-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dz9VoMS5MbFuAnra/FEtomJp7h/NQl2jOeuMedNODfBI6C/l1RMPa0vVrFU45gj5 u0+FmWTCbLC3mbCwI/iX7g== 0000906345-99-000011.txt : 19990331 0000906345-99-000011.hdr.sgml : 19990331 ACCESSION NUMBER: 0000906345-99-000011 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMDEN PROPERTY TRUST CENTRAL INDEX KEY: 0000906345 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 766088377 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-12110 FILM NUMBER: 99578172 BUSINESS ADDRESS: STREET 1: THREE GREENWAY PLAZA STREET 2: SUITE 1300 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7139643555 MAIL ADDRESS: STREET 1: 3200 SOUTHWEST FREEWAY STREET 2: SUITE 1500 CITY: HOUSTON STATE: TX ZIP: 77027 10-K 1 CAMDEN PROPERTY TRUST - DATED 12/31/98 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (MARK ONE) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _________ Commission file number: 1-12110 CAMDEN PROPERTY TRUST (Exact Name of Registrant as Specified in Its Charter) TEXAS 76-6088377 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3 GREENWAY PLAZA, SUITE 1300 HOUSTON, TEXAS 77046 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (713) 354-2500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Shares of Beneficial Interest, $.01 par value New York Stock Exchange 7.33% Convertible Subordinated Debentures due 2001 New York Stock Exchange $2.25 Series A Cumulative Convertible Preferred Shares, $.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. The aggregate market value of voting shares of beneficial interest held by non-affiliates of the registrant was $1,029,157,584 at March 1, 1999. The number of common shares of beneficial interest outstanding at March 1, 1999 was 42,725,791. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Annual Report to Shareholders for the year ended December 31, 1998 are incorporated by reference in Parts I, II and IV. Portions of the registrant's Proxy Statement in connection with its Annual Meeting of Shareholders to be held May 13, 1999 are incorporated by reference in Part III. 2 PART I ITEM 1. BUSINESS INTRODUCTION Camden Property Trust is a Houston-based real estate investment trust ("REIT") that owns, develops, acquires, manages, markets and disposes of multifamily apartment communities in the Southwest, Southeast, Midwest and Western regions of the United States. As of December 31, 1998, we owned interests in and operated 149 multifamily properties containing 51,310 apartment homes located throughout 14 core markets in nine states. These properties had a weighted average occupancy rate of 93% for the year ended December 31, 1998. Fourteen of our multifamily properties containing 5,658 apartment homes were under development at December 31, 1998. We have several additional sites which we intend to develop into multifamily apartment communities. On April 8, 1998, Oasis Residential, Inc. ("Oasis") was merged with and into one of our wholly-owned subsidiaries. Oasis was a REIT headquartered in Las Vegas, Nevada whose business was the operation and development of multifamily residential communities in Las Vegas, Denver and Southern California. The merger increased the size of our portfolio from 100 to 152 completed multifamily properties, and from 34,669 to 50,183 apartment homes. In this merger, each then outstanding share of Oasis common stock was exchanged for 0.759 of a Camden common share. Each then outstanding share of Oasis Series A Cumulative Convertible Preferred Stock was reissued as a Camden Series A Cumulative Convertible Preferred Share. The Camden preferred shares have comparable terms and conditions as the Oasis preferred stock. We issued 12.4 million common shares and 4.2 million preferred shares in the merger. We assumed approximately $484 million of Oasis debt, at fair value, in the merger. In the merger, we obtained a managing member interest in Oasis Martinique. The remaining interests are exchangeable into 672,490 Camden common shares. In connection with the merger with Oasis, on June 30, 1998, we completed a transaction in which we formed Sierra-Nevada Multifamily Investments, LLC. The other member of Sierra-Nevada is a private limited liability company. We retained a 20% interest in Sierra-Nevada. In this transaction, we transferred 19 apartment communities previously owned by Oasis containing 5,119 apartment homes located in Las Vegas for an aggregate of $248 million. This transaction was funded with capital invested by the members of Sierra-Nevada, the assumption of $9.9 million of existing nonrecourse indebtedness, the issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. We used the net proceeds from this transaction to reduce our outstanding debt by $124 million, including the $9.9 million of existing indebtedness noted above, and set aside $112 million into an escrow account which was used to complete tax-free exchange property acquisitions, retire debt and repurchase common shares. We did not record a book gain or loss as a result of this transaction. We continue to provide property management services for these assets. On April 15, 1997, we acquired through a tax-free merger, Paragon Group, Inc. ("Paragon"), a Dallas-based multifamily REIT. The acquisition increased the size of our portfolio from 53 to 103 multifamily properties, and from 19,389 to 35,364 apartment homes. Each share of Paragon common stock outstanding on April 15, 1997 was exchanged for 0.64 of a Camden common share. In this transaction, we issued 9.5 million common shares, 2.4 million limited partnership units in Camden Operating, L.P. and assumed approximately $296 million of Paragon debt at fair value. At December 31, 1998, we had 1,773 employees. Our headquarters are located at 3 Greenway Plaza, Suite 1300, Houston, Texas 77046 and our telephone number is (713) 354-2500. OPERATING STRATEGY We believe that producing consistent earnings growth and developing a strategy for selective investment in favorable markets are crucial factors to our success. We rely heavily on our sophisticated property management capabilities and innovative operating strategies in our efforts to produce consistent earnings growth. 3 Sophisticated Property Management. We believe the depth of our organization enables us to deliver quality services, thereby promoting resident satisfaction and improving resident retention, which reduces operating expenses. We manage our properties utilizing a staff of professionals and support personnel, including certified property managers, experienced apartment managers and leasing agents, and trained apartment maintenance technicians. Our on-site personnel are trained to deliver high quality services to their residents. We attempt to motivate our on-site employees through incentive compensation arrangements based upon the net operating income produced at their property, as well as rental rate increases and the level of lease renewals achieved. Innovative Operating Strategies. We believe an intense focus on operations is necessary to realize consistent, sustained earnings growth. Ensuring resident satisfaction, increasing rents as market conditions allow, maximizing rent collections, maintaining property occupancy at optimal levels and controlling operating costs comprise our principal strategies to maximize property net operating income. Lease terms are generally staggered based on vacancy exposure by apartment type so that lease expirations are better matched to each property's seasonal rental patterns. We offer leases ranging from six to thirteen months, with individual property marketing plans structured to respond to local market conditions. In addition, we conduct ongoing customer service surveys to ensure we respond timely to residents changing needs and to ensure that residents retain a high level of satisfaction. New Development and Acquisitions. We believe we are well positioned in our markets and have the expertise to take advantage of both development and acquisition opportunities. This dual capability, combined with what we believe is a conservative financial structure, allows us to concentrate our growth efforts towards selective development alternatives and acquisition opportunities. Selective development of new apartment properties in our core markets will continue to be important to the growth of our portfolio for the next several years. We use experienced on-site construction superintendents, operating under the supervision of project managers and senior management, to control the construction process. All development decisions are made from our corporate office. Risks inherent to developing real estate include zoning changes and environmental matters. There is also the risk that certain assumptions concerning economic conditions may change during the development process. We believe that we understand and effectively manage the risks associated with development and that the risks of new development are justified by higher potential yields. We plan to continue diversification of our investments, both geographically and in the number of apartment homes and selection of amenities offered. Our operating properties have an average age of nine years (calculated on a basis of investment dollars). We believe that the physical improvements we have made at our acquired properties, such as new or enhanced landscaping design, new or upgraded amenities and redesigned building structures, coupled with a strong focus on property management and marketing, has resulted in attractive yields on acquired properties. Dispositions. To generate consistent earnings growth, we seek to selectively dispose of properties and redeploy capital if we determine a property cannot meet long-term earnings growth expectations. The $275.5 million in net proceeds received from asset disposals during 1998, including the joint venture investment in Sierra-Nevada, were reinvested in acquisitions and developments and used to retire debt and repurchase common shares. Environmental Matters. Under various federal, state and local laws, ordinances and regulations, we are liable for the costs of removal or remediation of certain hazardous or toxic substances on or in our properties. These laws often impose liability without regard to whether we knew of, or were responsible for, the presence of the hazardous or toxic substances. All of our properties have been subjected to Phase I site assessments or similar environmental audits to determine if there is a likelihood of contamination from either on- or off-site sources. These audits have been carried out in accordance with accepted industry practices. We have also conducted limited subsurface investigations and tested for radon and lead-based paint where such procedures have been recommended by our consultants. We cannot assure you that existing environmental studies reveal all environmental liabilities or that any prior owner did not create any material environmental condition not know to us. The costs of investigation, remediation or removal of hazardous substances may be substantial. If hazardous or toxic substances are present on a property, or if we fail to properly remediate such substances, our ability to sell or rent such property or to borrow using such property as collateral may be adversely affected. 4 Insurance. We carry comprehensive liability, fire, flood, extended coverage and rental loss insurance on our properties, which we believe is of the type and amount customarily obtained on real property assets. We intend to obtain similar coverage for properties we acquire in the future. However, there are certain types of losses, generally of a catastrophic nature, such as losses from floods or earthquakes, that may be subject to limitations in certain areas. Our board exercises its discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed. MARKETS AND COMPETITION Our portfolio consists of middle to upper market apartment properties. We target acquisitions and developments in selected high-growth markets. Since our initial public offering, we have diversified into other markets in the Southwest region and into the Southeast, Midwest and Western regions of the United States. By combining acquisition, renovation and development capabilities, we believe we are able to better respond to changing conditions in each market, thereby reducing market risk and allowing us to take advantage of opportunities as they arise. There are numerous housing alternatives that compete with our properties in attracting residents. Our properties compete directly with other multifamily properties and single family homes that are available for rent in the markets in which our properties are located. Our properties also compete for residents with the new and existing owned-home market. The demand for rental housing is driven by economic and demographic trends. Recent trends in the economics of renting versus home ownership indicate an increasing demand for rental housing in certain markets, despite relatively low residential mortgage interest rates. Rental demand should be strong in areas anticipated to experience in-migration, due to the younger ages that characterize movers as well as the relatively high cost of home ownership in higher growth areas. DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS We have made statements in this report that are "forward-looking" in that they do not discuss historical fact, but instead note future expectations, projections, intentions or other items relating to the future. These forward-looking statements include those made in the documents incorporated by reference in this report. Forward-looking statements are subject to known and unknown risks, uncertainties and other facts that may cause our actual results or performance to differ materially from those contemplated by the forward-looking statements. Many of those factors are noted in conjunction with the forward-looking statements in the text. Other important factors that could cause actual results to differ include: 1. The results of our efforts to implement our property development strategy. 2. The effect of economic conditions. 3. Failure to qualify as a real estate investment trust. 4. The costs of our capital. 5. Actions of our competitors and our ability to respond to those actions. 6. Changes in government regulations, tax rates and similar matters. 7. Environmental uncertainties and natural disasters. 8. Unexpected Year 2000 problems. 9. Other risks detailed in our other SEC reports or filings. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this report. 5 ITEM 2. PROPERTIES THE PROPERTIES The Company's properties typically consist of two- and three-story buildings in a landscaped setting and provide residents with a variety of amenities. Most of the properties have, or are expected to have, one or more swimming pools and a clubhouse and many have whirlpool spas, tennis courts and controlled-access gates. Many of the apartment homes offer additional features such as fireplaces, vaulted ceilings, microwave ovens, covered parking, icemakers, washers and dryers and ceiling fans. The 149 properties, which we owned interests in and operated at December 31, 1998, average 838 square feet of living area. OPERATING PROPERTIES For the year ended December 31, 1998, no single operating property accounted for greater than 3.2% of our total revenues. The operating properties had a weighted average occupancy rate of 93.0% and 94.0% in 1998 and 1997, respectively. Resident lease terms generally range from six to thirteen months and usually require security deposits. One hundred twenty-six of our operating properties have over 200 apartment homes, with the largest having 894 apartment homes. Our operating properties were constructed and placed in service as follows: Year Placed in Service Number of Properties ------------------------------ ------------------------------ 1993 - 1998 40 1988 - 1992 26 1983 - 1987 53 1978 - 1982 19 1973 - 1977 7 1967 - 1972 4 Property Table The following table sets forth information with respect to our operating properties at December 31, 1998. 6 OPERATING PROPERTIES
- ------------------------------------------------------------------------------------------------------------------------------------ December 1998 Avg. Mo. Rental Rates ------------------------ Number of Year Placed Average Apartment 1998 Average Per PROPERTY AND LOCATION Apartments in Service Size (Sq. Ft.) Occupancy (1) Apartment Per Sq. Ft. - ---------------------------------------- --------------- -------------- -------------------- -------------- ----------- ------------ ARIZONA PHOENIX Arrowhead Springs, The Park at 288 1997 925 88 % $ 704 $ 0.76 Fountain Palms, The Park at (2) 192 1986/1996 1,050 87 703 0.67 Scottsdale Legacy 428 1996 1,067 90 893 0.84 Towne Center, The Park at (3) 240 1998 871 85 707 0.81 Vista Valley, The Park at 357 1986 923 90 703 0.76 TUCSON Eastridge 456 1984 559 91 446 0.80 Oracle Villa 365 1974 1,026 90 687 0.67 CALIFORNIA ORANGE COUNTY Martinique 713 1986 795 94 1,009 1.27 Parkside (4) 421 1972 835 61 924 1.11 Sea Palms 138 1990 891 97 1,115 1.25 COLORADO DENVER Centennial, The Park at 276 1985 744 96 715 0.96 Deerwood, The Park at 342 1996 1,141 95 1,093 0.96 Denver West, The Park at (5) 321 1997 1,012 96 1,033 1.02 Lakeway, The Park at 451 1997 919 95 953 1.04 Park Place 224 1985 748 95 706 0.94 Wexford, The Park at 358 1986 810 95 750 0.93 FLORIDA ORLANDO Grove, The 232 1973 677 97 537 0.79 Landtree Crossing 220 1983 748 95 594 0.79 Renaissance Pointe 272 1996 940 95 793 0.84 Riverwalk I & II 552 1984/1986 747 92 552 0.74 Sabal Club (2) 436 1986 1,077 91 845 0.78 Vineyard, The (6) 526 1990/1991 824 97 669 0.81 TAMPA/ST. PETERSBURG Chase Crossing 444 1986 1,223 88 784 0.64 Chasewood 247 1985 704 95 548 0.78 Dolphin/Lookout Pointe 832 1987/1989 748 94 646 0.86 Heron Pointe 276 1996 942 95 824 0.88 Island Club I & II 484 1983/1985 722 95 533 0.74 Live Oaks (2) 770 1990 1,093 89 743 0.68 Mallard Pointe I & II 688 1982/1983 728 93 573 0.79 Marina Pointe Village (9) 408 1997 927 89 795 0.86 Parsons Run 228 1986 728 97 572 0.78 Schooner Bay 278 1986 728 95 636 0.87 Summerset Bend 368 1984 771 94 597 0.77 KENTUCKY LOUISVILLE Copper Creek 224 1987 732 92 623 0.85 Deerfield 400 1987/1990 746 89 625 0.84 Glenridge 138 1990 916 89 735 0.80 Post Oak 126 1981 847 92 586 0.69 Sundance 254 1975 682 92 533 0.78 MISSOURI KANSAS CITY Camden Passage I & II 596 1989/1997 832 95 695 0.83 ST. LOUIS 92 Cedar Ridge (2) 420 1986 852 96 550 0.65 Cove at Westgate, The 276 1990 828 93 846 1.02 Knollwood I & II 608 1981/1985 722 91 534 0.74 Spanish Trace 372 1972 1,158 88 714 0.62 Tempo 304 1975 676 94 502 0.74 Westchase 160 1986 945 89 849 0.90 Westgate I & II (4) 591 1973/1980 947 92 741 0.78 NEVADA LAS VEGAS Oasis Bay (5) 128 1990 862 96 717 0.82 Oasis Bel Air I & II 528 1988/1995 943 94 670 0.71 Oasis Breeze 320 1989 846 95 673 0.80
7 OPERATING PROPERTIES (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------- December 1998 Avg. Mo. Rental Rates ------------------------ Number of Year Placed Average Apartment 1998 Average Per PROPERTY AND LOCATION Apartments in Service Size (Sq. Ft.) Occupancy (1) Apartment Per Sq. Ft. - ----------------------------------------- ------------ --------------- ------------------- --------------- ----------- ------------ Oasis Canyon 200 1995 987 92 % $ 776 $ 0.79 Oasis Cliffs 376 1988 936 92 733 0.78 Oasis Club 320 1989 896 95 711 0.79 Oasis Cove 124 1990 898 97 680 0.76 Oasis Crossings (5) 72 1996 983 90 752 0.77 Oasis Del Mar 560 1995 986 94 801 0.81 Oasis Emerald (5) 132 1988 873 94 642 0.74 Oasis Gateway (5) 360 1997 1,146 92 850 0.74 Oasis Glen 113 1994 792 98 686 0.88 Oasis Greens 432 1990 892 93 702 0.79 Oasis Harbor 336 1996 1,008 94 785 0.78 Oasis Heights 240 1989 849 93 659 0.78 Oasis Heritage (5) 720 1986 950 88 604 0.64 Oasis Hills 184 1991 579 95 507 0.88 Oasis Island (5) 118 1990 901 93 651 0.72 Oasis Landing (5) 144 1990 938 94 694 0.74 Oasis Meadows (5) 383 1996 1,031 89 782 0.76 Oasis Palms (5) 208 1989 880 96 664 0.75 Oasis Paradise 624 1991 905 93 743 0.82 Oasis Pearl (5) 90 1989 930 95 671 0.72 Oasis Pines 315 1997 1,005 91 795 0.79 Oasis Place (5) 240 1992 440 94 440 1.00 Oasis Plaza (5) 300 1976 820 95 603 0.74 Oasis Pointe 252 1996 985 95 749 0.76 Oasis Ridge (5) 477 1984 391 91 432 1.10 Oasis Rose (5) 212 1994 1,025 92 719 0.70 Oasis Sands 48 1994 1,125 94 735 0.65 Oasis Springs (5) 304 1988 838 94 635 0.76 Oasis Suites (5) 409 1988 404 93 444 1.10 Oasis Summit 234 1995 1,187 94 1,063 0.90 Oasis Tiara 400 1996 1,043 95 829 0.79 Oasis Topaz 270 1978 827 90 603 0.73 Oasis View (5) 180 1983 940 93 665 0.71 Oasis Vinings (5) 234 1994 1,152 94 739 0.64 Oasis Vintage 368 1994 978 92 731 0.75 Oasis Vista (5) 408 1985 896 86 527 0.59 Oasis Winds 350 1978 807 89 598 0.74 RENO Oasis Bluffs 450 1997 1,111 93 991 0.89 NORTH CAROLINA CHARLOTTE Copper Creek 208 1989 703 92 610 0.87 Eastchase 220 1986 698 91 569 0.82 Habersham Pointe 240 1986 773 91 646 0.84 Overlook, The (5) 220 1985 754 93 665 0.88 Park Commons 232 1997 859 92 726 0.84 Pinehurst 407 1967 1,147 90 758 0.66 Timber Creek 352 1984 706 90 606 0.86 GREENSBORO Brassfield Park (5) 336 1997 889 94 713 0.80 Glen, The 304 1980 662 88 555 0.84 River Oaks 216 1985 795 90 626 0.79 TEXAS AUSTIN Autumn Woods 283 1984 644 94 566 0.88 Calibre Crossing 183 1986 705 98 607 0.86 Huntingdon, The 398 1995 903 96 785 0.87 Quail Ridge 167 1984 859 97 672 0.78 Ridgecrest 284 1995 851 95 753 0.88 South Oaks 430 1980 705 94 589 0.83 CORPUS CHRISTI Breakers, The 288 1996 861 92 757 0.88
8 OPERATING PROPERTIES (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------- December 1998 Avg. Mo. Rental Rates ------------------------ Number of Year Placed Average Apartment 1998 Average Per PROPERTY AND LOCATION Apartments in Service Size (Sq. Ft.) Occupancy (1) Apartment Per Sq. Ft. - ----------------------------------------- ------------ ---------------- ------------------- --------------- ----------- ------------ Miramar I, II & III (7) 300 1994/1995/1998 708 89% $ 789 $ 1.11 Potters Mill 344 1986 775 91 597 0.77 Waterford, The 580 1976/1980 767 91 521 0.68 DALLAS/FORT WORTH Addison, The Park at 456 1996 942 92 873 0.93 Buckingham, The Park at (8) 464 1997 919 93 803 0.87 Centreport, The Park at (8) 268 1997 910 96 808 0.89 Chesapeake 128 1982 912 96 724 0.79 Cottonwood Ridge 208 1985 829 95 575 0.69 Emerald Valley 516 1986 743 95 657 0.88 Emerald Village 304 1987 713 94 616 0.86 Glen Arbor 320 1980 666 98 505 0.76 Glen Lakes 424 1979 877 95 746 0.85 Highland Trace 160 1985 816 94 657 0.80 Highpoint (5) 708 1985 835 95 640 0.77 Ivory Canyon 602 1986 548 96 538 0.98 Los Rios 286 1992 772 94 778 1.01 Nob Hill 486 1986 642 95 516 0.80 North Dallas Crossing I & II 446 1985 730 93 623 0.85 Oakland Hills 476 1985 853 97 601 0.70 Pineapple Place 256 1983 652 93 586 0.90 Randol Mill Terrace 340 1984 848 96 581 0.69 Shadow Lake 264 1984 733 92 573 0.78 Stone Creek 240 1995 831 92 787 0.95 Stone Gate 276 1996 871 93 814 0.94 Towne Centre Village 188 1983 735 97 565 0.77 Towne Crossing, The Place at 442 1984 772 97 570 0.74 Valley Creek Village 380 1984 855 97 639 0.75 Valley Ridge 408 1987 773 96 612 0.79 Westview 335 1983 697 95 593 0.85 EL PASO La Plaza 129 1969 997 95 582 0.58 HOUSTON Brighton Place 282 1978 749 97 558 0.74 Cambridge Place 336 1979 771 97 574 0.75 Crossing, The 366 1982 762 96 563 0.74 Driscoll Place 488 1983 708 95 467 0.66 Eagle Creek 456 1984 639 97 564 0.88 Jones Crossing 290 1982 748 97 563 0.75 Roseland 671 1982 726 96 554 0.75 Southpoint 244 1981 730 93 568 0.78 Stonebridge 204 1993 845 97 777 0.92 Sugar Grove, The Park at 380 1997 917 94 810 0.88 Vanderbilt I & II, The Park at 894 1996/1997 863 96 993 1.15 Wallingford 462 1980 787 95 589 0.75 Wilshire Place 536 1982 761 95 562 0.74 Woodland Park 288 1995 866 96 789 0.91 Wyndham Park 448 1978/1981 797 98 506 0.63 ========= =============== ============ ========= =========== Total 51,310 838 93% $ 681 $ 0.81 ========= =============== ============ ========= ===========
(1) Represents average physical occupancy for the year, except as noted below. (2) Acquisition property - average occupancy calculated from acquisition date through year-end. (3) Property under lease-up at December 31, 1998. Occupancy percentage listed is as of March 1, 1999, and is excluded from the December 31, 1998 average physical occupancy calculation. (4) Property under renovation during 1998, which affected occupancy levels during this period. Occupancy percentage listed is as of March 1, 1999, and is excluded from the December 31, 1998 average physical occupancy calculation. (5) Properties owned through joint venture investments. (6) Property combined with an adjacent property, The Reserve, in 1998. (7) Miramar is a student housing project for Texas A&M at Corpus Christi. Average occupancy includes summer which is normally subject to high vacancies. (8) Development property - average occupancy calculated from date at which occupancy exceeded 90% through year-end. (9) Property acquired during 1998 while still under lease-up. Occupancy percentage listed is as of March 1, 1999, and is excluded from the December 31, 1998 average physical occupancy calculation. 9 OPERATING PROPERTY UNDER LEASE-UP The operating property under lease-up table is incorporated herein by reference from page 22 of the Company's Annual Report to Shareholders for the year ended December 31, 1998, which page is filed as Exhibit 13.1 hereto. DEVELOPMENT PROPERTIES The total budgeted cost of the development properties is approximately $400.1 million, with a remaining cost to complete, as of December 31, 1998, of approximately $217.8 million. There can be no assurance that our budget, leasing or occupancy estimates will be attained for the development properties or that their performance will be comparable to that of our existing portfolio. Development Property Table The development property table is incorporated herein by reference from page 22 of our Annual Report to Shareholders for the year ended December 31, 1998, which is filed as Exhibit 13.1. Management believes that we possess the development capabilities and experience to provide a continuing source of portfolio growth. In making development decisions, management considers a number of factors, including the size of the property, the season in which leasing activity will occur and the extent to which delivery of the completed apartment homes will coincide with leasing and occupancy of such apartment homes (which is dependent upon local market conditions). In order to pursue a development opportunity, we currently require a minimum initial stabilized target return of 9.5%-10.5%. This minimum target return is based on projected market rents and projected stabilized expenses, considering the market and the nature of the prospective development. ITEM 3. LEGAL PROCEEDINGS Prior to our merger with Oasis, Oasis had been contacted by certain regulatory agencies with regard to alleged failures to comply with the Fair Housing Amendments Act as it pertained to nine properties (seven of which we currently own) constructed for first occupancy after March 31, 1991. On February 1, 1999, the Justice Department filed a lawsuit against us in the United States District Court for the District of Nevada alleging (1) that the design and construction of these properties violates the Fair Housing Act and (2) that the Company, through the merger with Oasis, has discriminated in the rental of dwellings to persons because of handicap. The complaint requests an order that (i) declares that the defendants' policies and practices violate the Fair Housing Act; (ii) enjoins the Company from (a) failing or refusing, to the extent possible, to bring the dwelling units and public use and common use areas at these properties and other covered units that it has designed and/or constructed into compliance with the Fair Housing Act, (b) failing or refusing to take such affirmative steps as may be necessary to restore, as nearly as possible, the alleged victims of the defendants alleged unlawful practices to positions they would have been in but for the discriminatory conduct and (c) designing or constructing any covered multi-family dwellings in the future that do not contain the accessibility and adaptability features set forth in the Fair Housing Act; and requires us to pay damages, including punitive damages, and a civil penalty. We are currently inspecting these properties to determine the extent of the alleged noncompliance and the changes that may be necessitated. At this time, we are not able to provide an estimate of costs and expenses associated with this matter. There can be no assurance that we will be successful in the defense of the Justice Department action. If this lawsuit is successful, we could suffer a material adverse impact. Camden is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such matters will not have a material adverse effect on the consolidated financial statements of Camden. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise. 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Information with respect to this Item 5 is incorporated herein by reference from page 49 of our Annual Report to Shareholders for the year ended December 31, 1998, which is filed as Exhibit 13.1. The number of holders of record of our common shares, $0.01 par value, as of March 1, 1999, was 1,137. ITEM 6. SELECTED FINANCIAL DATA Information with respect to this Item 6 is incorporated herein by reference from pages 50 and 51 of our Annual Report to Shareholders for the year ended December 31, 1998, which is filed as Exhibit 13.1. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information with respect to this Item 7 is incorporated herein by reference from pages 19 through 29 of our Annual Report to Shareholders for the year ended December 31, 1998, which is filed as Exhibit 13.1. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information with respect to this Item 7A is incorporated herein by reference from page 25 of our Annual Report to Shareholders for the year ended December 31, 1998, which is filed as Exhibit 13.1. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's financial statements and supplementary financial information for the years ended December 31, 1998, 1997 and 1996 are listed in the accompanying Index to Consolidated Financial Statements and Supplementary Data at F-1 and are incorporated herein by reference from pages 30 through 49 of our Annual Report to Shareholders for the year ended December 31, 1998, which is filed as Exhibit 13.1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 11 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information with respect to this Item 10 is incorporated by reference from the Company's Proxy Statement to be filed on or before March 31, 1999 in connection with the Annual Meeting of Shareholders to be held May 13, 1999. ITEM 11. EXECUTIVE COMPENSATION Information with respect to this Item 11 is incorporated by reference from the Company's Proxy Statement to be filed on or before March 31, 1999 in connection with the Annual Meeting of Shareholders to be held May 13, 1999. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information with respect to this Item 12 is incorporated by reference from the Company's Proxy Statement to be filed on or before March 31, 1999 in connection with the Annual Meeting of Shareholders to be held May 13, 1999. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information with respect to this Item 13 is incorporated by reference from the Company's Proxy Statement to be filed on or before March 31, 1999 in connection with the Annual Meeting of Shareholders to be held May 13, 1999. 12 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) (1) Financial Statements: The Company's financial statements and supplementary financial information for the years ended December 31, 1998, 1997 and 1996 are listed in the accompanying Index to Consolidated Financial Statements and Supplementary Data at F-1 and are incorporated herein by reference from pages 30 through 49 of the Company's Annual Report to the Shareholders for the year ended December 31, 1998, which pages are filed as Exhibit 13.1 hereto. (2) Financial Statement Schedule: The financial statement schedule listed in the accompanying Index to Consolidated Financial Statements and Supplementary Data at page F-1 is filed as part of this Report. (3) Index to Exhibits: NUMBER TITLE 2.1 Agreement and Plan of Merger, dated as of December 16, 1996, among the Registrant, Camden Subsidiary, Inc. and Paragon Group, Inc. Incorporated by reference from Exhibit 99.2 to the Registrant's Form 8-K filed December 18, 1996 (File No. 1-12110). 2.2 Agreement and Plan of Merger, dated December 16, 1997, among the Registrant, Camden Subsidiary II, Inc. and Oasis Residential, Inc. Incorporated by reference from Exhibit 2.1 to the Registrant's Form 8-K filed December 17, 1997 (File No. 1-12110). 2.3 Amendment No. 1, dated February 4, 1998, to the Agreement and Plan of Merger, dated December 16, 1997, among the Registrant, Camden Subsidiary II, Inc. and Oasis Residential, Inc. Incorporated by reference from Exhibit 2.1 to the Registrant's Form 8-K filed February 5, 1998 (File No. 1-12110). 2.4 Contribution Agreement, dated June 26, 1998, by and between Camden Subsidiary, Inc. and Sierra-Nevada Multifamily Investments, LLC. Incorporated by reference from Exhibit 2.1 to the Registrant's Form 8-K filed July 15, 1998 (File No. 1-12110). 2.5 Agreement of Purchase and Sale, dated June 26, 1998, by and between Camden Subsidiary, Inc. and Sierra-Nevada Multifamily Investments, LLC. Incorporated by reference from Exhibit 2.2 to the Registrant's Form 8-K filed July 15, 1998 (File No. 1-12110). 2.6 Agreement of Purchase and Sale, dated June 26, 1998, by and between NQRS, Inc. and Sierra-Nevada Multifamily Investments, LLC. Incorporated by reference from Exhibit 2.3 to the Registrant's Form 8-K filed July 15, 1998 (Filed No. 1-12110). 3.1 Amended and Restated Declaration of Trust of the Registrant. Incorporated by reference from Exhibit 3.1 to the Registrant's Form 10-K for the year ended December 31, 1993 (File No. 1-12110). 3.2 Amendment to the Amended and Restated Declaration of Trust of the Registrant. Incorporated by reference from Exhibit 3.1 to the Registrant's Form 10-Q filed August 14, 1997 (File No. 1-12110). 3.3 Second Amended and Restated Bylaws of the Registrant. Incorporated by reference from Exhibit 3.3 to the Registrant's Form 10-K for the year ended December 31, 1997 (File No. 1-12110). 4.1 Specimen certificate for Common Shares of beneficial interest. Incorporated by reference from Exhibit 4.1 to the Registrant's Registration Statement on Form S-11 filed September 15, 1993 (File No. 33-68736). 13 4.2 Indenture dated as of April 1, 1994 by and between the Registrant and The First National Bank of Boston, as Trustee. Incorporated by reference from Exhibit 4.3 to the Registrant's Statement on Form S-11 filed April 12, 1994 (File No. 33-76244). 4.3 Form of Convertible Subordinated Debenture Due 2001. Incorporated by reference from Exhibit 4.3 to the Registrant's Statement on Form S-11 filed April 12, 1994 (File No. 33-76244). 4.4 Indenture dated as of February 15, 1996 between the Company and the U.S. Trust Company of Texas, N.A., as Trustee. Incorporated by reference from Exhibit 4.1 to the Registrant's Form 8-K filed February 15, 1996 (File No. 1-12110). 4.5 First Supplemental Indenture dated as of February 15, 1996 between the Company and U.S. Trust Company of Texas N.A., as trustee. Incorporated by reference from Exhibit 4.2 to the Registrant's Form 8-K filed February 15, 1996 (File No. 1-12110). 4.6 Form of Camden Property Trust 6 5/8% Note due 2001. Incorporated by reference from Exhibit 4.3 to the Registrant's Form 8-K filed February 15, 1996 (File No. 1-12110). 4.7 Form of Camden Property Trust 7% Note due 2006. Incorporated by reference from Exhibit 4.3 to the Registrant's Form 8-K filed December 2, 1996 (File No. 1-12110). 4.8 Specimen certificate for Camden Series A Cumulative Convertible Shares of Beneficial Interest. Incorporated from Exhibit 4.3 to the Registrant's Registration Statement on Form S-4 filed February 6, 1998 (File No. 333-45817). 4.9 Statement of Designation, Preferences and Rights of Series A Cumulative Convertible Preferred Shares of Beneficial Interest. Incorporated by reference from Exhibit 4.1 to the Registrant's Registration Statement on Form S-4 filed February 6, 1998 (File No. 333-45817). 4.10 Form of Statement of Designation of Series B Cumulative Redeemable Preferred Shares of Beneficial Interest. Incorporated by reference from Exhibit 4.1 to the Registrant's Form 8-K filed on March 10, 1999 (File No. 1-2110). 10.1 Form of Indemnification Agreement by and between the Registrant and certain of its trust managers and executive officers. Incorporated by reference from Exhibit 10.18 to Amendment No. 1 of the Registrant's Registration Statement on Form S-11 filed July 9, 1993 (File No. 33-63588). 10.2 Letter Agreement dated July 18, 1993 among Richard J. Campo, G. Steven Dawson, the Registrant and Apartment Connection, Inc. Incorporated by reference from Exhibit 10.25 to the Registrant's Registration Statement on Form S-11 filed September 15, 1993 (File No. 33-68736). 10.3 Amendment and Restatement of the 1993 Share Option Plan of Camden Property Trust. Incorporated by reference from Exhibit 10.7 to the Registrant's Form 10-K filed March 28, 1996 (File No. 1-12110). 10.4* Amended and Restated Employment Agreement dated August 7, 1998 by and between the Registrant and Richard J. Campo. 10.5* Amended and Restated Employment Agreement dated August 7, 1998 by and between the Registrant and D. Keith Oden. 10.6 Form of Employment Agreement by and between the Registrant and certain senior executive officers. Incorporated by reference from Exhibit 10.13 to the Registrant's Form 10-K filed March 28, 1997 (File No. 1-12110). 10.7 Camden Property Trust Key Employee Share Option Plan. Incorporated by reference from Exhibit 10.14 to the Registrant's Form 10-K filed March 28, 1997 (File No. 1-12110). 14 10.8 Distribution Agreement dated March 20, 1997 among the Registrant and the Agents listed therein relating to the issuance of Medium Term Notes. Incorporated by reference from Exhibit 1.1 to the Registrant's Form 8-K filed March 21, 1997 (File No. 1-12110). 10.9 Registration Rights Agreement dated April 15, 1997 among the Company, the Operating Partnership and certain investors set forth therein. Incorporated by reference from Exhibit 99.1 to the Registrant's Registration Statement on Form S-3 filed with the Commission on April 22, 1997 (File No. 333-25637). 10.10 Camden Development, Inc. 1997 Non-Qualified Employee Stock Purchase Plan. Incorporated by reference from Exhibit 10.3 to the Registrant's Form 10-Q filed August 14, 1997 (File No. 1-12110). 10.11 Form of Master Exchange Agreement by and between the Registrant and certain key employees. Incorporated by reference from Exhibit 10.16 to the Registrant's Form 10-K filed February 6, 1998 (File No. 1-12110). 10.12 Restatement and Amendment of Loan Agreement dated November 25, 1997 between Registrant and NationsBank of Texas, N.A. Incorporated by reference from Exhibit 10.17 to the Registrant's Form 10-K filed February 6, 1998 (File No. 1-12110). 10.13 Form of Affiliate Letter. Incorporated by reference from Exhibit 10.1 to the Registrant's Registration Statement on Form S-4/A filed February 26, 1998 (File No. 333-45817). 10.14 Amended and Restated Limited Liability Company Agreement of Sierra-Nevada Multifamily Investments, LLC, adopted as of June 29, 1998 by Camden Subsidiary, Inc. and TMT-Nevada, L.L.C. Incorporated by reference from Exhibit 99.1 to the Registrant's Form 8-K filed July 15, 1998 (File No. 1-12110). 10.15 Form of Registration Rights Agreement, dated as of April 6, 1998, by and among Oasis Residential, Inc., ISCO and IFT Properties, Ltd. Incorporated by reference from Exhibit 99.1 to the Registrant's Registration Statement on Form S-3 filed January 8, 1999 (File No. 333-70295). 10.16 Form of Registration Rights Agreement, dated as of April 2, 1998, by and between Oasis Residential, Inc. and Merrill Lynch International Private Finance Limited. Incorporated by reference from Exhibit 99.2 to the Registrant's Registration Statement on Form S-3 filed January 8, 1999 (File No. 333-70295). 10.17 Amended and Restated Limited Liability Company Agreement of Oasis Martinique, LLC, dated as of October 23, 1998, by and among Oasis Residential, Inc. and the persons named therein. Incorporated by reference from Exhibit 10.59 to Oasis Residential, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-12428). 10.18 Exchange Agreement, dated as of October 23, 1998, by and among Oasis Residential, Inc., Oasis Martinique, LLC and the holders listed thereon. Incorporated by reference from Exhibit 10.60 to Oasis Residential, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-12428). 10.19 Contribution Agreement, dated as of February 23, 1999, by and among Belcrest Realty Corporation, Belair Real Estate Corporation, Camden Operating, L.P. and Camden Property Trust. Incorporated by reference from Exhibit 99.1 to the Registrant's Form 8-K filed on March 10, 1999 (File No. 1-12110). 10.20 First Amendment to Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P., dated as of February 23, 1999. Incorporated by reference from Exhibit 99.2 to the Registrant's Form 8-K filed on March 10, 1999 (File No. 1-12110). 10.21 Registration Rights Agreement, dated as of February 23, 1999, by and between Camden Property Trust and the unitholders named therein. Incorporated by reference from Exhibit 99.3 to the Registrant's Form 8-K filed on March 10, 1999 (File No. 1-12110). 15 11.1* Statement re Computation of Per Share Earnings. 13.1* Selected pages of the Camden Property Trust Annual Report to Shareholders for the year ended December 31, 1998. 21.1* Subsidiaries of the Registrant. 23.1* Consent of Deloitte & Touche LLP. 24.1* Powers of Attorney for Richard J. Campo, D. Keith Oden, G. Steven Dawson, William R. Cooper, George A. Hrdlicka, Scott S. Ingraham, Lewis A. Levey, F. Gardner Parker and Steven A. Webster. 27.1* Financial Data Schedule (filed only electronically with the SEC). 27.2* Restated Financial Data Schedules (filed only electronically with the SEC). 27.3* Restated Financial Data Schedules (filed only electronically with the SEC). - --------------------- *Filed herewith. 14(b) Reports on Form 8-K The Registrant did not file any Current Reports on Form 8-K during the fourth quarter of 1998. 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. March 29, 1999 CAMDEN PROPERTY TRUST By: /s/ G. Steven Dawson -------------------------------------- G. Steven Dawson Senior Vice President - Finance, Chief Financial Officer, Treasurer and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. NAME TITLE DATE * Chairman of the Board of Trust March 29, 1999 - ------------------------ Managers and Chief Executive Richard J. Campo Officer (Principal Executive Officer) * President, Chief Operating March 29, 1999 - ------------------------ Officer and Trust Manager D. Keith Oden /s/G. Steven Dawson Senior Vice President-Finance, March 29, 1999 - ------------------------ Chief Financial Officer, G. Steven Dawson Treasurer and Secretary (Principal Financial and Accounting Officer) * Trust Manager March 29, 1999 - ------------------------ William R. Cooper * Trust Manager March 29, 1999 - ------------------------ George A. Hrdlicka * Trust Manager March 29, 1999 - ------------------------ Scott S. Ingraham * Trust Manager March 29, 1999 - ------------------------ Lewis A. Levey * Trust Manager March 29, 1999 - ------------------------ F. Gardner Parker * Trust Manager March 29, 1999 - ------------------------ Steven A. Webster *By: /s/G. Steven Dawson - ------------------------ G. Steven Dawson Attorney-in-Fact 17 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following financial statements of the Registrant and its subsidiaries required to be included in Item 14(a)(1) are listed below: CAMDEN PROPERTY TRUST PAGE Independent Auditors' Report (included herein) . . . . . . . . . . . . . F-2 Financial Statements (incorporated by reference under Item 8 of Part II from Pages 30 through 49 of the Company's Annual Report to Shareholders for the year ended December 31, 1998): Independent Auditors' Report Consolidated Balance Sheets as of December 31, 1998 and 1997 Consolidated Statements of Operations for the Years Ended December 31,1998, 1997 and 1996 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 Notes to Consolidated Financial Statements The following financial statement supplementary data of the Registrant and its subsidiaries required to be included in Item 14(a)(2) is listed below: Schedule III -- Real Estate and Accumulated Depreciation . . . . . . . S-1 18 INDEPENDENT AUDITORS' REPORT To the Shareholders of Camden Property Trust We have audited the consolidated financial statements of Camden Property Trust ("Camden") as of December 31, 1997 and 1998, and for each of the three years in the period ended December 31, 1998, and have issued our report thereon dated January 26, 1999 (except for Notes 3, 6, 11 and 12 as to which the date is February 23, 1999); such consolidated financial statements and report are included in your 1998 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule of Camden Property Trust, listed in Item 14. This financial statement schedule is the responsibility of Camden's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Houston, Texas January 26, 1999 (except for Notes 3, 6, 11 and 12 as to which the date is February 23, 1999) 19 SCHEDULE III CAMDEN PROPERTY TRUST REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1998 (In thousands)
Cost Capitalized Subsequent to Acquisition Initial Cost to or Description Encumbrances Camden Property Trust Development - ---------------------------------- ------------ ------------------------- ------------- Building and PROPERTY NAME Location Land Improvements - ------------- -------- ---------- -------------- Apartments TX $ 33,737 $105,295 $ 564,941 $ 43,658 Apartments AZ 8,176 14,471 106,200 3,405 Apartments CA 71,083 41,535 82,041 5,286 Apartments CO 33,612 15,618 120,088 685 Apartments FL 33,445 43,754 303,603 10,813 Apartments KY 18,565 5,382 44,853 860 Apartments MO 54,252 21,612 141,446 6,683 Apartments NV 96,330 62,243 400,899 3,188 Apartments NC 20,445 11,842 75,102 3,275 Projects under Development AZ 6,390 2,581 Projects under Development NV 7,438 13,911 Projects under Development CO 6,053 16,393 Projects under Development CA 9,380 1,360 Projects under Development FL 8,501 9,564 Projects under Development KY 5,845 Projects under Development TX 76,508 52,756 ------------ ---------- -------------- ------------- Total $ 369,645 $436,022 $ 1,941,583 $ 77,853 ============ ========== ============== =============
(In thousands)
Date Gross Amount at Which Accumulated Constructed Depreciable Description Carried at December 31, 1998(a) Depreciation or Acquired Life (Years) - ----------------------------------- ------------------------------- ------------ ----------- ------------ PROPERTY NAME Location Land Building Total - ------------- -------- --------- ---------- ----------- Apartments TX $105,295 $ 608,599 $ 713,894 $ 97,158 1993-1998 3-35 Apartments AZ 14,471 109,605 124,076 11,923 1994-1998 3-35 Apartments CA 41,535 87,327 128,862 1,673 1998 3-35 Apartments CO 15,618 120,773 136,391 2,323 1998 3-35 Apartments FL 43,754 314,416 358,170 16,748 1997-1998 3-35 Apartments KY 5,382 45,713 51,095 3,697 1997-1998 3-35 Apartments MO 21,612 148,129 169,741 12,810 1997 3-35 Apartments NV 62,243 404,087 466,330 11,417 1998 3-35 Apartments NC 11,842 78,377 90,219 9,811 1997 3-35 Projects under Development AZ 6,390 2,581 8,971 1997-1998 Projects under Development NV 7,438 13,911 21,349 1998 Projects under Development CO 6,053 16,393 22,446 1994-1998 Projects under Development CA 9,380 1,360 10,740 1998 Projects under Development FL 8,501 9,564 18,065 1996-1998 Projects under Development KY 5,845 5,845 1997-1998 Projects under Development TX 76,508 52,756 129,264 1995-1998 --------- ---------- ----------- --------- Total $436,022 $2,019,436 $ 2,455,458 $ 167,560 ======== ========== =========== ========= (a) The aggregate cost for federal income tax purposes at December 31,1998 was $2.0 billion.
20 THE CHANGES IN TOTAL REAL ESTATE ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 ARE AS FOLLOWS:
1998 1997 1996 ----------- ------------ ------------ Balance, beginning of period $1,382,049 $ 646,545 $ 607,598 Additions during period: Acquisition - Oasis 997,049 Acquisition - Paragon 618,292 Acquisition - Other 139,199 45,830 6,294 Development 193,212 91,203 56,132 Improvements 26,108 13,308 9,578 Deductions during period: Cost of real estate sold - Third Party Transaction (237,423) Cost of real estate sold - Other (44,736) (33,139) (33,057) ----------- ------------ ------------ Balance, end of period $2,455,458 $ 1,382,049 $ 646,545 =========== ============ ============
THE CHANGES IN ACCUMULATED DEPRECIATION FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 ARE AS FOLLOWS:
1998 1997 1996 ----------- ------------- ------------ Balance, beginning of period $ 94,665 $ 56,369 $ 36,800 Depreciation 76,740 43,769 22,946 Real Estate Sold (3,845) (5,473) (3,377) ----------- ------------ ------------ Balance, end of period $ 167,560 $ 94,665 $ 56,369 =========== ============ ============
S-1 EX-10.4 2 AMENDED AND RESTATED EMPLOYMENT AGREEMENT 21 Exhibit 10.4 AMENDED AND RESTATED EMPLOYMENT AGREEMENT The Amended and Restated Employment Agreement (the "Agreement") made this 7th day of August 1998, by and between Camden Property Trust, a Texas real estate investment trust, (the "Company") and MR. RICHARD J. CAMPO (the "Executive"). WITNESSETH: WHEREAS the Company is engaged in the business of multifamily management and development and WHEREAS the Executive is experienced and knowledgeable in the field; and WHEREAS Mr. Campo shall work as Chairman & Chief Executive Officer; and WHEREAS this Agreement shall supersede and replace all prior employment agreements between the Company and the Executive, including, but not limited to the Employment Agreement dated July, 22, 1996 (the "Prior Agreement"). NOW THEREFORE, in consideration of the mutual covenants and conditions contained herein, the parties agree as follows: 1. EMPLOYMENT The Company employs Mr. Campo as Chairman and Chief Executive Officer (the "Officer") to perform the duties normally associated with that office under the control and at the direction of the Board of Trust Managers (the "Board") and other such duties as may, from time to time, be assigned and are consistent with the position. 2. EMPLOYMENT TERM (a) EMPLOYMENT TERM The term of employment shall begin the 7th day of August,1998, (the "Commencement Date"). This agreement will expire on July 22nd , 1999 or after the expiration of any Renewal Period (the "Expiration Date"). The term of employment shall annually be extended by one (1) year (the "Renewal Period") unless written notification is given by either party to the other at least six (6) months prior to the Expiration Date. The Commencement Date through and including the Expiration Date is hereinafter referred to as the "Employment Term." (b) TERMINATION The Company agrees to employ the Executive for the period beginning on the Commencement Date and continuing through the earliest of: (i) death of the Executive; or (ii) termination of the Executive by vote of a committee of the Board for "Disability," as defined below; or (iii)the discharge of the Executive by vote of the Board "For Cause", as defined below, or any other termination For Cause; or 22 (iv) the discharge of the Executive by vote of the Board for any reason other than For Cause; (v) retirement of the Executive under the terms of the Company's retirement plan as instituted and amended from time to time by the Board; (vi) termination of the Agreement due to a "Change of Control," as defined below; or (vii)the end of the Employment Term. (c) DISABILITY The term Disability refers to the physical or mental incapacity of the Executive that has prevented the execution of the duties of the office, as outlined below, for three (3) consecutive months or for a period of more than 180 business days in the aggregate in any 18 month period and that, in the determination of the Board after consultation with a medical doctor licensed to practice in the State of Texas appointed by the Board and the Executive, may be expected to prevent the Executive for any period of time thereafter from devoting substantial time and energies to the Duties of the office, as outlined below. The Executive agrees to submit to reasonable requests for medical examinations to determine whether a Disability exists. During the period of incapacitation, as provided above, the salary otherwise payable to the Executive may, at the absolute discretion of the Board, be reduced by the amount of any disability benefits or payment received by the Executive, excluding health insurance benefits or other reimbursement of medical expenses for the Executive. (d) FOR CAUSE The term "For Cause" shall mean any one or more of the following: (i) material or repeated violation by the Executive of the the terms of this Agreement or the material or repeated failure to perform the duties of the office to include material substandard performance of the Executive in the achievement of written goals and objectives set by the Board for two (2) consecutive years, other than any such failure resulting from the Executive's Disability; (ii) excessive absenteeism not related to illness; or (iii)the Executive's conviction of or plea of nolo contendere to a felony or conviction of any other crime which incarcerates the Executive for a period of one (1) year or longer; or (iv) the Executive's commission of fraud, embezzlement, theft, or other felony crimes, in any case, whether or not involving the Company, that, in the reasonable opinion of the Board, render the Executive's continued employment harmful to the Company. (v) the voluntary resignation of the Executive without the prior consent of the Board. 23 (e) CHANGE OF CONTROL A "change of control" shall be determined to have occurred when any one or more of the following events occur: (i) at any time during any twelve (12) month period, the Trust Managers in office at the beginning of such period cease to constitute a majority of the Company's Board of Trust Managers, disregarding any vacancies occurring during such period by reasons of death or disability but deeming any individual whose election, or nomination for election, to fill such vacancy to have been in office at the beginning of such one (1) year prior; (ii) there is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report or item therein), each as promulgated pursuant to the Securities Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing over 25% of the combined voting power of the securities of the Company entitled to vote generally in the election of Trust Managers (the "Voting Shares") of the Company or could become the owner of over 25% of the Company's Common Shares of Beneficial Interest through the conversion of the Company's debt or equity securities; (iii)the Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has occurred or will occur in the future pursuant to any then-existing contract or transaction; or (iv) a merger or consolidation occurs to which the Company is party and the Company is not the surviving entity; or (v) the sale of at least fifty (50%) percent of the Company's assets to any person or entity or in a series of related transactions. The determination as to which party to a merger, consolidation or reorganization is the "surviving entity" within the meaning of Section 2(e) shall be made on the basis of the relative equity interest of the shareholders in the entity existing after the merger, consolidation or reorganization, as follows: if following any merger, consolidation or reorganization the holders of outstanding Voting Shares of the Company immediately prior to the merger, consolidation or reorganization own equity securities possessing more than 50% of the voting power of the entity existing following the merger, consolidation or reorganization, the Company shall be the surviving entity. In all other cases, the Company shall not be the surviving entity. In making the determination of ownership of equity securities by the shareholders of an entity immediately after the merger, consolidation or reorganization pursuant to this paragraph, equity securities which the shareholders owned immediately before the merger, consolidation or reorganization as shareholders of another party to the transaction shall be disregarded. Further, for purposes of this paragraph only, outstanding voting securities of an entity shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote. 24 Notwithstanding the foregoing provisions of Section 2(e), unless otherwise determined in a specific case by majority vote of the Board of Trust Managers of the Company, a "Change of Control" will not be deemed to have occurred for purposes of Section 2(e) solely because (A) an entity in which the Company, directly or indirectly, beneficially owns 50% or more of the voting securities (a "Subsidiary"), or (B) any employee share ownership plan or any other employee benefit plan of the Company or any Subsidiary either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K, or Schedule 14A (or any successor schedule, form, or report or item therein) under the Exchange Act disclosing beneficial ownership by it of shares of Voting Shares, whether in excess of 25% or otherwise, or because the Company reports that a change in control of the Company has occurred or will occur in the future by reason of such beneficial ownership. 3. DUTIES The Executive will devote substantially all of his time, skill, energy, knowledge, and best efforts during the Employment Term to such duties, and will, faithfully and diligently endeavor to the best of his ability, further the best interests of the Company. The Executive may: (i) continue to serve as general partner in, or as an officer, director, or shareholder of a corporation that is a general partner in, the limited partnerships listed in Schedule A to the Prior Agreement; and (ii) continue to serve as a director or shareholder, directly or indirectly, in the corporations listed in Schedule A to the Prior Agreement; and (iii)serve in the future as an officer, director, shareholder, or limited partner in any business venture which is not prohibited by Section 9(c). At no time shall the Executive be requested to perform duties that are not commensurate with the duties of a senior executive of the Company. 4. LOCATION OF EMPLOYMENT The Executive shall be located in or about Houston, Texas. The Executive shall travel to such geographical locations as may be appropriate from time to time to carry out the duties of the office as outlined in Section 3, Duties. 5. COMPENSATION For all services rendered by the Executive to the Company, the Company shall pay: (a) BASE SALARY For services rendered, the Company shall pay the Executive an annual salary of $258,000, "the base salary" payable in arrears monthly or semi-monthly as the Board may elect from time to time during the Employment Term. The Board shall conduct an annual review of the Executive's Base Salary. The Executive shall be entitled to receive increases in the Base Salary, if any, that may be determined by the Board at its sole discretion. Any increases to the Executive's Base Salary shall be effective January 1 for each year of the Employment Term. In no event shall the Executive's base salary be reduced, except as provided for under Section 2(c), Disability. 25 (b) ANNUAL INCENTIVE COMPENSATION In further consideration of the Executive's service, the Executive shall be eligible to receive an annual incentive compensation as determined by the Board. (c) LONG-TERM INCENTIVE COMPENSATION In further consideration of the Executive's service, the Executive shall be eligible to receive a long-term incentive compensation as determined by the Board. (d) TAXES All compensation paid to the Executive shall be subject to applicable employment and withholding taxes. The Executive shall be responsible for any taxes resulting from a determination that any portion of any benefits supplied to the Executive may be reimbursing personal as well as business expenses. 6. EMPLOYEE BENEFITS (a) BENEFITS The Executive shall receive group health/dental insurance, life insurance, disability insurance, and other similar benefits available to the Company's employees. Benefits may be changed, modified, or revoked at the sole discretion of the Company. The Executive shall not be deemed to have a vested interest in any of the Company plans or programs. The Executive shall receive benefits not generally provided to Company employees from time to time at the sole discretion of the Board. (b) VACATION The Executive is entitled to receive twenty- (20) business days paid vacation annually for each year of the Employment Term. Such vacation shall be taken at such times that are consistent with the reasonable business needs of the Company. All vacation shall be subject to the policies and procedures of the Company. (c) FRINGE BENEFITS The Executive shall receive fringe benefits as such benefits may exist from time to time at the sole discretion of the Board. 7. BUSINESS EXPENSES The Executive is authorized to incur reasonable, ordinary and necessary business expenses in the performance of the duties outlined above during the Employment Term in accordance with policies established by the Board. The Executive shall account to the Company for all such expenses. The Company shall reimburse the Executive or pay the expenses in accordance with the policies established by the Board. 8. TERMINATION In the event of termination, the Executive's rights and the Company's obligations shall terminate except as herein provided. In all events, the Company shall be obligated to pay all salary and 26 benefits accrued to the Executive through and including the date of termination. Additionally, the Executive shall be entitled to receive the minimum bonus for the contract year during which the termination occurs, prorated through and including the date of termination. (a) TERMINATION FOR REASON OTHER THAN FOR CAUSE Upon the occurrence of a change of control or if the Employment Term is terminated for reasons other than For Cause, the Executive shall be entitled to receive a severance payment (the "Severance Benefit") equal to 2.99 times (I) Executive's annualized compensation that would be included in Executive's gross income in the year in which the first event constituting a change of control occurs or the taxable year in which the termination occurs, as applicable, or, if higher, (ii) the average annual compensation that was included in the gross income of the Executive for the three (3) most recent taxable years that ended before the date of termination or the date of the change of control, as applicable, plus 2.99 times Executive's targeted annual incentive compensation for the fiscal year in which the event first constituting a change of control occurs. Gross income includes, but is not limited to: (i) base salary; (ii) annual bonus amounts; (iii)deferred compensation amounts; and (iv) the value, in good faith, of share options, restricted share grants and dividend equivalent rights granted to the Executive and any other benefits received by the Executive from the Company, (assuming for purposes of such calculation that all grants have vested). For purposes of making the calculation in Section 8(a)(iv) above, the Board shall make such calculation and shall use the Black-Scholes pricing model for its calculation; provided, however, that if the Black-Scholes pricing model cannot be used to value the types of benefit being valued, the Board shall use any other reasonable method of calculation based upon the recommendation of the Company's independent compensation consultant (or if there is none, an independent compensation consultant retained by the Board for such purpose.) However, gross income shall not include untaxed fringe benefits. Following the occurrence of a Change of Control or termination of employment for a reason other than For Cause, the Company will pay to the Executive the Severance Benefit in immediately available funds, in United States Dollars, within five business days after the first occurrence of a Change of Control or termination, as applicable. In addition, during the Severance Period, the Company will arrange to provide the Executive Employee Benefits that are welfare benefits (but not share options, share purchase, share appreciation, dividend equivalent rights or similar compensatory benefits) substantially similar to those which the Executive was receiving or entitled to receive immediately prior to the Change of Control. Such one year period will be considered service with the Company for the purpose of determining service credits and benefits due and payable to the Executive under the Company's retirement income, supplemental executive retirement, and other benefit plans of the Company applicable to the Executive, the Executive's dependents, or the Executive's beneficiaries immediately prior to the Change of Control. If and to the extent that any benefit described in the immediately preceding sentence is not or cannot be paid or provided under any policy, plan, program or arrangement of the Company, then the Company will itself pay or provide for the payment of such Employee Benefits to the Executive, and, if applicable, the Executive's dependents and beneficiaries. Employee Benefits otherwise 27 receivable by the Executive pursuant to this Section 8 will be reduced to the extent comparable welfare benefits are actually received by the Executive from another employer during the Severance Period. There will be no right of set-off or counterclaim in respect of any claim, debt of obligation against any payment to or benefit for the Executive provided for in this Agreement, except as expressly provided herein. Notwithstanding any other provision hereof, the parties' respective rights and obligations under this Section 8 and under Sections 11 and 16 will survive any termination or expiration of this Agreement following a Change of Control or termination of employment, other than for cause. Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment. "Employee Benefits" means the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which the Executive is entitled to participate, including, without limitation, any share option, share purchase, share appreciation, dividend equivalent rights, savings, pension, supplemental executive retirement or other retirement income or welfare benefit, deferred compensation, incentive compensation, group or other life, health, medical/hospital, or other insurance (whether funded by actual insurance or self-insured by the Company), disability, salary continuation, expense reimbursement, and other employee benefit policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter by the Company, providing perquisites, benefits and service credit for benefits at least as great in the aggregate as are payable thereunder prior to a Change of Control. "Severance Period" means the period of time commencing on the date of an occurrence of each change of control and continuing until the earliest of (i) the expiration of one year after each occurrence of an event constituting a change of control, (ii) the Executive's death, or (iii) the Executive's attainment of age 65. (b) TERMINATION BY REASON OF DEATH If the Employment Term is terminated by reason of Death, the Executive shall be entitled to receive a severance payment equal to the Severance Benefit. Vesting of benefits shall be treated as described in Section 24 of this Agreement. (c) TERMINATION BY REASON OF DISABILITY If the Employment Term is terminated by reason of Disability, the Executive shall be entitled to receive a severance payment equal to the Severance Benefit. Vesting of benefits shall be treated as described in Section 24 of this Agreement. The Executive shall receive, so long as the Disability continues, to remain eligible for all benefits provided under any long-term 28 disability program(s) of the Company in effect at the time of such termination, subject to the terms and conditions of any such program(s), as may be amended, changed, modified, or terminated for all employees of the Company. (d) ADDITIONAL PAYMENTS (i) Notwithstanding anything in this Agreement to the contrary, in the event it is determined (as hereafter provided) that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any share option, share appreciation right, dividend equivalent right, restricted shares of similar right, the lapse or termination of any restriction on or the vesting or exercise ability of any of the foregoing (any such payment or distribution, a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue code of 1986, as amended (the "Code") (or any successor provision thereto),by reason of being considered "contingent on a change in ownership or control" of the Company, within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment or payments(collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no Gross-up Payment will be made with respect to the Excise Tax, if any, attributable to (A) any incentive share option ("ISO") granted prior to the execution of this Agreement or (B) any share appreciation or similar right, whether or not limited, granted in tandem with any ISO described in clause (A) of this sentence. The Gross-Up Payment will be in an amount such that, after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive will have received an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. (ii) Subject to the provisions of Section 8(d)(vi), all determinations required to be made under this Section 8(e), including whether an Excise Tax is payable by the Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to the Executive and the amount of such Gross-Up Payment, if any, will be made by a nationally recognized accounting firm (the "Accounting Firm") selected by the Executive in the Executive's sole discretion. The Executive will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and the Executive within 30 calendar days after the Executive's termination date, and any such other time or times as may be requested by the Company of the Executive. If the Accounting Firm determines that any Excise Tax is payable by the Executive, the Company will pay the required Gross-Up Payment to the Executive within five business days after receipt of such determination and calculations with respect to any Payment to the Executive. If the Accounting firm determines that no Excise Tax is payable by the Executive, it will, at the same time as it makes such determination, furnish the Company and the Executive an opinion that the Executive has substantial authority not to report any Excise Tax on the Executive's federal, state or local income or other tax return. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) and the possibility of similar uncertainty regarding applicable state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an "Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts or fails to pursue its remedies pursuant to Section 8(d)(vi) and the Executive 29 thereafter is required to make a payment of any Excise Tax, the Executive will direct the Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its determination and detailed supporting calculations to both the Company and the Executive as promptly as possible. Any such Underpayment will be promptly paid by the Company to, or for the benefit of, the Executive within five business days after receipt of such determination and calculations. (iii)The Company and the Executive will each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or the Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation of and issuance of the determinations and calculations contemplated by Section 8(d)(ii). Any determination by the Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company and the Executive. (iv) The federal, state, and local income or other tax returns filed by the Executive will by prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax payable by the Executive. The Executive will make proper payment of the amount of any Excise Payment and,at the request of the Company, provide to the Company true and correct copies (with any amendments) of the Executive's federal tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company, evidencing such payment. If prior to the filing of the Executive's federal income tax return, or corresponding state or local tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment should be reduced, the Executive will within five business days pay to the Company the amount of such reduction. (v) The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated herein will be borne by the Company. If such fees and expenses are initially paid by the Executive, the Company will reimburse the Executive the full amount of such fees and expenses within five business days after receipt from the Executive of a statement therefor and reasonable evidence of the Executive's payment thereof. (vi) The Executive will notify the Company in writing of any claim by the Internal Revenue Service or any other taxing authority that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification will be given as promptly as practicable but no later than 10 business days after the Executive actually receives notice of such claim and the Executive will further apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by the Executive). The Executive will not pay such claim prior to the earlier of (i) the expiration if the 30-calendar day period following the date on which the Executive gives such notice to the Company and (ii) the date that any payment of amount with respect to such claim is due. If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive will: a) provide the Company with any written records or documents in the Executive's possession relating to such claim reasonably requested by the Company; 30 b) take such action in connection with contesting such claim as the Company may reasonably request in writing from time to time, including without limitation accepting legal representation with respect to such claim by attorney competent in respect of the subject matter and reasonably selected by the Company; c) cooperate with the Company in good faith in order effectively to contest such claim; and d) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company will bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and will indemnify and hold harmless the Executive, on an after-tax basis, for and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 8(d), the Company will control all proceedings taken in connection with the contest of any claim contemplated by this Section 8(d)(vi) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided, however, that the Executive may participate therein at the Executive's own cost and expense) and may, at its option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive will prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction, and in one or more appellate courts, as the Company may determine; provided, however, that is the Company directs the Executive to pay the tax claimed and sue for a refund, the Company will advance the amount of such payment to the Executive on an interest-free basis and will indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which the contested amount if claimed to be due is limited solely to such contested amount. The Company's control of any such contested claim will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (vii)If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(d)(vi), the Executive receives any refund with respect to such claim, the Executive will (subject to the Company's complying with the requirements of Section 8(e)(vi) pay to the Company the amount of such refund (together with any interest paid or credited thereon after (vii) If, after the receipt by the Executive of an amount advanced by the Company pursuant to any taxes applicable thereto) within 30 calendar days after such receipt and the Company's satisfaction of all accrued obligations under this Agreement. If, after the receipt by the Executive of any amount advanced by the Company pursuant to Section 8(d)(vi), a determination is made that the Executive will not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such determination prior to the expiration of 30 calendar days after such determination, then such advance will be forgiven and will not be required to be repaid and the amount of any such advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid by the Company to the Executive pursuant to this Section 8. 31 9. CONFIDENTIALITY AND NON-COMPETITION All information (the "Confidential Information")includes all confidential information of the Company and/or its subsidiaries, including information entrusted to the Company and/or any of its subsidiaries by third parties, not otherwise publicly disclosed or available, other than as a result of wrongful disclosure by the Executive, which, during the Employment Term: (i) is disclosed by any of them to the Executive; or (ii) the Executive had access or otherwise had reason to know; or (iii) was developed or discovered by the Executive. Confidential Information includes, but is not limited to, whether or not legended or otherwise identified as "confidential": (i) property lists, prospective properties lists, and details of agreement with sellers; and (ii) acquisition, expansion, marketing, financial, and other business information and plans; and (iii) research and development and data related thereto; and (iv) other compilations of data; and (v) computer programs and/or records; and (vi) sources of supply; and (vii) confidential information developed by consultants and contractors; and (viii)purchasing, operating, and other costs data; and (ix) employee information; and (x) manuals, memoranda, projections, minutes, plans, drawings, designs, formula books and specifications. (a) RESTRICTION ON USE AND DISCLOSURE The Executive acknowledges that the Confidential Information is valuable and proprietary to the Company or to third parties which have entrusted the Company and/or its subsidiaries, and, except as required by the Executive's Duties, the Executive shall not use, publish, disseminate, or otherwise disclose any Confidential information without prior written consent of the Company. (b) RETURN OF DOCUMENTS Upon termination of the Executive's employment, the Executive shall forthwith deliver to the Company all plans, designs, drawings, specifications, listings, manuals, records, notebooks, and similar repositories of or containing Confidential Information, including all copies, then in the Executive's possession or control, whether 32 prepared by the Executive or others. Upon such termination the Executive shall retain no copies of any such documents. (c) RESTRICTION ON COMPETITIVE EMPLOYMENT The term Business shall mean: (i) the business of the Company and its subsidiaries as described in the Company's most recent Form 10-K; and (ii) any other business in which the Company or any of its subsidiaries is engaged during the Executive's Employment Term. The term Territories shall refer to those metropolitan areas in which the Company owns properties or otherwise is engaged in the Business, including any areas where the Company has specific plans to acquire or develop properties within the following six (6) months following the date of termination or change of control, as applicable, and all outlying areas located within a thirty (30) mile radius of each such metropolitan area. Except as noted in Section 3, Duties, during the Employment Term and the twelve months (12) months following the termination of this Agreement (the "Non-Competition Period"), absent the Company's prior written approval, the Executive shall not, as owner, part-owner, shareholder, partner, director, principal, agent, employee, consultant, or otherwise, within the Territories, directly or indirectly engage or participate in activities relating to, or render services to or invest in any firm or business engaged or about to become engaged in, the Business, provided that the Executive may: (i) engage in the activities as noted in Section 3, Duties; (ii) make passive investments in an enterprise engaged in the the Business the shares of ownership of which are publicly traded if the Executive's investment constitutes constitutes less than 2% of the total equity of such enterprise. (d) INDUCEMENT / ENTICEMENT During the Employment Term and the Non-Competition Period, the Executive shall not, directly or indirectly: (i) induce, or attempt to induce, any employees or agents or consultants of or to the Company or any subsidiary of the Company to do anything from which the Executive is restricted by reason of Section 9(a) through 9(c), inclusive; or (ii) offer or aid others to offer employment to anyone who is an employee, agent or consultant of or to the Company or an subsidiary of the Company at the time of termination of the Executive. (e) REDUCTION OF NON-COMPETITION PERIOD If this Agreement shall be terminated by the Company pursuant to Section 2(b)(iv), Termination for reason other than For Cause, the provisions of Sections 9(c) and 9(d) shall terminate on the first business day following the termination of the Executive. Unless otherwise provided, the provisions of Sections 9(a) through 9(d), inclusive, shall survive the termination of this Agreement for the duration of the Non-Competition Period. 33 10. REMEDIES FOR THE COMPANY The Executive acknowledges that remedy at law for any breach or attempted breach of the Executive's obligations under Section 9, Confidentiality and Non-Competition, may be inadequate, agrees that the Company may be entitled to specific performance and injunctive and other equitable remedies in case of any such breach or attempted breach, and further agrees to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief. The termination of the Employment Term pursuant to Section 2(a)(iii), Discharge For Cause, shall not be deemed to be a waiver by the Company of any breach by the Executive of this Agreement or any other obligation owed the Company, and, notwithstanding such a termination, the Executive shall be liable for all damages attributable to such a breach. 11. REMEDIES FOR THE EXECUTIVE In the event the Executive is terminated For Cause and it is ultimately determined the Company lacked "cause", the: (i) Executive's termination shall be treated as a Termination for reason other than For Cause, as it pertains to Section 8(a); and (ii) Executive shall reserve the right to seek remedy for breach of the Agreement by the Company including, but not limited to, any other such damages as may be suffered and/or incurred by the Executive, the Executive's costs incurred during the dispute, and reasonable attorney's fees in connection with such dispute; and (iii)Executive shall receive all Severance Benefits under Section 8(a), Termination for reason other than For Cause, with interest of 8% annually on all payments considered past due from the date at which such payment payment would have been made. 12. NO WAIVER No Waiver or non-action by either party with respect to any breach by the other party of any provision of this Agreement,nor the waiver or non-action with respect to the provisions of similar agreement with other employees or the breach thereof, shall be deemed or construed to be a waiver of any succeeding breach of such provision,or as a waiver of the provision itself. 13. INVALID PROVISIONS Should any portion of this Agreement be adjusted or held invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable,or void shall, if possible, be deemed amended or reduced in scope,or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof. 14. SUCCESSOR AND ASSIGNS Neither the Executive nor the Company may assign its rights, duties, or obligations hereunder without consent of the other. 15. SURVIVAL OF THE EXECUTIVE'S OBLIGATIONS Except with respect to any termination under Section 2(b)(iv), the Executive's obligations under Sections 9 and 10 shall survive regardless of whether or not the Executive's employment is terminated, voluntarily or involuntarily, by the employer or the Executive, with or without cause. 34 16. SURVIVAL OF THE COMPANY'S OBLIGATIONS The Company's obligations under Sections 8 and 11 shall survive regardless of whether or not the Executive's employment is terminated, voluntarily or involuntarily, by the employer or the Executive, with or without cause. 17. PRIOR AGREEMENTS This Agreement incorporates the entire agreement between both parties with respect to the subject matter hereof and supersedes all prior agreements, documents, or other instruments with respect to the matters covered herein. 18. GOVERNING LAW This Agreement shall be governed by, and interpreted in accordance with the provisions of, the law of the State of Texas, without reference to provisions that refer a matter to the law of any other jurisdiction. Each party hereto hereby irrevocably submits itself to the non-exclusive personal jurisdiction of the Federal and State courts sitting in Texas. 19. NO ORAL MODIFICATIONS This Agreement may not be changed or terminated orally, and no change, termination, or waiver of this Agreement or of any of the provisions herein contained shall be binding unless made in writing and signed by both parties, and, in the case of the Company, by a person designated by the Board. Without limiting the foregoing, any change or changes, from time to time, in the Executive's salary or duties or both shall not be, nor be deemed to be, a change, termination, or waiver of this Agreement or of any of the provisions herein contained. 20. NOTICES All notices and other communications required or permitted hereunder shall be made in writing, and shall be deemed properly given if delivered personally, mailed by certified mail, postage prepaid and return receipt requested, sent by facsimile, or sent by Express Mail or Federal Express or other nationally recognized express delivery service, as follows: If to the Company or the Board: Camden Property Trust Three Greenway Plaza, Suite 1300 Houston, TX 77046 Attention: Board of Trust Managers If to the Executive: Richard J. Campo Three Greenway Plaza, Suite 1300 Houston, TX 77046 Notice given by hand, Express Mail, Federal Express, or other such express delivery service shall be effective upon actual receipt. Notice given by facsimile transmission shall be effective upon actual receipt of received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the 35 recipient's normal business hours. All notices sent by facsimile transmission shall be confirmed promptly after transmission in writing by certified mail or personal delivery. Any party may change any address to which notice shall be given to it by giving notice as provided above of such change in address. 21. EXECUTIVE'S REPRESENTATION AND WARRANTIES The Executive represents and warrants that he is legally free to make and perform this Agreement, that he has no obligation to any other person or entity that would affect or conflict with any of his obligations hereunder, and that the complete performance of his obligations hereunder will not violate any law, regulation, order, or decree of any governmental or jurisdictional body or contract by which he is bound. 22. EXPENSES; SECURITY It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of the Executive's rights to compensation upon a Change of Control by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare the agreement to pay Executive compensation upon a change of control void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, r to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive's choice, at the expense of the Company as hereinafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any Trust Manager, officer, shareholder, or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive's entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship will exist between the Executive and such counsel. Without regard to whether the Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all attorneys' and related fees and expenses incurred by the Executive in connection with any of the foregoing. 23. ENTIRE AGREEMENT The parties expressly agree that this Agreement is contractual in nature and not a mere recital, and that it contains all the terms and conditions of the agreement between the parties with respect to the matters set forth herein. All prior negotiations, agreements, arrangements, understandings and statements between the parties relating to the matters set forth herein that have occurred at any time or contemporaneously with the execution of this Agreement (including, but not limited to, the Prior Agreement) are superseded and merger into this completely integrated Agreement. The Recitals set forth above shall be deemed to be part of this Agreement. 24. VESTING OF BENEFITS Notwithstanding anything in this Agreement, the Company's employee benefit 36 plans, any agreement entered into under such plans,or under any retirement, pension, profit sharing or other similar plan, upon the occurrence of a change of control, as defined in Section 2(e), or termination for reason of death or disability or If Executive is terminated other than For Cause all deferred or unvested portions of any award made to Executive under any of the foregoing plans and agreements shall automatically becomefully vested in Executive and shall be in effect and redeemable by or payable to Executive, or Executive's designated beneficiary or estate, on the same conditions (other than vesting) as would have applied had the change of control, or termination for reason of death or disability or the termination other than For Cause, as applicable, not occurred, including, but not limited to, the right to exercise any share options for a period of 10 years from the date of grant. All unvested awards under the plans shall immediately vest upon the change of control, or termination for reason of death or disability or if Executive is terminated other than For Cause and the Executive or Executive's designated beneficiary or estate shall have the right to exercise any vested awards during the balance of the awards' term. EXECUTED as of the date first written above. CAMDEN PROPERTY TRUST By: /s/D. Keith Oden ------------------------------------ Name: D. Keith Oden ------------------------------------ Title: President ------------------------------------ EXECUTIVE /s/Richard J. Campo ------------------------------------ Richard J. Campo EX-10.5 3 AMENDED AND RESTATED EMPLOYMENT AGREEMENT 37 Exhibit 10.5 AMENDED AND RESTATED EMPLOYMENT AGREEMENT The Amended and Restated Employment Agreement (the "Agreement") made this 7th day of August 1998, by and between Camden Property Trust, a Texas real estate investment trust, (the "Company") and MR. D. KEITH ODEN (the "Executive"). WITNESSETH: WHEREAS the Company is engaged in the business of multifamily management and development and WHEREAS the Executive is experienced and knowledgeable in the field; and WHEREAS Mr. Oden shall work as President & Chief Operating Officer; and WHEREAS this Agreement shall supersede and replace all prior employment agreements between the Company and the Executive, including, but not limited to the Employment Agreement dated July, 22, 1996 (the "Prior Agreement"). NOW THEREFORE, in consideration of the mutual covenants and conditions contained herein, the parties agree as follows: 1. EMPLOYMENT The Company employs Mr. Oden as President & Chief Operating Officer (the "Officer") to perform the duties normally associated with that office under the control and at the direction of the Board of Trust Managers (the "Board") and other such duties as may, from time to time, be assigned and are consistent with the position. 2. EMPLOYMENT TERM (a) EMPLOYMENT TERM The term of employment shall begin the 7th day of August,1998, (the "Commencement Date"). This agreement will expire on July 22nd , 1999 or after the expiration of any Renewal Period (the "Expiration Date"). The term of employment shall annually be extended by one (1) year (the "Renewal Period") unless written notification is given by either party to the other at least six (6) months prior to the Expiration Date. The Commencement Date through and including the Expiration Date is hereinafter referred to as the "Employment Term." (b) TERMINATION The Company agrees to employ the Executive for the period beginning on the Commencement Date and continuing through the earliest of: (i) death of the Executive; or (ii) termination of the Executive by vote of a committee of the Board for "Disability," as defined below; or (iii)the discharge of the Executive by vote of the Board "For Cause," as defined below, or any other termination For Cause; or 38 (iv) the discharge of the Executive by vote of the Board for any reason other than For Cause; (v) retirement of the Executive under the terms of the Company's retirement plan as instituted and amended from time to time by the Board; (vi) termination of the Agreement due to a "Change of Control," as defined below; or (vii) the end of the Employment Term. (c) DISABILITY The term Disability refers to the physical or mental incapacity of the Executive that has prevented the execution of the duties of the office, as outlined below, for three (3) consecutive months or for a period of more than 180 business days in the aggregate in any 18 month period and that, in the determination of the Board after consultation with a medical doctor licensed to practice in the State of Texas appointed by the Board and the Executive, may be expected to prevent the Executive for any period of time thereafter from devoting substantial time and energies to the Duties of the office, as outlined below. The Executive agrees to submit to reasonable requests for medical examinations to determine whether a Disability exists. During the period of incapacitation, as provided above, the salary otherwise payable to the Executive may, at the absolute discretion of the Board, be reduced by the amount of any disability benefits or payment received by the Executive, excluding health insurance benefits or other reimbursement of medical expenses for the Executive. (d) FOR CAUSE The term "For Cause" shall mean any one or more of the following: (i) material or repeated violation by the Executive of the terms of this Agreement or the material or repeated failure to perform the duties of the office to include material substandard performance of the Executive in the achievement of written goals and objectives set by the Board for two (2) consecutive years, other than any such failure resulting from the Executive's Disability; (ii) excessive absenteeism not related to illness; or (iii)the Executive's conviction of or plea of nolo contendere to a felony or conviction of any other crime which incarcerates the Executive for a period of one (1) year or longer; or (iv) the Executive's commission of fraud, embezzlement, theft, or other felony crimes, in any case, whether or not involving the Company, that, in the reasonable opinion of the Board, render the Executive's continued employment harmful to the Company. (v) the voluntary resignation of the Executive without the prior consent of the Board. 39 (e) CHANGE OF CONTROL A "change of control" shall be determined to have occurred when any one or more of the following events occur: (i) at any time during any twelve (12) month period, the Trust Managers in office at the beginning of such period cease to constitute a majority of the Company's Board of Trust Managers, disregarding any vacancies occurring during such period by reasons of death or disability but deeming any individual whose election, or nomination for election, to fill such vacancy to have been in office at the beginning of such one (1) year prior; (ii) there is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report or item therein), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any person (as the term "person" is used in Section 13(d)(3) or Section 14 (d) (2) of the Exchange Act) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing over 25% of the combined voting power of the securities of the Company entitled to vote generally in the election of Trust Managers (the "Voting Shares") of the Company or could become the owner of over 25% of the Company's Common Shares of Beneficial Interest through the conversion of the Company's debt or equity securities; (iii)the Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has occurred or will occur in the future pursuant to any then-existing contract or transaction; or (iv) a merger or consolidation occurs to which the Company is party and the Company is not the surviving entity; or (v) the sale of at least fifty (50%) percent of the Company's assets to any person or entity or in a series of related transactions. The determination as to which party to a merger, consolidation or reorganization is the "surviving entity" within the meaning of Section 2(e) shall be made on the basis of the relative equity interest of the shareholders in the entity existing after the merger, consolidation or reorganization, as follows: if following any merger, consolidation or reorganization the holders of outstanding Voting Shares of the Company immediately prior to the merger, consolidation or reorganization own equity securities possessing more than 50% of the voting power of the entity existing following the merger, consolidation or reorganization, the Company shall be the surviving entity. In all other cases, the Company shall not be the surviving entity. In making the determination of ownership of equity securities by the shareholders of an entity immediately after the merger, consolidation or reorganization pursuant to this paragraph, equity securities which the shareholders owned immediately before the merger, consolidation or reorganization as shareholders of another party to the transaction shall be disregarded. Further, for purposes of this paragraph only, outstanding voting securities of an entity shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote. 40 Notwithstanding the foregoing provisions of Section 2(e), unless otherwise determined in a specific case by majority vote of the Board of Trust Managers of the Company, a "Change of Control" will not be deemed to have occurred for purposes of Section 2(e) solely because (A) an entity in which the Company, directly or indirectly, beneficially owns 50% or more of the voting securities (a "Subsidiary"), or (B) any employee share ownership plan or any other employee benefit plan of the Company or any Subsidiary either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K, or Schedule 14A (or any successor schedule, form, or report or item therein) under the Exchange Act disclosing beneficial ownership by it of shares of Voting Shares, whether in excess of 25% or otherwise, or because the Company reports that a change in control of the Company has occurred or will occur in the future by reason of such beneficial ownership. 3. DUTIES The Executive will devote substantially all of his time, skill, energy, knowledge, and best efforts during the Employment Term to such duties, and will, faithfully and diligently endeavor to the best of his ability, further the best interests of the Company The Executive may: (i) continue to serve as general partner in, or as an officer, director, or shareholder of a corporation that is a general partner in, the limited partnerships listed in Schedule A to the Prior Agreement; and (ii) continue to serve as a director or shareholder, directly or indirectly, in the corporations listed in Schedule A to the Prior Agreement; and (iii) serve in the future as an officer, director, shareholder, or limited partner in any business venture which is not prohibited by Section 9(c). At no time shall the Executive be requested to perform duties that are not commensurate with the duties of a senior executive of the Company. 4. LOCATION OF EMPLOYMENT The Executive shall be located in or about Houston, Texas. The Executive shall travel to such geographical locations as may be appropriate from time to time to carry out the duties of the office as outlined in Section 3, Duties. 5. COMPENSATION For all services rendered by the Executive to the Company, the Company shall pay: (a) BASE SALARY For services rendered, the Company shall pay the Executive an annual salary of $258,000, "the base salary" payable in arrears monthly or semi-monthly as the Board may elect from time to time during the Employment Term. The Board shall conduct an annual review of the Executive's Base Salary. The Executive shall be entitled to receive increases in the Base Salary, if any, that may be determined by the Board at its sole discretion. Any increases to the Executive's Base Salary shall be effective January 1 for each year of the Employment Terms In no event shall the Executive's base salary be reduced, except as provided for under Section 2(c), Disability. 41 (b) ANNUAL INCENTIVE COMPENSATION In further consideration of the Executive's service, the Executive shall be eligible to receive an annual incentive compensation as determined by the Board. (c) LONG-TERM INCENTIVE COMPENSATION In further consideration of the Executive's service, the Executive shall be eligible to receive a long-term incentive compensation as determined by the Board. (d) TAXES All compensation paid to the Executive shall be subject to applicable employment and withholding taxes. The Executive shall be responsible for any taxes resulting from a determination that any portion of any benefits supplied to the Executive may be reimbursing personal as well as business expenses. 6. EMPLOYEE BENEFITS (a) BENEFITS The Executive shall receive group health/dental insurance, life insurance, disability insurance, and other similar benefits available to the Company's employees. Benefits may be changed, modified, or revoked at the sole discretion of the Company. The Executive shall not be deemed to have a vested interest in any of the Company plans or programs. The Executive shall receive benefits not generally provided to Company employees from time to time at the sole discretion of the Board. (b) VACATION The Executive is entitled to receive twenty- (20) business days paid vacation annually for each year of the Employment Term. Such vacation shall be taken at such times that are consistent with the reasonable business needs of the Company. All vacation shall be subject to the policies and procedures of the Company. (c) FRINGE BENEFITS The Executive shall receive fringe benefits as such benefits may exist from time to time at the sole discretion of the Board. 7. BUSINESS EXPENSES The Executive is authorized to incur reasonable, ordinary and necessary business expenses in the performance of the duties outlined above during the Employment Term in accordance with policies established by the Board. The Executive shall account to the Company for all such expenses. The Company shall reimburse the Executive or pay the expenses in accordance with the policies established by the Board. 8. TERMINATION In the event of termination, the Executive's rights and the Company's obligations shall terminate except as herein provided. 42 In all events, the Company shall be obligated to pay all salary and benefits accrued to the Executive through and including the date of termination. Additionally, the Executive shall be entitled to receive the minimum bonus for the contract year during which the termination occurs, prorated through and including the date of termination. (a) TERMINATION FOR REASON OTHER THAN FOR CAUSE Upon the occurrence of a change of control or if the Employment Term is terminated for reasons other than For Cause, the Executive shall be entitled to receive a severance payment (the "Severance Benefit") equal to 2.99 times (I) Executive's annualized compensation that would be included in Executive's gross income in the year in which the first event constituting a change of control occurs or the taxable year in which the termination occurs, as applicable, or, if higher, (ii) the average annual compensation that was included in the gross income of the Executive for the three (3) most recent taxable years that ended before the date of termination or the date of the change of control, as applicable, plus 2.99 times Executive's targeted annual incentive compensation for the fiscal year in which the event first constituting a change of control occurs. Gross income includes, but is not limited to: (i) base salary; (ii) annual bonus amounts; (iii)deferred compensation amounts; and (iv) the value, in good faith, of share options, restricted share grants and dividend equivalent rights granted to the Executive and any other benefits received by the Executive from the Company, (assuming for purposes of such calculation that all grants have vested). For purposes of making the calculation in Section 8(a)(iv) above, the Board shall make such calculation and shall use the Black-Scholes pricing model for its calculation; provided, however, that if the Black-Scholes pricing model cannot be used to value the types of benefit being valued, the Board shall use any other reasonable method of calculation based upon the recommendation of the Company's independent compensation consultant (or if there is none, an independent compensation consultant retained by the Board for such purpose.) However, gross income shall not include untaxed fringe benefits. Following the occurrence of a Change of Control or termination of of employment for a reason other than For Cause, the Company will pay to the Executive the Severance Benefit in immediately available funds, in United States Dollars, within five business days after the first occurrence of a Change of Control or termination, as applicable. In addition, during the Severance Period, the Company will arrange to provide the Executive Employee Benefits that are welfare benefits (but not share options, share purchase, share appreciation, dividend equivalent rights or similar compensatory benefits) substantially similar to those which the Executive was receiving or entitled to receive immediately prior to the Change of Control. Such one year period will be considered service with the Company for the purpose of determining service credits and benefits due and payable to the Executive under the Company's retirement income, supplemental executive retirement, and other benefit plans of the Company applicable to the Executive, the Executive's dependents, or the 43 Executive's beneficiaries immediately prior to the Change of Control. If and to the extent that any benefit described in the immediately preceding sentence is not or cannot be paid or provided under any policy, plan, program or arrangement of the Company, then the Company will itself pay or provide for the payment of such Employee Benefits to the Executive, and, if applicable, the Executive's dependents and beneficiaries. Employee Benefits otherwise receivable by the Executive pursuant to this Section 8 will be reduced to the extent comparable welfare benefits are actually received by the Executive from another employer during the Severance Period. There will be no right of set-off or counterclaim in respect of any claim, debt of obligation against any payment to or benefit for the Executive provided for in this Agreement, except as expressly provided herein. Notwithstanding any other provision hereof, the parties' respective rights and obligations under this Section 8 and under Sections 11 and 16 will survive any termination or expiration of this Agreement following a Change of Control or termination of employment, other than for cause. Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment. "Employee Benefits" means the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which the Executive is entitled to participate, including, without limitation, any share option, share purchase, share appreciation, dividend equivalent rights, savings, pension, supplemental executive retirement or other retirement income or welfare benefit, deferred compensation, incentive compensation, group or other life, health, medical/hospital, or other insurance (whether funded by actual insurance or self-insured by the Company), disability, salary continuation, expense reimbursement, and other employee benefit policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter by the Company, providing perquisites, benefits and service credit for benefits at least as great in the aggregate as as are payable thereunder prior to a Change of Control. "Severance Period" means the period of time commencing on the date of an occurrence of each change of control and continuing until the earliest of (i) the expiration of one year after each occurrence of an event constituting a change of control, (ii) the Executive's death, or (iii) the Executive's attainment of age 65. (b) TERMINATION BY REASON OF DEATH If the Employment Term is terminated by reason of Death, the Executive shall be entitled to receive a severance payment equal to the Severance Benefit. Vesting of benefits shall be treated as described in Section 24 of this Agreement. (c) TERMINATION BY REASON OF DISABILITY If the Employment Term is terminated by reason of Disability, the Executive shall be entitled to receive a severance payment equal to the Severance Benefit. Vesting of benefits shall be treated as treated as described in Section 24 of this Agreement. 44 The Executive shall receive, so long as the Disability continues, to remain eligible for all benefits provided under any long-term disability program(s) of the Company in effect at the time of such termination, subject to the terms and conditions of any such program(s), as may be amended, changed, modified, or terminated for all employees of the Company. (d) ADDITIONAL PAYMENTS (i) Notwithstanding anything in this Agreement to the contrary, in the event it is determined (as hereafter provided) that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any share option, share appreciation right, dividend equivalent right, restricted shares of similar right, the lapse or termination of any restriction on or the vesting or exercise ability of any of the foregoing (any such payment or distribution, a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue code of 1986, as amended (the "Code") (or any successor provision thereto), by reason of being considered "contingent on a change in ownership or control" of the Company, within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment or payments (collectively, a "Gross-Up Payment"); provided, HOWEVER, that no Gross-up Payment will be made with respect to the Excise Tax, if any, attributable to (A) any incentive share option ("ISO") granted prior to the execution of this Agreement or (B) any share appreciation or similar right, whether or not limited, granted in tandem with any ISO described in clause (A) of this sentence. The Gross-Up Payment will be in an amount such that, after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive will have received an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. (ii) Subject to the provisions of Section 8 (d) (vi), all determinations required to be made under this Section 8(e), including whether an Excise Tax is payable by the Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to the Executive and the amount of such Gross-Up Payment, if any, will be made by a nationally recognized accounting firm (the "Accounting Firm") selected by the Executive in the Executive's sole discretion. The Executive will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and the Executive within 30 calendar days after the Executive's termination date, and any such other time or times as may be requested by the Company of the Executive. If the Accounting Firm determines that any Excise Tax is payable by the Executive, the Company will pay the required Gross-Up Payment to the Executive within five business days after receipt of such determination and calculations with respect to any Payment to the Executive. If the Accounting firm determines that no Excise Tax is payable by the Executive, it will, at the same time as it makes such determination, furnish the Company and the Executive an opinion that the Executive has substantial authority not to report any Excise Tax on the Executive's federal, state or local income or other tax return. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) and the possibility of similar uncertainty regarding applicable state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the 45 Company should have been made (an "Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts or fails to pursue its remedies pursuant to Section 8(d)(vi) and the Executive thereafter is required to make a payment of any Excise Tax, the Executive will direct the Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its determination and detailed supporting calculations to both the Company and the Executive as promptly as possible. Any such Underpayment will be promptly paid by the Company to, or for the benefit of, the Executive within five business days after receipt of such determination and calculations. (iii) The Company and the Executive will each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or the Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation of and issuance of the determinations and calculations contemplated by Section 8(d)(ii). Any determination by the Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company and the Executive. (iv) The federal, state, and local income or other tax returns filed by the Executive will by prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax payable by the Executive. The Executive will make proper payment of the amount of any Excise Payment and, at the request of the Company, provide to the Company true and correct copies (with any amendments) of the Executive's federal tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company, evidencing such payment. If prior to the filing of the Executive's federal income tax return, or corresponding state or local tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment should be reduced, the Executive will within five business days pay to the Company the amount of such reduction. (v) The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated herein will be borne by the Company. If such fees and expenses are initially paid by the Executive, the Company will reimburse the Executive the full amount of such fees and expenses within five business days after receipt from the Executive of a statement therefor and reasonable evidence of the Executive's payment thereof. (vi) The Executive will notify the Company in writing of any claim by the Internal Revenue Service or any other taxing authority that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification will be given as promptly as practicable but no later than 10 business days after the Executive actually receives notice of such claim and the Executive will further apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by the Executive). The Executive will not pay such claim prior to the earlier of (i) the expiration if the 30-calendar day period following the date on which the Executive gives such notice to the Company and (ii) the date that any payment of amount with respect to such claim is due. If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive will: 46 a) provide the Company with any written records or documents in the Executive's possession relating to such claim reasonably requested by the Company; b) take such action in connection with contesting such claim as the Company may reasonably request in writing from time to time, including without limitation accepting legal representation with respect to such claim by attorney competent in respect of the subject matter and reasonably selected by the Company; c) cooperate with the Company in good faith in order effectively to contest such claim; and d) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company will bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and will indemnify and hold harmless the Executive, on an after-tax basis, for and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 8(d), the Company will control all proceedings taken in connection with the contest of any claim contemplated by this Section 8(d)(vi) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided, however, that the Executive may participate therein at the Executive's own cost and expense) and may, at its option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive will prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction, and in one or more appellate courts, as the Company may determine; provided, however, that is the Company directs the Executive to pay the tax claimed and sue for a refund, the Company will advance the amount of such payment to the Executive on an interest-free basis and will indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which the contested amount if claimed to be due is limited solely to such contested amount. The Company's control of any such contested claim will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (vii) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(d) (vi), the Executive receives any refund with respect to such claim, the Executive will (subject to the Company's complying with the requirements of Section 8(e)(vi) pay to the Company the amount of such refund (together with any interest paid or credited thereon after (vii) If, after the receipt by the Executive of an amount advanced by the Company pursuant to any taxes applicable thereto) within 30 calendar days after such receipt and the Company's satisfaction of all accrued obligations under this Agreement. If, after the receipt by the Executive of any amount advanced by the Company pursuant to Section 8(d) (vi), a determination is made that the Executive will not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such determination prior to the expiration of 30 calendar days after such determination, then such advance will be forgiven and will not be 47 required to be repaid and the amount of any such advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid by the Company to the Executive pursuant to this Section 8. 9. CONFIDENTIALITY AND NON-COMPETITION All information (the "Confidential Information") includes all confidential information of the Company and/or its subsidiaries, including information entrusted to the Company and/or any of its subsidiaries by third parties, not otherwise publicly disclosed or available, other than as a result of wrongful bisclosure by the Executive, which, during the Employment Term: (i) is disclosed by any of them to the Executive; or (ii) the Executive had access or otherwise had reason to know; or (iii) was developed or discovered by the Executive. Confidential Information includes, but is not limited to, whether or not legended or otherwise identified as "confidential": (i) property lists, prospective properties lists, and details of agreement with sellers; and (ii) acquisition, expansion, marketing, financial, and other business information and plans; and (iii) research and development and data related thereto; and (iv) other compilations of data; and (v) computer programs and/or records; and (vi) sources of supply; and (vii) confidential information developed by consultants and contractors; and (viii)purchasing, operating, and other costs data; and (ix) employee information; and (x) manuals, memoranda, projections, minutes, plans, drawings, designs, formula books and specifications. (a) RESTRICTION ON USE AND DISCLOSURE The Executive acknowledges that the Confidential Information is valuable and proprietary to the Company or to third parties which have entrusted the Company and/or its subsidiaries, and, except as required by the Executive's Duties, the Executive shall not use, publish, disseminate, or otherwise disclose any Confidential information without prior written consent of the Company. (b) RETURN OF DOCUMENTS Upon termination of the Executive's employment, the Executive shall forthwith deliver to the Company all plans, designs, drawings, 48 specifications, listings, manuals, records, notebooks, and similar repositories of or containing Confidential Information, including all copies, then in the Executive's possession or control, whether prepared by the Executive or others. Upon such termination the Executive shall retain no copies of any such documents. (c) RESTRICTION ON COMPETITIVE EMPLOYMENT The term Business shall mean: (i) the business of the Company and its subsidiaries as described in the Company's most recent Form 10-K; and (ii) any other business in which the Company or any of its subsidiaries is engaged during the Executive's Employment Term. The term Territories shall refer to those metropolitan areas in which the Company owns properties or otherwise is engaged in the Business, including any areas where the Company has specific plans to acquire or develop properties within the following six (6) months following the date of termination or change of control, as applicable, and all outlying areas located within a thirty (30) mile radius of each such metropolitan area. Except as noted in Section 3, Duties, during the Employment Term and the twelve months (12) months following the termination of this Agreement (the "Non-Competition Period"), absent the Company's prior written approval, the Executive shall not, as owner, part-owner, shareholder, partner, director, principal, agent, employee, consultant, or otherwise, within the Territories, directly or indirectly engage or participate in activities relating to, or render services to or invest in any firm or business engaged or about to become engaged in, the Business, provided that the Executive may: (i) engage in the activities as noted in Section 3, Duties; (ii) make passive investments in an enterprise engaged in the Business the shares of ownership of which are publicly traded if the Executive's investment constitutes less than 2% of the total equity of such enterprise. (d) INDUCEMENT / ENTICEMENT During the Employment Term and the Non-Competition Period, the Executive shall not, directly or indirectly: (i) induce, or attempt to induce, any employees or agents or consultants of or to the Company or any subsidiary of the Company to do anything from which the Executive is restricted by reason of Section 9(a) through 9(c), inclusive; or (ii) offer or aid others to offer employment to anyone who is an employee, agent or consultant of or to the Company or an subsidiary of the Company at the time of termination of the Executive. (e) REDUCTION OF NON-COMPETITION PERIOD If this Agreement shall be terminated by the Company pursuant to Section 2(b)(iv), Termination for reason other than For Cause, the provisions of Sections 9(c) and 9(d) shall terminate on the first business day following the termination of the Executive. 49 Unless otherwise provided, the provisions of Sections 9(a) through 9(d), inclusive, shall survive the termination of this Agreement for the duration of the Non-Competition Period. 10. REMEDIES FOR THE COMPANY The Executive acknowledges that remedy at law for any breach or attempted breach of the Executive's obligations under Section 9, Confidentiality and Non-Competition, may be inadequate, agrees that the Company may be entitled to specific performance and injunctive and other equitable remedies in case of any such breach or attempted breach, and further agrees to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief. The termination of the Employment Term pursuant to Section 2(a)(iii), Discharge For Cause, shall not be deemed to be a waiver by the Company of any breach by the Executive of this Agreement or any other obligation owed the Company, and, notwithstanding such a termination, the Executive shall be liable for all damages attributable to such a breach. 11. REMEDIES FOR THE EXECUTIVE In the event the Executive is terminated For Cause and it is ultimately determined the Company lacked "cause", the: (i) Executive's termination shall be treated as a Termination for reason other than For Cause, as it pertains to Section 8(a); and (ii) Executive shall reserve the right to seek remedy for breach of the Agreement by the Company including, but not limited to, any other such damages as may be suffered and/or incurred by the Executive, the Executive's costs incurred during the dispute, and reasonable attorney's fees in connection with such dispute; and (iii)Executive shall receive all Severance Benefits under Section 8(a), Termination for reason other than For Cause, with interest of 8% annually on all payments considered past due from the date at which such payment would have been made. 12. NO WAIVER No Waiver or non-action by either party with respect to any breach by the other party of any provision of this Agreement, nor the waiver or non-action with respect to the provisions of similar agreement with other employees or the breach thereof, shall be deemed or construed to be a waiver of any succeeding breach of such provision, or as a waiver of the provision itself. 13. INVALID PROVISIONS Should any portion of this Agreement be adjusted or held invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable, or void shall, if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof. 50 14. SUCCESSOR AND ASSIGNS Neither the Executive nor the Company may assign its rights, duties, or obligations hereunder without consent of the other. 15. SURVIVAL OF THE EXECUTIVE'S OBLIGATIONS Except with respect to any termination under Section 2(b)(iv), the Executive's obligations under Sections 9 and 10 shall survive regardless of whether or not the Executive's employment is terminated, voluntarily or involuntarily, by the employer or the Executive, with or without cause. 16. SURVIVAL OF THE COMPANY'S OBLIGATIONS The Company's obligations under Sections 8 and 11 shall survive regardless of whether or not the Executive's employment is terminated, voluntarily or involuntarily, by the employer or the Executive, with or without cause. 17. PRIOR AGREEMENTS This Agreement incorporates the entire agreement between both parties with respect to the subject matter hereof and supersedes all prior agreements, documents, or other instruments with respect to the matters covered herein. 18. GOVERNING LAW This Agreement shall be governed by, and interpreted in accordance with the provisions of, the law of the State of Texas, without reference to provisions that refer a matter to the law of any other jurisdiction. Each party hereto hereby irrevocably submits itself to the non-exclusive personal jurisdiction of the Federal and State courts sitting in Texas. 19. NO ORAL MODIFICATIONS This Agreement may not be changed or terminated orally, and no change, termination, or waiver of this Agreement or of any of the provisions herein contained shall be binding unless made in writing and signed by both parties, and, in the case of the Company, by a person designated by the Board. Without limiting the foregoing, any change or changes, from time to time, in the Executive's salary or duties or both shall not be, nor be deemed to be, a change, termination, or waiver of this Agreement or of any of the provisions herein contained. 20. NOTICES All notices and other communications required or permitted hereunder shall be made in writing, and shall be deemed properly given if delivered personally, mailed by certified mail, postage prepaid and return receipt requested, sent by facsimile, or sent by Express Mail or Federal Express or other nationally recognized express delivery service, as follows: If to the Company or the Board: Camden Property Trust Three Greenway Plaza, Suite 1300 Houston, TX 77046 Attention: Board of Trust Managers If to the Executive: D. Keith Oden Three Greenway Plaza, Suite 1300 Houston, TX 77046 51 Notice given by hand, Express Mail, Federal Express, or other such express delivery service shall be effective upon actual receipt. Notice given by facsimile transmission shall be effective upon actual receipt of received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. All notices sent by facsimile transmission shall be confirmed promptly after transmission in writing by certified mail or personal delivery. Any party may change any address to which notice shall be given to it by giving notice as provided above of such change in address. 21. EXECUTIVE'S REPRESENTATION AND WARRANTIES The Executive represents and warrants that he is legally free to make and perform this Agreement, that he has no obligation to any other person or entity that would affect or conflict with any of his obligations hereunder, and that the complete performance of his obligations hereunder will not violate any law, regulation, order, or decree of any governmental or jurisdictional body or contract by which he is bound. 22. EXPENSES; SECURITY It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of the Executive's rights to compensation upon a Change of Control by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare the agreement to pay Executive compensation upon a change of control void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive's choice, at the expense of the Company as hereinafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any Trust Manager, officer, shareholder, or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive's entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship will exist between the Executive and such counsel. Without regard to whether the Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all attorneys' and related fees and expenses incurred by the Executive in connection with any of the foregoing. 52 23. ENTIRE AGREEMENT The parties expressly agree that this Agreement is contractual in nature and not a mere recital, and that it contains all the terms and conditions of the agreement between the parties with respect to the matters set forth herein. All prior negotiations, agreements, arrangements, understandings and statements between the parties relating to the matters set forth herein that have occurred at any time or contemporaneously with the execution of this Agreement (including, but not limited to, the Prior Agreement) are superseded and merger into t his completely integrated Agreement. The Recitals set forth above shall be deemed to be part of this Agreement. 24. VESTING OF BENEFITS Notwithstanding anything in this Agreement, the Company's employee benefit plans, any agreement entered into under such plans, or under any retirement, pension, profit sharing or other similar plan, upon the occurrence of a change of control, as defined in Section 2(e), or termination for reason of death or disability or if Executive is terminated other than For Cause all deferred or unvested portions of any award made to Executive under any of the foregoing plans and agreements shall automatically become fully vested in Executive and shall be in effect and redeemable by or payable to Executive, or Executive's designated beneficiary or estate, on the same conditions (other than vesting) as would have applied had the change of control, or termination for reason of death or disability or the termination other than For Cause, as applicable, not occurred, including, but not limited to, the right to exercise any share options for a period of 10 years from the date of grant. All unvested awards under the plans shall immediately vest upon the change of control, or termination for reason of death or disability or if Executive is terminated other than For Cause and the Executive or Executive's designated beneficiary or estate shall have the right to exercise any vested awards during the balance of the awards' term. EXECUTED as of the date first written above. CAMDEN PROPERTY TRUST By: /s/Richard J. Campo --------------------------------- Name: Richard J. Campo --------------------------------- Title: Chief Executive Officer --------------------------------- EXECUTIVE /s/D. Keith Oden ----------------------------------- D. Keith Oden EX-11.1 4 COMPUTATION OF EARNINGS PER COMMON SHARE 53
EXHIBIT 11.1 CAMDEN PROPERTY TRUST COMPUTATION OF EARNINGS PER COMMON SHARE Year Ended December 31, ---------------------------------------- 1998 1997 1996 ---------- ---------- ---------- BASIC EARNINGS PER SHARE Weighted Average Common Shares Outstanding 41,174 26,257 14,849 ========== ========== ========== Basic Earnings Per Share $ 1.16 $ 1.46 $ 0.59 ========== ========== ========== DILUTED EARNINGS PER SHARE Weighted Average Common Shares Outstanding 41,174 26,257 14,849 Shares Issuable from Assumed Conversion of: Common Share Options and Awards Granted 399 330 130 Minority Interest Units 2,610 1,769 ---------- ---------- ---------- Weighted Average Common Shares Outstanding, as Adjusted 44,183 28,356 14,979 ========== ========== ========== Diluted Earnings Per Share $ 1.12 $ 1.41 $ 0.58 ========== ========== ========== EARNINGS FOR BASIC AND DILUTED COMPUTATION Net Income $ 57,333 $ 38,438 $ 8,713 Less: Dividends on Preferred Shares 9,371 4 ---------- ---------- ---------- Net Income to Common Shareholders (Basic Earnings Per Share Computation) 47,962 38,438 8,709 Dividends on Preferred Shares 4 Minority Interests 1,322 1,655 ---------- ---------- ---------- Net Income to Common Shareholders, as Adjusted (Diluted Earnings Per Share Computation) $ 49,284 $ 40,093 $ 8,713 ========== ========== ==========
EX-13.1 5 ANNUAL REPORT 54 EXHIBIT 13.1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the "Comparative Summary of Selected Financial and Property Data" and the consolidated financial statements and notes thereto appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. The statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may differ materially from those included in the forward-looking statements. These forward-looking statements involve risks and uncertainties, including, but not limited to, the following: changes in general economic conditions in the markets that could impact demand for the rental of the Company's properties, and changes in financial markets and interest rates impacting the Company's ability to meet its financing needs and obligations. BUSINESS Camden Property Trust, a Houston-based real estate investment trust ("REIT"), and its subsidiaries (collectively, "Camden" or the "Company") report as a single business segment, with activities related to the ownership, development, acquisition, management, marketing and disposition of multifamily apartment communities in the Southwest, Southeast, Midwest and Western regions of the United States. As of December 31, 1998, the Company owned interests in and operated or was developing 163 multifamily properties containing 56,968 apartment homes located in nine states. These properties had a weighted average occupancy rate of 93% for the year ended December 31, 1998. Fourteen of the Company's multifamily properties containing 5,658 apartment homes were under development at December 31, 1998. The Company has several additional sites which it intends to develop into multifamily apartment communities. On April 8, 1998, the Company acquired through a tax-free merger (the "Oasis Merger"), Oasis Residential, Inc. ("Oasis"), a publicly traded Las Vegas-based multifamily REIT. The acquisition increased the size of the Company's portfolio from 100 to 152 completed multifamily properties and from 34,669 to 50,183 apartment homes at the date of acquisition. Upon completion of ten properties under development at the date of acquisition, the Company's portfolio would have increased to 54,314 apartment homes in 162 properties. As provided in the Plan of Merger dated December 16, 1997, as amended, each of the shares of Oasis common stock outstanding on April 8, 1998 was exchanged for 0.759 share of the Company's common shares. Each share of Oasis Series A cumulative convertible preferred stock (the "Oasis Preferred Stock") outstanding on April 8, 1998 was reissued as one Camden Series A Cumulative Convertible Preferred Share (the "Preferred Shares") with terms and conditions comparable to the Oasis Preferred Stock. The Company issued 12.4 million common shares and 4.2 million Preferred Shares in exchange for the outstanding Oasis common stock and outstanding Oasis Preferred Stock, respectively. Approximately $484 million of Oasis debt, at fair value, was assumed in the merger. In connection with the Oasis Merger, the Company also acquired the managing member interest in Oasis Martinique, LLC. The remaining interests (the "Martinique Units") are exchangeable into 672,490 common shares and are accounted for as a minority interest. In connection with the Oasis Merger, Camden disclosed its intentions of entering into a joint venture investment (the "Joint Venture") in order to transfer into the Joint Venture 19 apartment communities containing 5,119 apartment homes located in Las Vegas (the "Third Party Transaction"). 55 On June 30, 1998, the Company completed the Third Party Transaction for an aggregate of $248 million with a private limited liability company (the "LLC"). The Company retained a 20% interest in the LLC, which is included in investment in joint ventures. The Third Party Transaction was funded with capital invested by the LLC members, the assumption of $9.9 million of existing nonrecourse indebtedness, the issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. The LLC assumed the $190 million of treasury locks which Camden had entered into during the first quarter of 1998 as a hedge against interest rate exposure for the LLC. The treasury locks were unwound by the LLC simultaneously with the completion of the funding for the Third Party Transaction. Camden used the net proceeds from the Third Party Transaction to reduce outstanding debt by $124 million, including the $9.9 million of existing indebtedness noted above, and set aside $112 million into an escrow account which was used to complete tax-free exchange property acquisitions, retire debt and repurchase the Company's common shares pursuant to the Company's share repurchase program. No book gain or loss was recorded by Camden as a result of the Third Party Transaction. Camden continues to provide property management services for these assets. On April 15, 1997, the Company acquired through a tax-free merger, Paragon Group, Inc. ("Paragon"), a Dallas-based multifamily REIT. The acquisition increased the size of the Company's portfolio from 53 to 103 multifamily properties, and from 19,389 to 35,364 apartment homes (the "Paragon Acquisition"). Each share of Paragon common stock outstanding on April 15, 1997 was exchanged for 0.64 shares of the Company's common shares. The Company issued 9.5 million shares in exchange for all of the outstanding shares of Paragon common stock and 2.4 million limited partnership units ("OP Units") in Camden Operating, L.P. (the "Operating Partnership") and assumed approximately $296 million of Paragon debt, at fair value, in connection with the Paragon Acquisition. The accompanying consolidated financial statements include the operations of Paragon since April 1, 1997, the effective date of the Paragon Acquisition for accounting purposes. 56 The Company's multifamily property portfolio, excluding land held for future development and joint venture properties not managed by the Company, at December 31, 1998, 1997 and 1996 is summarized as follows:
1998 (a) 1997 1996 ---------------------------- ----------------------------- ------------------------------ Apartment Apartment Apartment Homes Properties % (b) Homes Properties % (b) Homes Properties % (b) --------- ------------ ----- ------------ ---------- ----- ---------- ------------ ------ Operating Properties Texas Houston 6,345 15 13% 6,345 16 18% 6,987 18 36% Dallas (c) (d) 9,381 26 17 9,381 26 24 6,045 16 31 Austin 1,745 6 4 1,745 6 5 1,745 6 9 Other 1,641 5 3 1,585 5 4 1,585 5 8 ----------- ------- ------ ----------- ------ ----- ----------- ------ ------- Total Texas Operating Properties 19,112 52 37 19,056 53 51 16,362 45 84 Arizona 2,326 7 5 1,894 5 5 1,249 3 7 California 1,272 3 3 Colorado (c) 1,972 6 3 Florida 7,261 17 14 6,355 17 18 Kentucky 1,142 5 2 1,142 5 3 Missouri 3,327 8 7 3,487 10 10 Nevada (c) 12,163 41 14 North Carolina (c) (d) 2,735 10 4 2,735 10 6 ----------- ------- ------ ----------- ------ ----- ----------- ------ ------- Total Operating Properties 51,310 149 89 34,669 100 93 17,611 48 91 ----------- ------- ------ ----------- ------ ----- ----------- ------ ------- Properties Under Development Texas Houston 2,213 5 4 1,365 3 4 758 2 4 Dallas 600 1 1 732 2 4 ----------- ------- ------ ----------- ------ ----- ----------- ------ ------- Total Texas Development Properties 2,813 6 5 1,365 3 4 1,490 4 8 Arizona 325 1 1 240 1 1 288 1 1 California 380 1 1 Colorado 558 2 1 Florida 1,150 3 2 306 1 1 Kentucky 432 1 1 432 1 1 ----------- ------- ------ ----------- ------ ----- ----------- ------ ------- Total Properties Under Development 5,658 14 11 2,343 6 7 1,778 5 9 ----------- ------- ------ ----------- ------ ----- ----------- ------ ------- Total Properties 56,968 163 100% 37,012 106 100% 19,389 53 100% ======= ====== ====== ===== ====== ======= Less: Joint Venture Apartment Homes (c) (d) 6,704 1,264 ----------- ----------- ----------- Total Apartment Homes - Owned 100% 50,264 35,748 19,389 =========== =========== ===========
(a) Includes the combination of operations at December 31, 1998 of two adjacent properties in Nevada, which were acquired in the Oasis Merger, two adjacent properties in Houston and two adjacent properties in Florida. (b) Based on number of apartment homes owned 100%. (c) The 1998 figures include properties held in joint ventures as follows: one property with 708 apartment homes in Dallas and two properties with 556 apartment homes in North Carolina in which the company owns a 44% interest, one property with 321 apartment homes in Colorado in which the company owns a 50% interest, and 19 properties with 5,119 apartment homes in Nevada in which the company owns a 20% interest. (d) The 1997 figures include properties held in a joint venture as follows: one property with 708 apartment homes in Dallas and two properties with 556 apartment homes in North Carolina in which the company owns a 44% interest. 57 At December 31, 1998, the Company had one property under lease-up as follows:
Estimated Product Number of % Leased Date of Date of Property and Location Type Apartment Homes at 1/27/99 Completion Stabilization - ----------------------------------------- ---------- ----------------- ------------- -------------- ----------------- The Park at Towne Center Glendale, AZ Garden 240 78% 4Q98 2Q99
At December 31, 1998, the Company had 14 development properties in various stages of construction as follows:
Product Number of Estimated Estimated Estimated Type Apartment Cost Date of Date of Property and Location Homes ($ millions) * Completion Stabilization - ------------------------------------------- ------------ ------------- -------------- ------------ --------------- Renaissance Pointe II Orlando, FL Garden 306 $ 17.3 1Q99 3Q99 The Park at Goose Creek Baytown, TX Affordable 272 11.8 2Q99 4Q99 The Park at Midtown Houston, TX Urban 337 21.5 2Q99 4Q99 The Park at Interlocken Denver, CO Garden 340 34.9 3Q99 1Q00 The Park at Holly Springs Houston, TX Garden 548 37.1 3Q99 3Q00 The Park at Caley Denver, CO Urban 218 18.3 4Q99 1Q00 The Park at Oxmoor Louisville, KY Garden 432 22.1 4Q99 3Q00 The Park at Greenway Houston, TX Urban 756 55.7 4Q99 4Q00 The Park at Arizona Center Phoenix, AZ Urban 325 22.0 1Q00 3Q00 The Park at Lee Vista Orlando, FL Garden 492 32.8 1Q00 4Q00 The Park at Mission Viejo Mission Viejo, CA Garden 380 42.0 2Q00 4Q00 The Park at Farmers Market, Phase I Dallas, TX Urban 600 45.9 4Q00 3Q01 ---------- ---------- 5,006 361.4 Marina Pointe II To Be To Be Tampa, FL Garden 352 25.2 Determined Determined The Park at Steeplechase To Be To Be Houston, TX Affordable 300 13.5 Determined Determined ---------- ----------- Total for 14 development properties 5,658 $ 400.1 ========== ===========
* At December 31, 1998, the Company had incurred $182.3 million of the estimated $400.1 million. 58 Camden has diversified into other markets in the Southwest region and into the Southeast, Midwest and Western regions of the United States. At December 31, 1998 and 1997, the Company's investment in the various geographic areas, excluding investment in joint ventures, was as follows:
(Dollars in thousands) 1998 1997 ------------------- ------------------ Texas Houston $ 347,069 14% $ 265,404 19% Dallas 370,538 15 321,101 23 Austin 67,832 3 66,365 5 Other 57,705 2 53,462 4 ------------- ----- ------------ ----- Total Texas Properties 843,144 34 706,332 51 ------------- ----- ------------ ----- Arizona 133,047 5 102,520 8 California 139,602 6 Colorado 158,837 7 3,083 Florida 376,235 15 240,008 17 Kentucky 56,954 2 55,210 4 Missouri 169,741 7 173,939 13 Nevada 487,679 20 North Carolina 90,219 4 100,957 7 ------------- ----- ------------ ----- Total Properties $ 2,455,458 100% $ 1,382,049 100% ============= ===== ============ =====
LIQUIDITY AND CAPITAL RESOURCES Financial Structure. The Company intends to continue maintaining what management believes to be a conservative capital structure by: (i) using a prudent combination of debt, common and preferred equity; (ii) extending and sequencing the maturity dates of its debt where possible; (iii) managing interest rate exposure using fixed rate debt and hedging, where appropriate; (iv) borrowing on an unsecured basis; (v) maintaining a substantial number of unencumbered assets; and (vi) maintaining conservative coverage ratios. The interest coverage ratio was 3.8 times and 3.6 times for the years ended December 31, 1998 and 1997, respectively. At December 31, 1998 and 1997, 73.2% and 78.9%, respectively, of the Company's properties (based on invested capital) were unencumbered. Liquidity. The Company intends to meet its short-term liquidity requirements through cash flows provided by operations, its unsecured lines of credit (the "Unsecured Lines of Credit") described in the Financial Flexibility section and other short-term borrowings. The Company uses common and preferred equity capital and senior unsecured debt to refinance maturing secured debt and borrowings under its Unsecured Lines of Credit. As of December 31, 1998, the Company had $18 million available under the Unsecured Lines of Credit. Subsequent to December 31, 1998, the Company added an additional $75 million in capacity to its Unsecured Lines of Credit, increasing its total capacity to $275 million, raised an additional $39.5 million from the sale of senior unsecured notes, and completed the private placement of $100 million of its perpetual preferred units. The Company filed a universal shelf registration statement in April 1997 providing for the issuance of up to $500 million in equity, debt, preferred or convertible securities, of which $275 million remains unused. Additionally, in March 1997 the Company implemented a $196 million medium-term note program used to provide intermediate and long-term, unsecured publicly-traded debt financing. Finally, the Company has significant unencumbered real estate assets which could be sold or used as collateral for financing purposes should other sources of capital not be available. The Company considers its ability to generate cash to be sufficient, and expects to be able to meet future operating cash requirements and to pay distributions to shareholders and partners. 59 On January 15, 1999, the Company paid a distribution of $0.505 per share for the fourth quarter of 1998 to all holders of record of Camden's common shares as of December 22, 1998, and paid an equivalent amount per unit to holders of OP Units. Total distributions to common shareholders and holders of OP Units for the year ended December 31, 1998 were $2.02 per share for holders who held common shares and OP Units for the full year. For the period from January 1, 1998 through the date of the Oasis Merger, Oasis paid distributions of $0.4525 per share to common shareholders. The Company determines the amount of cash available for distribution in accordance with the partnership agreements and has distributed and intends to continue to make distributions to the holders of OP Units in amounts equivalent to the per share distributions paid to holders of common shares. The Company intends to continue shareholder distributions in accordance with REIT qualification requirements under the federal tax code while maintaining what management believes to be a conservative payout ratio, and expects to continue reducing the payout ratio by raising the distributions at a rate which is less than the funds from operations ("FFO") growth rate. On February 15, 1999, the Company paid a quarterly dividend on its Preferred Shares, which were reissued for Oasis Preferred Stock in conjunction with the merger of Oasis. The dividend in the amount of $0.5625 per share was paid to all preferred shareholders of record as of December 22, 1998. Total dividends to holders of Preferred Shares from the date of the Oasis Merger through December 31, 1998 were $1.6875 per share. For the period from January 1, 1998 through the date of the Oasis Merger, Oasis paid dividends of $0.5625 per share to preferred shareholders. Financial Flexibility. The Company concentrates its growth efforts toward selective development and acquisition opportunities in its core markets, and through the acquisition of existing operating portfolios and development properties in selected new markets. During 1998, the Company incurred $193.2 million in development costs and $139.2 million in acquisition costs. In addition, Camden issued 12.4 million common shares, 4.2 million Preferred Shares and assumed $484 million of indebtedness, at fair value, to purchase Oasis. The Company has announced plans to develop 14 additional properties at an aggregate cost of approximately $400.1 million, of which $182.3 million had been incurred through December 31, 1998. The Company funds its developments and acquisitions through a combination of equity capital, partnership units, medium-term notes, construction loans, other debt securities and the Unsecured Lines of Credit. The Company also seeks to selectively dispose of assets that are not in core markets, have a lower projected net operating income growth rate than the overall portfolio, or no longer conform to the Company's operating and investment strategies. The $275.5 million in net proceeds received from these asset disposals, including the Third Party Transaction, during 1998 were reinvested in acquisitions and developments, used to retire debt and used to repurchase the Company's common shares. The Company's Unsecured Lines of Credit mature July 1999 through July 2000. Prior to maturity, the Company intends to have these notes extended, renegotiated or repaid. The scheduled interest rates on the loans currently range from LIBOR plus 95 basis points to prime. These scheduled rates are subject to change as the Company's credit ratings change. Advances under the Unsecured Lines of Credit may be priced at the scheduled rates, or the Company may enter into bid rate loans ("Bid Rate Loans") with participating banks at rates below the scheduled rates. These Bid Rate Loans have terms of six months or less and may not exceed the lesser of $75 million or the remaining amount available under the Unsecured Lines of Credit. The Unsecured Lines of Credit are subject to customary financial covenants and limitations. As an alternative to its Unsecured Lines of Credit, the Company from time to time borrows using competitively bid unsecured short-term notes with lenders who may or may not be a part of the Unsecured Lines of Credit bank groups. Such borrowings vary in term and pricing and are typically priced at interest rates below those available under the Unsecured Lines of Credit. As a result of the Oasis Merger, the Company assumed $228 million in conventional mortgage loans with interest rates currently ranging from 5 3/4% to 8 5/8%. As of December 31, 1998, $201 million of the conventional mortgage loans assumed remained outstanding. In conjunction with the Oasis Merger, Camden assumed $150 million in senior unsecured notes payable issued by Oasis in November 1996. These notes are due in equal increments in November 2001, 2003, 2006 and bear interest at annual rates ranging from 6 3/4% to 7 1/4%, payable quarterly. 60 Proceeds from the Third Party Transaction were used to reduce outstanding debt by $124 million, including $9.9 million of existing indebtedness and approximately $114 million on the Unsecured Lines of Credit, and $112 million was set aside into an escrow account which was used to complete tax-free exchange property acquisitions, retire debt and repurchase the Company's common shares. In October 1998, the Company issued $102 million principal amounts of senior unsecured notes from its $196 million medium-term note shelf registration. These fixed rate notes, due in October 2000, bear interest at a weighted average rate of 7.19 %, payable semiannually on March 15 and September 15. The net proceeds were used to liquidate the $75 million Reset Notes, pay off certain mortgage notes payable, and reduce indebtedness incurred under the Unsecured Lines of Credit. At December 31, 1998, $69 million of the medium-term note program remained unused. Subsequent to December 31, 1998, the Company issued $39.5 million principal amounts of senior unsecured notes from its $196 million medium-term note shelf registration. These fixed rate notes, due in January 2002 through January 2009, respectively, bear interest at a weighted average rate of 7.07%, payable semiannually on January 15 and July 15. The net proceeds were used to reduce indebtedness outstanding under the Unsecured Lines of Credit. On February 23, 1999, the Operating Partnership issued $100 million of 8.5% Series B Cumulative Redeemable Perpetual Preferred Units ("Preferred Units"). The Preferred Units are redeemable for cash by the Operating Partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The Preferred Units are convertible after 10 years by the holder into registered preferred shares of the Company. The Preferred Units are subordinate to present and future debt of the Operating Partnership and the Company. MARKET RISK The Company uses fixed and floating rate debt to finance acquisitions, developments and maturing debt. These transactions expose the Company to market risk related to changes in interest rates. Derivative financial instruments, specifically interest rate swap agreements, are occasionally used to manage this risk. The Company currently has a $25 million interest rate swap agreement designated as a partial hedge of floating rate debt. The swap is scheduled to mature in July 2000, but the issuing bank has an option to extend this agreement to July 2002. The LIBOR rate is fixed at 6.1%, resulting in a fixed rate equal to 6.1% plus the actual LIBOR spread on the related indebtedness. The Company's policy as to the occasional use of derivative financial instruments in managing market risk exposures is consistent with the prior year and is not expected to change in future years. The Company does not use derivative financial instruments for trading purposes. For fixed rate debt, interest rate changes affect the fair market value but do not impact net income to common shareholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income to common shareholders and cash flows, assuming other factors are held constant. At December 31, 1998, after adjusting for the effect of the interest rate swap agreement, Camden had fixed rate debt of $781.3 million and floating rate debt of $221.3 million. Holding other variables constant (such as debt levels), a one percentage point variance in interest rates would change the unrealized fair market value of the fixed rate debt by approximately $30 million. The net income to common shareholders and cash flows impact on the next year resulting from a one percentage point variance in interest rates on floating rate debt would be approximately $2.2 million, holding all other variables constant. 61 FUNDS FROM OPERATIONS Management considers FFO to be an appropriate measure of performance of an equity REIT. The National Association of Real Estate Investment Trusts currently defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In addition, extraordinary or unusual items, along with significant non-recurring events that materially distort the comparative measure of FFO are typically disregarded in its calculation. The Company's definition of FFO also assumes conversion at the beginning of the period of all convertible securities, including minority interests, which are convertible into common equity. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO should be examined in conjunction with net income as presented in the consolidated financial statements and data included elsewhere in this report. FFO is not defined by generally accepted accounting principles. FFO should not be considered as an alternative to net income as an indication of the Company's operating performance or to net cash provided by operating activities as a measure of the Company's liquidity. Further, FFO as disclosed by other REITs may not be comparable to the Company's calculation. Camden's FFO for the year ended December 31, 1998 increased $62.2 million over 1997 primarily due to the Oasis Merger, the Paragon Acquisition, property acquisitions, developments and improvements in the performance of the stabilized properties in the portfolio. The calculation of FFO for the two years ended December 31, 1998 follows:
1998 1997 --------- ---------- (In thousands) Net income to common shareholders $ 47,962 $ 38,438 Real estate depreciation 76,740 43,769 Minority interests 1,322 1,655 Real estate depreciation from unconsolidated ventures 2,253 906 Interest on convertible subordinated debentures 317 670 Amortization of deferred costs on convertible debentures 31 88 Preferred share dividends 9,371 Gain on sales of properties (10,170) Losses related to early retirement of debt 397 --------- ---------- Funds from operations $137,996 $ 75,753 ========= ========== Weighted average number of common and common dilutive and antidilutive equivalent shares outstanding 46,779 28,882
RESULTS OF OPERATIONS Changes in revenues and expenses related to the operating properties from period to period are primarily due to the Oasis Merger, the Paragon Acquisition, property acquisitions, developments, dispositions and improvements in the performance of the stabilized properties in the portfolio. Where appropriate, comparisons are made on a dollars-per-weighted-average-apartment homes basis in order to adjust for such changes in the number of apartment homes owned during each period. Selected weighted average revenues and expenses per operating apartment home for the three years ended December 31, 1998 are as follows:
1998 1997 1996 ------------ ----------- ------------ Rental income per apartment home per month $ 591 $ 535 $ 508 Property operating and maintenance per apartment home per year $ 2,290 $ 2,414 $ 2,339 Real estate taxes per apartment home per year $ 742 $ 718 $ 760 Weighted average number of operating apartment homes 42,411 29,280 17,362
62 1998 COMPARED TO 1997 The changes in operating results from 1997 to 1998 are primarily due to the Oasis Merger, the Paragon Acquisition, development of five properties aggregating 2,074 apartment homes, the acquisition of seven properties containing 3,123 apartment homes, the disposition of 11 properties containing 2,986 apartment homes and an increase in net operating income generated by the stabilized portfolio. The weighted average number of apartment homes increased by 13,131 apartment homes, or 44.8%, from 29,280 to 42,411 for the years ended December 31, 1997 and 1998, respectively. Total operating properties were 97 and 126 at December 31, 1997 and 1998, respectively. The weighted average number of apartment homes and the operating properties exclude the impact of the Company's ownership interest in operating properties and apartment homes owned in joint ventures. Rental income per apartment home per month increased $56, or 10.5%, from $535 to $591 for the years ended December 31, 1997 and 1998, respectively. The increase was primarily due to increased revenue growth from the stabilized real estate portfolio, higher average rental rates on properties added to the portfolio through the Oasis Merger, the seven acquired properties and completion of new development properties. Other property income increased $8.6 million from $9.4 million to $18.1 million for the years ended December 31, 1997 and 1998, respectively. This increase in other property income was due to a larger number of apartment homes owned and in operation and a $2.9 million increase from new revenue sources such as telephone, cable and water. Property operating and maintenance expenses increased $26.5 million, from $70.7 million to $97.1 million, but decreased as a percent of total property income from 35.8% to 30.5% for the years ended December 31, 1997 and 1998, respectively. The Company's operating expense ratios decreased from the prior year primarily as a result of operating efficiencies resulting from operating a larger portfolio and the impact of the Company's April 1, 1998 adoption of a new accounting policy, whereby expenditures for carpet, appliances and HVAC unit replacements are expensed in the first five years of a property's life and capitalized thereafter. Prior to the adoption of this policy, the Company had been expensing these costs. Had this policy change not been adopted, the 1998 operating expense ratio would have been 32.0%. Real estate taxes increased $10.4 million from $21.0 million to $31.5 million for the years ended December 31, 1997 and 1998, respectively, which represents an annual increase of $24 per apartment home. Real estate taxes per apartment home have increased due to increases in the valuations of renovated, acquired and developed properties, and increases in property tax rates. This increase per apartment home was partially offset by lower property taxes in the portfolio added through the Oasis Merger. General and administrative expenses increased from $4.4 million in 1997 to $8.0 million in 1998, and increased as a percent of revenues from 2.2% to 2.5%. The general and administrative expense ratio increase is mainly attributable to the impact of the Company's March 20, 1998 adoption of Issue No. 97-11, Accounting for Internal Costs Relating to Real Estate Property Acquisitions, discussed in Note 2 in the Company's consolidated financial statements, which was partially offset by efficiencies resulting from operating a larger portfolio. Interest expense increased from $28.5 million in 1997 to $50.5 million in 1998 due to increased indebtedness related to the Oasis Merger, the Paragon Acquisition, completed developments, renovations and property acquisitions. This increase was partially offset by reductions in average interest rates on the Company's debt, the equity offering that occurred in July 1997 and property dispositions. Interest capitalized was $9.9 million and $3.3 million for the years ended December 31, 1998 and 1997, respectively. Depreciation and amortization increased from $44.8 million to $78.1 million. This increase was due primarily to the Oasis Merger, the Paragon Acquisition, developments, renovations and property acquisitions. Gain on sales of properties decreased $10.2 million due to the December 1997 disposition of four properties containing 1,400 apartment homes. Dispositions in 1998 resulted in no book gain or loss. 63 1997 COMPARED TO 1996 The changes in operating results from 1996 to 1997 are primarily due to the Paragon Acquisition, development of ten properties aggregating 3,823 apartment homes, and an increase in net operating income generated by the stabilized portfolio. The weighted average number of apartment homes increased by 11,918 apartment homes, or 68.6%, from 17,362 to 29,280 for the years ended December 31, 1996 and 1997, respectively. Total operating properties were 48 and 97 at December 31, 1996 and 1997, respectively. The 29,280 weighted average apartment homes and the 97 operating properties exclude the impact of the Company's ownership interest in 1,264 apartment homes on three properties owned in joint ventures. Rental income per apartment home per month increased $27, or 5.3%, from $508 to $535 for the years ended December 31, 1996 and 1997, respectively. The increase was primarily due to increased revenue growth from the stabilized real estate portfolio, higher average rental rates on properties added to the portfolio through the Paragon Acquisition and completion of new development properties. Other property income increased $5.0 million from $4.5 million to $9.4 million for the years ended December 31, 1996 and 1997, respectively. This increase in other property income was due to a larger number of apartment homes owned and in operation and a $2.2 million increase from new revenue sources such as telephone, cable and water. Property operating and maintenance expenses increased $30.1 million, from $40.6 million to $70.7 million, but decreased as a percent of total property income from 36.8% to 35.8% for the years ended December 31, 1996 and 1997, respectively. The Company's operating expense ratios decreased from the prior year primarily as a result of operating efficiencies resulting from operating a larger portfolio together with savings in utilities and other costs. Real estate taxes increased $7.8 million from $13.2 million to $21.0 million for the years ended December 31, 1996 and 1997, respectively, which represents an annual decrease of $42 per apartment home. Real estate taxes per apartment home have decreased due to lower property taxes for the Company's properties outside of Texas. This decrease per apartment home was offset by increases in the valuations of renovated, acquired and developed properties, and increases in property tax rates. General and administrative expenses increased from $2.6 million in 1996 to $4.4 million in 1997, and decreased slightly as a percent of revenues from 2.4% to 2.2%. Interest expense increased from $17.3 million in 1996 to $28.5 million in 1997 due to increased indebtedness related to the Paragon Acquisition, completed developments and renovations. This increase was partially offset by reductions in average interest rates on the Company's debt and an equity offering that occurred in July 1997. Interest capitalized was $3.3 million and $4.1 million for the years ended December 31, 1997 and 1996, respectively. Depreciation and amortization increased from $23.9 million to $44.8 million primarily due to the Paragon Acquisition, developments and renovations. Gain on sales of properties increased $10.2 million due to the gain on disposition of four properties containing 1,400 apartment homes in December 1997. INFLATION The Company leases apartments under lease terms generally ranging from six to thirteen months. Management believes that such short-term lease contracts lessen the impact of inflation due to the ability to adjust rental rates to market levels as leases expire. 64 YEAR 2000 CONVERSION Camden has recognized the need to ensure that its computer equipment and software ("computer systems"), other equipment and operations will not be adversely impacted by the change to the calendar Year 2000. As such, the Company has taken steps to identify and resolve potential areas of risk by implementing a comprehensive Year 2000 action plan. The plan is divided into four phases: identification, assessment, notification/certification, and testing/contingency plan development; and includes three major elements: computer systems, other equipment and third parties. The Company is on the fourth phase for its computer systems, and the third phase for its other equipment and third party services. The Company believes that the Year 2000 issue will not pose significant operating problems for the Company's computer systems, since the significant computer equipment and software products the Company utilizes are already compliant and are being converted or modified by March 31, 1999 as part of system upgrades unrelated to the Year 2000 issue. The Company is in the process of developing a contingency plan which will permit its primary computer systems operations to continue if the testing of such conversions and modifications are not completed by March 31, 1999. The total cost to the Company of addressing the Year 2000 issues with respect to its own computer systems, other equipment and operations is expected to be minimal because the Company is not performing its computer systems upgrades and conversions to address the Year 2000 issues. Additionally, the majority of Year 2000 issues are being addressed by use of internal resources and the Company does not separately track such internal costs which are principally payroll and related costs. The Company's minimal cost estimate does not include time and costs that may be incurred by the Company as a result of the failure of any third parties to become Year 2000 ready or costs to implement any contingency plans. The Company is communicating with its key third party service providers and vendors, including those who have previously sold equipment to the Company, to obtain information and compliance certificates, if possible, regarding their state of readiness with respect to the Year 2000 issue. Failure of certain third parties to remediate Year 2000 issues affecting their respective businesses on a timely basis, or to implement contingency plans sufficient to permit uninterrupted continuation of their businesses in the event of a failure of their systems, could have a material adverse impact on the Company's business and results of operations. However, failure of third parties to remediate Year 2000 issues affecting the Company's previously purchased equipment is not expected to have a material adverse impact on the Company's business or results of operations. Final determination of third party Year 2000 readiness is expected to be substantially complete in early 1999, however, none of the responses received from third party service providers as of January 26, 1999 have indicated any problem with bringing their services into Year 2000 compliance. The Company intends to continue to monitor the progress made by third parties, test critical system interfaces and formulate appropriate contingency and business continuation plans to address third party issues identified through its evaluations and assessments. The Company presently believes that the most reasonably likely worst case scenario with respect to the Year 2000 issues is the failure of third party service providers, including utility suppliers and banks, to become Year 2000 compliant. This could result in interruptions in services to the Company's apartment communities for a period of time and could adversely affect the Company's access to credit and money markets which, in turn, could result in loss of normal operating capacity by the Company. If the Company's computer systems completely fail, the Company would be able to continue affected functions either manually or through non-Year 2000 compliant systems. The Company does not believe that the increased costs associated with such interruptions could exceed $1 million. IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, which requires recognition of all derivatives as either assets or liabilities in the financial statements and measurement of those instruments at fair value. SFAS No. 133 is effective for all periods beginning after June 15, 1999. Management is evaluating what, if any, effect on the Company's consolidated financial statements will occur upon the implementation of SFAS No. 133. 65 INDEPENDENT AUDITORS' REPORT To the Shareholders of Camden Property Trust We have audited the accompanying consolidated balance sheets of Camden Property Trust as of December 31, 1998 and 1997, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the management of Camden Property Trust. Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Camden Property Trust at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Houston, Texas January 26, 1999 (except for Notes 3, 6, 11 and 12 as to which the date is February 23, 1999) 66 CAMDEN PROPERTY TRUST CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
December 31, ------------------------------ 1998 1997 -------------- --------------- Assets Real estate assets, at cost Land $ 321,752 $ 182,909 Buildings and improvements 1,917,026 1,155,335 -------------- -------------- 2,238,778 1,338,244 Less: accumulated depreciation (167,560) (94,665) -------------- -------------- Net operating real estate assets 2,071,218 1,243,579 Properties under development, including land 216,680 43,805 Investment in joint ventures 32,484 15,089 -------------- -------------- 2,320,382 1,302,473 Accounts receivable - affiliates 831 950 Notes receivable - affiliates 1,800 1,796 Other assets, net 15,036 7,885 Cash and cash equivalents 5,647 6,468 Restricted cash-- escrow deposits 4,286 4,048 -------------- -------------- Total assets $ 2,347,982 $ 1,323,620 ============== ============== Liabilities and Shareholders' Equity Liabilities Notes payable: Unsecured $ 632,923 $ 316,941 Secured 369,645 163,813 Accounts payable 24,180 13,698 Accrued real estate taxes 21,474 16,568 Accrued expenses and other liabilities 28,278 15,881 Distributions payable 25,735 16,805 -------------- -------------- Total liabilities 1,102,235 543,706 Minority Interests 71,783 63,325 7.33% Convertible Subordinated Debentures 3,576 6,025 Shareholders' Equity Preferred shares of beneficial interest; $2.25 Series A Cumulative Convertible, $0.01 par value per share, liquidation preference of $25 per share, 10,000 shares authorized, 4,165 issued and outstanding at December 31, 1998 42 Common shares of beneficial interest; $0.01 par value per share; 100,000 shares authorized; 45,123 and 31,954 issued at December 31, 1998 and 1997, respectively 447 317 Additional paid-in capital 1,299,539 780,738 Distributions in excess of net income (98,897) (63,526) Unearned restricted share awards (10,039) (6,965) Less: treasury shares, at cost ` (20,704) -------------- -------------- Total shareholders' equity 1,170,388 710,564 -------------- -------------- Total liabilities and shareholders' equity $ 2,347,982 $ 1,323,620 ============== ==============
See Notes to Consolidated Financial Statements. 67 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Year Ended December 31, ----------------------------------------- 1998 1997 1996 ----------- ----------- ----------- REVENUES Rental income $ 300,632 $ 187,928 $ 105,785 Other property income 18,093 9,446 4,453 ----------- ----------- ----------- Total property income 318,725 197,374 110,238 Equity in income of joint ventures 1,312 1,141 Fee and asset management 1,552 743 949 Other income 2,250 531 419 ----------- ----------- ----------- Total revenues 323,839 199,789 111,606 ----------- ----------- ----------- EXPENSES Property operating and maintenance 97,137 70,679 40,604 Real estate taxes 31,469 21,028 13,192 General and administrative 7,998 4,389 2,631 Interest 50,467 28,537 17,336 Depreciation and amortization 78,113 44,836 23,894 ----------- ----------- ----------- Total expenses 265,184 169,469 97,657 ----------- ----------- ----------- INCOME BEFORE GAIN ON SALES OF PROPERTIES, LOSSES RELATED TO EARLY RETIREMENT OF DEBT AND MINORITY INTERESTS 58,655 30,320 13,949 GAIN ON SALES OF PROPERTIES 10,170 115 LOSSES RELATED TO EARLY RETIREMENT OF DEBT (397) (5,351) ----------- ----------- ----------- INCOME BEFORE MINORITY INTERESTS 58,655 40,093 8,713 MINORITY INTERESTS (1,322) (1,655) ----------- ----------- ----------- NET INCOME 57,333 38,438 8,713 PREFERRED SHARE DIVIDENDS (9,371) (4) ----------- ----------- ----------- NET INCOME TO COMMON SHAREHOLDERS $ 47,962 $ 38,438 $ 8,709 =========== =========== =========== BASIC EARNINGS PER SHARE $ 1.16 $ 1.46 $ 0.59 DILUTED EARNINGS PER SHARE $ 1.12 $ 1.41 $ 0.58 DISTRIBUTIONS DECLARED PER COMMON SHARE $ 2.02 $ 1.96 $ 1.90 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 41,174 26,257 14,849 WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON DILUTIVE EQUIVALENT SHARES OUTSTANDING 44,183 28,356 14,979
See Notes to Consolidated Financial Statements. 68 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands, except per share amounts)
Preferred Common Unearned Shares of Shares of Additional Distributions Restricted Beneficial Beneficial Paid-In in Excess of Share Treasury Interest Interest Capital Net Income Awards Shares ---------- ---------- ---------- ------------- ----------- -------- SHAREHOLDERS' EQUITY, JANUARY 1, 1996 $ $ 145 $ 299,808 $ (29,625) $ (2,499) $ Net income to common shareholders 8,709 Public offering of 1,090 common shares 11 27,580 Common shares issued under dividend reinvestment plan 31 Conversion of debentures 6 15,814 Restricted shares issued under benefit plan (82 shares) 1 2,074 (1,062) Common share options exercised (71 shares) 1 1,272 Conversion of preferred shares 1 1,952 Other (192) Cash distributions ($1.90 per share) (28,599) ---------- ---------- ---------- ------------- ----------- --------- SHAREHOLDERS' EQUITY, DECEMBER 31, 1996 165 348,339 (49,515) (3,561) ---------- ---------- ---------- ------------- ----------- --------- Net income to common shareholders 38,438 Common shares issued in Paragon Acquisition (9,466 shares) 95 262,275 Public offering of 4,830 common shares 48 142,579 Common shares issued under dividend reinvestment plan 38 Conversion of debentures 9 21,061 Restricted shares issued under benefit plan (194 shares) 2 5,519 (3,407) Restricted shares placed into Rabbi Trust (261 shares) (3) 3 Common share options exercised (33 shares) 1 773 Conversion of Operating Partnership units 154 Cash distributions ($1.96 per share) (52,449) ---------- ---------- ---------- ------------- ----------- --------- SHAREHOLDERS' EQUITY, DECEMBER 31, 1997 317 780,738 (63,526) (6,965) ---------- ---------- ---------- ------------- ----------- --------- Net income to common shareholders 47,962 Common shares issued in Oasis Merger (12,393 shares) 124 395,404 Preferred shares issued in Oasis Merger (4,165 shares) 42 104,083 Common shares issued under dividend reinvestment plan 35 Conversion of debentures 1 2,408 Restricted shares issued (232 shares) 2 6,675 (3,076) Employee Stock Purchase Plan (136) Restricted shares placed into Rabbi Trust (236 shares) (2) 2 Common share options exercised (82 shares) 1 428 Conversion of Operating Partnership units 4 9,904 Repurchase of common shares (801 shares) (20,704) Cash distributions ($2.02 per share) (83,333) --------- ----------- ----------- ------------ ----------- ---------- SHAREHOLDERS' EQUITY, DECEMBER 31, 1998 $ 42 $ 447 $1,299,539 $ (98,897) $ (10,039) $(20,704) ========= =========== =========== ========== =========== ==========
See Notes to Consolidated Financial Statements. 69 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Year Ended December 31, ------------------------------------ 1998 1997 1996 ----------- ----------- ------------ Cash Flow from Operating Activities Net income $ 57,333 $ 38,438 $ 8,713 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 78,113 44,836 23,894 Equity in income of joint ventures, net of cash received 1,278 929 Gain on sales of properties (10,170) (115) Losses related to early retirement of debt 397 5,351 Minority interests 1,322 1,655 Accretion of discount on unsecured notes payable 169 142 72 Net change in operating accounts 204 (10,253) 3,352 ----------- ----------- ------------ Net cash provided by operating activities 138,419 65,974 41,267 Cash Flow from Investing Activities Cash of Oasis and Paragon at acquisition 7,253 9,847 Net proceeds from Third Party Transaction 226,128 Increase in real estate assets (335,567) (133,206) (71,288) Net proceeds from sales of properties 42,513 37,826 29,794 Net proceeds from sale of joint venture 6,841 Increase in investment in joint ventures (4,922) Decrease in investment in joint ventures 1,478 4,624 Net decrease (increase) in affiliate notes receivable 5,389 7,749 (73) Other (4,126) (549) (130) ----------- ----------- ------------ Net cash used in investing activities (55,013) (73,709) (41,697) Cash Flow from Financing Activities Net increase (decrease) in unsecured lines of credit and short-term borrowings 146,792 31,000 (110,783) Debt repayments from Third Party Transaction (114,248) Proceeds from notes payable 152,600 100,000 181,048 Repayment of notes payable (160,225) (206,097) (61,614) Proceeds from issuance of common shares 142,627 27,591 Distributions to shareholders and minority interests (89,115) (55,514) (27,457) Repurchase of common shares (20,704) Payment of loan costs (1,430) (988) (2,253) Losses related to early retirement of debt (397) (5,351) Other 2,103 1,206 1,379 ----------- ----------- ----------- Net cash (used in) provided by financing activities (84,227) 11,837 2,560 ----------- ----------- ----------- Net (decrease) increase in cash and cash equivalents (821) 4,102 2,130 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,468 2,366 236 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,647 $ 6,468 $2,366 =========== =========== ===========
70 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (In thousands)
Year Ended December 31, ------------------------------------ 1998 1997 1996 ----------- ----------- ------------ Supplemental Information Cash paid for interest, net of interest capitalized $ 51,574 $ 27,155 $ 15,585 Interest capitalized $ 9,929 $ 3,338 $ 4,129 Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of Oasis (including the Third Party Transaction) and Paragon, net of cash acquired: Fair value of assets acquired $ 793,513 $ 650,634 Liabilities assumed 505,721 332,839 Common shares issued 395,528 262,370 Preferred shares issued 104,125 Fair value of minority interest 21,520 65,272 Notes payable assumed upon purchase of properties $ 22,424 $ 16,022 Conversion of 7.33% subordinated debentures to common shares, net $ 2,409 $ 21,070 $ 15,820 Value of shares issued under benefit plans, net $ 6,821 $ 5,372 $ 2,449 Conversion of preferred shares and dividends $ 1,953
See Notes to Consolidated Financial Statements. 71 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS Camden Property Trust ("Camden" or the "Company") is a Houston-based self-administered and self-managed real estate investment trust ("REIT") organized on May 25, 1993. Camden and its subsidiaries report as a single business segment, with activities related to the ownership, development, acquisition, management, marketing and disposition of multifamily apartment communities in the Southwest, Southeast, Midwest and Western regions of the United States. As of December 31, 1998, the Company owned interests in, operated or was developing 163 multifamily properties containing 56,968 apartment homes located in nine states. Fourteen of the Company's multifamily properties containing 5,658 apartment homes were under development at December 31, 1998. The Company has several additional sites which it intends to develop into multifamily apartment communities. Acquisition of Oasis Residential, Inc. On April 8, 1998, the Company acquired through a tax-free merger (the "Oasis Merger"), Oasis Residential, Inc. ("Oasis"), a publicly traded Las Vegas-based multifamily REIT. The acquisition increased the size of the Company's portfolio from 100 to 152 completed multifamily properties, and from 34,669 to 50,183 apartment homes at the date of acquisition. Upon completion of ten properties under development at the date of acquisition, the Company's portfolio would have increased to 54,314 apartment homes in 162 properties. As provided in the Plan of Merger dated December 16, 1997, as amended, each of the shares of Oasis common stock outstanding on April 8, 1998 was exchanged for 0.759 share of the Company's common shares. Each share of Oasis Series A cumulative convertible preferred stock (the "Oasis Preferred Stock") outstanding on April 8, 1998 was reissued as one Camden Series A Cumulative Convertible Preferred Share (the "Preferred Shares") with terms and conditions comparable to the Oasis Preferred Stock. The Company issued 12.4 million common shares and 4.2 million Preferred Shares in exchange for the outstanding Oasis common stock and outstanding Oasis Preferred Stock, respectively. Approximately $484 million of Oasis debt, at fair value, was assumed in the merger. In connection with the Oasis Merger, the Company also acquired the managing member interest in Oasis Martinique, LLC. The remaining interests (the "Martinique Units") are exchangeable into 672,490 common shares and are accounted for as a minority interest. In connection with the Oasis Merger, Camden disclosed its intentions of entering into a joint venture investment (the "Joint Venture") in order to transfer into the Joint Venture 19 apartment communities containing 5,119 apartment homes located in Las Vegas (the "Third Party Transaction"). On June 30, 1998, the Company completed the Third Party Transaction for an aggregate of $248 million with a private limited liability company (the "LLC"). The Company retained a 20% interest in the LLC, which is included in investment in joint ventures. The Third Party Transaction was funded with capital invested by the LLC members, the assumption of $9.9 million of existing nonrecourse indebtedness, the issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. The LLC assumed the $190 million of treasury locks which Camden had entered into during the first quarter of 1998 as a hedge against interest rate exposure for the LLC. The treasury locks were unwound by the LLC simultaneously with the completion of the funding for the Third Party Transaction. Camden used the net proceeds from the Third Party Transaction to reduce outstanding debt by $124 million, including the $9.9 million of existing indebtedness noted above, and set aside $112 million into an escrow account which was used to complete tax-free exchange property acquisitions, retire debt and repurchase the Company's common shares pursuant to the Company's share repurchase program. No book gain or loss was recorded by Camden as a result of the Third Party Transaction. Camden continues to provide property management services for these assets. 72 The Oasis Merger has been recorded under the purchase method of accounting. In accordance with generally accepted accounting principles, the purchase price was allocated to the net assets acquired based on their estimated fair values. No goodwill was recorded in this transaction. The accompanying consolidated financial statements include the operations of Oasis since April 1, 1998, the effective date of the Oasis Merger for accounting purposes. Pro forma unaudited consolidated operating results of the Company for the years ended December 31, 1998 and 1997, assuming that the Oasis Merger and the Third Party Transaction had occurred as of January 1, 1997, are summarized below (in thousands, except per share amounts): Year Ended December 31, ----------------------------- 1998 1997 ------------- -------------- Total revenues $ 337,868 $ 282,274 Net income to common shareholders $ 51,440 $ 59,181 Basic earnings per share $ 1.16 $ 1.53 Diluted earnings per share $ 1.10 $ 1.49 These pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the Oasis Merger and the Third Party Transaction been completed on the date indicated, nor are they necessarily indicative of future operations. Acquisition of Paragon Group, Inc. On April 15, 1997, the Company acquired through a tax-free merger, Paragon Group, Inc. ("Paragon"), a Dallas-based multifamily REIT. The acquisition increased the size of the Company's portfolio from 53 to 103 multifamily properties, and from 19,389 to 35,364 apartment homes (the "Paragon Acquisition"). Each share of Paragon common stock outstanding on April 15, 1997 was exchanged for 0.64 shares of the Company's common shares. The Company issued 9.5 million shares in exchange for all of the outstanding shares of Paragon common stock and 2.4 million limited partnership units ("OP Units") in Camden Operating, L.P. (the "Operating Partnership") and assumed approximately $296 million of Paragon debt, at fair value, in connection with the Paragon Acquisition. The accompanying consolidated financial statements include the operations of Paragon since April 1, 1997, the effective date of the Paragon Acquisition for accounting purposes. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation. The consolidated financial statements of Camden include the assets, liabilities, and operations of the parent company and its wholly-owned subsidiaries and partnerships in which its aggregate ownership is greater than 50%. Those entities owned less than 50% are accounted for using the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, results of operations during the reporting periods and related disclosures. Actual results could differ from those estimates. Operating Partnership. Approximately 29.0% of Camden's multifamily apartment units at December 31, 1998, are held in the Operating Partnership of which Camden holds 81.56% interest and the sole 1% general partner interest. The remaining 17.44% of the Operating Partnership interests are held by former officers, directors and investors in Paragon, who collectively owned 2,000,109 OP Units at December 31, 1998. Minority interests in the accompanying consolidated financial statements relate to holders of these OP Units and the Martinique Units described in Note 1. Each OP Unit is redeemable for one common share of Camden or cash at the election of the Company. Holders of OP Units are not entitled to rights as shareholders of the Company prior to redemption of their OP Units. No member of the Company's management team owns OP Units and only two of the eight Trust Managers of the Company own OP Units. 73 Cash and Cash Equivalents. All cash and investments in money market accounts and other securities with a maturity of three months or less, are considered to be cash and cash equivalents. Restricted Cash. Restricted cash mainly consists of escrow deposits held by lenders for property taxes, insurance and replacement reserves. Substantially all restricted cash is invested in short-term securities. Real Estate Assets, at Cost. Real estate assets are carried at cost plus capitalized carrying charges. Expenditures directly related to the development, acquisition, and improvement of real estate assets, excluding those costs prohibited by EITF 97-11 described in the New Accounting Pronouncements section, are capitalized at cost as land, buildings and improvements. All construction and carrying costs are capitalized and reported on the balance sheet in "Projects under development, including land" until such apartment homes are completed. Upon completion of each building of the project, the total cost of that building and the associated land is transferred to "Land" and "Buildings and improvements" and the assets are depreciated over their estimated useful lives using the straight line method of depreciation. Upon achieving 90% occupancy, or one year from opening the leasing office, whichever occurs first, all apartment homes are considered operating and the Company begins expensing all items that were previously considered as carrying costs. If there is an event or change in circumstance that indicates a potential impairment in the value of a property has occurred, the Company's policy is to assess any potential impairment by making a comparison of the current and projected operating cash flows for such property over its remaining useful life, on an undiscounted basis, to the carrying amount of the property. If such carrying amounts are in excess of the estimated projected operating cash flows of the property, the Company would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its estimated fair market value. The Company capitalized $26.1 million and $13.3 million in 1998 and 1997, respectively, of renovation and improvement costs which extended the economic lives and enhanced the earnings of its multifamily properties. If the accounting policy described below had been adopted as of January 1, 1997, the amounts capitalized for 1998 and 1997 would have increased to $27.2 million and $17.4 million, respectively. Effective April 1, 1998, the Company implemented prospectively a new accounting policy whereby expenditures for carpet, appliances and HVAC unit replacements are capitalized and depreciated over their estimated useful lives. Previously, all such replacements had been expensed. The Company believes that the newly adopted accounting policy is preferable as it is consistent with standards and practices utilized by the majority of the Company's peers and provides a better matching of expenses with the related benefit of the expenditure. The change in accounting principle is inseparable from the effect of the change in accounting estimate and is therefore treated as a change in accounting estimate. See New Accounting Pronouncements section for the effect of this change and the Company's adoption of a new accounting pronouncement on Camden's financial results for the nine months ended December 31, 1998. Carrying charges, principally interest and ad valorem taxes, of land under development and buildings under construction are capitalized as part of projects under development and buildings and improvements to the extent that such charges do not cause the carrying value of the asset to exceed its net realizable value. Capitalized interest was $9.9 million in 1998, $3.3 million in 1997 and $4.1 million in 1996. Capitalized ad valorem taxes were $1.4 million in 1998, $557,000 in 1997 and $617,000 in 1996. All buildings and improvements are depreciated over their remaining estimated useful lives of 10 to 35 years using the straight line method. Capital improvements subsequent to the initial renovation period are depreciated over their expected useful lives of 3 to 15 years using the straight line method. 74 Other Assets, Net. Other assets are amortized over the lives of the asset or the terms of the related debt on the straight line method. Leasehold improvements and equipment are depreciated on the straight line method over the shorter of the expected useful lives or the lease terms which range from 3 to 10 years. Accumulated depreciation and amortization was $4.1 million in 1998 and $2.9 million in 1997 for other assets, deferred financing, leasehold improvements and equipment. Interest Rate Swap Agreements. The differential to be paid or received on interest rate swap agreements is accrued as interest rates change and is recognized over the life of the agreements as an increase or decrease in interest expense. The Company does not use these instruments for trading purposes, rather it uses them to hedge the impact of interest rate fluctuations on floating rate debt. Income Recognition. Rental, other property income, interest and all other sources of income are recognized as earned. Rental Operations. Camden owns and operates multifamily apartment homes that are rented to residents on lease terms ranging from six to thirteen months, with monthly payments due in advance. None of the properties are subject to rent control or rent stabilization. Operations of apartment properties acquired are recorded from the date of acquisition in accordance with the purchase method of accounting. All operating expenses, excluding depreciation, associated with occupied apartment homes for properties in the development and leasing phase are expensed against revenues generated by those apartment homes as they become occupied. In management's opinion, due to the number of residents, the type and diversity of submarkets in which the properties operate, and the collection terms, there is no concentration of credit risk. Income Taxes and Distributions. Camden has maintained and intends to maintain its election as a REIT under the Internal Revenue Code of 1986, as amended. As a result, the Company generally will not be subject to federal taxation to the extent it distributes 95% of its REIT taxable income to its shareholders and satisfies certain other requirements. Accordingly, no provision for federal income taxes has been included in the accompanying consolidated financial statements. Taxable income differs from net income for financial reporting purposes due principally to the timing of the recognition of depreciation expense. This difference is primarily due to the difference in the book/tax basis of the real estate assets and the differing methods of depreciation and useful lives of the assets. During 1998, book depreciation expense exceeded the amount reported for tax purposes by $19.3 million. As a result of these cumulative book/tax differences, the net book basis of the Company's real estate assets exceeds its net tax basis by $344 million at December 31, 1998. At December 31, 1997, the net book basis exceeded the net tax basis by $85 million. 75 A schedule of per share distributions paid by the Company to be reported by the shareholders is set forth in the following table:
Year Ended December 31, ------------------------------------- 1998 1997 1996 ---------- ---------- ---------- Ordinary income $ 1.68 $ 1.30 $ 1.03 20% Long-term capital gain 0.10 0.12 25% Sec. 1250 capital gain 0.24 0.08 Return of capital 0.46 0.87 ---------- ---------- ---------- Total $ 2.02 $ 1.96 $ 1.90 ========== ========== ========== Percentage of distributions representing tax preference items. 9.052% 17.013% 24.769%
Dividends paid to preferred shareholders totaled $1.69 per share for 1998, with $1.40 representing ordinary income, $0.09 representing 20% long-term capital gain, and $0.20 representing 25% Sec. 1250 capital gain. A schedule of 1998 per share distributions paid by Oasis to Oasis shareholders prior to the Oasis Merger is set forth in the following table:
1998 ---------------------------- Common Preferred ------------ ------------ Ordinary income $ 0.28 $ 0.56 Return of capital 0.17 ------------ ------------ Total $ 0.45 $ 0.56 ============ ============
Property Operating and Maintenance Expenses. Property operating and maintenance expenses included normal repairs and maintenance totaling $21.5 million in 1998, $14.6 million in 1997 and $8.3 million in 1996. Earnings Per Share. Basic earnings per share has been computed by dividing net income to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share has been computed by dividing net income to common shareholders (as adjusted) by the weighted average number of common and common dilutive equivalent shares outstanding. 76 The following table presents information necessary to calculate basic and diluted earnings per share for the periods indicated (in thousands, except per share amounts):
Year Ended December 31, ----------------------------------------- 1998 1997 1996 ---------- ---------- ---------- BASIC EARNINGS PER SHARE Weighted Average Common Shares Outstanding 41,174 26,257 14,849 ========== ========== ========== Basic Earnings Per Share $ 1.16 $ 1.46 $ 0.59 ========== ========== ========== DILUTED EARNINGS PER SHARE Weighted Average Common Shares Outstanding 41,174 26,257 14,849 Shares Issuable from Assumed Conversion of: Common Share Options and Awards Granted 399 330 130 Minority Interest Units 2,610 1,769 ---------- ---------- ---------- Weighted Average Common Shares Outstanding, as Adjusted 44,183 28,356 14,979 ========== ========== ========== Diluted Earnings Per Share $ 1.12 $ 1.41 $ 0.58 ========== ========== ========== EARNINGS FOR BASIC AND DILUTED COMPUTATION Net Income $ 57,333 $ 38,438 $ 8,713 Less: Preferred Share Dividends 9,371 4 ---------- ---------- ---------- Net Income to Common Shareholders (Basic Earnings Per Share Computation) 47,962 38,438 8,709 Preferred Share Dividends 4 Minority Interests 1,322 1,655 ---------- ---------- ---------- Net Income to Common Shareholders, as Adjusted (Diluted Earnings Per Share Computation) $ 49,284 $ 40,093 $ 8,713 ========== ========== ==========
Reclassifications. Certain reclassifications have been made to amounts in prior year financial statements to conform with current year presentations. New Accounting Pronouncements. In March 1998, the Accounting Standards Executive Committee ("AcSEC") of the American Institute of Certified Public Accountants ("AICPA") reached a consensus on Statement of Position ("SOP") No. 98-1, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use. SOP No. 98-1 is effective for financial statements for fiscal years beginning after December 15, 1998. The Company believes the adoption of this SOP will not have a material effect on the Company's consolidated financial statements. In March 1998, the Emerging Issues Task Force ("EITF") of the Financial Accounting Standards Board ("FASB") reached a consensus decision on Issue No. 97-11, Accounting for Internal Costs Relating to Real Estate Property Acquisitions, which requires that internal costs of identifying and acquiring operating properties be expensed as incurred for transactions entered into on or after March 20, 1998. Prior to Camden's adoption of this policy, the Company had been capitalizing such costs. The effect of the Company's adoption of Issue No. 97-11 and the new accounting policy for carpet, appliances and HVAC unit replacements on the nine months ended December 31, 1998 was to increase the net income to common shareholders by $3.2 million ($0.08 per basic earnings per share and $0.07 per diluted earnings per share). In April 1998, the AcSEC of the AICPA reached a consensus on SOP No. 98-5, Reporting on the Costs of Start-Up Activities, which provides that costs of start-up activities and organization costs be expensed as incurred. SOP No. 98-5 is effective for financial statements for fiscal years beginning after December 15, 1998. The Company believes the adoption of this SOP will not have a material effect on the Company's consolidated financial statements. 77 In June 1998, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, which requires recognition of all derivatives as either assets or liabilities in the financial statements and measurement of those instruments at fair value. SFAS No. 133 is effective for all periods beginning after June 15, 1999. Management is evaluating what, if any, effect on the Company's consolidated financial statements will occur upon the implementation of SFAS No. 133. 3. NOTES PAYABLE The following is a summary of the Company's indebtedness: (In millions)
December 31, ----------------------- 1998 1997 ---------- ----------- Senior Unsecured Notes: 6 5/8% - 7 1/4% Notes, due 2001 - 2006 $ 323.9 $ 174.0 6.92% - 7.23% Medium-Term Notes, due 2000 - 2004 127.0 25.0 Unsecured Lines of Credit and Short-Term Borrowings 182.0 43.0 Reset Notes 75.0 ----------- --------- 632.9 317.0 Secured Notes - Mortgage Loans (5 7/10% - 8 5/8%), due 1999-2025 369.7 163.8 ----------- --------- Total notes payable $ 1,002.6 $ 480.8 =========== ========= Floating rate debt included in unsecured notes payable, net of $25 million hedging agreement (6 1/4% - 7 3/4%) $ 157.0 $ 93.0 Floating rate tax-exempt debt included in mortgage loans (5 7/10% - 5 3/4%) $ 64.3
As of December 31, 1998, the Company had $18 million available under its revolving unsecured lines of credit ("Unsecured Lines of Credit"). The weighted average balance outstanding on the Unsecured Lines of Credit during the year ended December 31, 1998 was $129 million, with a maximum outstanding balance of $189 million. In February 1999, the Company added an additional $75 million in capacity to its Unsecured Lines of Credit, increasing its total capacity to $275 million. The Unsecured Lines of Credit mature July 1999 through July 2000. Prior to maturity, the Company intends to have these notes extended, renegotiated or repaid. The scheduled interest rates on the loans currently range from LIBOR plus 95 basis points to prime. These scheduled rates are subject to change as the Company's credit ratings change. Advances under the Unsecured Lines of Credit may be priced at the scheduled rates, or the Company may enter into bid rate loans ("Bid Rate Loans") with participating banks at rates below the scheduled rates. These Bid Rate Loans have terms of six months or less and may not exceed the lesser of $75 million or the remaining amount available under the Unsecured Lines of Credit. The Unsecured Lines of Credit are subject to customary financial covenants and limitations. As an alternative to its Unsecured Lines of Credit, the Company from time to time borrows using competitively bid unsecured short-term notes with lenders who may or may not be a part of the Unsecured Lines of Credit bank groups. Such borrowings vary in term and pricing and are typically priced at interest rates below those available under the Unsecured Lines of Credit. As a result of the Oasis Merger, the Company assumed $228 million in conventional mortgage loans with interest rates currently ranging from 5 3/4% to 8 5/8%. As of December 31, 1998, $201 million of the conventional mortgage loans assumed remained outstanding. In conjunction with the Oasis Merger, Camden assumed $150 million in senior unsecured notes payable issued by Oasis in November 1996. These notes are due in equal increments in November 2001, 2003, 2006 and bear interest at annual rates ranging from 6 3/4% to 7 1/4%, payable quarterly. 78 Proceeds from the Third Party Transaction were used to reduce outstanding debt by $124 million, including $9.9 million of existing indebtedness and approximately $114 million on the Unsecured Lines of Credit, and $112 million was set aside into an escrow account which was used to complete tax-free exchange property acquisitions, retire debt and repurchase the Company's common shares. In October 1998, the Company issued $102 million principal amounts of senior unsecured notes from its $196 million medium-term note shelf registration. These fixed rate notes, due in October 2000, bear interest at a weighted average rate of 7.19%, payable semiannually on March 15 and September 15. The net proceeds were used to liquidate the $75 million Reset Notes, pay off certain mortgage notes payable, and reduce indebtedness incurred under the Unsecured Lines of Credit. At December 31, 1998, the Company maintained a $25 million interest rate hedging agreement which is scheduled to mature in July 2000. The issuing bank has an option to extend this agreement to July 2002. The LIBOR rate is fixed at 6.1%, resulting in a fixed rate equal to 6.1% plus the actual LIBOR spread on the related indebtedness. This swap continues to be used as a hedge to manage the risk of interest rate fluctuations on the Unsecured Lines of Credit and other floating rate indebtedness. At December 31, 1998, the weighted average interest rate on floating rate debt was 6.6%. Subsequent to December 31, 1998, the Company issued $39.5 million principal amounts of senior unsecured notes from its $196 million medium-term note shelf registration. These fixed rate notes, due in January 2002 through January 2009, respectively, bear interest at a weighted average rate of 7.07%, payable semiannually on January 15 and July 15. The net proceeds were used to reduce indebtedness outstanding under the Unsecured Lines of Credit. Scheduled principal repayments on all loans outstanding at December 31, 1998 over the next five years are $18.6 million in 1999, $295.6 million in 2000, $167.7 million in 2001, $6.2 million in 2002, $125.7 million in 2003 and $388.8 million thereafter. 4. CONVERTIBLE SUBORDINATED DEBENTURES In April 1994, the Company issued $86.3 million aggregate principal amount of 7.33% Convertible Subordinated Debentures due 2001 (the "Debentures"). The Debentures are convertible at any time prior to maturity into common shares of beneficial interest, $0.01 par value, of the Company at a conversion price of $24 per share, subject to adjustment under certain circumstances. The Debentures will not be redeemable by the Company prior to maturity, except in certain circumstances intended to maintain the Company's status as a REIT. Interest on the Debentures is payable on April 1 and October 1 of each year. The Debentures are unsecured and subordinated to present and future senior debt and will be effectively subordinated to all debt and other liabilities of the Company. As of December 31, 1998, $82.7 million in principal amount of the Debentures had been converted to 3.4 million common shares. For the converted Debentures, the earned but unpaid interest was forfeited by the Debenture holders in accordance with the Indenture and the unpaid interest payable was credited to additional paid-in-capital. In addition, $3.2 million of unamortized Debenture issue costs have been reclassified to additional paid-in-capital. Had all these converted Debentures converted as of the beginning of the period, basic earnings per share would have been $1.17, $1.46 and $0.62 per share for the years ended December 31, 1998, 1997 and 1996, respectively. Diluted earnings per share would have been $1.12, $1.41 and $0.62 per share for the years ended December 31, 1998, 1997 and 1996, respectively. Deferred Debenture issue costs of $58,000 and $142,000 remained outstanding at December 31, 1998 and 1997, respectively, and are being amortized over the life of the Debentures. 79 5. INCENTIVE AND BENEFIT PLANS The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25") and related interpretations in accounting for its share-based compensation. Under APB No. 25, since the exercise price of employee share options equals the market price of the Company's shares at the date of grant, no compensation expense is recorded. Restricted shares are recorded to compensation expense over the vesting periods based on the market value on the date of grant, and no compensation expense is recorded for the Company's Employee Stock Purchase Plan ("ESPP"), since the ESPP is considered non-compensatory. The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Incentive Plan. The Company has a non-compensatory option plan (the "Plan") which was amended in the second quarter of 1997 by the Company's shareholders and trust managers. This amendment resulted in an increase in the maximum number of common shares available for issuance under the Plan to 10% of the common shares outstanding at any time. Compensation awards that can be granted under the Plan include various forms of incentive awards including incentive share options, non-qualified share options and restricted share awards (collectively, the "Incentive Awards"). The class of eligible persons that can receive grants of Incentive Awards under the Plan consists of non-employee trust managers, key employees, consultants, and directors of subsidiaries as determined by a committee of the Board of Trust Managers (the "Committee") of the Company. No Incentive Awards may be granted after May 27, 2003. Following is a summary of the activity of the Plan for the three years ended December 31, 1998:
Shares Available for Issuance Options and Restricted Shares ------------- --------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average 1998 1997 1996 1998 1998 Price 1997 Price 1996 Price ------------- ----------- ----------- ----------- ----------- ------------ --------- Balance at January 1 1,748,983 1,303,849 $ 24.94 843,360 $ 23.34 870,835 $ 23.12 Current Year Share Adjustment Due to Plan Amendment 1,165,618 Options Granted (1,657,008) 1,657,008 29.32 310,050 26.99 Exercised (82,327) 22.96 (33,042) 23.39 (71,450) 22.35 Forfeited 271,538 (271,538) 23.57 (4,333) 24.00 (54,650) 23.71 ------------- ----------- ----------- ----------- ----------- ------------ --------- Net Options (1,385,470) 1,303,143 30.92 272,675 27.47 (126,100) 22.94 ------------- ----------- ----------- ----------- ----------- ------------ --------- Restricted Shares Granted (248,769) 248,769 29.06 193,724 28.42 124,341 24.73 Forfeited (17,262) 27.67 (5,910) 26.39 (25,716) 24.37 ------------- ----------- ----------- ----------- ----------- ------------ --------- Net Restricted Shares (248,769) 231,507 29.16 187,814 28.48 98,625 24.83 ------------- ----------- ----------- ----------- ----------- ------------ --------- Balance at December 31 1,280,362 2,838,499 $ 28.03 1,303,849 $ 24.94 843,360 $ 23.34 ============= =========== =========== =========== =========== ============ ========= Exercisable options at December 31 586,607 $ 26.15 565,600 $ 22.95 533,617 $ 22.86 Vested restricted shares at December 31 213,782 $ 25.20 123,341 $ 24.46 56,781 $ 23.96
Options are exercisable, subject to the terms and conditions of the Plan, in increments of 33.33% per year on each of the first three anniversaries of the date of grant. The Plan provides that the exercise price of an option (other than non-employee trust manager options) will be determined by the Committee on the day of grant and 80 to date all options have been granted at an exercise price which equals the fair market value on the date of grant. Options exercised during 1998 were exercised at prices ranging from $22 to $24 per share. At December 31, 1998, options outstanding were at prices ranging from $22 to $29.44 per share. Such options have a weighted average remaining contractual life of nine years. The Company converted all unexercised Oasis stock options issued under the former Oasis stock incentive plans that are held by former employees of Oasis into 894,111 options to purchase Camden common shares based on the 0.759 exchange ratio described in Note 1. The options are exercisable at prices ranging from $28.66 to $33.76. All of the Oasis options became fully vested upon conversion, are exercisable, and have a weighted average remaining contractual life of six years. These options are exercisable at a weighted average price of $30.29. The fair value of each option grant, excluding the Oasis stock options, was estimated on the date of grant utilizing the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 1998 and 1997, respectively: risk-free interest rates ranging from 5.5% to 5.6% and 6.3% to 6.9%, expected life of ten years, dividend yield of 7.8% and 6.3%, and expected share price volatility of 13.9% and 14.4%. The weighted average fair value of options granted in 1998 and 1997, respectively, was $1.27 per share and $2.63 per share. Restricted shares have vesting periods of up to five years. The compensation cost for restricted shares has been appropriately recognized at fair market value of the Company's shares. Employee Stock Purchase Plan. In July 1997, the Company established and commenced an ESPP for all active employees, officers, and trust managers who have completed one month of continuous service. Participants may elect to purchase Camden common shares through payroll or director fee deductions and/or through quarterly contributions. At the end of each six-month offering period, each participant's account balance is applied to acquire common shares on the open market at 85% of the market value, as defined, on the first or last day of the offering period, whichever price is lower. A participant may not purchase more than $25,000 in value of shares during any Plan Year, as defined. No compensation expense was recognized for the difference in price paid by employees and the fair market value of the Company's shares at the date of purchase. There were 32,678 and 0 shares purchased under the ESPP during 1998 and 1997, respectively. The weighted average fair value of ESPP shares purchased in 1998 was $30.41 per share. On January 4, 1999, 31,761 shares were purchased under the ESPP related to the 1998 Plan Year. If the Company applied the recognition provisions of SFAS No. 123 to its option grants and ESPP, the Company's net income to common shareholders and related basic and diluted earnings per share would be as follows (in thousands, except per share amounts):
Year Ended December 31, ----------------------- 1998 1997 ----------- ---------- Net income to common shareholders $ 47,360 $ 38,381 Basic earnings per share $ 1.15 $ 1.46 Diluted earnings per share $ 1.10 $ 1.41
The Company did not grant any option awards in 1996. The effects of applying SFAS No. 123 in this pro forma disclosure are not indicative of future amounts. Rabbi Trust. In February 1997, the Company established a rabbi trust (the "Rabbi Trust"), in which salary and bonus amounts awarded to certain officers under the Key Employee Share Option Plan and restricted shares awarded to certain officers may be deposited. The Company accounts for the Rabbi Trust similar to a compensatory stock option plan. At December 31, 1998, approximately 497,000 restricted shares were held in the Rabbi Trust. 81 401(k) Savings Plan. The Company has a 401(k) savings plan (the "Savings Plan") which is a voluntary defined contribution plan. Under the Savings Plan, every employee is eligible to participate beginning on the earlier of January 1 or July 1 following the date the employee has completed six months of continuous service with the Company. Each participant may make contributions to the Savings Plan by means of a pre-tax salary deferral which may not be less than 1% nor more than 15% of the participant's compensation. The federal tax code limits the annual amount of salary deferrals that may be made by any participant. The Company may make matching contributions on the participant's behalf. A participant's salary deferral contribution will always be 100% vested and nonforfeitable. A participant will become vested in the Company's matching contributions 33.33% after one year of service, 66.67% after two years of service and 100% after three or more years of service. Expenses under the Savings Plan were not material. 6. COMMON SHARE REPURCHASE PROGRAM In September 1998, the Board of Trust Managers authorized the Company to repurchase up to $50 million of Camden's common shares through open market purchases and private transactions. At December 31, 1998 the Company had repurchased 801,400 common shares for a total cost of $20.7 million. As of February 23, 1999, an additional 1,142,310 shares were purchased with the remaining $29.3 million. 7. CONVERTIBLE PREFERRED SHARES The 4,165,000 Preferred Shares reissued in conjunction with the Oasis Merger pay a cumulative dividend quarterly in arrears in an amount equal to $2.25 per share per annum. The Preferred Shares generally have no voting rights and have a liquidation preference of $25 per share plus accrued and unpaid distributions. The Preferred Shares are convertible at the option of the holder at any time into common shares at a conversion price of $32.4638 per common share (equivalent to a conversion rate of 0.7701 per common share for each Preferred Share), subject to adjustment in certain circumstances. The Preferred Shares are not redeemable by the Company prior to April 30, 2001. 8. RELATED PARTY TRANSACTIONS Camden Connection, Inc. ("CCI") (formerly Apartment Connection, Inc.) is a nonqualified-REIT subsidiary. CCI was established to act as a leasing agent providing tenants for apartment owners in Houston, including properties owned by the Company. Locator fees paid by the Company to CCI were $79,000, and $136,000 for the years ended 1997, and 1996, respectively. The Company made an unsecured working capital revolving line of credit available to CCI, which was renewable annually. The loan had a maximum commitment of $1.2 million and earned interest at a fixed rate of 7.5% per annum. During 1997, the operations of CCI were sold and the loan was paid off. Two of the Company's executive officers (the "Executives") have loans totaling $1.8 million with one of the Company's nonqualified-REIT subsidiaries. The Executives utilized amounts received from these loans to purchase common shares of the Company. The loans mature in April of 1999 and bear interest at the fixed rate of 7.0%. These loans are non-recourse, but are secured by a pledge of such common shares, and do not require any prepayments of principal until maturity. The Company is currently in the process of renegotiating the maturity date and interest rate terms of these loans with the Executives. In connection with the Paragon Acquisition, Oasis Merger and the Third Party Transaction, the Company began performing residential services for owners of affiliated properties. Management fees earned on the properties amounted to $583,000 and $279,000 for the years ended December 31, 1998 and 1997, respectively. Prior to 1997, the Company had management agreements in which the Executives had 1% economic interests with respect to four properties. Fees earned amounted to $428,000 for the year ended 1996. Although the management agreements were not the result of arm's length negotiations, the Company believes that they were no more favorable to the owners than the fees that would have been paid to unaffiliated third parties under similar circumstances. 82 In connection with the Oasis Merger, the Company entered into consulting agreements with two former Oasis executives, one of whom currently serves as a trust manager of the Company, to locate potential investment opportunities in California through Camden Capital, Inc., a subsidiary of the Company. During 1998, the Company paid consulting fees totaling $340,000 to these executives. At December 31, 1998, Camden Capital had invested approximately $4.9 million in three operating properties and one development property held in two joint ventures which the Company does not manage. 9. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS SFAS No. 107 requires disclosure about fair value for all financial instruments, whether or not recognized, for financial statement purposes. Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 1998 and December 31, 1997. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could obtain on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. As of December 31, 1998 and 1997, management estimates that the fair value of (i) cash and cash equivalents, receivables, accounts payable, accrued expenses and other liabilities and distributions payable are carried at amounts which reasonably approximate their fair value; and (ii) based upon the Company's effective borrowing rate for issuance of debt with similar terms and remaining maturities, the carrying amounts of fixed rate debt approximate fair value. The Company is exposed to credit risk in the event of nonperformance by counterparties to its interest rate swap agreements, but has no off-balance sheet risk of loss. The Company anticipates that its counter parties will fully perform their obligations under the agreements. 10. NET CHANGE IN OPERATING ACCOUNTS The effect of changes in the operating accounts on cash flows from operating activities is as follows: (In thousands)
Year Ended December 31, ----------------------------------------- 1998 1997 1996 ------------ ------------ ------------ Decrease (increase) in assets: Accounts receivable - affiliates $ 1,496 $ 853 $ 210 Other assets, net 1,518 2,046 221 Restricted cash - escrow deposits 1,272 (1,733) 929 Increase (decrease) in liabilities: Accounts payable 11,570 434 (788) Accrued real estate taxes 3,879 842 1,381 Accrued expenses and other liabilities (19,531) (12,695) 1,399 ------------ ------------ ------------ Net change in operating accounts $ 204 $ (10,253) $ 3,352 ============ ============ ============
11. COMMITMENTS AND CONTINGENCIES Construction Contracts. As of December 31, 1998, the Company was obligated for approximately $124.2 million of additional expenditures (a substantial amount of which is to be provided by debt). 83 Lease Commitments. At December 31, 1998, Camden had long-term leases covering certain land, office facilities and equipment. Rental expense totaled $1.0 million in 1998, $783,000 in 1997 and $475,000 in 1996. Minimum annual rental commitments for the years ending December 31, 1999 through 2003 are $1.0 million, $982,000, $916,000, $899,000 and $935,000, respectively, and $9.6 million in the aggregate thereafter. Employment Agreements. The Company has employment agreements with six of its senior officers, the terms of which expire at various times through August 20, 1999. Such agreements provide for minimum salary levels as well as various incentive compensation arrangements, which are payable based on the attainment of specific goals. The agreements also provide for severance payments in the event certain situations occur such as termination without cause or a change of control. The severance payments vary based on the officer's position and amount to one times the current salary base for four of the officers and 2.99 times the average annual compensation over the previous three fiscal years for the two remaining officers. Six months prior to expiration, unless notification of termination is given by the senior officers, these agreements extend for one year from the date of expiration. Contingencies. Prior to our merger with Oasis, Oasis had been contacted by certain regulatory agencies with regards to alleged failures to comply with the Fair Housing Amendments Act (the "Fair Housing Act") as it pertained to nine properties (seven of which the Company currently owns) constructed for first occupancy after March 31, 1991. On February 1, 1999, the Justice Department filed a lawsuit against us in the United States District Court for the District of Nevada alleging (1) that the design and construction of these properties violates the Fair Housing Act and (2) that the Company, through the merger with Oasis, has discriminated in the rental of dwellings to persons because of handicap. The complaint requests an order that (i) declares that the defendant's policies and practices violate the Fair Housing Act; (ii) enjoins the Company from (a) failing or refusing, to the extent possible, to bring the dwelling units and public use and common use areas at these properties and other covered units that it has designed and/or constructed into compliance with the Fair Housing Act, (b) failing or refusing to take such affirmative steps as may be necessary to restore, as nearly as possible, the alleged victims of the defendants alleged unlawful practices to positions they would have been in but for the discriminatory conduct and (c) designing or constructing any covered multi-family dwellings in the future that do not contain the accessibility and adaptability features set forth in the Fair Housing Act; and requires the Company to pay damages, including punitive damages, and a civil penalty. The Company is currently inspecting these properties to determine the extent of the alleged noncompliance and the changes that may be necessitated. At this time, the Company is not able to provide an estimate of costs and expenses associated with this matter. There can be no assurance that the Company will be successful in the defense of the Justice Department action. If this lawsuit is successful, the Company could suffer a material adverse impact. Camden is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such matters will not have a material adverse effect on the consolidated financial statements of Camden. 12. SUBSEQUENT EVENTS On February 23, 1999, the Operating Partnership issued $100 million of 8.5% Series B Cumulative Redeemable Perpetual Preferred Units ("Preferred Units"). The Preferred Units are redeemable for cash by the Operating Partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The Preferred Units are convertible after 10 years by the holder into registered preferred shares of the Company. The Preferred Units are subordinated to present and future debt of the Operating Partnership and the Company. In the ordinary course of its business, the Company issues letters of intent indicating a willingness to negotiate for the purchase or sale of multifamily properties or development land. In accordance with local real estate market practice, such letters of intent are non-binding, and neither party to the letter of intent is obligated to pursue negotiations unless and until a definitive contract is entered into by the parties. Even if definitive contracts are entered into, the letters of intent and resulting contracts contemplate that such contracts will provide the purchaser with time to evaluate the properties and conduct its due diligence and during which time the purchaser will have the ability to terminate the contracts without penalty or forfeiture of any deposit 84 or earnest money. There can be no assurance that definitive contracts will be entered into with respect to any properties covered by letters of intent or that the Company will acquire or sell any property as to which the Company may have entered into a definitive contract. Further, due diligence periods are frequently extended as needed. An acquisition or sale becomes probable at the time that the due diligence period expires and the definitive contract has not been terminated. The Company is then at risk under an acquisition contract, but only to the extent of any earnest money deposits associated with the contract, and is obligated to sell under a sales contract. The Company is currently in the due diligence period for the purchase of land for development. No assurance can be made that the Company will be able to complete the negotiations or become satisfied with the outcome of the due diligence. The Company seeks to selectively dispose of assets that are not in core markets, have a lower projected net operating income growth rate than the overall portfolio, or no longer conform to the Company's operating and investment strategies. The proceeds from these sales may be reinvested in acquisitions or developments or used to retire debt. 13. QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized quarterly financial data for the years ended December 31, 1998 and 1997 are as follows: (In thousands, except per share amounts)
First Second Third Fourth Total ---------- ----------- ----------- ---------- ----------- 1998**: Revenues $ 58,592 $ 91,587 $ 86,549 $ 87,111 $ 323,839 Net income to common shareholders 8,961 9,568 14,650 14,783 47,962 Basic earnings per share 0.28 0.22 0.33 0.33 1.16 Diluted earnings per share 0.27 0.21 0.31 0.32 1.12 1997**: Revenues $ 29,472 $ 54,072 $ 56,939 $ 59,306 $ 199,789 Net income to common shareholders 4,064 6,429 8,260 19,685* 38,438 Basic earnings per share 0.25 0.24 0.27 0.62* 1.46 Diluted earnings per share 0.24 0.24 0.27 0.59* 1.41
* Includes a $10,170 or $0.32 basic earnings and $0.29 diluted earnings per share impact related to gain on sales of properties. ** Includes results of the Paragon Acquisition and the Oasis Merger beginning April 1, 1997 and 1998, respectively. 14. PRICE RANGE OF COMMON SHARES (UNAUDITED) The high and low sales prices per share of the Company's common shares, as reported on the New York Stock Exchange composite tape, and distributions per share declared for the quarters indicated were as follows:
High Low Distributions ------------- ------------- ------------------ 1998: First $ 30 9/16 $ 28 5/8 $ 0.505 Second 31 1/16 27 15/16 0.505 Third 30 7/16 25 0.505 Fourth 27 7/8 24 1/2 0.505 1997: First $ 28 3/4 $ 26 3/4 $ 0.490 Second 31 5/8 26 1/2 0.490 Third 31 5/8 28 5/8 0.490 Fourth 33 3/16 29 1/4 0.490
85 CAMDEN PROPERTY TRUST COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA (In thousands, except per share amounts)
Years Ended December 31, -------------------------------------------------------------------- 1998* 1997** 1996 1995 1994 ------------- ------------- ----------- ----------- ----------- OPERATING DATA Revenues: Rental income $ 300,632 $ 187,928 $ 105,785 $ 92,275 $ 71,468 Other property income 18,093 9,446 4,453 3,617 2,811 ------------- ------------- ----------- ----------- ----------- Total property income 318,725 197,374 110,238 95,892 74,279 Equity in income of joint ventures 1,312 1,141 Fee and asset management 1,552 743 949 1,029 721 Other income 2,250 531 419 353 456 ------------- ------------- ----------- ----------- ----------- Total revenues 323,839 199,789 111,606 97,274 75,456 ------------- ------------- ----------- ----------- ----------- Expenses Property operating and maintenance 97,137 70,679 40,604 37,093 29,352 Real estate taxes 31,469 21,028 13,192 11,481 8,962 General and administrative 7,998 4,389 2,631 2,263 2,574 Interest 50,467 28,537 17,336 13,843 8,807 Depreciation and amortization 78,113 44,836 23,894 20,264 16,239 ------------- ------------- ----------- ----------- ----------- Total expenses 265,184 169,469 97,657 84,944 65,934 ------------- ------------- ----------- ----------- ----------- Income before gain on sales of properties, losses related to early retirement of debt and minority interests 58,655 30,320 13,949 12,330 9,522 Gain on sales of properties 10,170 115 Losses related to early retirement of debt (397) (5,351) ------------- ------------- ----------- ---------- ----------- Income before minority interests 58,655 40,093 8,713 12,330 9,522 Minority interests (1,322) (1,655) ------------- ------------- ----------- ---------- ----------- Net income 57,333 38,438 8,713 12,330 9,522 Preferred share dividends (9,371) (4) (39) (20) ------------- ------------- ----------- ---------- ----------- Net income to common shareholders $ 47,962 $ 38,438 $ 8,709 $ 12,291 $ 9,502 ============= ============= =========== =========== =========== Basic earnings per share $ 1.16 $ 1.46 $ 0.59 $ 0.86 $ 0.78 Diluted earnings per share $ 1.12 $ 1.41 $ 0.58 $ 0.86 $ 0.77 Distributions per common share $ 2.02 $ 1.96 $ 1.90 $ 1.84 $ 1.76 Weighted average number of common shares outstanding 41,174 26,257 14,849 14,325 12,188 Weighted average number of common and common dilutive equivalent shares outstanding 44,183 28,356 14,979 14,414 12,310 BALANCE SHEET DATA (AT END OF PERIOD) Real estate assets $ 2,487,942 $ 1,397,138 $ 646,545 $ 607,598 $ 510,324 Accumulated depreciation (167,560) (94,665) (56,369) (36,800) (17,731) Total assets 2,347,982 1,323,620 603,510 582,352 504,284 Notes payable 1,002,568 480,754 244,182 235,459 149,547 Minority interests 71,783 63,325 Convertible subordinated debentures 3,576 6,025 27,702 44,050 47,800 Series A Preferred Shares issued in 1993 1,950 1,950 Shareholders' Equity 1,170,388 710,564 295,428 267,829 277,604 Common shares outstanding 43,825 31,694 16,521 14,514 14,273
86 CAMDEN PROPERTY TRUST COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA (CONTINUED) (In thousands, except property data amounts)
Years Ended December 31, ------------------------------------------------------------------- 1998* 1997** 1996 1995 1994 ------------ ------------- ------------ ------------- ------------- OTHER DATA Cash flows provided by (used in): Operating activities $ 138,419 $ 65,974 $ 41,267 $ 37,594 $ 33,560 Investing activities (55,013) (73,709) (41,697) (97,003) (198,0877) Financing activities (84,227) 11,837 2,560 59,404 159,388 Funds from operations*** 137,996 75,753 39,999 35,260 28,604 PROPERTY DATA Number of operating properties (at end of period) 149 100 48 50 48 Number of operating apartment homes (at end of period) 51,310 34,669 17,611 16,742 15,783 Number of operating apartment homes (weighted average) 42,411 29,280 17,362 16,412 13,694 Weighted average monthly total property income per apartment home $ 626 $ 562 $ 529 $ 487 $ 452 Properties under development (at end of period) 14 6 5 9 8
*Effective April 1, 1998 the Company acquired Oasis. **Effective April 1, 1997 the Company acquired Paragon. ***Management considers FFO to be an appropriate measure of the performance of an equity REIT. The National Association of Real Estate Investment Trusts ("NAREIT") currently defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In addition, extraordinary or unusual items, along with significant non-recurring events that materially distort the comparative measure of FFO are typically disregarded in its calculation. Prior to March 1995 the NAREIT definition of FFO required the add back of non-real estate depreciation and amortization, such as loan cost amortization. Camden adopted the new FFO definition prescribed by NAREIT during 1995. The Company's definition of FFO also assumes conversion at the beginning of the period of all convertible securities, including minority interests, which are convertible into common equity. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO should be examined in conjunction with net income as presented in the consolidated financial statements and data included elsewhere in this report. FFO is not defined by generally accepted accounting principles. FFO should not be considered as an alternative to net income as an indication of the Company's operating performance or to net cash provided by operating activities as a measure of the Company's liquidity. Further, FFO as disclosed by other REIT's may not be comparable to the Company's calculation. EX-21.1 6 SUBSIDIARIES OF THE REGISTRANT 87 EXHIBIT 21.1
State of Incorporation/ Name Under Which Names of Subsidiaries Organization Business is Done - -------------------------------------------------------- ----------------------- ----------------------------------- 1. Camden Operating, L.P. Delaware Camden Operating, L.P. 2. Camden USA, Inc. Delaware Camden USA, Inc.
EX-23.1 7 INDEPENDENT AUDITOR'S CONSENT 88 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 33-80230 filed on June 15, 1994, No. 333-32569 filed on July 31, 1997 and No. 333-57565 filed on June 24, 1998, each on Form S-8, Amendment No. 2 to No. 33-84658 filed on March 30, 1995, Amendment No. 1 to No. 33-84536 filed on March 30, 1995, Amendment No. 1 to No. 333-24637 filed on April 14, 1997, No. 333-25637 filed on April 22, 1997 and Amendment No. 1 to No. 333-70295 filed on January 8, 1999, each on Form S-3, of Camden Property Trust of our report dated January 26, 1999 (except for Notes 3, 6, 11 and 12 as to which the date is February 23, 1999), appearing in this Annual Report on Form 10-K of Camden Property Trust for the year ended December 31, 1998. DELOITTE & TOUCHE LLP Houston, Texas March 26, 1999 EX-24.1 8 POWER OF ATTORNEY 89 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Richard J. Campo ------------------------------------------------------- Signature Richard J. Campo ------------------------------------------------------- Print Name Dated: March 29, 1999 90 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/D. Keith Oden ------------------------------------------------------- Signature D. Keith Oden ------------------------------------------------------- Print Name Dated: March 29, 1999 91 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden and Richard J. Campo, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/G. Steven Dawson ------------------------------------------------------- Signature G. Steven Dawson ------------------------------------------------------- Print Name Dated: March 29, 1999 92 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/William R. Cooper ------------------------------------------------------- Signature William R. Cooper ------------------------------------------------------- Print Name Dated: March 25, 1999 93 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/George A. Hrdlicka ------------------------------------------------------- Signature George A. Hrdlicka ------------------------------------------------------- Print Name Dated: March 29, 1999 94 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Scott S. Ingraham ------------------------------------------------------- Signature Scott S. Ingraham ------------------------------------------------------- Print Name Dated: March 26, 1999 95 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Lewis A. Levey ------------------------------------------------------- Signature Lewis A. Levey ------------------------------------------------------- Print Name Dated: March 25, 1999 96 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/F. Gardner Parker ------------------------------------------------------- Signature F. Gardner Parker ------------------------------------------------------- Print Name Dated: March 29, 1999 97 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby constitute and appoint D. Keith Oden, Richard J. Campo and G. Steven Dawson, and each of them, each with full power to act without the other, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign an Annual Report (the "Annual Report") of CAMDEN PROPERTY TRUST on Form 10-K for the year ended December 31, 1998 and to sign any and all amendments to the Annual Report and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. /s/Steven A. Webster ------------------------------------------------------- Signature Steven A. Webster ------------------------------------------------------- Print Name Dated: March 29, 1999 EX-27.1 9 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1998 DEC-31-1998 9,933 0 0 0 0 0 2,487,942 167,560 2,347,982 0 1,002,568 0 42 447 1,169,899 2,347,982 0 323,839 0 128,606 78,113 0 50,467 0 0 0 0 0 0 57,333 1.16 1.12
EX-27.2 10 RESTATED FINANCIAL DATA SCHEDULES
5 1,000 3-MOS 6-MOS 9-MOS DEC-31-1998 DEC-31-1998 DEC-31-1998 MAR-31-1998 JUN-30-1998 SEP-30-1998 6,765 127,893 39,959 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,448,987 2,262,551 2,413,204 108,865 127,198 147,285 1,356,682 2,284,052 2,322,270 0 0 0 535,856 926,118 962,728 0 0 0 0 42 42 319 446 446 709,639 1,203,832 1,194,979 1,356,682 2,284,052 2,322,270 0 0 0 58,592 150,179 236,728 0 0 0 25,607 62,218 95,877 14,488 36,977 57,388 0 0 0 7,754 23,266 36,680 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8,961 23,215 40,208 0.28 0.49 0.83 0.27 0.47 0.79
EX-27.3 11 RESTATED FINANCIAL DATA SCHEDULES
5 0000906345 CAMDEN PROPERTY TRUST 1,000 12-MOS 9-MOS DEC-31-1997 DEC-31-1997 DEC-31-1997 SEP-30-1997 10,516 7,597 0 0 0 0 0 0 0 0 0 0 1,397,138 1,325,840 94,665 87,014 1,323,620 1,273,708 0 0 480,754 440,197 0 0 0 0 317 318 710,247 704,684 1,323,620 1,273,708 0 0 199,789 140,483 0 0 91,707 65,015 44,836 31,425 0 0 28,537 20,742 0 0 0 0 0 0 0 0 0 0 0 0 38,438 18,753 1.46 .77 1.41 .76
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