quarter, Camden repurchased a total of $182.3 million of senior unsecured notes, resulting in a $1.1 million gain on early retirement of debt. On June 30, 2009, the Company prepaid $135.3 million of secured mortgage debt originally scheduled to mature in 2010 and 2011, resulting in a $3.8 million loss on early retirement of debt. Subsequent to quarter-end, the Company retired $81.9 million of senior unsecured notes. Camden has no remaining debt maturities in 2009 and $137.6 million of debt maturities in 2010.

Earnings Guidance

Camden updated its earnings guidance for 2009 based on its current and expected views of the apartment market and general economic conditions. Full-year 2009 FFO is expected to be $2.91 to $3.05 per diluted share, and full-year 2009 EPS is expected to be $0.42 to $0.56 per diluted share. The Company’s previous FFO guidance was $2.87 to $3.09 per diluted share. Third quarter 2009 earnings guidance is $0.67 to $0.73 per diluted share for FFO and $0.02 to $0.08 per diluted share for EPS. Camden intends to update its earnings guidance to the market on a quarterly basis.

The Company’s 2009 earnings guidance continues to be based on projections of same-property NOI declines between 4.5% and 7.5%. Same-property revenue is now expected to decline between 2.0% and 3.5%, compared to a prior estimated decline between 0.5% and 2.5%. Same-property expense growth is projected between 2.5% and 4.0%, compared to a prior range of 5.0% to 6.25%. A reconciliation of expected net income attributable to common shareholders to expected FFO is included in the financial tables accompanying this press release.

Conference Call

The Company will hold a conference call on Friday, July 31, 2009 at 11:00 a.m. Central Time to review its second quarter 2009 results and discuss its outlook for future performance. To participate in the call, please dial (866) 843-0890 (domestic) or (412) 317-9250 (international) by 10:50 a.m. Central Time and enter passcode: 9120864, or join the live webcast of the conference call by accessing the Investor Relations section of the Company’s website at 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, an S&P 400 Company, is a real estate company engaged in the ownership, development, acquisition, management and disposition of multifamily apartment communities. Camden owns interests in and operates 182 properties containing 62,946 apartment homes across the United States. Upon completion of three properties under development, the Company’s portfolio will increase to 63,658 apartment homes in 185 properties. Camden was recently named by FORTUNE® Magazine for the second consecutive year as one of the “100 Best Companies to Work For” in America.

For additional information, please contact Camden’s Investor Relations Department at (800) 922-6336 or (713) 354-2787 or access our website at camdenliving.com.

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

2009   2008 2009   2008 Property revenues Rental revenues $135,800 $136,555 $272,300 $270,818 Other property revenues 21,657     18,972   42,189     36,173   Total property revenues 157,457 155,527 314,489 306,991   Property expenses Property operating and maintenance 44,562 40,218 86,845 79,397 Real estate taxes 18,532     17,831   37,064     35,112   Total property expenses 63,094 58,049 123,909 114,509   Non-property income Fee and asset management income 2,244 2,131 4,275 4,543 Interest and other income 1,097 1,092 1,832 2,425 Income (loss) on deferred compensation plans 7,660     (639 ) 3,508     (9,180 ) Total non-property income (loss) 11,001 2,584 9,615 (2,212 )   Other expenses Property management 4,542 5,281 9,471 10,181 Fee and asset management 1,303 1,696 2,438 3,421 General and administrative 7,246 8,414 15,478 16,374 Interest 34,002 33,286 66,247 65,859 Depreciation and amortization 43,888 43,190 87,868 84,706 Amortization of deferred financing costs 857 589 1,674 1,323 Expense (benefit) on deferred compensation plans 7,660     (639 ) 3,508     (9,180 ) Total other expenses 99,498     91,817   186,684     172,684    

Income from continuing operations before gain on sale of properties, including land, gain (loss) on early retirement of debt, and equity in income (loss) of joint ventures

5,866 8,245 13,511 17,586 Gain on sale of properties, including land - - - 1,106 Gain (loss) on early retirement of debt (2,716 ) 2,298 (2,550 ) 2,298 Equity in income (loss) of joint ventures 222     (474 ) 630     (521 ) Income from continuing operations before income taxes 3,372 10,069 11,591 20,469 Income tax expense - current (347 )   (160 ) (646 )   (433 ) Income from continuing operations 3,025 9,909 10,945 20,036 Income from discontinued operations 575 1,712 1,160 3,392 Gain on sale of discontinued operations 16,887     8,549   16,887     14,676   Net income 20,487 20,170 28,992 38,104 Less net income allocated to noncontrolling interests (422 ) (1,126 ) (943 ) (2,395 ) Less income allocated to perpetual preferred units (1,750 )   (1,750 ) (3,500 )   (3,500 ) Net income attributable to common shareholders $18,315     $17,294   $24,549     $32,209      

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

Net income $20,487 $20,170 $28,992 $38,104 Other comprehensive income (loss) Unrealized gain (loss) on cash flow hedging activities 1,361 15,623 (1,574 ) (3,802 ) Reclassification of net losses on cash flow hedging activities 5,469     2,640   10,744     3,970   Comprehensive income 27,317 38,433 38,162 38,272 Less net income allocated to noncontrolling interests (422 ) (1,126 ) (943 ) (2,395 ) Less income allocated to perpetual preferred units (1,750 )   (1,750 ) (3,500 )   (3,500 ) Comprehensive income attributable to common shareholders $25,145     $35,557   $33,719     $32,377      

PER SHARE DATA

Net income attributable to common shareholders - basic $0.30 $0.31 $0.42 $0.58 Net income attributable to common shareholders - diluted 0.30 0.31 0.41 0.57 Income from continuing operations attributable to common shareholders - basic 0.01 0.12 0.11 0.25 Income from continuing operations attributable to common shareholders - diluted 0.01 0.12 0.11 0.25   Weighted average number of common and common equivalent shares outstanding: Basic 61,499 55,351 58,542 55,158 Diluted 61,499 56,033 59,025 55,829   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

2009   2008 2009   2008   Net income attributable to common shareholders $18,315 $17,294 $24,549 $32,209 Real estate depreciation and amortization from continuing operations 42,863 42,295 85,873 82,948 Real estate depreciation from discontinued operations - 1,114 - 2,399 Adjustments for unconsolidated joint ventures 1,961 1,715 3,877 3,254 Income allocated to noncontrolling interests 321 1,004 742 2,160 (Gain) on sale of operating properties, net of taxes - - - (1,106 ) (Gain) on sale of discontinued operations (16,887 )   (8,554 ) (16,887 )   (14,666 ) Funds from operations - diluted $46,573     $54,868   $98,154     $107,198    

PER SHARE DATA

Funds from operations - diluted $0.72 $0.94 $1.60 $1.83 Cash distributions 0.45 0.70 1.15 1.40   Weighted average number of common and common equivalent shares outstanding: FFO - diluted 64,357 58,612 61,430 58,578  

PROPERTY DATA

Total operating properties (end of period) (a) 182 182 182 182 Total operating apartment homes in operating properties (end of period) (a) 62,946 63,612 62,946 63,612 Total operating apartment homes (weighted average) 50,846 51,957 50,767 51,860 Total operating apartment homes - excluding discontinued operations (weighted average) 50,175 49,093 50,096 48,924    

(a) 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, 2009   2009   2008   2008   2008 ASSETS Real estate assets, at cost Land $746,936 $746,935 $744,059 $745,085 $755,200 Buildings and improvements 4,473,906     4,466,296     4,447,587     4,442,067     4,474,749   5,220,842 5,213,231 5,191,646 5,187,152 5,229,949 Accumulated depreciation (1,065,861 )   (1,023,466 )   (981,049 )   (952,883 )   (935,640 ) Net operating real estate assets 4,154,981 4,189,765 4,210,597 4,234,269 4,294,309 Properties under development and land 268,655 258,239 264,188 323,300 333,419 Investments in joint ventures 22,334 15,158 15,106 15,663 14,773 Properties held for sale, including land 6,732     20,696     20,653     9,495     36,152   Total real estate assets 4,452,702 4,483,858 4,510,544 4,582,727 4,678,653 Accounts receivable - affiliates 35,909 36,105 37,000 36,868 36,556 Notes receivable Affiliates 54,033 58,481 58,109 58,240 53,849 Other - - 8,710 8,710 8,710 Other assets, net (a) 92,421 84,905 103,013 111,847 117,599 Cash and cash equivalents 157,665 7,256 7,407 29,517 1,242 Restricted cash 5,190     4,437     5,559     4,971     4,687   Total assets $4,797,920     $4,675,042     $4,730,342     $4,832,880     $4,901,296         LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Notes payable Unsecured $1,728,150 $2,151,492 $2,103,187 $2,096,285 $2,400,027 Secured 969,668 680,631 729,209 727,235 539,328 Accounts payable and accrued expenses 65,012 73,250 82,575 86,668 77,441 Accrued real estate taxes 30,154 19,113 23,600 40,664 30,664 Other liabilities (b) 132,763 137,397 149,554 124,915 129,471 Distributions payable 33,050     43,136     42,936     42,968     42,965   Total liabilities 2,958,797 3,105,019 3,131,061 3,118,735 3,219,896   Commitments and contingencies   Perpetual preferred units 97,925 97,925 97,925 97,925 97,925   Shareholders' equity Common shares of beneficial interest 769 666 660 660 660 Additional paid-in capital 2,517,788 2,242,940 2,237,703 2,232,436 2,230,119 Distributions in excess of net income attributable to common shareholders (357,168 ) (345,481 ) (312,309 ) (238,301 ) (272,294 ) Notes receivable secured by common shares (287 ) (291 ) (295 ) (298 ) (302 ) Treasury shares, at cost (462,751 ) (462,751 ) (463,209 ) (463,108 ) (463,574 ) Accumulated other comprehensive loss (c) (41,886 )   (48,716 )   (51,056 )   (17,423 )   (15,955 ) Total common shareholders' equity 1,656,465 1,386,367 1,411,494 1,513,966 1,478,654 Noncontrolling interest 84,733     85,731     89,862     102,254     104,821   Total shareholders' equity 1,741,198     1,472,098     1,501,356     1,616,220     1,583,475   Total liabilities and shareholders' equity $4,797,920     $4,675,042     $4,730,342     $4,832,880     $4,901,296         (a) includes: net deferred charges of: $12,108 $10,061 $10,505 $11,388 $9,434   (b) includes: deferred revenues of: $3,183 $2,402 $2,640 $2,940 $2,747 distributions in excess of investments in joint ventures of: $30,287 $31,318 $30,105 $27,977 $26,022 fair value adjustment of derivative instruments: $41,797 $48,693 $51,068 $17,511 $15,955   (c) Represents the fair value adjustment of derivative instruments and gain on post retirement obligations. CAMDEN NON-GAAP FINANCIAL MEASURES DEFINITIONS & RECONCILIATIONS (In thousands, except per share amounts)                     (Unaudited)          

This document contains certain non-GAAP financial measures 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 attributable to common shares 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 attributable to common shareholders to FFO is provided below:

  Three Months Ended Six Months Ended June 30, June 30, 2009   2008 2009   2008 Net income attributable to common shareholders $18,315 $17,294 $24,549 $32,209 Real estate depreciation and amortization from continuing operations 42,863 42,295 85,873 82,948 Real estate depreciation from discontinued operations - 1,114 - 2,399 Adjustments for unconsolidated joint ventures 1,961 1,715 3,877 3,254 Income allocated to noncontrolling interests 321 1,004 742 2,160 (Gain) on sale of operating properties, net of taxes - - - (1,106 ) (Gain) on sale of discontinued operations (16,887 )   (8,554 ) (16,887 )   (14,666 ) Funds from operations - diluted $46,573     $54,868   $98,154     $107,198    

Weighted average number of common and common equivalent shares outstanding:

EPS diluted 61,499 56,033 59,025 55,829 FFO diluted 64,357 58,612 61,430 58,578   Net income attributable to common shareholders - diluted $0.30 $0.31 $0.41 $0.57 FFO per common share - diluted $0.72 $0.94 $1.60 $1.83    

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 attributable to common shareholders (EPS). A reconciliation of the ranges provided for expected net income attributable to common shareholders per diluted share to expected FFO per diluted share is provided below:

  3Q09 Range 2009 Range Low   High Low   High   Expected net income attributable to common shareholders per share - diluted $0.02 $0.08 $0.42 $0.56 Expected difference between EPS and fully diluted FFO shares 0.00 0.00 (0.02 ) (0.02 ) Expected real estate depreciation 0.62 0.62 2.62 2.62 Expected adjustments for unconsolidated joint ventures 0.03 0.03 0.13 0.13 Expected income allocated to noncontrolling interests 0.00 0.00 0.02 0.02 Expected (gain) on sale of properties and properties held for sale 0.00     0.00   (0.26 )   (0.26 ) Expected FFO per share - diluted 0.67 0.73 $2.91 $3.05             Note: This table contains forward-looking statements. Please see the paragraph regarding forward-looking statements earlier in this document.

CAMDEN

NON-GAAP FINANCIAL MEASURES

DEFINITIONS & RECONCILIATIONS

(In thousands, except per share amounts)

 

(Unaudited)

         

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 attributable to common shareholders 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 attributable to common shareholders to net operating income is provided below:

  Three Months Ended Six Months Ended June 30, June 30, 2009   2008 2009   2008 Net income attributable to common shareholders $18,315 $17,294 $24,549 $32,209 Fee and asset management income (2,244 ) (2,131 ) (4,275 ) (4,543 ) Interest and other income (1,097 ) (1,092 ) (1,832 ) (2,425 ) Income (loss) on deferred compensation plans (7,660 ) 639 (3,508 ) 9,180 Property management expense 4,542 5,281 9,471 10,181 Fee and asset management expense 1,303 1,696 2,438 3,421 General and administrative expense 7,246 8,414 15,478 16,374 Interest expense 34,002 33,286 66,247 65,859 Depreciation and amortization 43,888 43,190 87,868 84,706 Amortization of deferred financing costs 857 589 1,674 1,323 Expense (benefit) on deferred compensation plans 7,660 (639 ) 3,508 (9,180 ) Gain on sale of properties, including land - - - (1,106 ) Gain (loss) on early retirement of debt 2,716 (2,298 ) 2,550 (2,298 ) Equity in income (loss) of joint ventures (222 ) 474 (630 ) 521 Less income allocated to perpetual preferred units 1,750 1,750 3,500 3,500 Net income allocated to noncontrolling interests 422 1,126 943 2,395 Income tax expense - current 347 160 646 433 Income from discontinued operations (575 ) (1,712 ) (1,160 ) (3,392 ) Gain on sale of discontinued operations (16,887 ) (8,549 ) (16,887 ) (14,676 ) Income from discontinued operations allocated to common units -     -   -     -   Net Operating Income (NOI) $94,363 $97,478 $190,580 $192,482   "Same Property" Communities $78,905 $85,497 $159,777 $169,581 Non-"Same Property" Communities 11,197 9,647 23,048 18,610 Development and Lease-Up Communities 2,996 124 5,548 68 Redevelopment Communities 690 772 1,394 1,531 Dispositions / Other 575     1,438   813     2,692   Net Operating Income (NOI) $94,363 $97,478 $190,580 $192,482    

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 net income allocated to noncontrolling interests. The Company considers EBITDA to be an appropriate supplemental measure of operating performance to net income attributable to common shareholders 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 attributable to common shareholders to EBITDA is provided below:

 

 

 

  Three Months Ended Six Months Ended June 30, June 30, 2009   2008 2009   2008 Net income attributable to common shareholders $18,315 $17,294 $24,549 $32,209 Interest expense 34,002 33,463 66,247 66,239 Amortization of deferred financing costs 857 589 1,674 1,323 Depreciation and amortization 43,888 43,190 87,868 84,706 Less income allocated to perpetual preferred units 1,750 1,750 3,500 3,500 Net income allocated to noncontrolling interests 422 1,126 943 2,395 Income tax expense - current 347 160 646 433 Real estate depreciation and amortization from discontinued operations - 1,121 - 2,414 Gain on sale of properties, including land - - - (1,106 ) Gain (loss) on early retirement of debt 2,716 (2,298 ) 2,550 (2,298 ) Equity in income (loss) of joint ventures (222 ) 474 (630 ) 521 Gain on sale of discontinued operations (16,887 )   (8,549 ) (16,887 )   (14,676 ) EBITDA $85,188 $88,320 $170,460 $175,660