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