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 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
_
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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.)
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 964-3555
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class 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
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. |X|
The aggregate market value of voting shares of beneficial interest held by
non-affiliates of the registrant was $451,605,448 at March 18, 1997.
The number of common shares of beneficial interest outstanding at March 18,
1997 was 16,705,224.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the year
ended December 31, 1996 are incorporated by reference in Parts II and IV.
Portions of the registrant's Proxy Statement in connection with its Annual
Meeting of Shareholders to be held June 5, 1997 are incorporated by
reference in Part III.
PAGE
PART I
Item 1. Business
Introduction
Camden Property Trust and its subsidiaries ("Camden" or the "Company")
are engaged in the ownership, development, acquisition, management,
marketing and disposition of multifamily apartment communities in the
Southwest region of the United States. As of December 31, 1996, the
Company owned and operated 48 multifamily properties ("Operating
Properties") containing 17,611 units located in Houston, Dallas/Fort Worth,
Austin, Corpus Christi, El Paso, Phoenix and Tucson. These properties had
a weighted average occupancy rate of 94.0% for the year ended December 31,
1996. The Company is developing five multifamily properties (the
"Development Properties") in Houston, Dallas and Phoenix which will, when
completed, add 1,778 units to its portfolio, and has one site in Denver
which it intends to develop (collectively with the Operating Properties and
the Development Properties, the "Camden Properties").
On December 16, 1996, the Company announced the execution of a
definitive merger agreement pursuant to which Paragon Group, Inc. would be
merged with and into a wholly-owned subsidiary of Camden. Upon
consummation of the merger, the Company will have 35,364 units and
approximately $1.25 billion in total assets. Each share of Paragon will be
exchanged for 0.64 shares of Camden. The exchange ratio is based on
Camden's closing price on December 4, 1996 of $27.75 per share and $17.75
per share for Paragon. If Camden's share price falls below $25.67 per
share during a specified time frame as set forth in the merger agreement,
Paragon has the right to terminate the agreement, subject to Camden's right
to negate such termination right by increasing the exchange ratio so that
Paragon's shareholders receive the same aggregate dollar value of Camden
shares had Camden's share price remained at the $25.67 per share threshold.
Paragon is a fully integrated real estate investment trust ("REIT")
headquartered in Dallas, Texas whose business is the operation, development
and acquisition of multifamily apartment communities in the Southwest,
Midwest, North Carolina and Florida. Paragon is a self-administered and
self-managed REIT that, as of December 31, 1996, owned interests in 57
completed multifamily properties located in six states, with three
additional multifamily properties under construction. Subsequent to
December 31, 1996, three of Paragon's properties were sold and one of
Paragon's construction properties was completed.
The merger with Paragon has been structured as a tax-free transaction
and will be treated as a purchase for accounting purposes. The merger is
subject to the approval of both companies' shareholders. The meetings to
consider the transaction have been scheduled for April 15, 1997. It is
anticipated that the merger will be completed by the end of April 1997.
At December 31, 1996, the Company employed 613 persons approximately
73 of whom were located at the Company's headquarters and 540 of whom were
"on-site" or in regional operating offices. The Company's headquarters are
located at 3200 Southwest Freeway, Suite 1500, Houston, Texas 77027 and its
telephone number is (713) 964-3555.
Operating Strategy
Management believes that producing consistent earnings growth and
developing a strategy for selective investment in favorable markets are
crucial factors to Camden's success. Camden relies heavily on its
sophisticated property management capabilities and innovative operating
strategies in its efforts to produce consistent earnings growth.
Sophisticated Property Management. Management believes the depth of
its organization enables Camden to deliver quality services, thereby
promoting resident satisfaction and improving resident retention, which
reduces operating expenses. Camden manages the Camden Properties utilizing
its staff of professionals and support personnel, including certified
property managers, certified public accountants, experienced apartment
managers and leasing agents, and trained apartment maintenance technicians.
All on-site personnel are trained to deliver high quality services to their
residents. Camden attempts to motivate 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. Management believes 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
Camden's 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 Camden Property's
seasonal rental patterns. Camden offers leases of six-month to
thirteen-month terms, with individual property marketing plans structured
to respond to local market conditions. In addition, Camden conducts
ongoing customer service surveys to ensure timely responsiveness to
changing resident needs and the highest level of resident satisfaction.
Acquisitions and Dispositions. Camden believes it is well positioned
in its markets with the expertise to take advantage of both acquisition and
development opportunities. This dual capability, combined with what
management believes is a conservative financial structure, affords Camden
the ability to concentrate its growth efforts towards selective acquisition
opportunities and development alternatives.
Several of Camden's core markets are targeted by Camden for continued
acquisitions during 1997. Camden plans to continue diversification of its
investments within its core markets, both geographically and in terms of
the number of units and selection of amenities offered. The broadest
segment of Camden's core markets is comprised of properties which are ten
to fifteen years old. Camden's Operating Properties have an average age of
ten years (calculated on a basis of investment dollars). Camden believes
its demonstrated ability to make physical improvements to 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
the acquired Camden Properties.
To generate consistent earnings growth, Camden seeks to selectively
dispose of properties and redeploy capital if management determines a
property cannot meet long-term earnings growth expectations. Camden
disposed of five properties containing 1,219 units in 1996. The net
proceeds of $29.8 million from the property dispositions were either
reinvested in acquisitions or developments or were used to retire debt.
New Development. Selective development of new apartment properties in
Camden's core markets will continue to be important to the growth of
Camden's portfolio for the next several years. Camden uses 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 the 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.
Management believes that it understands and effectively manages the risks
associated with development and that the risks of new development are
justified by higher potential yields.
Environmental Matters. Under various federal, state, and local
environmental laws, regulations and ordinances, a current or previous owner
or operator of real estate may be required to investigate and clean up
hazardous or toxic substances, petroleum product releases or ACMs at such
property and may be held liable to a governmental entity or to third
parties for property damage and for investigation and cleanup costs
incurred by such parties in connection with the contamination. The costs
of investigation, remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to
properly remediate the contamination on such property, may adversely affect
the owner's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment
of hazardous or toxic substances at a disposal or treatment facility also
may be liable for the costs of remediation or removal of a release of
hazardous or toxic substances at or from such facility whether or not such
facility is owned or operated by such person. In addition, some
environmental laws create a lien on the contaminated site in favor of the
government for damages and costs it incurs in connection with the
contamination. Finally, the owner of a site may be subject to common law
claims by third parties based on damages and costs resulting from
environmental contamination emanating from a site.
In connection with its acquisitions of properties, the Company's
practice is to obtain Phase I and, if necessary, Phase II environmental
assessments. These Phase I assessments have been carried out in accordance
with accepted industry practices. The Company has also conducted limited
subsurface investigations and tested for radon and lead-based paint where
such procedures have been recommended by the consultants.
Insurance. The Company carries comprehensive liability, fire,
extended coverage and rental loss insurance with respect to all of its
properties, with policy specifications, insured limits and deductibles
customarily carried for similar properties, and carries similar insurance
with respect to any undeveloped parcels (with such exceptions as are
appropriate given the undeveloped nature of such properties).
Financial Strategy
Financial Structure. The Company intends to continue maintaining what
management believes to be a conservative capital structure by: (i)
targeting a ratio of total debt to total market capitalization of less than
50%; (ii) extending and sequencing the maturity dates of its debt where
possible; (iii) borrowing at fixed rates; (iv) borrowing on an unsecured
basis; (v) maintaining a substantial number of unencumbered assets; and
(vi) maintaining a conservative debt service coverage ratio.
Camden has maintained on a quarterly basis a financial structure with
no more than 40% total debt to total market capitalization since its
initial public offering ("Camden IPO") in July 1993. At December 31, 1996,
the Company's ratio of total debt to total market capitalization was
approximately 32.6% (based on the closing price of $28.63 per common share
of the Company on the New York Stock Exchange composite tape on December
31, 1996). This ratio represents total consolidated debt of the Company
(excluding the Company's 7.33% Convertible Debentures due 2001
["Convertible Debentures"]) as a percentage of the market value of the
Company's common shares (including common shares issuable upon conversion
of the Convertible Debentures, but excluding common shares issuable upon
exercise of outstanding options) plus total consolidated debt (excluding
the Convertible Debentures). The interest coverage ratio was 3.2 times and
3.4 times for 1996 and 1995, respectively. At December 31, 1996 and 1995,
84.3% and 68.6%, respectively, of the Company's properties (based on
invested capital) were unencumbered. After adjusting for the early 1997
retirement of two conventional mortgage loans, this unencumbered property
percentage increased to 90.1%.
Liquidity. The Company intends to meet its short-term liquidity
requirements through cash flows provided by operations, the $150 million
unsecured credit facility (the "Unsecured Credit Facility" or "facility"),
construction loans, and other short-term borrowing arrangements. The
Company intends to use equity capital or senior unsecured debt to refinance
maturing secured debt, borrowings under its facility and other short-term
borrowing arrangements. The Company has commenced under its previously
filed shelf registration statement a $196 million medium-term note program
to be used to provide intermediate or long-term, unsecured publicly-traded
debt, none of which has yet been issued. The Company considers its
ability to generate cash to be sufficient, and expects to be able to meet
future operating requirements and shareholder distributions.
On December 13, 1996, the Company declared its fourth quarter dividend
in the amount of $0.475 per common share, bringing the total dividends for
the year to $1.90 per common share. The fourth quarter distributions were
paid on January 17, 1997 to shareholders of record as of December 30, 1996.
During the first quarter of 1997, the Company announced an increase in the
quarterly dividend rate to $0.49 per common share effective for 1997. 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 dividends per
share at a rate which is less than the funds from operations per share
growth rate.
Financial Flexibility. The Company concentrates its growth efforts
toward selective development and acquisition opportunities in its core
markets. During the year ended December 31, 1996, the Company incurred
$56.1 million in development costs and $6.3 million in acquisition costs
for new properties. The Company also seeks to selectively dispose of
assets that are either 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 $29.8
million in net proceeds received from these asset disposals during 1996
were either reinvested in acquisitions or developments or were used to
retire debt.
The Company funds its developments and acquisitions through a
combination of equity capital, debt securities, conventional mortgage
loans, the Unsecured Credit Facility and other short-term borrowing
arrangements. In the past, the Company had also utilized construction
loans to fund its developments. The Unsecured Credit Facility is subject
to certain restrictions and financial covenants. The facility may be used
for acquisitions, developments and working capital purposes. During 1996,
the Company utilized the facility to retire three secured construction
loans aggregating $26.1 million and later refinanced that amount with
ten-year unsecured notes described below. The facility is currently
structured as a revolving facility until July 1997. The interest rate on
the facility, which is subject to changes in the Company's credit ratings,
was reduced to LIBOR plus 150 basis points or Prime during 1996.
Management is currently negotiating the terms of the facility with its bank
group and expects to be able to extend the maturity date and lower the
interest rate on this facility. Furthermore, management believes it will
continue to be able to extend the maturity date of this facility as needed
in the future. The facility is subject to certain restrictive covenants
including, among others, liquidity, net worth, leverage, capitalization and
cash flow ratios and limitations on capital investments. Such restrictions
also include a limitation on distributions to common shareholders that are
not to exceed 95% of funds from operations except as required to maintain
REIT status. As of December 31, 1996, the Company had $138.0 million
available under its facility.
Subsequent to December 31, 1996, the Company began utilizing
competitively bid short-term borrowings as an alternative to borrowing
under its Unsecured Credit Facility. Such borrowings vary in term and
pricing but have the same covenants as the facility and may be funded
through lenders outside of the facility bank group at rates substantially
below those of the facility. Since there are no commitments in place for
such arrangements, these borrowings cannot exceed the unused portion of the
facility.
On October 16, 1996, the Company completed a common share offering
from its previously filed shelf registration statement selling 1,090,000
shares at a gross price of $25.875 per share. The net proceeds of $27.6
million were used primarily to retire a $25.1 million secured construction
loan.
During 1996, the Company issued from its previously filed shelf
registration statement two issues of senior unsecured notes. The first
issue for an aggregate principal amount of $100 million accrues interest at
a rate of 6.6% per annum, has an average effective annual rate of 6.7%, and
matures within five years. The second issue for an aggregate principal
amount of $75 million accrues interest at a rate of 7.0% per annum, has an
average effective annual rate of 7.2%, and matures within ten years. These
two issues of senior unsecured notes received investment-grade ratings from
Moody's Investors Service, Standard & Poor's and Duff & Phelps. Both
issues pay interest semi-annually and are direct, senior unsecured
obligations of the Company ranking equally with all other unsecured and
unsubordinated indebtedness of the Company. Both issues may be redeemed at
any time at the option of the Company subject to make-whole provisions.
The net proceeds from the first issue of $98.4 million were used to reduce
$93.4 million of indebtedness under the Unsecured Credit Facility, to pay
$4.9 million arising from the early settlement of hedging agreements
related to the indebtedness repaid and to pay $500,000 to extinguish a
bank's option related to a settled hedging agreement. The net proceeds
from the second issue of $73.6 million were used to reduce $64.0 million of
indebtedness under the facility and to repay the Company's only remaining
secured construction loan of $9.4 million.
Subsequent to December 31, 1996, the Company prepaid two of its 8.8%
conventional mortgage loans with outstanding balances at December 31, 1996
of $20.3 million and prepayment penalties of $203,000. The loans were
prepaid by utilizing funds from the lower interest bearing Unsecured Credit
Facility.
At December 31, 1996, a $25 million interest rate hedging agreement
remained in effect and is scheduled to mature in July 2000 with a bank's
option to extend to July 2002. The LIBOR rate on this $25 million hedging
agreement is fixed at 6.1%. The resulting fixed rate is equal to the 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. The differential to be paid or received on the interest rate
hedging agreement is accrued as interest rates change and is recognized
over the life of the agreement as an increase or decrease in interest
expense.
Markets and Competition
Camden's portfolio consists of middle to upper market apartment
properties. Camden has expanded its portfolio since the Camden IPO through
targeted acquisitions and developments in selected high-growth markets. By
combining acquisition, renovation and development capabilities, management
believes it is able to better respond to changing conditions in each
market, thereby reducing market risk and allowing Camden to take advantage
of opportunities as they arise.
At December 31, 1996, 88% of Camden's real estate assets were located
in Texas. Since the Camden IPO, Camden has diversified into other markets
in the Southwest region of the United States, including Phoenix and Tucson,
with additional development properties in Phoenix, Corpus Christi, Austin
and Dallas. At the time of the Camden IPO, approximately 77% of the Camden
Properties (based on the number of units) were located in Houston. At
December 31, 1996, after giving effect to the anticipated completion of the
Development Properties, 40% of the Camden Properties were located in
Houston. The Company intends to further diversify geographically into the
Midwest, North Carolina and Florida through its planned merger with
Paragon.
Camden believes it has benefitted from the strong employment growth
and economic diversification within the State of Texas. Camden also
believes the diversified employment base of the Texas metropolitan areas
where the Camden Properties are located provides significant stability to
Camden's cash flow. For example, the major industries in Houston include
petrochemicals, health care, technology and education. In Dallas, the
major industries include trade, transportation and energy. In Austin, the
major industries include government, education and technology.
Camden believes that there is a limited supply of vacant apartments in
the markets where the Camden Properties are located due to only moderate
new construction of multifamily apartment properties during the last
decade. Camden expects the rate of new apartment construction in these
markets to continue to be restrained in the near future, due to higher
investment yield requirements, continued conservative lending parameters,
restrictions on building relating to political factors, impact fees and
infrastructure assessments and the lack of tax and governmental incentives.
There are numerous housing alternatives that compete with Camden's
Properties in attracting residents. Camden's Properties compete directly
with other multifamily properties and single family homes that are
available for rent in the markets in which Camden's properties are located.
Camden's 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. In
addition, management believes that the accelerating growth in the formation
of non-traditional households, which tend to rent, should increase the
demand for apartments.
Disclosure Regarding Forward Looking Statements
The statements contained in Item 1 of 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: the proposed merger with Paragon Group,
Inc., changes in general economic conditions in the markets that could
impact demand for the Company's product, and changes in financial markets
and interest rates impacting the Company's ability to meet its financing
needs and obligations.
PAGE
Item 2. Properties
The Properties
The Camden Properties typically consist of two- and three-story
buildings in a landscaped setting and provide residents with a variety of
amenities. Most of the Camden 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 units offer
additional features such as fireplaces, vaulted ceilings, microwave ovens,
covered parking, icemakers, washers and dryers and ceiling fans. The
Operating Properties' units average 781 square feet of living area.
Operating Properties
For the year ended December 31, 1996, no single Operating Property
accounted for greater than 4.8% of the Company's total revenues. The
Operating Properties had an average occupancy rate of 94.0% and 93.3% in
1996 and 1995, respectively. Resident leases are generally for six-month
to thirteen-month terms and usually require security deposits. Forty-two
of the Operating Properties have in excess of 200 units, with the largest
having 804 units. Nine of the Operating Properties were constructed by the
Company or its predecessors and placed in service since 1992. Twenty-six
were placed in service between 1982 and 1987, eleven were placed in service
between 1974 and 1981 and one was placed in service in each of 1968 and
1969.
Property Table
The following table sets forth information with respect to the
Company's Operating Properties as of December 31, 1996:
PAGE
OPERATING PROPERTIES
December 1996 December 1995
Average Monthly Average Monthly
Average
1996 Rental Rates 1995 Rental Rates
Number Year Year Unit
Average -------------- Average --------------
Property of Placed in Renovation Size
Occupancy Per Per Occupancy Per Per
and Location Units Service Commenced (Sq. Ft.)
<F1> Unit Sq Ft <F1> Unit Sq Ft
- ------------------------ ------- ---------- ---------- ---------
- ---------- ---- ----- --------- ---- -----
ARIZONA
Phoenix
Scottsdale Legacy<F2> 428 1996 <F3> 1,067
95% $867 $0.81
Tucson
Eastridge 456 1984 1994 559
94 443 0.79 89% $441 $0.79
Oracle Villa 365 1974 1994 1,026
92 713 0.70 87 711 0.69
TEXAS
Austin
Autumn Woods 283 1984 1993 644
95 553 0.86 95 548 0.85
Calibre Crossing 183 1986 1994 705
93 588 0.84 95 595 0.84
Huntingdon 398 1995 <F3> 903
90 814 0.90 94 824 0.91
Quail Ridge 167 1984 1994 859
95 670 0.78 95 659 0.77
Ridgecrest 284 1995 <F3> 851
92 774 0.91 94 774 0.91
South Oaks 430 1980 1993 705
92 571 0.80 95 549 0.77
Corpus Christi
Breakers<F2> 288 1996 <F3> 861
96 747 0.86
Miramar<F4> 244 1994/95 <F3> 722
85 653 0.90 84 629 0.89
Potters Mill 344 1986 1994 775
94 575 0.74 95 552 0.71
Waterford 580 1976/80 1993 767
91 509 0.66 92 484 0.63
Dallas/Fort Worth
Cottonwood Ridge 208 1985 1994 829
96 529 0.64 97 508 0.61
Emerald Valley 516 1986 1994 743
95 617 0.83 93 593 0.80
Emerald Village 304 1987 1994 713
96 581 0.82 95 564 0.79
Glen Lakes 424 1979 1992 877
95 696 0.79 92 672 0.77
Ivory Canyon 602 1986 1994 548
95 502 0.92 94 491 0.90
North Dallas Crossing 446 1985 1993/94 730
94 582 0.80 92 567 0.78
Oakland Hills 476 1985 1994 853
95 563 0.66 93 539 0.63
Park at Addison<F2> 456 1996 <F3> 942
90 842 0.89
Pineapple Place 256 1983 1994 652
94 543 0.83 95 526 0.81
Randol Mill Terrace 340 1984 1994 848
93 538 0.64 94 527 0.62
Shadowlake 264 1984 1994 733
92 533 0.73 92 510 0.70
Towne Centre Village 188 1983 1994 735
96 535 0.73 95 514 0.70
Towne Crossing 442 1984 1994 772
94 535 0.69 95 521 0.68
Valley Creek Village 380 1984 1994 855
96 588 0.69 93 567 0.66
Valley Ridge 408 1987 1994 773
94 573 0.74 95 555 0.72
Westview 335 1983 1993 697
94 561 0.81 96 537 0.77
El Paso
La Plaza 129 1969 1994 997
98 586 0.59 98 568 0.57
Houston
Bay Crest Village 96 1980 1990 855
91 580 0.68 92 569 0.67
Bay Place 193 1968 1990 856
91 529 0.62 88 509 0.59
Brighton Place 282 1978 1992 749
95 510 0.68 96 488 0.65
Cambridge Place 336 1979 1992 771
95 521 0.68 92 506 0.66
Crossing, The 366 1982 1993 762
96 524 0.69 93 498 0.65
Driscoll Place 488 1983 1991 708
94 437 0.62 91 421 0.60
Eagle Creek 456 1984 1992 639
96 503 0.79 95 498 0.78
Hayes Place 307 1980 1991 746
93 485 0.65 91 472 0.63
Jones Crossing 290 1982 1994 748
96 522 0.70 95 505 0.68
Roseland Place 671 1982 1992 726
97 503 0.69 96 484 0.67
Sierra Pines I & II<F5> 804 1982 1993 766
91 455 0.59 91 437 0.58
Southpoint 244 1981 1993 730
95 542 0.74 96 530 0.73
Stonebridge 204 1993 <F3> 845
96 724 0.86 95 709 0.84
Vanderbilt Square I<F2> 516 1996 <F3> 963
98 989 1.03
Wallingford 462 1980 1993 787
94 533 0.68 93 523 0.66
Wilshire Place 536 1982 1992 761
94 504 0.66 92 497 0.65
Woodland Park 288 1995 <F3> 866
95 745 0.86 96 737 0.85
Wyndham Park 448 1978/81 1991 797
92 474 0.59 92 459 0.58
------ ---
- -- ---- ----- -- ---- -----
TOTAL 17,611 781
94% $588 $0.75 93% $542 $0.71
====== ===
== ==== ===== == ==== =====
<FN>
<F1> Represents average physical occupancy for the year ended.
<F2> 1996 average occupancy calculated from date at which occupancy
exceeded 90% through December 31, 1996.
<F3> These properties were recently constructed by the Company or its
predecessors; accordingly, they have not been
renovated.
<F4> Miramar is a student housing project for Texas A&M at Corpus Christi.
Average occupancy includes summer which is
normally subject to high vacancies.
<F5> Phase II of Sierra Pines was acquired in May 1996, increasing the
total number of units at this property from 404
to 804.
</FN>
/TABLE
Development Properties
The total budgeted cost of the Development Properties is approximately
$99.4 million, with a remaining cost to complete, as of December 31, 1996,
of approximately $52.7 million. There can be no assurance that the
Company's budget, leasing or occupancy estimates will be attained for the
Development Properties or that their performance will be comparable to
that of the Company's existing portfolio.
Development Property Table
The development property table is incorporated herein by reference
from page 19 of the Company's Annual Report to Shareholders for the year
ended December 31, 1996, which page is filed as Exhibit 13.1 hereto.
Management believes that the Company possesses 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
units will coincide with leasing and occupancy of such units (which is
dependent upon local market conditions). In order to pursue a development
opportunity, the Company currently requires a minimum initial stabilized
target return of 10%-10.5%. This minimum target return is based on
current market rents and projected stabilized expenses, considering the
market and the nature of the prospective development.
Item 3. Legal Proceedings
Neither the Company nor the Camden Properties are presently subject to
any material litigation nor, to the Company's knowledge, is any material
litigation threatened against the Company or the Camden Properties, other
than routine litigation arising in the ordinary course of business and
which is expected to be covered by liability insurance.
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.
PAGE
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 40 of the Company's Annual Report to Shareholders for
the year ended December 31, 1996, which page is filed as Exhibit 13.1
hereto. The number of holders of record of the Company's common shares,
$0.01 par value, as of March 18, 1997, was 436.
Item 6. Selected Financial Data
Information with respect to this Item 6 is incorporated herein by
reference from pages 41 and 42 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996, which pages are filed as
Exhibit 13.1 hereto.
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 18 through 24 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996, which pages are filed
as Exhibit 13.1 hereto.
Item 8. Financial Statements and Supplementary Data
The Company's financial statements and supplementary financial
information for the years ended December 31, 1996, 1995 and 1994 are
listed in the accompanying Index to Consolidated Financial Statements and
Supplementary Data at F-1 and are incorporated herein by reference from
pages 25 through 40 of the Company's Annual Report to Shareholders for the
year ended December 31, 1996, which pages are filed as Exhibit 13.1
hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PAGE
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
Item 11. Executive Compensation
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
Item 13. Certain Relationships and Related Transactions
Information with respect to this item is incorporated by reference
from the Company's Proxy Statement to be filed on or before April 30, 1997
in connection with the Annual Meeting of Shareholders to be held June 5,
1997.
PAGE
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, 1996, 1995 and 1994 are
listed in the accompanying Index to Consolidated Financial Statements
and Supplementary Data at F-1 and are incorporated herein by
reference from pages 25 through 40 of the Company's Annual Report to
the Shareholders for the year ended December 31, 1996, 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).
3.1 Amended and Restated Declaration of Trust of the Registrant.
Incorporated by reference from Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993
(File No. 1-12110).
3.2 Amended and Restated Bylaws of the Registrant. Incorporated by
reference from Exhibit 3.1 to the Registrant's Form 8-K filed
November 18, 1996 (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).
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.
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).
10.1 Registration Rights Agreement dated July 29, 1993 by and between
the Registrant and Richard J. Campo, D. Keith Oden, Redstone
Richmond, Inc., Gay A. Roane, Walter M. Mischer, Sr. and the
corporations listed on Exhibits A and B thereto. Incorporated by
reference from Exhibit 10.2 to the Registrant's Registration
Statement Form S-11 filed September 15, 1993 (File No. 33-68736).
10.2 Non-competition Agreement dated July 21, 1993 by and between
Centeq Investments Inc. and the Registrant. Incorporated by
reference from Exhibit 10.6 to the Registrant's Registration
Statement on Form S-11 filed September 15, 1993 (File No.
33-68736).
10.3 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).
10.4 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).
10.5 Camden Property Trust Key Executive Bonus Plan. Incorporated by
reference from Exhibit 10.38 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993 (File No.
1-12110).
10.6 Loan Agreement dated July 28, 1995 between Registrant and
NationsBank of Texas, N.A. Incorporated by reference from
Exhibit 10.1 to the Registrant's Form 10-Q for the quarter ended
June 30, 1995 (File No. 1-12110).
10.7 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).
10.8 Employment Agreement dated July 22, 1996 by and between the
Registrant and Richard J. Campo. Incorporated by reference from
Exhibit 10.1 to the Registrant's Form 8-K filed October 11, 1996
(File No. 1-12110).
10.9 Employment Agreement dated July 22, 1996 by and between the
Registrant and D. Keith Oden. Incorporated by reference from
Exhibit 10.2 to the Registrant's Form 8-K filed October 11, 1996
(File No. 1-12110).
10.10 Voting Agreement, dated December 16, 1996, between Camden,
Paragon and certain major securityholders of Camden. Incorporated
by reference from Exhibit 10.7 to the Registrant's Registration
Statement on Form S-4 filed February 26, 1997 (File No.
333-22411).
10.11 Voting Agreement, dated December 16, 1996, between Camden,
Paragon and certain major securityholders of Paragon.
Incorporated by reference from Exhibit 10.8 to the Registrant's
Registration Statement on Form S-4 filed February 26, 1997 (File
No. 333-22411).
10.12 Stock Purchase Agreement, dated December 16, 1996, between
Apartment Connection, Inc. and Texas Paragon Management Partners
L.P. Incorporated by reference from Exhibit 10.9 to the
Registrant's Registration Statement on Form S-4 filed February
26, 1997 (File No. 333-22411).
10.13* Form of Employment Agreement by and between the Registrant and
certain senior executive officers.
10.14* Camden Property Trust Key Employee Share Option Plan.
10.15* Form of Master Exchange Agreement by and between the Registrant
and certain key employees.
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, 1996.
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, George A. Hrdlicka, F. Gardner Parker and Steven
A. Webster.
27.1* Financial Data Schedule (filed only electronically with the
SEC).
- ------------------
*Filed herewith.
(b) Reports on Form 8-K
Current Report on Form 8-K dated October 10, 1996 was filed which
contained information under Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits).
Current Report on Form 8-K dated October 21, 1996 was filed which
contained information under Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits).
Current Report on Form 8-K dated October 31, 1996 was filed which
contained information under Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits).
Current Report on Form 8-K dated November 19, 1996 was filed which
contained information under Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits).
Current Report on Form 8-K dated December 16, 1996 was filed which
contained information under Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits).
PAGE
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 26, 1997 CAMDEN PROPERTY TRUST
/s/
By: _______________________
G. Steven Dawson
Senior Vice President - Finance,
Chief Financial Officer and
Treasurer
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
*
- ----------------
Richard J. Campo Chairman of the Board of Trust March 26, 1997
Managers and Chief Executive
Officer (Principal Executive
Officer)
*
- ----------------
D. Keith Oden President, Chief Operating March 26, 1997
Officer and Trust Manager
/s/
- ----------------
G. Steven Dawson Senior Vice President Finance, March 26, 1997
Chief Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
*
- ----------------
George A. Hrdlicka Trust Manager March 26, 1997
*
- ----------------
F. Gardner Parker Trust Manager March 26, 1997
*
- ----------------
Steven A. Webster Trust Manager March 26, 1997
*By: /s/
- ----------------
G. Steven Dawson
Attorney-in-Fact
PAGE
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:
Page
CAMDEN PROPERTY TRUST
Independent Auditors' Report (included herein)..........................F-2
Financial Statements (incorporated by reference under Item 8 of
Part II from pages 25 through 40 of the Company's Annual Report to
Shareholders for the year ended December 31, 1996):
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the Years Ended
December 31,1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994
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
PAGE
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Camden Property Trust
We have audited the consolidated financial statements of Camden Property
Trust as of December 31, 1996 and 1995, and for each of the three years in
the period ended December 31, 1996; and have issued our report thereon
dated February 21, 1997; such consolidated financial statements and report
are included in your 1996 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
February 21, 1997
PAGE
SCHEDULE III
CAMDEN PROPERTY TRUST
REAL ESTATE AND ACCUMULATED
DEPRECIATION
December 31, 1996
(In thousands)
Cost
Gross Amount
Capitalized
at Which Carried Date of Dep.
Encum- Initial Cost to Subsequent to at
December 31, 1996 Accum. Construction Life
Description brances Camden Property Trust Acq. or Dev.
<F1> Dep. or Acquired (Years)
- --------------------- ------- ---------------------- ------------
- -------------------------- ------- ------------ -------
Building
and
Property Name Location Land Improvements Land
Building Total
- ------------- -------- -------- ------------
- -------- -------- -------
Apartments Texas
Vanderbilt
Square $ $ 9,324 $ 28,247 $ 13 $
9,324 $ 28,260 $ 37,584 $ 1,712 1994-1995 3-35
Other 58,382 69,692 410,525 27,309
69,692 437,834 507,526 50,014 1993-1996 3-35
Apartments Arizona 7,657 55,582 1,649
7,657 57,231 64,888 4,643 1994-1996 3-35
Projects under
development Texas 11,678 12,670
11,678 12,670 24,348 1994-1996
Projects under
development Arizona 1,324 8,143
1,324 8,143 9,467 1995-1996
Projects under
development Colorado 1,951 781
1,951 781 2,732 1994
------- -------- -------- -------
- -------- -------- -------- -------
Total $58,382 $101,626 $515,948 $28,971
$101,626 $544,919 $646,545 $56,369
======= ======== ======== =======
======== ======== ======== =======
<FN>
<F1> The aggregate cost for federal income tax purposes at December 31,
1996 was $653.9 million.
</FN>
PAGE
The changes in total real estate assets for the years ended December 31,
1996, 1995 and 1994 are
as follows:
1996 1995 1994
-------- -------- --------
Balance, beginning of the period $607,598 $510,324 $296,545
Additions during period:
Acquisitions 6,294 137,777
Development 56,132 91,237 66,245
Improvements 9,578 8,409 9,757
Deductions during period:
Cost of real estate sold (33,057) (2,372)
-------- -------- --------
Balance, end of period $646,545 $607,598 $510,324
======== ======== ========
The changes in accumulated depreciation for the years ended December 31,
1996, 1995 and 1994
are as follows:
1996 1995 1994
------- ------- -------
Balance, beginning of the period $36,800 $17,731 $ 3,388
Depreciation 22,946 19,299 14,343
Real estate sold (3,377) (230)
------- ------- -------
Balance, end of period $56,369 $36,800 $17,731
======= ======= =======