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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, 1997

[ ] 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.)

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:

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

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the 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 $924,578,038 at January 23, 1998.

The number of common shares of beneficial interest outstanding at January 23,
1998 was 31,714,881.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Joint Proxy Statement/Prospectus in connection with
its Special Meeting in lieu of the Annual Meeting of Shareholders to be held in
April 1998 are incorporated by reference in Part III.

PART I

ITEM 1. BUSINESS

INTRODUCTION

Camden Property Trust, a Houston-based real estate investment trust
("REIT"), and its subsidiaries ("Camden" or the "Company") report as a single
business segment with activities related to the ownership, development,
acquisition, management, marketing and disposition of multifamily apartment
communities in the Southwest, Southeast and Midwest regions of the United
States. As of December 31, 1997, the Company owned interests in and operated
100 multifamily properties (the "Operating Properties") containing 34,669 units
located in Texas, Florida, Missouri, North Carolina, Arizona and Kentucky.
These properties had a weighted average occupancy rate of 94.0% for the year
ended December 31, 1997. Six of the Company's multifamily properties containing
2,343 apartment units were under development (the "Development Properties") at
December 31, 1997. The Company has several additional sites which it intends to
develop into multifamily apartment communities (collectively with the Operating
Properties and the Development Properties, the "Camden Properties").
Additionally, the Company managed 4,163 apartment units in 14 properties for
third-parties and non-consolidated affiliates at December 31, 1997.

On April 15, 1997, the Company acquired through a tax-free merger Paragon
Group, Inc. ("Paragon"), a Dallas-based multifamily REIT. The acquisition
increased the size of the Company's portfolio from 53 to 103 multifamily
properties (after combining the operations of seven of the acquired properties
with adjacent properties), and from 19,389 to 35,364 apartment units at the
date of acquisition (the "Paragon Acquisition"). As provided in the Plan of
Merger dated December 16, 1996, each share of Paragon common stock outstanding
on April 15, 1997 was exchanged for 0.64 shares of the Company's common shares
(based on a share price of $17.75 per share of Paragon common stock and $27.75
per share of Camden common shares). The Company issued 9,466,346 shares in
exchange for all of the outstanding shares of Paragon common stock. Subsequent
to the Paragon Acquisition, 2,352,161 limited partnership units ("OP Units") in
Camden Operating, L.P. (the "Operating Partnership") were outstanding.
Approximately $296 million of Paragon debt, at fair value, was assumed in the
Paragon Acquisition.

On December 16, 1997, the Company announced the execution of a definitive
merger agreement pursuant to which Oasis Residential, Inc. ("Oasis") would be
merged with and into a wholly-owned subsidiary of Camden. Upon consummation of
the merger, the Company will own interests in 52,469 apartment units (including
2,683 apartment units currently under development) with approximately $2.3
billion in total assets. Each share of Oasis common stock will be exchanged for
0.759 shares of Camden. Each share of Oasis Series A cumulative convertible
preferred stock (the "Oasis Preferred Stock") outstanding will be reissued as
Camden Series A cumulative convertible preferred shares with comparable terms
and conditions as previously existed with respect to the Oasis Preferred Stock.

Oasis is a fully integrated REIT headquartered in Las Vegas, Nevada whose
business is the operation and development of multifamily apartment communities
in Las Vegas, Denver and Southern California. Oasis is a self-administered and
self-managed REIT that, as of December 31, 1997, owned interests in 52
completed multifamily properties, with one additional multifamily property
under construction.

The merger with Oasis 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, customary regulatory approvals
and other conditions. It is anticipated that the meetings to consider the
transaction and the completion of the merger will both take place during the
second quarter of 1998. Following the closing of the merger with Oasis, the
Company intends to spin-off approximately 5,000 of the Las Vegas apartment
units into a new private entity in which Camden will hold a minority interest.
Camden expects to continue to provide property management services for these
assets following the spin-off. There can be no assurance, however, as to the
terms and conditions of the spin-off or that the transaction will ultimately be
consummated.

At December 31, 1997, the Company employed 1,180 persons approximately 105
of whom were located at the Company's headquarters and 1,075 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.

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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,
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 property's seasonal rental patterns. Camden offers
leases ranging from six to thirteen months, 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 1998. 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. Camden's portfolio consists
primarily of properties which are 10 to 15 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. In December 1997, Camden disposed
of five properties containing 1,592 units. The net proceeds of $36.0 million
from the property dispositions were reinvested in developments and 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

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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)
managing interest rate exposure using fixed rate debt and hedging, where
appropriate; (iv) borrowing on an unsecured basis; (v) maintaining a
substantial number of unencumbered assets; and (vi) maintaining 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 (the "Camden IPO") in July 1993. At December 31, 1997, the
Company's ratio of total debt to total market capitalization was approximately
31.0% (based on the closing price of $31 per common share of the Company on the
New York Stock Exchange composite tape on December 31, 1997). This ratio
represents total consolidated debt of the Company as a percentage of the market
value of the Company's common shares (including common shares issuable upon
conversion of convertible securities and OP Units, but excluding common shares
issuable upon exercise of outstanding options) plus total consolidated debt
(excluding the convertible securities). The interest coverage ratio was 4.0
times for the fourth quarter of 1997 and 3.6 times and 3.2 times for the twelve
months ended December 31, 1997 and 1996, respectively. At December 31, 1997 and
1996, 78.9% and 84.3%, respectively, of the Company's properties (based on
invested capital) were unencumbered.

Liquidity. The Company intends to meet its short-term liquidity
requirements through cash flows provided by operations, the Unsecured Credit
Facility and other short-term borrowings. The Company uses equity capital and
senior unsecured debt to refinance maturing secured debt and borrowings under
its Unsecured Credit Facility and other short-term borrowings. As of December
31, 1997, the Company had $107 million available under the Unsecured Credit
Facility. The Company filed a universal shelf registration statement in April
1997 providing for the issuance of up to $500 million in equity, debt,
preferred or convertible securities, of which, over $275 million remains
unused. Additionally, in March 1997 the Company implemented a $196 million
medium-term note program used to provide intermediate and long-term, unsecured
publicly-traded debt financing, of which $171 million remains unused. Finally,
the Company has significant unencumbered real estate assets which could be sold
or used as collateral for financing purposes should other sources of capital
not be available. The Company considers its ability to generate cash to be
sufficient, and expects to be able to meet future operating cash requirements
and to pay distributions to shareholders and holders of OP Units.

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On January 16, 1998, the Company paid a distribution of $0.49 per share for
the fourth quarter of 1997 to all holders of record of Camden's common shares
as of December 24, 1997, and paid an equivalent amount per unit to holders of
OP Units. Total distributions to common shareholders for the year ended
December 31, 1997 were $1.96 per share. Total distributions to holders of OP
Units from the date of the Paragon Acquisition through December 31, 1997 were
$1.47 per unit. The Company determines the amount of cash available for
distribution from the Operating Partnership in accordance with the partnership
agreement and has distributed and intends to continue to make distributions to
the holders of OP Units in amounts equivalent to the per share dividends paid
to holders of common shares. The Company intends to continue shareholder
distributions in accordance with REIT qualification requirements under the
federal tax code while maintaining what management believes to be a
conservative payout ratio, and expects to continue reducing the payout ratio by
raising the dividends at a rate which is less than the funds from operations
("FFO") growth rate.

Financial Flexibility. The Company concentrates its growth efforts toward
selective development and acquisition opportunities in its core markets, and
through the acquisition of existing operating portfolios and development
properties in selected new markets. During 1997, the Company incurred $91.2
million in development costs and $45.8 million in acquisition costs. In
addition, Camden issued 9.5 million common shares and assumed $296 million of
indebtedness, at fair value, to purchase Paragon. The Company has announced
plans to develop six additional properties at an aggregate cost of
approximately $142 million. The Company funds its developments and acquisitions
through a combination of equity capital, OP Units, debt securities, the
Unsecured Credit Facility and other short-term borrowing arrangements, and
previously has used construction and other mortgage loans. The Company also
seeks to selectively dispose of assets that are not in core markets, have a
lower projected net operating income growth rate than the overall portfolio, or
no longer conform to the Company's operating and investment strategies. The
$36.0 million in net proceeds received from these asset disposals during 1997
were reinvested in developments and used to retire debt.

The Company's Unsecured Credit Facility matures July 28, 2000. One year
prior to maturity, this note becomes a term loan, unless it is extended,
renegotiated or repaid. The scheduled interest rate on the loan is currently
based on LIBOR plus 105 basis points or Prime plus 25 basis points. This
scheduled rate is subject to change as the Company's credit ratings change.
Advances under the Unsecured Credit Facility may be priced at the scheduled
rate, or the Company may enter into bid rate loans ("Bid Rate Loans") with
participating banks at rates below the scheduled rate. These Bid Rate Loans
have terms of six months or less and may not exceed the lesser of $75 million
or the remaining amount available under the Unsecured Credit Facility. The
Unsecured Credit Facility is subject to customary financial covenants and
limitations.

As an alternative to its Unsecured Credit Facility, the Company from time
to time borrows using competitively bid unsecured short-term notes with lenders
who may or may not be a part of the Unsecured Credit Facility bank group. Such
borrowings vary in term and pricing and are typically priced at interest rates
below those available under the Unsecured Credit Facility.

On May 9, 1997, the Company issued from its recently filed $500 million
universal shelf registration statement an aggregate principal amount of $75
million of its unsecured reset notes maturing May 2002 (the "Reset Notes").
During the one-year period ending May 11, 1998, the interest rate on the Reset
Notes, which will be reset quarterly, will equal 90-day LIBOR plus 32 basis
points and interest will be payable on a quarterly basis. After the one-year
period, the mode and duration of the interest rate on the Reset Notes will be
reset by the Company and a remarketing underwriter as either fixed or floating
and for durations of six months to four years. The Reset Notes are direct,
senior unsecured obligations of the Company and rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Reset Notes are
redeemable after May 11, 1998 at the option of the Company at par value. The
net proceeds to the Company from the sale of the Reset Notes were $74.8
million. The Company used the net proceeds to reduce indebtedness incurred
under the Unsecured Credit Facility which had been used to liquidate portions
of the debt assumed in the Paragon Acquisition.

On June 20, 1997, the Company issued $25 million aggregate principal amount
of senior unsecured notes from its $196 million medium-term note shelf
registration. These fixed rate notes, due in June 2004, bear interest at the
annual rate of 7.172%, payable semiannually on March 15 and September 15. The
net proceeds were used to reduce indebtedness outstanding under short-term
unsecured notes.

On July 21, 1997, Camden retired $66.7 million in mortgage loans using a
portion of the proceeds of the July 1997 Equity Offering. Including the debt
retirements made in conjunction with the July 1997 Equity Offering, the Company
has retired $160.8 million of the $296 million of debt assumed in the Paragon
Acquisition.

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At December 31, 1997, the Company maintained a $25 million interest rate
hedging agreement which is scheduled to mature in July 2000. The issuing bank
has an option to extend this agreement to July 2002. The LIBOR rate is fixed at
6.1%, resulting in a fixed rate equal to 6.1% plus the actual LIBOR spread on
the related indebtedness. This swap continues to be used as a hedge to manage
the risk of interest rate fluctuations on the Unsecured Credit Facility and
other floating rate indebtedness.

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, 1997, 51% of Camden's real estate assets were located in
Texas. Since the Camden IPO, the Company has diversified into other markets in
the Southwest region and into the Southeast and Midwest regions of the United
States. 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, 1997, after giving effect to the anticipated completion of the Development
Properties, 21% of the Camden Properties were located in Houston. The Company
intends to further diversify geographically into the Western region of the
United States through its planned merger with Oasis.

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 Oasis, 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.

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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
798 square feet of living area.

OPERATING PROPERTIES

For the year ended December 31, 1997, no single Operating Property
accounted for greater than 3.1% of the Company's total revenues. The Operating
Properties had an average occupancy rate of 94.0% in both 1997 and 1996.
Resident lease terms generally range from six to thirteen months and usually
require security deposits. Eighty-eight of the Operating Properties have in
excess of 200 units, with the largest having 832 units. Twenty of the Operating
Properties were constructed by the Company or its predecessors and placed in
service since 1992. Seven were placed in service between 1988 and 1992, 43 were
placed in service between 1983 and 1987, 18 were placed in service between 1978
and 1982, seven were placed in service between 1973 and 1977 and five were
placed in service between 1967 and 1972.

The following table sets forth information with respect to the Company's
Operating Properties, excluding properties currently in lease-up, as of
December 31, 1997:

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OPERATING PROPERTIES
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DECEMBER 1997 AVG.
MO. RENTAL RATES
NUMBER YEAR PLACED AVERAGE UNIT 1997 AVERAGE ----------------------
PROPERTY AND LOCATION OF UNITS IN SERVICE SIZE (SQ. FT) OCCUPANCY (1) PER UNIT PER SQ. FT.
- ------------------------------------------------------------------------------------------------------------------------

ARIZONA
PHOENIX/SCOTTSDALE
Arrowhead Springs, The Park at 288 1997 925 93% $ 740 $ 0.80
Longmore Estates (3) 357 1986 923 92 678 0.73
Scottsdale Legacy 428 1996 1,067 93 876 0.82
TUCSON
Eastridge 456 1984 559 92 428 0.77
Oracle Villa 365 1974 1,026 92 675 0.66

FLORIDA
ORLANDO
Grove 232 1973 677 96 503 0.74
Landtree Crossing 220 1983 748 95 566 0.76
Renaissance Pointe (2) 272 1996 940 97 770 0.82
Reserve 146 1991 893 97 699 0.78
Riverwalk I & II 552 1984/1986 747 91 524 0.70
Vineyard 380 1990 798 98 623 0.78
TAMPA/ST. PETERSBURG
Broadmoor 384 1986 651 93 481 0.74
Chase Crossing (3) 444 1986 1,223 93 760 0.62
Chasewood 247 1985 704 95 521 0.74
Dolphin Pointe 832 1987/1989 748 93 611 0.82
Greenhouse 324 1982 694 94 471 0.68
Heron Pointe 276 1996 942 97 798 0.85
Island Club I & II 484 1983/1985 722 96 496 0.69
Mallard Pointe I & II 688 1982/1983 728 94 558 0.77
Parsons Run 228 1986 728 98 547 0.75
Schooner Bay 278 1986 728 96 611 0.84
Summerset Bend (5) 368 1984/1986 771 96 568 0.74

KENTUCKY
LOUISVILLE
Copper Creek 224 1987 732 94 616 0.84
Deerfield 400 1987/1990 746 91 607 0.81
Glenridge 138 1990 916 94 710 0.78
Post Oak 126 1981 847 90 578 0.68
Sundance 254 1975 682 94 516 0.76

MISSOURI
KANSAS CITY
Camden Passage I & II (2) (6) 596 1989/1997 832 92 667 0.80
ST. LOUIS
Cove at Westgate 276 1990 828 97 826 1.00
Knolls 112 1973 1,493 92 798 0.53
Knollwood I & II 608 1981/1985 722 94 514 0.71
Pear Tree 134 1967 723 95 500 0.69
Spanish Trace (4) 372 1972 1,158 87 691 0.60
Sunswept 334 1971 805 91 525 0.65
Tempo 304 1975 676 95 478 0.71
Westchase Park 160 1986 945 90 841 0.89
Westgate I & II (4) 591 1973/1980 947 84 760 0.80

NORTH CAROLINA
CHARLOTTE
Copper Creek 208 1989 703 94 577 0.82
Eastchase 220 1986 698 93 557 0.80
Falls 352 1984 706 93 592 0.84
Habersham Pointe 240 1986 773 95 612 0.79
Overlook (7) 220 1985 754 93 653 0.87
Park Commons (2) 232 1997 859 94 690 0.80
Pinehurst 407 1967 1,147 93 737 0.64
GREENSBORO
Brassfield Park (2) (7) 336 1997 889 92 668 0.75
Glen 304 1980 662 93 520 0.79
River Oaks 216 1985 795 92 608 0.76

(1) Represents average physical occupancy for the year ended.
(2) Development property - average occupancy calculated from date at which
occupancy exceeded 90% through year end.
(3) Acquisition property - average occupancy calculated from acquisition date
through year end.
(4) These properties were under major renovation during 1997, which affected
occupancy levels during this period.

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OPERATING PROPERTIES (CONTINUED)
- --------------------------------------------------------------------------------

DECEMBER 1997 AVG.
MO. RENTAL RATES
------------------
NUMBER YEAR PLACED AVERAGE UNIT 1997 AVERAGE
PROPERTY AND LOCATION OF UNITS IN SERVICE SIZE (SQ. FT) OCCUPANCY (1) PER UNIT PER SQ. FT.
- ------------------------------------------------------------------------------------------------------------------------

TEXAS
AUSTIN
Autumn Woods 283 1984 644 94% $ 553 $ 0.86
Calibre Crossing 183 1986 705 95 587 0.83
Huntingdon 398 1995 903 94 760 0.84
Quail Ridge 167 1984 859 93 640 0.74
Ridgecrest 284 1995 851 92 732 0.86
South Oaks 430 1980 705 94 578 0.81
CORPUS CHRISTI
Breakers 288 1996 861 95 754 0.88
Miramar (8) 244 1994/1995 722 89 744 1.03
Potters Mill 344 1986 775 93 588 0.76
Waterford 580 1976/1980 767 91 521 0.68
DALLAS/FORT WORTH
Addison, The Park at 456 1996 942 94 866 0.92
Chesapeake 128 1982 912 95 713 0.78
Cottonwood Ridge 208 1985 829 97 547 0.66
Emerald Valley 516 1986 743 96 636 0.86
Emerald Village 304 1987 713 94 597 0.84
Glen Arbor 320 1980 666 96 481 0.72
Glen Lakes 424 1979 877 92 719 0.82
Highland Trace 160 1985 816 95 634 0.78
Highpoint (7) 708 1985 835 94 610 0.73
Ivory Canyon 602 1986 548 93 523 0.96
Los Rios 286 1992 772 96 760 0.99
Nob Hill 486 1986 642 95 503 0.78
North Dallas Crossing 446 1985 730 93 607 0.83
Oakland Hills 476 1985 853 95 581 0.68
Pineapple Place 256 1983 652 96 571 0.88
Randol Mill Terrace 340 1984 848 95 559 0.66
Shadowlake 264 1984 733 94 558 0.76
Stone Creek 240 1995 831 95 782 0.94
Stone Gate (2) 276 1996 871 94 800 0.92
Towne Centre Village 188 1983 735 97 550 0.75
Towne Crossing, The Place at 442 1984 772 95 550 0.71
Valley Creek Village 380 1984 855 97 612 0.72
Valley Ridge 408 1987 773 95 593 0.77
Westview 335 1983 697 95 579 0.83
EL PASO
La Plaza 129 1969 997 97 572 0.57
HOUSTON
Brighton Place 282 1978 749 94 522 0.70
Cambridge Place 336 1979 771 95 533 0.69
Crossing, The 366 1982 762 95 542 0.71
Driscoll Place 488 1983 708 93 446 0.63
Eagle Creek 456 1984 639 98 532 0.83
Jones Crossing 290 1982 748 97 536 0.72
Roseland Place 671 1982 726 95 518 0.71
Southpoint 244 1981 730 92 557 0.76
Stonebridge 204 1993 845 97 742 0.88
Sugar Grove, The Park at 380 1997 917 96 790 0.86
Vanderbilt I, The Park at 516 1996 963 96 1,020 1.06
Wallingford 462 1980 787 95 549 0.70
Wilshire Place 536 1982 761 95 533 0.70
Woodland Park 288 1995 866 97 766 0.89
Wyndham Park 448 1978/1981 797 96 490 0.61
------ --- --- -------- ------
33,559 798 94% $ 616 $ 0.78
=== === ======== ======
Properties Under Lease-Up 1,110
------
TOTAL 34,669
======

(5) Phase II of Summerset Bend was acquired in June 1997, increasing the total
number of units at this property from 272 to 368.
(6) Phase II of Camden Passage was completed in 1997 and stabilized during the
third quarter of 1997.
(7) Properties owned through investment in joint venture.
(8) Miramar is a student housing project for Texas A&M at Corpus Christi.
Average occupancy includes summer which is normally subject to high
vacancies.

9
10
OPERATING PROPERTIES UNDER LEASE-UP

The following table sets forth information regarding the Operating
Properties under lease-up at December 31, 1997:

% Leased Estimated
Number at Date of Date of
Property and Location of Units 1/28/98 Completion Stabilization
- --------------------------------------- ------------ ---------- ------------- --------------

The Park at Vanderbilt, Phase II
Houston, TX........................... 378 89% 3Q97 1Q98
The Park at Centreport
Dallas, TX............................ 268 65 4Q97 3Q98
The Park at Buckingham
Dallas, TX............................ 464 57 4Q97 3Q98
-----
Total............................... 1,110
=====

DEVELOPMENT PROPERTIES

The total budgeted cost of the Development Properties is approximately
$141.8 million, with a remaining cost to complete, as of December 31, 1997, of
approximately $113.5 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.

The following table sets forth information regarding the Development
Properties:

Number Estimated Estimated Estimated
of Cost Date of Date of
Property and Location Units ($ millions) Completion Stabilization
- --------------------------------- ----------- ------------- ----------- -------------

The Park at Towne Center
Glendale, AZ.................. 240 $13.4 4Q98 2Q99
Renaissance Pointe II
Orlando, FL................... 306 17.3 4Q98 3Q99
The Park at Goose Creek
Baytown, TX................... 272 11.8 1Q99 3Q99
The Park at Midtown
Houston, TX................... 337 21.5 2Q99 4Q99
The Park at Oxmoor
Louisville, KY................ 432 22.1 2Q99 4Q99
The Park at Greenway
Houston, TX................... 756 55.7 1Q00 4Q00
----- ------
Total.................... 2,343 $141.8
===== ======

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.

10
11

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.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The number of holders of record of the Company's common shares, $0.01 par
value, as of January 23, 1998 was 698.

The high and low sales prices per share of the Company's common shares, as
reported on the New York Stock Exchange composite tape, and distributions per
share declared for the quarters indicated were as follows:

High Low Distributions
-------- -------- -------------

1997:
First..................................................................... $28 3/4 $26 3/4 $0.490
Second.................................................................... 31 5/8 26 1/2 0.490
Third..................................................................... 31 5/8 28 5/8 0.490
Fourth.................................................................... 33 3/16 29 1/4 0.490

1996:
First..................................................................... $24 3/4 $22 3/4 $0.475
Second.................................................................... 25 21 3/4 0.475
Third..................................................................... 26 1/2 22 3/4 0.475
Fourth.................................................................... 29 1/4 25 5/8 0.475

11
12
Item 6. SELECTED FINANCIAL DATA

CAMDEN PROPERTY TRUST
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA

(In thousands, except per share amounts)

Camden
Camden Property Trust Predecessors
----------------------------------------------------------------- ------------
July 29 January 1
Years Ended December 31, to to
---------------------------------------------------- December July
1997* 1996 1995 1994 31, 1993 28, 1993
----------- --------- --------- ---------- --------- ------------

OPERATING DATA
Revenues:
Rental income ............................ $ 187,928 $ 105,785 $ 92,275 $ 71,468 $ 16,785 $ 16,721
Other property income .................... 9,510 4,453 3,617 2,811 539 590
---------- --------- --------- --------- --------- --------
Total property income .......... 197,438 110,238 95,892 74,279 17,324 17,311
Equity in income of joint ventures ...... 1,141
Fee and asset management ................ 743 949 1,029 721
Other income ............................ 467 419 353 456 243 310
---------- --------- --------- --------- --------- --------
Total revenues ................. 199,789 111,606 97,274 75,456 17,567 17,621
---------- --------- --------- --------- --------- --------

Expenses:
Property operating and maintenance ....... 70,595 40,604 37,093 29,352 6,907 7,380
Real estate taxes ........................ 21,028 13,192 11,481 8,962 1,910 1,989
General and administrative ............... 4,473 2,631 2,263 2,574 291 343
Interest ................................. 28,537 17,336 13,843 8,807 1,340 4,364
Depreciation and amortization ............ 44,836 23,894 20,264 16,239 3,572 3,045
---------- --------- --------- --------- --------- --------
Total expenses ................. 169,469 97,657 84,944 65,934 14,020 17,121
---------- --------- --------- --------- --------- --------

Income before gain on sales of properties,
losses related to early retirement of
debt and minority interest ............... 30,320 13,949 12,330 9,522 3,547 500
Gain on sales of properties ................. 10,170 115
Losses related to early retirement of debt .. (397) (5,351)
---------- --------- --------- --------- --------- --------
Income before minority interest ............. 40,093 8,713 12,330 9,522 3,547 500
Minority interest in Operating Partnership .. (1,655)
---------- --------- --------- --------- --------- --------
Net income .................................. 38,438 8,713 12,330 9,522 3,547 $ 500
========
Preferred share dividends ................... (4) (39) (20)
---------- --------- --------- --------- ---------
Net income to common shareholders ........... $ 38,438 $ 8,709 $ 12,291 $ 9,502 $ 3,547
========== ========= ========= ========= =========

Basic earnings per share .................... $ 1.46 $ 0.59 $ 0.86 $ 0.78 $ 0.39
Diluted earnings per share .................. $ 1.41 $ 0.58 $ 0.86 $ 0.77 $ 0.39
Distributions per common share .............. $ 1.96 $ 1.90 $ 1.84 $ 1.76 $ 0.68
Weighted average number of common shares
outstanding .............................. 26,257 14,849 14,325 12,188 9,069
Weighted average number of common shares
outstanding plus dilutive potential
common shares............................. 28,356 14,979 14,414 12,310 9,114

BALANCE SHEET DATA (AT END OF PERIOD)
Real estate assets .......................... $1,397,138 $ 646,545 $ 607,598 $ 510,324 $ 296,545
Accumulated depreciation .................... (94,665) (56,369) (36,800) (17,731) (3,388)
Total assets ................................ 1,323,620 603,510 582,352 504,284 304,345
Notes payable ............................... 480,754 244,182 235,459 149,547 111,513
Minority interest in Operating Partnership .. 63,325
Convertible subordinated debentures ......... 6,025 27,702 44,050 47,800
Series A Preferred Shares ................... 1,950 1,950 1,950
Shareholders'/Partners' Equity .............. 710,564 295,428 267,829 277,604 175,984

Common shares outstanding ................... 31,694 16,521 14,514 14,273 9,162

12
13

CAMDEN PROPERTY TRUST
COMPARATIVE SUMMARY OF SELECTED FINANCIAL AND PROPERTY DATA
(CONTINUED)

(In thousands, except property data amounts)

Camden
Camden Property Trust Predecessors
---------------------------------------------------------------- ------------
July 29 January 1
Years Ended December 31, to to
--------------------------------------------------- December July
1997* 1996 1995 1994 31, 1993 28, 1993
---------- ---------- ---------- ------------- --------- ------------

OTHER DATA
Cash flows provided by (used in)
Operating activities.................. $ 65,974 $ 41,267 $ 37,594 $ 33,560 $ 16,554 $ 1,942
Investing activities.................. (73,709) (41,697) (97,003) (198,087) (237,346) (4,297)
Financing activities.................. 11,837 2,560 59,404 159,388 226,171 1,073
Funds from operations **................. 75,753 39,999 35,260 28,604 7,119 3,545

PROPERTY DATA
Number of operating properties
(at end of period).................... 100 48 50 48 32 17
Number of operating units
(at end of period).................... 34,669 17,611 16,742 15,783 11,064 6,040
Number of operating units
(weighted average).................... 29,280 17,362 16,412 13,694 7,935 5,996
Weighted average monthly total property
income per unit....................... $ 562 $ 529 $ 487 $ 452 $ 420 $ 414
Properties under development
(at end of period).................... 6 6 9 8 3

* Effective April 1, 1997 the Company acquired Paragon.

** Management considers FFO to be an appropriate measure of the performance of
an equity REIT. The National Association of Real Estate Investment Trusts
("NAREIT") currently defines FFO as net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. In addition, extraordinary or unusual items, along with significant
non-recurring events that materially distort the comparative measure of FFO are
typically disregarded in its calculation. Prior to March 1995 the NAREIT
definition of FFO required the add back of non-real estate depreciation and
amortization, such as loan cost amortization. Camden adopted the new FFO
definition prescribed by NAREIT during 1995. The Company's definition of FFO
also assumes conversion at the beginning of the period of all convertible
securities including minority interests which are convertible into common
equity. The Company believes that in order to facilitate a clear understanding
of the consolidated historical operating results of the Company, FFO should be
examined in conjunction with net income as presented in the consolidated
financial statements and data included elsewhere in this report. FFO is not
defined by generally accepted accounting principles. FFO should not be
considered as an alternative to net income as an indication of the Company's
operating performance or to net cash provided by operating activities as a
measure of the Company's liquidity. Further, FFO as disclosed by other REITs may
not be comparable to the Company's calculation.

14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
"Comparative Summary of Selected Financial and Property Data" and the
consolidated financial statements and notes thereto appearing elsewhere in this
report. Historical results and trends which might appear should not be taken as
indicative of future operations. The statements contained in this report that
are not historical facts are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results may differ
materially from those included in the forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, the following: the proposed merger with Oasis Residential, Inc.
("Oasis"), 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.

BUSINESS

Camden Property Trust, a Houston-based real estate investment trust
("REIT"), and its subsidiaries ("Camden" or the "Company") report as a single
business segment, with activities related to the ownership, development,
acquisition, management, marketing and disposition of multifamily apartment
communities in the Southwest, Southeast and Midwest regions of the United
States. As of December 31, 1997, the Company owned interests in, operated or was
developing 106 multifamily properties containing 37,012 units located in Texas,
Florida, Missouri, North Carolina, Arizona and Kentucky. These properties had a
weighted average occupancy rate of 94.0% for the year ended December 31, 1997.
Six of the Company's multifamily properties containing 2,343 units were under
development at December 31, 1997. The Company has several additional sites which
it intends to develop into multifamily apartment communities. Additionally, the
Company managed 4,163 apartment units in 14 properties for third-parties and
non-consolidated affiliates at December 31, 1997.

On April 15, 1997, the Company acquired through a tax-free merger Paragon
Group, Inc. ("Paragon"), a Dallas-based multifamily REIT. The acquisition
increased the size of the Company's portfolio from 53 to 103 multifamily
properties (after combining the operations of seven of the acquired properties
with adjacent properties), and from 19,389 to 35,364 apartment units at the date
of acquisition (the "Paragon Acquisition"). As provided in the Plan of Merger
dated December 16, 1996, each share of Paragon common stock outstanding on April
15, 1997 was exchanged for 0.64 shares of the Company's common shares (based on
a share price of $17.75 per share of Paragon common stock and $27.75 per share
of Camden common shares). The Company issued 9,466,346 shares in exchange for
all of the outstanding shares of Paragon common stock. Subsequent to the Paragon
Acquisition, 2,352,161 limited partnership units ("OP Units") in Camden
Operating, L.P. (the "Operating Partnership") were outstanding. Approximately
$296 million of Paragon debt, at fair value, was assumed in the Paragon
Acquisition.

On December 16, 1997, the Company announced the execution of a definitive
merger agreement pursuant to which Oasis would be merged with and into a
wholly-owned subsidiary of Camden. The merger will create the third largest
multifamily REIT with interests in 52,469 apartment units (including 2,683
apartment units currently under development) with approximately $2.3 billion in
total assets. Each share of Oasis common stock will be exchanged for 0.759
shares of Camden. Each share of Oasis Series A cumulative convertible preferred
stock (the "Oasis Preferred Stock") outstanding will be reissued as Camden
Series A cumulative convertible preferred shares with comparable terms and
conditions as previously existed with respect to the Oasis Preferred Stock.

Oasis is a fully integrated REIT headquartered in Las Vegas, Nevada whose
business is the operation and development of multifamily apartment communities
in Las Vegas, Denver and Southern California. Oasis is a self-administered and
self-managed REIT that, as of December 31, 1997, owned interests in 52 completed
multifamily properties, with one additional multifamily property under
construction.

The merger with Oasis 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, customary regulatory approvals and
other conditions. It is anticipated that the meetings to consider the
transaction and the completion of the merger will both take place during the
second quarter of 1998. Following the closing of the merger with Oasis, the
Company intends to spin-off approximately 5,000 of the Las Vegas apartment units
into a new private entity in which Camden will hold a minority interest. Camden
expects to continue to provide property management services for these assets
following the spin-off. There can be no assurance, however, as to the terms and
conditions of the spin-off or that the transaction will ultimately be
consummated.

The Company's multifamily property portfolio, excluding land held for
future development, at December 31, 1997, 1996 and 1995 is summarized as
follows:

1997** 1996 1995
--------------------------- ------------------------- --------------------------
Units Properties %* Units Properties %* Units Properties %*
-------- ------------ ----- ------ ---------- ---- -------- ---------- ----

OPERATING PROPERTIES
Texas
Houston................................ 6,345 16 17% 6,987 18 36% 6,598 20 33 %
Dallas................................. 9,381 26 26 6,045 16 31 6,065 17 30
Austin................................. 1,745 6 5 1,745 6 9 1,745 6 9
Other.................................. 1,585 5 4 1,585 5 8 1,513 5 8
-------- ------- ----- ------ ------ ----- -------- ------ ----
Total Texas Operating Properties..... 19,056 53 52 16,362 45 84 15,921 48 80
Arizona................................... 1,894 5 5 1,249 3 7 821 2 4
Florida................................... 6,355 17 17
Kentucky.................................. 1,142 5 3
Missouri.................................. 3,487 10 10
North Carolina............................ 2,735 10 7
-------- ------- ----- ------ ------ ----- -------- ------ ----
Total Operating Properties........... 34,669 100 94 17,611 48 91 16,742 50 84
-------- ------- ----- ------ ------ ----- -------- ------ ----

PROPERTIES UNDER DEVELOPMENT
Texas
Houston................................ 1,365 3 4 758 2 4 1,226 3 6
Dallas................................. 732 2 4 920 2 5
Other.................................. 288 1 1
-------- ------- ----- ------ ------ ----- -------- ------ ----
Total Texas Development Properties... 1,365 3 4 1,490 4 8 2,434 6 12
Arizona................................... 240 1 288 1 1 716 2 4
Florida................................... 306 1 1
Kentucky.................................. 432 1 1
-------- ------- ----- ------ ------ ----- -------- ------ ----
Total Properties Under Development... 2,343 6 6 1,778 5 9 3,150 8 16
-------- ------- ----- ------ ------ ----- -------- ------ ----
Total Properties..................... 37,012 106 100% 19,389 53 100% 19,892 58 100%
======== ======= ===== ====== ====== ===== ======== ====== ====

* Based on number of units.
** Includes three operating properties containing 1,264 units owned in joint
ventures.

At December 31, 1997, the Company had three properties under lease-up as
follows:

% Leased Estimated
Number at Date of Date of
Property and Location of Units 1/28/98 Completion Stabilization
- --------------------- -------- -------- ----------- --------------

The Park at Vanderbilt, Phase II
Houston, TX ....................... 378 89% 3Q97 1Q98

The Park at Centreport
Dallas, TX ........................ 268 65 4Q97 3Q98

The Park at Buckingham
Dallas, TX ........................ 464 57 4Q97 3Q98
-----
Total ..................... 1,110
=====

At December 31, 1997, the Company had six development properties in
various stages of construction as follows:

The Park at Towne Center
Glendale, AZ.................. 240 $ 13.4 4Q98 2Q99
Renaissance Pointe II
Orlando, FL................... 306 17.3 4Q98 3Q99
The Park at Goose Creek
Baytown, TX................... 272 11.8 1Q99 3Q99
The Park at Midtown
Houston, TX................... 337 21.5 2Q99 4Q99
The Park at Oxmoor
Louisville, KY................ 432 22.1 2Q99 4Q99
The Park at Greenway
Houston, TX................... 756 55.7 1Q00 4Q00
----- ------
Total.................... 2,343 $141.8
===== ======

At December 31, 1997, 51% of Camden's real estate assets were located in
Texas. Since the Company's initial public offering in July 1993 (the "Camden
IPO"), Camden has diversified into other markets in the Southwest region and
into the Southeast and Midwest regions of the United States.

At December 31, 1997 and 1996, the Company's investment in the various
geographic areas was as follows:

(Dollars in thousands)

1997 1996
--------------------- --------------------

Texas
Houston..................................................... $ 265,404 19% $ 243,575 38%
Dallas...................................................... 321,101 23 207,628 32
Austin...................................................... 66,365 5 65,677 10
Other....................................................... 53,462 4 52,578 8
-------------- ----- ------------ ------
Total Texas Properties................................... 706,332 51 569,458 88
-------------- ----- ------------ ------
Arizona......................................................... 102,520 8 74,355 12
Florida......................................................... 240,008 17
Kentucky........................................................ 55,210 4
Missouri........................................................ 173,939 13
North Carolina.................................................. 100,957 7
Other........................................................... 3,083 2,732
-------------- ----- ------------ ------
Total Properties....................................... $ 1,382,049 100% $ 646,545 100%
============== ===== ============ ======

The Company intends to further diversify geographically into the Western
region of the United States through its planned merger with Oasis.

LIQUIDITY AND CAPITAL RESOURCES

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)
managing interest rate exposure using fixed rate debt and hedging, where
appropriate; (iv) borrowing on an unsecured basis; (v) maintaining a substantial
number of unencumbered assets; and (vi) maintaining 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 the Camden IPO in
July 1993. At December 31, 1997, the Company's ratio of total debt to total
market capitalization was approximately 31.0% (based on the closing price of $31
per common share of the Company on the New York Stock Exchange composite tape on
December 31, 1997). This ratio represents total consolidated debt of the Company
as a percentage of the market value of the Company's common shares (including
common shares issuable upon conversion of convertible securities and OP Units,
but excluding common shares issuable upon exercise of outstanding options) plus
total consolidated debt (excluding the convertible securities). The interest
coverage ratio was 4.0 times for the fourth quarter of 1997 and 3.6 times and
3.2 times for the twelve months ended December 31, 1997 and 1996, respectively.
At December 31, 1997 and 1996, 78.9% and 84.3%, respectively, of the Company's
properties (based on invested capital) were unencumbered.

Liquidity. The Company intends to meet its short-term liquidity
requirements through cash flows provided by operations, the Unsecured Credit
Facility and other short-term borrowings. The Company uses equity capital and
senior unsecured debt to refinance maturing secured debt and borrowings under
its Unsecured Credit Facility and other short-term borrowings. As of December
31, 1997, the Company had $107 million available under the Unsecured Credit
Facility. The Company filed a universal shelf registration statement in April
1997 providing for the issuance of up to $500 million in equity, debt, preferred
or convertible securities, of which, over $275 million remains unused.
Additionally, in March 1997 the Company implemented a $196 million medium-term
note program used to provide intermediate and long-term, unsecured
publicly-traded debt financing, of which $171 million remains unused. Finally,
the Company has significant unencumbered real estate assets which could be sold
or used as collateral for financing purposes should other sources of capital not
be available. The Company considers its ability to generate cash to be
sufficient, and expects to be able to meet future operating cash requirements
and to pay distributions to shareholders and holders of OP Units.

On January 16, 1998, the Company paid a distribution of $0.49 per share
for the fourth quarter of 1997 to all holders of record of Camden's common
shares as of December 24, 1997, and paid an equivalent amount per unit to
holders of OP Units. Total distributions to common shareholders for the year
ended December 31, 1997 were $1.96 per share. Total distributions to holders of
OP Units from the date of the Paragon Acquisition through December 31, 1997 were
$1.47 per unit. The Company determines the amount of cash available for
distribution from the Operating Partnership in accordance with the partnership
agreement and has distributed and intends to continue to make distributions to
the holders of OP Units in amounts equivalent to the per share dividends paid to
holders of common shares. The Company intends to continue shareholder
distributions in accordance with REIT qualification requirements under the
federal tax code while maintaining what management believes to be a conservative
payout ratio, and expects to continue reducing the payout ratio by raising the
dividends at a rate which is less than the funds from operations ("FFO") growth
rate.

Financial Flexibility. The Company concentrates its growth efforts toward
selective development and acquisition opportunities in its core markets, and
through the acquisition of existing operating portfolios and development
properties in selected new markets. During 1997, the Company incurred $91.2
million in development costs and $45.8 million in acquisition costs. In
addition, Camden issued 9.5 million common shares and assumed $296 million of
indebtedness, at fair value, to purchase Paragon. The Company has announced
plans to develop six additional properties at an aggregate cost of approximately
$142 million. The Company funds its developments and acquisitions through a
combination of equity capital, OP Units, debt securities, the Unsecured Credit
Facility and other short-term borrowing arrangements, and previously has used
construction and other mortgage loans. The Company also seeks to selectively
dispose of assets that are not in core markets, have a lower projected net
operating income growth rate than the overall portfolio, or no longer conform to
the Company's operating and investment strategies. The $36.0 million in net
proceeds received from these asset disposals during 1997 were reinvested in
developments and used to retire debt.

The Company's Unsecured Credit Facility matures July 28, 2000. One year
prior to maturity, this note becomes a term loan, unless it is extended,
renegotiated or repaid. The scheduled interest rate on the loan is currently
based on LIBOR plus 105 basis points or Prime plus 25 basis points. This
scheduled rate is subject to change as the Company's credit ratings change.
Advances under the Unsecured Credit Facility may be priced at the scheduled
rate, or the Company may enter into bid rate loans ("Bid Rate Loans") with
participating banks at rates below the scheduled rate. These Bid Rate Loans have
terms of six months or less and may not exceed the lesser of $75 million or the
remaining amount available under the Unsecured Credit Facility. The Unsecured
Credit Facility is subject to customary financial covenants and limitations.

On May 9, 1997, the Company issued from its recently filed $500 million
universal shelf registration statement an aggregate principal amount of $75
million of its unsecured reset notes maturing May 2002 (the "Reset Notes").
During the one-year period ending May 11, 1998, the interest rate on the Reset
Notes, which will be reset quarterly, will equal 90-day LIBOR plus 32 basis
points and interest will be payable on a quarterly basis. After the one-year
period, the mode and duration of the interest rate on the Reset Notes will be
reset by the Company and a remarketing underwriter as either fixed or floating
and for durations of six months to four years. The Reset Notes are direct,
senior unsecured obligations of the Company and rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Reset Notes are
redeemable after May 11, 1998 at the option of the Company at par value. The net
proceeds to the Company from the sale of the Reset Notes were $74.8 million. The
Company used the net proceeds to reduce indebtedness incurred under the
Unsecured Credit Facility which had been used to liquidate portions of the debt
assumed in the Paragon Acquisition.

On June 20, 1997, the Company issued $25 million aggregate principal
amount of senior unsecured notes from its $196 million medium-term note shelf
registration. These fixed rate notes, due in June 2004, bear interest at the
annual rate of 7.172%, payable semiannually on March 15 and September 15. The
net proceeds were used to reduce indebtedness outstanding under short-term
unsecured notes.

FUNDS FROM OPERATIONS

Management considers FFO an appropriate measure of performance of an
equity REIT. The National Association of Real Estate Investment Trusts
("NAREIT") currently defines FFO as net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. In addition, extraordinary or unusual items, along with significant
non-recurring events that materially distort the comparative measure of FFO are
typically disregarded in its calculation. The Company's definition of FFO also
assumes conversion at the beginning of the period of all convertible securities
including minority interests which are convertible into common equity.

The Company believes that in order to facilitate a clear understanding of
the consolidated historical operating results of the Company, FFO should be
examined in conjunction with net income as presented in the consolidated
financial statements and data included elsewhere in this report. FFO is not
defined by generally accepted accounting principles. FFO should not be
considered as an alternative to net income as an indication of the Company's
operating performance or to net cash provided by operating activities as a
measure of the Company's liquidity. Further, FFO as disclosed by other REITs may
not be comparable to the Company's calculation. Camden's FFO for the year ended
December 31,1997 increased $35.8 million over 1996 primarily due to the Paragon
Acquisition, property acquisitions, developments and improvements in the
performance of the stabilized properties in the portfolio. The calculation of
FFO for the two years ended December 31, 1997 follows:

(In thousands)

1997 1996
--------- ----------

Net income to common shareholders............................................... $ 38,438 $ 8,709
Real estate depreciation........................................................ 43,769 22,946
Minority interest in Operating Partnership...................................... 1,655
Real estate depreciation from unconsolidated ventures........................... 906
Interest on convertible subordinated debentures................................. 670 2,809
Amortization of deferred costs on convertible debentures........................ 88 295
Gain on sales of properties..................................................... (10,170) (115)
Losses related to early retirement of debt...................................... 397 5,351
Preferred share dividends....................................................... 4
-------- --------
Funds from operations....................................................... $ 75,753 $ 39,999
======== ========

Weighted average number of common and common equivalent shares
outstanding.............................................................. 28,882 16,682

RESULTS OF OPERATIONS

Changes in revenues and expenses related to the operating properties
from period to period are primarily due to the Paragon Acquisition, property
acquisitions, developments, dispositions and improvements in the performance of
the stabilized properties in the portfolio. Where appropriate, comparisons are
made on a dollars-per-weighted-average-units basis in order to adjust for such
changes in the number of units owned during each period. Selected weighted
average revenues and expenses per operating unit for the three years ended
December 31, 1997 are as follows:

1997 1996 1995
----------- ---------- -----------

Rental income per unit per month................................................. $ 535 $ 508 $ 469
Property operating and maintenance per unit per year............................. $ 2,411 $ 2,339 $ 2,260
Real estate taxes per unit per year.............................................. $ 718 $ 760 $ 700
Weighted average number of operating units....................................... 29,280 17,362 16,412

1997 COMPARED TO 1996

The changes in operating results from 1996 to 1997 are primarily due to
the Paragon Acquisition, development of ten properties aggregating 3,823 units,
and an increase in net operating income generated by the stabilized portfolio.
The weighted average number of units increased by 11,918 units, or 68.6%, from
17,362 to 29,280 for the years ended December 31, 1996 and 1997, respectively.
Total operating properties were 48 and 97 at December 31, 1996 and 1997,
respectively. The 29,280 weighted average units and the 97 operating properties
exclude the impact of the Company's ownership interest in 1,264 units on three
properties owned in joint ventures.

The average rental income per unit increased $27, or 5.3%, from $508 to
$535 for the years ended December 31, 1996 and 1997, respectively. The increase
was primarily due to increased revenue growth from the stabilized real estate
portfolio, higher average rental rates on properties added to the portfolio
through the Paragon Acquisition and completion of new development properties.

19
20

Other property income increased $5.1 million from $4.5 million to $9.5
million for the years ended December 31, 1996 and 1997, respectively. This
increase was due to a larger number of units owned and in operation and a $2.2
million increase from new revenue sources such as telephone, cable and water.

Property operating and maintenance expenses and real estate taxes increased
$37.8 million, from $53.8 million to $91.6 million for the years ended December
31, 1996 and 1997, respectively, which represented an annual increase of $30
per unit. The Company's operating expense ratios decreased from the prior year
primarily as a result of operating efficiencies resulting from a larger
portfolio together with savings in utilities and other costs. Real estate taxes
increased as a result of the Paragon Acquisition, increases in valuations of
renovated and developed properties and increases in property tax rates. Real
estate taxes per unit have decreased due to lower property taxes in the Camden
portfolio outside of Texas.

General and administrative expenses increased from $2.6 million in 1996 to
$4.5 million in 1997, and decreased slightly as a percent of revenues from 2.4%
to 2.2%.

Interest expense increased from $17.3 million in 1996 to $28.5 million in
1997 due to increased indebtedness related to the Paragon Acquisition,
completed developments and renovations. This increase was partially offset by
reductions in average interest rates on the Company's debt and the July 1997
Equity Offering discussed in the Liquidity and Capital Resources section.
Interest capitalized was $3.3 million and $4.1 million for the years ended
December 31, 1997 and 1996, respectively.

Depreciation and amortization increased from $23.9 million to $44.8 million
primarily due to the Paragon Acquisition, developments and renovations.

Gain on sales of properties increased $10.2 million due to the December
1997 disposition of five properties containing 1,592 units.

1996 COMPARED TO 1995

The changes in operating results from 1995 to 1996 are due to completion of
the development of four properties aggregating 1,688 units, the acquisition of
an adjoining property containing 400 units, the disposition of five properties
containing 1,219 units and an increase in revenues generated by the stabilized
portfolio. The weighted average number of units increased by 950 units, or
5.8%, from 16,412 to 17,362 for the years ended December 31, 1995 and 1996,
respectively. Total units owned and operating were 16,742 and 17,611 at
December 31, 1995 and 1996, respectively.

The average rental income increased $39 per unit per month, or 8.3%, from
$469 to $508 for the years ended December 31, 1995 and 1996, respectively. The
increase was primarily due to an increase in revenue growth from the stabilized
real estate portfolio, higher than average rental rates achieved on properties
added to the portfolio, and overall increases in average occupancy from 93.3% in
1995 to 94.0% in 1996.

Other property income increased $800,000 from $3.6 million to $4.5 million
for the years ended December 31, 1995 and 1996, respectively. This 23.1%
increase was due to a larger number of units owned and in operation.

Property operating and maintenance expenses and real estate taxes increased
$5.2 million, from $48.6 million to $53.8 million for the years ended December
31, 1995 and 1996 respectively, which represented an annual increase of $139
per unit. The Company's operating expense ratios decreased from the prior year
primarily as a result of the change in the property mix due to development and
property dispositions. Real estate taxes increased as a result of increases in
valuation of renovated and developed properties and increases in property tax
rates.

General and administrative expenses increased from $2.3 million in 1995 to
$2.6 million in 1996, a rate consistent with the overall increase in revenues.

21
Interest expense increased from $13.8 million in 1995 to $17.3 million in
1996 due to increased indebtedness related to a property acquisition, completed
developments and renovations, partially offset by reductions in interest rates,
reductions in debt as a result of an equity offering in October 1996, the
conversion of convertible debentures and proceeds from dispositions. Interest
capitalized was $5.3 million and $4.1 million for the years ended December 31,
1995 and 1996, respectively.

Depreciation and amortization increased from $20.3 million to $23.9 million
primarily due to developments and renovations partially offset by property
dispositions.

During 1996, the Company utilized proceeds from the 6-5/8% and 7% notes
primarily to reduce indebtedness under its Unsecured Credit Facility. In
connection with such reductions, the Company also early settled certain hedging
agreements and recorded a loss of $5.4 million.

INFLATION

The Company leases apartments under lease terms generally ranging from six
to thirteen months. Management believes that such short-term lease contracts
lessen the impact of inflation due to the ability to adjust rental rates to
market levels as leases expire.

YEAR 2000 CONVERSION

Camden has recognized the need to ensure that its systems, equipment and
operations will not be adversely impacted by the change to the calendar year
2000. As such, the Company has taken steps to identify potential areas of risk
and has begun addressing these in its planning, purchasing and daily
operations. The total cost of converting all internal systems, equipment and
operations to the year 2000 has not been fully quantified, but it is not
expected to be a material cost to Camden. However, no estimates can be made as
to the potential adverse impact resulting from the failure of third party
service providers and vendors to prepare for the year 2000. Camden is
attempting to identify those risks as well as to receive compliance
certificates from all third parties that have a material impact on Camden's
operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Company are listed under Item 14(a) and are
filed as a part of this report on the pages indicated. The supplementary data
is included in Note 11 to the Consolidated Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

21
22
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 Joint Proxy Statement/Prospectus to be filed before March 31, 1998 in
connection with the Special Meeting in lieu of the Annual Meeting of
Shareholders to be held in April 1998.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

22
23
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

14(a)(1) and (2) Financial Statements and Schedule

Index to Financial Statements and Schedule

The following Consolidated Financial Statements and Schedule of the
Registrant and its subsidiaries and Independent Auditors' Report thereon are
filed as part of this report on the pages indicated.

Page
----

Financial Statements

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . 27
Consolidated Balance Sheets as of December 31, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995 . . . . . . . . . . . . . . 29
Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 1997, 1996 and 1995 . . . . . . . . . . . 30
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 . . . . . . . . . . . . . . 31
Notes to Consolidated Financial Statements . . . . . . . . . . . . 32

Schedule III -- Real Estate and Accumulated Depreciation . . . . . . S-1

14(a)(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).

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 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.

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).

23
24

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 Form of Camden Property Trust Remarketed Reset Note due May 9,
2002. Incorporated by reference from Exhibit 4.3 to the
Registrant's Form 8-K filed May 21, 1997 (File No. 1-12110).

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 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).

10.5 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).

10.6 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).

10.7 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).

10.8 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).

10.9 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).

10.10 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).

10.11 Underwriting Agreement dated May 6, 1997 between the Company
and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Incorporated by reference from Exhibit 1.1 to the Registrant's
Form 8-K filed May 21, 1997 (File No. 1-12110).

24
25

10.12 Remarketing Agreement dated May 6, 1997 between the Company and
Merrill Lynch, Pierce, Fenner & Smith Incorporated. Incorporated
by reference from Exhibit 1.2 to the Registrant's Form 8-K filed
May 21, 1997 (File No. 1-12110).

10.13 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).

10.14 Company Voting Agreement, dated December 16, 1997, among the
Registrant and certain stockholders of Oasis Residential, Inc.
Incorporated by reference from Exhibit 99.1 to the Registrant's
Form 8-K filed December 17, 1997 (File No. 1-12110).

10.15 Camden Voting Agreement, dated December 16, 1997, among Oasis
Residential, Inc. and certain shareholders of the Registrant.
Incorporated by reference from Exhibit 99.2 to the Registrant's
Form 8-K filed December 17, 1997 (File No. 1-12110).

10.16* Form of Master Exchange Agreement by and between the
Registrant and certain key employees.

10.17* Restatement and Amendment of Loan Agreement dated November 25,
1997 between Registrant and NationsBank of Texas, N.A.

11.1* Statement re Computation of Per Share Earnings.

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, Lewis A.
Levey, F. Gardner Parker and Steven A. Webster.

27.1* Financial Data Schedule (filed only electronically with the
SEC).

- ------------------------------
*Filed herewith.

14(b) Reports on Form 8-K

Current Report on Form 8-K dated December 16, 1997 was filed
which contained information under Item 5 (Other Events) and
Item 7 (Financial Statements, Pro Forma Financial Information
and Exhibits).

25
26
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.

February 2, 1998 CAMDEN PROPERTY TRUST

By: /S/
-----------------------------
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
---- ----- ----

* Chairman of the Board of Trust Managers and February 2, 1998
- ----------------------------------- Chief Executive Officer
Richard J. Campo (Principal Executive Officer)

* President, Chief Operating Officer and February 2, 1998
- ----------------------------------- Trust Manager
D. Keith Oden

/S/ Senior Vice President - Finance, Chief February 2, 1998
- ----------------------------------- Financial Officer and Treasurer
G. Steven Dawson (Principal Financial and Accounting Officer)

* Trust Manager February 2, 1998
- -----------------------------------
William R. Cooper

* Trust Manager February 2, 1998
- -----------------------------------
George A. Hrdlicka

Trust Manager February 2, 1998
*
- -----------------------------------
Lewis A. Levey

* Trust Manager February 2, 1998
- -----------------------------------
F. Gardner Parker

* Trust Manager February 2, 1998
- -----------------------------------
Steven A. Webster

*By:
/S/
-------------------------------
G. Steven Dawson
Attorney-in-Fact

26
27
INDEPENDENT AUDITORS' REPORT

To the Shareholders of Camden Property Trust

We have audited the accompanying consolidated balance sheets of Camden Property
Trust as of December 31, 1997 and 1996, and related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. Our audits also included the financial
statement schedule listed in the Index at Item 14. These financial statements
and financial statement schedule are the responsibility of the management of
Camden Property Trust. Our responsibility is to express an opinion on the
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Camden Property Trust at December
31, 1997 and 1996, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles. Also, 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 16, 1998

28
CAMDEN PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

December 31,
--------------------------
1997 1996
------------ ----------

ASSETS
Real estate assets, at cost
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 182,909 $ 86,673
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . 1,155,335 523,325
------------ ----------
1,338,244 609,998
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . (94,665) (56,369)
------------ ----------
Net operating real estate assets . . . . . . . . . . . . . . . . 1,243,579 553,629
Projects under development, including land . . . . . . . . . . . . . . . . 43,805 36,547
Investment in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . 15,089
------------ ----------
1,302,473 590,176

Accounts receivable -- affiliates . . . . . . . . . . . . . . . . . . . . . . . 950 148
Notes receivable -- affiliates . . . . . . . . . . . . . . . . . . . . . . . . 1,796 3,550
Deferred financing and other assets, net . . . . . . . . . . . . . . . . . . . 7,885 4,847
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 6,468 2,366
Restricted cash -- escrow deposits . . . . . . . . . . . . . . . . . . . . . . 4,048 2,423
------------ ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,323,620 $ 603,510
============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Notes payable
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 316,941 $ 185,800
Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,813 58,382
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,698 7,512
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . 16,568 13,246
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . 15,881 7,675
Distributions payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,805 7,765
------------ ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543,706 280,380

Minority Interest in Operating Partnership . . . . . . . . . . . . . . . . . . 63,325
7.33% Convertible Subordinated Debentures . . . . . . . . . . . . . . . . . . . 6,025 27,702

Shareholders' Equity
Preferred shares of beneficial interest; $0.01 par value per share;
10,000 shares authorized . . . . . . . . . . . . . . . . . . . . . . . .
Common shares of beneficial interest; $0.01 par value per share;
100,000 shares authorized; 31,954 and 16,521 issued at
December 31, 1997 and 1996, respectively . . . . . . . . . . . . . . . . . 317 165
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 780,738 348,339
Distributions in excess of net income . . . . . . . . . . . . . . . . . . . (63,526) (49,515)
Unearned restricted share awards . . . . . . . . . . . . . . . . . . . . . . (6,965) (3,561)
------------ ----------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . 710,564 295,428
------------ ----------
Total liabilities and shareholders' equity . . . . . . . . . . . . . $ 1,323,620 $ 603,510
============ ==========

See Notes to Consolidated Financial Statements.

28
29
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

Year Ended December 31,
------------------------------------
1997 1996 1995
--------- --------- --------

REVENUES
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 187,928 $ 105,785 $ 92,275
Other property income . . . . . . . . . . . . . . . . . . . . . . . . . 9,510 4,453 3,617
--------- --------- --------
Total property income . . . . . . . . . . . . . . . . . . . . . . . 197,438 110,238 95,892

Equity in income of joint ventures . . . . . . . . . . . . . . . . . . 1,141
Fee and asset management . . . . . . . . . . . . . . . . . . . . . . . 743 949 1,029
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 419 353
--------- --------- --------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 199,789 111,606 97,274
--------- --------- --------
EXPENSES
Property operating and maintenance . . . . . . . . . . . . . . . . . . 70,595 40,604 37,093
Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,028 13,192 11,481
General and administrative . . . . . . . . . . . . . . . . . . . . . . 4,473 2,631 2,263
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,537 17,336 13,843
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 44,836 23,894 20,264
--------- --------- --------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 169,469 97,657 84,944
--------- --------- --------
INCOME BEFORE GAIN ON SALES OF PROPERTIES, LOSSES RELATED TO EARLY
RETIREMENT OF DEBT AND MINORITY INTEREST . . . . . . . . . . . . . . . . 30,320 13,949 12,330
GAIN ON SALES OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . 10,170 115
LOSSES RELATED TO EARLY RETIREMENT OF DEBT . . . . . . . . . . . . . . . . (397) (5,351)
--------- --------- --------
INCOME BEFORE MINORITY INTEREST . . . . . . . . . . . . . . . . . . . . . . 40,093 8,713 12,330
MINORITY INTEREST IN OPERATING PARTNERSHIP . . . . . . . . . . . . . . . . (1,655)
--------- --------- --------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,438 8,713 12,330
PREFERRED SHARE DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . (4) (39)
--------- --------- --------
NET INCOME TO COMMON SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . $ 38,438 $ 8,709 $ 12,291
========= ========= ========

BASIC EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.46 $ 0.59 $ 0.86
DILUTED EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . $ 1.41 $ 0.58 $ 0.86

DISTRIBUTIONS DECLARED PER COMMON SHARE . . . . . . . . . . . . . . . . . . $ 1.96 $ 1.90 $ 1.84

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING . . . . . . . . . . . 26,257 14,849 14,325
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
PLUS DILUTIVE POTENTIAL COMMON SHARES . . . . . . . . . . . . . . . . . . 28,356 14,979 14,414

See Notes to Consolidated Financial Statements.

29
30
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except per share amounts)

Common Unearned
Shares of Additional Distributions in Restricted
Beneficial Paid-in Excess of Net Share
Interest Capital Income Awards
---------- ---------- ---------------- ----------

SHAREHOLDERS' EQUITY, JANUARY 1, 1995 . . . . . . . . . . . . . $ 143 $ 294,097 $ (15,502) $ (1,134)

Net income to common shareholders . . . . . . . . . . . . 12,291
Common shares issued under dividend reinvestment plan . . . 28
Conversion of debentures . . . . . . . . . . . . . . . . . 1 3,588
Restricted shares issued under benefit plan (83 shares) . . 1 2,095 (1,365)
Cash distributions ($1.84 per share) . . . . . . . . . . . (26,414)
------- ---------- ------------- ----------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1995 . . . . . . . . . . . . 145 299,808 (29,625) (2,499)
------- ---------- ------------- ----------

Net income to common shareholders . . . . . . . . . . . . . 8,709
Public offering of 1,090 common shares. . . . . . . . . . . 11 27,580
Common shares issued under dividend reinvestment plan . . . 31
Conversion of debentures . . . . . . . . . . . . . . . . . 6 15,814
Restricted shares issued under benefit plan (82 shares) . . 1 2,074 (1,062)
Common share options exercised (71 shares) . . . . . . . . 1 1,272
Conversion of preferred shares . . . . . . . . . . . . . . 1 1,952
Other . . . . . . . . . . . . . . . . . . . . . . . . . . (192)
Cash distributions ($1.90 per share) . . . . . . . . . . . (28,599)
------- ---------- ------------- ----------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1996 . . . . . . . . . . . . 165 348,339 (49,515) (3,561)
------- ---------- ------------- ----------

Net income to common shareholders . . . . . . . . . . . . 38,438
Common shares issued in Paragon Acquisition (9,466
shares) . . . . . . . . . . . . . . . . . . . . . . . 95 262,275
Public offering of 4,830 common shares . . . . . . . . . . 48 142,579
Common shares issued under dividend reinvestment plan . . 38
Conversion of debentures . . . . . . . . . . . . . . . . . 9 21,061
Restricted shares issued under benefit plan (194 shares). . 2 5,519 (3,407)
Restricted shares placed into Rabbi Trust (261 shares) (3) 3
Common share options exercised (33 shares) . . . . . . . . 1 773
Conversion of Operating Partnership units . . . . . . . . 154
Cash distributions ($1.96 per share) . . . . . . . . . . . (52,449)
------- ---------- ------------- ----------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1997 . . . . . . . . . . . . $ 317 $ 780,738 $ (63,526) $ (6,965)
======= ========== ============= ==========

See Notes to Consolidated Financial Statements.

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31
CAMDEN PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended December 31,
------------------------------------
1997 1996 1995
---------- ---------- ----------

CASH FLOW FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,438 $ 8,713 $ 12,330
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 44,836 23,894 20,264
Equity in income of joint ventures, net of cash received . . . . . . 929
Gain on sales of properties . . . . . . . . . . . . . . . . . . . . (10,170) (115)
Losses related to early retirement of debt . . . . . . . . . . . . . 397 5,351
Minority interest in Operating Partnership . . . . . . . . . . . . . 1,655
Accretion of discount on unsecured notes payable . . . . . . . . . . 142 72
Net change in operating accounts . . . . . . . . . . . . . . . . . . (10,253) 3,352 5,000
---------- ---------- ----------
Net cash provided by operating activities . . . . . . . . . . . 65,974 41,267 37,594

CASH FLOW FROM INVESTING ACTIVITIES
Cash of Paragon at acquisition . . . . . . . . . . . . . . . . . . . 9,847
Increase in real estate assets . . . . . . . . . . . . . . . . . . . (133,206) (71,288) (96,183)
Proceeds from sales of properties . . . . . . . . . . . . . . . . . . 37,826 29,794
Decrease (increase) in affiliate notes receivable . . . . . . . . . . 7,749 (73) (833)
Decrease in investment in joint ventures. . . . . . . . . . . . . . . 4,624
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (549) (130) 13
---------- ---------- ----------
Net cash used in investing activities . . . . . . . . . . . . . (73,709) (41,697) (97,003)

CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of common shares . . . . . . . . . . . . . . . 142,627 27,591
Net increase (decrease) in credit facility and short term notes . . . 31,000 (110,783) 50,759
Proceeds from notes payable . . . . . . . . . . . . . . . . . . . . . 100,000 181,048 39,860
Losses related to early retirement of debt . . . . . . . . . . . . . (397) (5,351)
Repayment of notes payable . . . . . . . . . . . . . . . . . . . . . (45,323) (61,614) (4,707)
Repayment of Paragon debt, including line of credit . . . . . . . . . (160,774)
Distributions to common shareholders and minority interests . . . . . (55,514) (27,457) (26,071)
Payment of loan costs . . . . . . . . . . . . . . . . . . . . . . . . (988) (2,253) (634)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,206 1,379 197
---------- ---------- ----------
Net cash provided by financing activities . . . . . . . . . . . 11,837 2,560 59,404
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents . . . . . . 4,102 2,130 (5)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . . . . . . . 2,366 236 241
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . . $ 6,468 $ 2,366 $ 236
========== ========== ==========

SUPPLEMENTAL INFORMATION
Cash paid for interest, net of interest capitalized . . . . . . . . . $ 27,155 $ 15,585 $ 13,189
Interest capitalized . . . . . . . . . . . . . . . . . . . . . . . . $ 3,338 $ 4,129 $ 5,321

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisition of Paragon, net of cash acquired:
Fair value of assets acquired . . . . . . . . . . . . . . . . $ 650,634
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . 332,839
Common shares issued . . . . . . . . . . . . . . . . . . . . . 262,370
Fair value of minority interest . . . . . . . . . . . . . . . 65,272
Conversion of 7.33% subordinated debentures to common shares, net . . $ 21,070 $ 15,820 $ 3,589
Value of shares issued under benefit plans, net . . . . . . . . . . . $ 5,372 $ 2,449 $ 2,096
Notes payable assumed upon purchase of a property . . . . . . . . . . $ 16,022
Conversion of preferred shares and dividends . . . . . . . . . . . . $ 1,953

See Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS

Camden Property Trust ("Camden" or the "Company") is a Houston-based
self-administered and self-managed real estate investment trust ("REIT")
organized on May 25, 1993. Camden and its subsidiaries report as a single
business segment, with activities related to the ownership, development,
acquisition, management, marketing and disposition of multifamily apartment
communities in the Southwest, Southeast and Midwest regions of the United
States. As of December 31, 1997, the Company owned interests in, operated or
was developing 106 multifamily properties containing 37,012 units located in
Texas, Florida, Missouri, North Carolina, Arizona and Kentucky. Six of the
Company's multifamily properties containing 2,343 units were under construction
at December 31, 1997. The Company has several additional sites which it intends
to develop into multifamily apartment communities. Additionally, the Company
managed 4,163 apartment units in 14 properties for third-parties and
non-consolidated affiliates at December 31, 1997.

Acquisition of Paragon Group, Inc. On April 15, 1997, the Company acquired
through a tax-free merger Paragon Group, Inc. ("Paragon"), a Dallas-based
multifamily REIT. The acquisition increased the size of the Company's
portfolio from 53 to 103 multifamily properties (after combining the operations
of seven of the acquired properties with adjacent properties), and from 19,389
to 35,364 apartment units at the date of acquisition (the "Paragon
Acquisition"). As provided in the Plan of Merger dated December 16, 1996, each
share of Paragon common stock outstanding on April 15, 1997 was exchanged for
0.64 shares of the Company's common shares (based on a share price of $17.75
per share of Paragon common stock and $27.75 per share of Camden common
shares). The Company issued 9,466,346 shares in exchange for all of the
outstanding shares of Paragon common stock. Subsequent to the Paragon
Acquisition, 2,352,161 limited partnership units ("OP Units") in Camden
Operating, L.P. (the "Operating Partnership") were outstanding. Approximately
$296 million of Paragon debt, at fair value, was assumed in the Paragon
acquisition.

The Paragon Acquisition has been recorded under the purchase method of
accounting. In accordance with generally accepted accounting principles, the
purchase price was allocated to the net assets acquired based on their
estimated fair values. No goodwill was recorded in this transaction. The
accompanying consolidated statements of operations include the operating
results of Paragon since April 1, 1997, the effective date of the Paragon
Acquisition for accounting purposes. Pro forma unaudited consolidated
operating results of the Company for the years ended December 31, 1997 and
1996, assuming that the Paragon Acquisition had been made as of January 1,
1996, are summarized below (in thousands, except per share amounts):

Year Ended
December 31,
---------------------------------
1997 1996
---------------- ---------------

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $ 223,197 $ 211,580
Net income to common shareholders . . . . . . . . . . . . . . . . . 36,626 17,729
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . 1.28 0.73
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . 1.21 0.73

The non-residential operations of Paragon Group Property Services, Inc., a
Paragon affiliate which was sold on June 30, 1996, and the related gain from
the sale have been adjusted out of the 1996 pro forma amounts. These pro forma
results have been prepared for informational purposes only and do not purport
to be indicative of the results of operations which actually would have
resulted had the Paragon Acquisition been completed on the date indicated, nor
are they necessarily indicative of future operations.

Acquisition of Oasis Residential, Inc. On December 16, 1997, the Company
announced the execution of a definitive merger agreement pursuant to which
Oasis Residential, Inc. ("Oasis") would be merged with and into a wholly-owned
subsidiary of Camden expanding the Company's geographic focus in 1998 to
include the Western region of the United States. Each share of Oasis will be
exchanged for 0.759 shares of Camden. Each share of Oasis Series A cumulative
convertible preferred stock (the "Oasis Preferred Stock") outstanding will be
reissued as Camden Series A cumulative convertible preferred shares with
comparable terms and conditions as previously existed with respect to the Oasis
Preferred Stock. The merger 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, customary regulatory

32
33
approvals and other conditions. It is anticipated that the meetings to
consider the transaction and the completion of the merger will both take place
during the second quarter of 1998. Following the closing of the merger with
Oasis, the Company intends to spin-off approximately 5,000 of the Las Vegas
apartment units into a new private entity in which Camden will hold a minority
interest. Camden expects to continue to provide property management services
for these assets following the spin-off. There can be no assurance, however,
as to the terms and conditions of the spin-off or that the transaction will
ultimately be consummated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation. The consolidated financial statements of
Camden include the assets, liabilities, and operations of the parent company
and its wholly-owned subsidiaries and partnerships in which its aggregate
ownership is greater than 50%. Those owned less than 50% are accounted for
using the equity method. All significant intercompany accounts and
transactions have been eliminated in consolidation. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements, results of operations during the reporting periods and related
disclosures. Actual results could differ from those estimates.

Operating Partnership. Camden owns the assets acquired from Paragon,
comprising approximately 45.0% of Camden's multifamily apartment units at
December 31, 1997, in the Operating Partnership in which Camden holds 79.1% of
the OP Units, and the sole 1% general partner interest. The remaining 19.9% of
the Operating Partnership interests are held by former officers, directors and
investors in Paragon, who collectively owned 2,346,640 OP Units at December 31,
1997. Minority interests in the accompanying consolidated financial statements
relate to holders of these OP Units. Each OP Unit is redeemable for one common
share of Camden or cash at the election of the Company. Holders of OP Units are
not entitled to rights as shareholders of the Company prior to redemption of
their OP Units. No member of the Company's management team owns OP Units and
only two of the seven Trust Managers of the Company own OP Units.

Cash and Cash Equivalents. All cash and investments in money market
accounts and other securities with a maturity of three months or less, at the
time of purchase, are considered to be cash and cash equivalents.

Restricted Cash. Restricted cash mainly consists of escrow deposits held by
lenders for property taxes, insurance and replacement reserves. Substantially
all restricted cash is invested in short-term securities.

Real Estate Assets, at Cost. Real estate assets are carried at cost plus
capitalized carrying charges. Expenditures directly related to the development,
acquisition, and improvement of real estate assets are capitalized at cost as
land, buildings and improvements. All construction and carrying costs are
capitalized and reported on the balance sheet in "Projects under development,
including land" until such units are completed. Upon completion of each
building of the project, the total cost of that building and the associated
land is transferred to "Land" and "Buildings and improvements" and the assets
are depreciated over their estimated useful lives using the straight-line
method of depreciation. Upon achieving 90% occupancy, or one year from opening
the leasing office, whichever occurs first, all units are considered operating
and the Company begins expensing all items that were previously considered as
carrying costs.

The Company expenses recurring capital expenditures for items such as
carpets, appliances and HVAC units as these items are replaced in their normal
course. During a renovation, many of these items may be capitalized,
particularly to the extent that an inordinate number of such items are
replaced. Non-recurring capital expenditures for such items as roof
replacements are capitalized. The Company capitalized $13.3 million in 1997
and $9.6 million in 1996 of non- recurring renovations and improvements to
extend the economic lives and enhance its multifamily properties.

Carrying charges, principally interest and ad valorem taxes, of land under
development and buildings under construction are capitalized as part of
projects under development and buildings and improvements to the extent that
such charges do not cause the carrying value of the asset to exceed its net
realizable value. Capitalized interest was $3.3 million in 1997, $4.1 million
in 1996 and $5.3 million in 1995. Capitalized ad valorem taxes were $557,000 in
1997, $617,000 in 1996 and $551,000 in 1995.

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34
All buildings and improvements are depreciated over their remaining
estimated useful lives of 10 to 35 years using the straight line method.
Subsequent expenditures for furnishings, equipment and other normal recurring
items are expensed as incurred. Capital improvements subsequent to the initial
renovation period are depreciated over their expected useful lives of 3 to 15
years using the straight line method.

Deferred Financing and Other Assets, Net. Deferred financing and other
assets are amortized ($881,000 in 1997, $838,000 in 1996, and $871,000 in 1995)
over the terms of the related debt or lives of the asset on the straight line
method. Leasehold improvements and equipment are depreciated on the straight
line method over the shorter of the expected useful lives or the lease terms
which range from 3 to 10 years. Accumulated depreciation and amortization was
$2.9 million in 1997 and $1.8 million in 1996 for deferred financing, other
assets, leasehold improvements and equipment.

Interest Rate Swap Agreements. The differential to be paid or received on
interest rate swap agreements is accrued as interest rates change and is
recognized over the life of the agreements as an increase or decrease in
interest expense. The Company does not use these instruments for trading
purposes, rather it uses them to hedge the impact of interest rate
fluctuations on floating rate debt.

Income Recognition. Rental, other property income, interest and all other
sources of income are recognized as earned.

Rental Operations. Camden owns and operates garden style multifamily
apartment units that are rented to residents on lease terms ranging from six to
thirteen months, with monthly payments due in advance. None of the properties
are subject to rent control or rent stabilization. Operations of apartment
properties acquired are recorded from the date of acquisition in accordance
with the purchase method of accounting. All operating expenses, excluding
depreciation, associated with occupied units for properties in the development
and leasing phase are expensed against revenues generated by those units as
they become occupied. In management's opinion, due to the number of tenants,
the type and diversity of submarkets in which the properties operate, and the
collection terms, there is no concentration of credit risk.

Income Taxes and Distributions. Camden intends to maintain its election as
a REIT under the Internal Revenue Code of 1986, as amended. As a result, the
Company generally will not be subject to federal taxation to the extent it
distributes 95% of its REIT taxable income to its shareholders and satisfies
certain other requirements. Accordingly, no provision for federal income taxes
has been included in the accompanying consolidated financial statements.

Taxable income differs from net income for financial reporting purposes
principally due to the timing of the recognition of depreciation. Such
differences are primarily due to differences in the book/tax basis of the real
estate assets of $14.5 million and differences in methods of depreciation and
lives of the real estate assets. As a result of these differences, the book
basis of the Company's net real estate assets exceeds its tax basis by $85.0
million at December 31, 1997. At December 31, 1996, the tax basis exceeded the
book basis by $37.1 million.

Shareholders are taxed on distributions declared and must report such
distributions as either ordinary income, short-term gains, long-term gains, or
as return of capital.

A schedule of per share distributions paid by the Company is set forth in
the following table:

Year Ended December 31,
----------------------------
1997 1996 1995
------ ------ -------

Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.30 $ 1.03 $ 1.37
20% Long-term capital gain . . . . . . . . . . . . . . . . . . . . . . . 0.12
25% Sec. 1250 capital gain . . . . . . . . . . . . . . . . . . . . . . . 0.08
Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.46 0.87 0.47
------ ------ -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.96 $ 1.90 $ 1.84
====== ====== =======

Percentage of distributions representing tax preference items . . . . . . 17.013% 24.769% 20.119%

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35
A schedule of 1997 per share distributions paid by Paragon to Paragon
shareholders prior to the Paragon Acquisition is set forth in the following
table:

1997
-------

Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.13
28% Mid-term capital gain . . . . . . . . . . . . . . . . . . . . . . . . 0.18
Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.47
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.78
=======

Property Operating and Maintenance Expenses. Property operating and
maintenance expenses included normal repairs and maintenance totaling $14.6
million in 1997, $8.3 million in 1996 and $7.3 million in 1995. In addition,
amounts incurred subsequent to the initial renovation and rehabilitation
periods for recurring expenditures such as carpets, appliances, and furnishings
and equipment which might otherwise be capitalized, totaled $5.5 million in
1997, $3.5 million in 1996 and $2.8 million in 1995 and were included in
expense.

Earnings Per Share. Basic earnings per share has been computed by dividing
net income to common shareholders by the weighted average number of common
shares outstanding. Diluted earnings per share has been computed by dividing
net income to common shareholders (as adjusted) by the weighted average number
of common shares outstanding plus dilutive potential common shares.

The following table presents information necessary to calculate basic and
diluted earnings per share for the periods indicated, with 1996 and 1995 being
restated to conform with the requirements of the Statement of Financial
Accounting Standards No. 128, Earnings Per Share, described below (in
thousands, except per share amounts):

For the Year Ended December 31,
----------------------------------------
1997 1996 1995
---------- --------- ----------

BASIC EARNINGS PER SHARE
Weighted Average Common Shares Outstanding . . . . . . . . . . 26,257 14,849 14,325
========== ========= ==========
Basic Earnings Per Share . . . . . . . . . . . . . . $ 1.46 $ 0.59 $ 0.86
========== ========= ==========

DILUTED EARNINGS PER SHARE
Weighted Average Common Shares Outstanding . . . . . . . . . . 26,257 14,849 14,325
Shares Issuable from Assumed Conversion of:
Common Share Options and Awards Granted . . . . . . . . . . 330 130 4
Convertible Preferred Shares . . . . . . . . . . . . . . .
Operating Partnership Units . . . . . . . . . . . . . . . 1,769 85
---------- --------- ----------
Weighted Average Common Shares Outstanding, as Adjusted . . . 28,356 14,979 14,414
========== ========= ==========
Diluted Earnings Per Share . . . . . . . . . . . . . $ 1.41 $ 0.58 $ 0.86
========== ========= ==========
EARNINGS FOR BASIC AND DILUTED COMPUTATION:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,438 $ 8,713 $ 12,330
Preferred Share Dividends . . . . . . . . . . . . . . . . . . (4) (39)
---------- --------- ----------
Net Income to Common Shareholders (Basic Earnings Per Share
Computation) . . . . . . . . . . . . . . . . . . . . . . . 38,438 8,709 12,291
Preferred Share Dividends . . . . . . . . . . . . . . . . . . 4 39
Minority Interest in Operating Partnership . . . . . . . . . . 1,655
---------- --------- ----------
Net Income to Common Shareholders, as Adjusted
(Diluted Earnings Per Share Computation) . . . . . . . . . $ 40,093 $ 8,713 $ 12,330
========== ========= ==========

Reclassifications. Certain reclassifications have been made to amounts in
prior year financial statements to conform with current year presentations.
Specifically, certain components of revenues have now been reported separately.

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36
New Accounting Pronouncements. In February 1997, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings Per Share. SFAS No. 128, which was effective for
periods ending after December 15, 1997, specifies the computation, presentation
and disclosure requirements of earnings per share and supercedes Accounting
Principles Board Opinion No. 15. SFAS No. 128 requires a dual presentation of
basic and diluted earnings per share. Basic earnings per share, which excludes
the impact of common share equivalents, replaces primary earnings per share.
Diluted earnings per share, which utilizes the average market price per share
as opposed to the greater of the average market price per share or ending
market price per share when applying the treasury stock method in determining
common share equivalents, replaces fully diluted earnings per share.

In February 1997, the FASB also issued SFAS No. 129, Disclosure of
Information about Capital Structure, which establishes standards for disclosing
information about an entity's capital structure. SFAS No. 129 was effective
for periods ending after December 15, 1997. The adoption of SFAS No. 129 did
not impact the Company's capital structure disclosures as the Company was
already in compliance with this SFAS.

In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
and SFAS No. 131, Disclosures About Segments of an Enterprise and Related
Information. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components. SFAS No. 131 establishes standards
for the way that public business enterprises report information about operating
segments and related information in interim and annual financial statements.
SFAS No. 131 will not impact the Company's financial statements as it reports
as a single segment. SFAS Nos. 130 and 131 are effective for periods beginning
after December 15, 1997. Management is evaluating what, if any, additional
disclosures may be required upon the implementation of SFAS No. 130.

3. NOTES PAYABLE

The following is a summary of the Company's indebtedness:

(In millions) December 31,
-------------------
1997 1996
------- -------

Senior Unsecured Notes:
6 5/8% Notes, due 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99.7 $ 99.6
Reset Notes, due 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.0
7% Notes, due 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.3 74.2
7.172% Medium Term Notes, due 2004 . . . . . . . . . . . . . . . . . . . . . . . . 25.0
Credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.0 12.0
------- -------
317.0 185.8

Secured Notes - Mortgage loans (5 3/4% - 8 1/2%) . . . . . . . . . . . . . . . . . . 163.8 58.4
------- -------
Total notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 480.8 $ 244.2
======= =======
Floating rate debt included in notes payable, net of hedging agreement . . . . . . . . $ 93.0 $ --
======= =======

The Company has a revolving $150 million unsecured line of credit (the
"Unsecured Credit Facility") which matures July 28, 2000. One year prior to
maturity, this note becomes a term loan, unless it is extended, renegotiated or
repaid. The scheduled interest rate on the loan is currently based on LIBOR
plus 105 basis points or Prime plus 25 basis points. This scheduled rate is
subject to change as the Company's credit ratings change. Advances under the
Unsecured Credit Facility may be priced at the scheduled rate, or the Company
may enter into bid rate loans ("Bid Rate Loans") with participating banks at
rates below the scheduled rate. These Bid Rate Loans have terms of six months
or less and may not exceed the lesser of $75 million or the remaining amount
available under the Unsecured Credit Facility. The Unsecured Credit Facility
is subject to customary financial covenants and limitations. As of December 31,
1997, the Company had $107 million available under its Unsecured Credit
Facility. The weighted average balance outstanding on the Unsecured Credit
Facility during the year ended December 31, 1997 was $31.1 million with a
maximum outstanding balance of $119.5 million.

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37
During 1996, the Company utilized proceeds from the 6-5/8% and 7% notes
primarily to reduce indebtedness under its Unsecured Credit Facility. In
connection with such reductions, the Company also early settled certain hedging
agreements and recorded a loss of $5.4 million.

On July 21, 1997, the Company completed the public sale and issuance of
4,830,000 common shares, including 630,000 shares issued to the underwriters to
satisfy over-allotments (the "July 1997 Equity Offering"), at a price of $31
per share. The shares were issued from the Company's recently filed $500
million universal shelf registration statement. Net proceeds from the July
1997 Equity Offering were used to retire certain secured indebtedness assumed
in the Paragon Acquisition and to reduce amounts outstanding under the
Unsecured Credit Facility which had been advanced to fund recent property
developments, acquisitions and other working capital requirements. Had the
July 1997 Equity Offering been completed on the effective date of the Paragon
Acquisition, the interest expense on a pro forma basis would have been $21.3
million for the nine months ended December 31, 1997. Net income to common
shareholders on a pro forma basis would have been $37.4 million for the nine
months ended December 31, 1997. Basic and diluted earnings per share for the
nine months ended December 31, 1997 would have been $1.20 per share and $1.16
per share, respectively.

At December 31, 1997, the Company maintained a $25 million interest rate
hedging agreement which is scheduled to mature in July 2000. The issuing bank
has an option to extend this agreement to July 2002. The LIBOR rate is fixed
at 6.1%, resulting in a fixed rate equal to 6.1% plus the actual LIBOR spread
on the related indebtedness. This swap continues to be used as a hedge to
manage the risk of interest rate fluctuations on the Unsecured Credit Facility
and other floating rate indebtedness.

At December 31, 1997, the weighted average interest rate on total notes
payable was 7.0%.

Scheduled principal repayments on all loans outstanding at December 31,
1997 over the next five years are $4.7 million in 1998, $15.7 million in 1999,
$51.4 million in 2000, $102.3 million in 2001, $77.5 million in 2002 and $229.1
million thereafter.

4. CONVERTIBLE SUBORDINATED DEBENTURES

In April 1994, the Company issued $86.3 million aggregate principal amount
of 7.33% Convertible Subordinated Debentures due 2001 (the "Debentures"). The
Debentures are convertible at any time prior to maturity into common shares of
beneficial interest, $0.01 par value, of the Company at a conversion price of
$24 per share, subject to adjustment under certain circumstances. The
Debentures will not be

37
38
redeemable by the Company prior to maturity, except in certain circumstances
intended to maintain the Company's status as a REIT. Interest on the Debentures
is payable on April 1 and October 1 of each year. The Debentures are unsecured
and subordinated to present and future senior debt and will be effectively
subordinated to all debt and other liabilities of the Company. As of December
31, 1997, $80.2 million in principal amount of the Debentures had been converted
to 3.3 million common shares. For the converted Debentures, the earned but
unpaid interest was forfeited by the Debenture holders in accordance with the
Indenture and the unpaid interest payable was credited to additional
paid-in-capital. In addition, $3.2 million of unamortized Debenture issue costs
have been reclassified to additional paid-in-capital. Had all these converted
Debentures converted as of the beginning of the period, basic earnings per share
would have been $1.46, $0.62 and $0.86 per share for the years ended December
31, 1997, 1996 and 1995, respectively. Diluted earnings per share would have
been $1.41, $0.62 and $0.86 per share for the years ended December 31, 1997,
1996 and 1995, respectively. Deferred Debenture issue costs of $142,000 and
$855,000 remained outstanding at December 31, 1997 and 1996, respectively, and
are being amortized over the life of the Debentures.

5. INCENTIVE AND BENEFIT PLANS

Incentive Plan. The Company has a non-compensatory option plan (the "Plan")
which was amended in the second quarter of 1997 by the Company's shareholders
and trust managers. This amendment resulted in an increase in the maximum
number of common shares available for issuance under the Plan to 10% of the
common shares outstanding at any time. Compensation awards that can be granted
under the Plan include various forms of incentive awards including incentive
share options, non-qualified share options and restricted share awards
("Incentive Awards"). The class of eligible persons that can receive grants of
Incentive Awards under the Plan consists of non-employee trust managers, key
employees, consultants, and directors of subsidiaries as determined by a
committee of the Board of Trust Managers (the "Committee") of the Company. No
Incentive Award may be granted after May 27, 2003.

Following is a summary of the activity of the Plan for the three years ended
December 31, 1997:

Shares
Available for
Issuance Options and Restricted Shares
------- ----------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
1997 1997 1997 Price 1996 1996 Price 1995 1995 Price
------- ------- ---------- ------- ---------- ------- ----------

Balance at January 1 . . . . . . . 535,190 843,360 $ 23.34 870,835 $ 23.12 834,900 $ 23.18

Additional Shares Available Due to
Plan Amendment . . . . . . . . . 1,713,234

Options
Granted . . . . . . . . . . . . (310,050) 310,050 26.99
Exercised . . . . . . . . . . . (33,042) 23.39 (71,450) 22.35
Forfeited . . . . . . . . . . . 4,333 (4,333) 24.00 (54,650) 23.71 (47,175) 24.00
--------- --------- -------- -------- -------- -------- --------
Net Options . . . . . . . . (305,717) 272,675 27.47 (126,100) 22.94 (47,175) 24.00
--------- --------- -------- -------- -------- -------- --------
Restricted Shares
Granted . . . . . . . . . . . . (193,724) 193,724 28.42 124,341 24.73 90,956 23.24
Forfeited . . . . . . . . . . . (5,910) 26.39 (25,716) 24.37 (7,846) 25.50
--------- --------- -------- -------- -------- -------- --------
Net Restricted Shares . . . (193,724) 187,814 28.48 98,625 24.83 83,110 23.03
--------- --------- -------- -------- -------- -------- --------

Balance at December 31 . . . . . . 1,748,983 1,303,849 $ 24.94 843,360 $ 23.34 870,835 $ 23.12
========= ========= ======== ======== ======== ======== ========

Exercisable options at December 31 565,600 $ 22.95 533,617 $ 22.86 406,008 $ 22.78
Vested restricted shares at December 31 123,341 $ 24.46 56,781 $ 23.96 22,806 $ 24.30

Options are exercisable, subject to the terms and conditions of the Plan, in
increments of 33.33% per year on each of the first three anniversaries of the
date of grant. The Plan provides that the exercise price

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39
of an option (other than non-employee trust manager options) will be determined
by the Committee on the day of grant and to date all options have been granted
at an exercise price which equals the fair market value on the date of grant.
Options exercised during 1997 were exercised at prices ranging from $22.00 to
$24.00 per share. At December 31,1997, options outstanding were at prices
ranging from $22.00 to $27.00 per share. Such options have a weighted average
remaining contractual life of seven years.

In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 prescribes a fair value-based method of determining
compensation expense related to stock-based awards granted to employees or
associates. The recognition provisions of SFAS No. 123 are optional; however,
entities electing not to adopt SFAS No. 123 are required to disclose in annual
financial statements issued for fiscal years beginning after December 15, 1995
pro forma net income and earnings per share as if SFAS No. 123 had been
applied. The Company elected not to adopt the recognition provisions of SFAS
No. 123, however, required disclosures are included below.

The fair value of each option grant is estimated on the date of grant
utilizing the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1997: risk-free interest rates ranging
from 6.3% to 6.9%, expected life of ten years, dividend yield of 6.3% and
expected share price volatility of 14.4%. The weighted average fair value of
options granted in 1997 was $2.63 per share.

If the Company applied the recognition provisions of SFAS No. 123 to its
option grants, the Company's net income to common shareholders would have
decreased $57,000 in 1997 and both basic and diluted earnings per share would
have remained the same.

The recognition provisions of SFAS No. 123 did not impact the Company in
1995 and 1996 due to the fact that the Company did not grant any option awards
from January 1, 1995 through December 31, 1996. Furthermore, the effects of
applying SFAS No. 123 in this pro forma disclosure are not indicative of future
amounts.

Restricted shares have vesting periods of up to five years. The
compensation cost for restricted shares has been appropriately recognized at
fair market value of the Company's shares in 1995, 1996 and 1997.

Rabbi Trust. In February 1997 the Company established a rabbi trust
(the "Rabbi Trust"), in which salary and bonus amounts awarded to certain
officers under the recently established Key Employee Share Option Plan and
restricted shares awarded to certain officers may be deposited. The Company
accounts for the Rabbi Trust similar to a compensatory stock option plan. At
December 31, 1997, approximately 261,000 restricted shares were held in the
Rabbi Trust.

401(k) Savings Plan. The Company has a 401(k) savings plan (the "Savings
Plan") which is a voluntary defined contribution plan. Under the Savings Plan,
every employee is eligible to participate beginning on the earlier of January 1
or July 1 following the date the employee has completed six months of
continuous service with the Company. Each participant may make contributions to
the Savings Plan by means of a pre-tax salary deferral which may not be less
than 1% nor more than 15% of the participant's compensation. The federal tax
code limits the annual amount of salary deferrals that may be made by any
participant. The Company may make matching contributions on the participant's
behalf. A participant's salary deferral contribution will always be 100%
vested and nonforfeitable. A participant will become vested in the Company's
matching contributions 33.33% after one year of service, 66.67% after two years
of service and 100% after three or more years of service. Expenses under the
Savings Plan were not material.

Employee Stock Purchase Plan. In July 1997, the Company established and
commenced an Employee Stock Purchase Plan ("ESPP") for all active employees,
officers, and trust managers who have completed one month of continuous
service. Participants may elect to purchase Camden common shares through
payroll or director fee deductions and/or through quarterly contributions. At
the end of each six-month offering period, each participant's account balance
is applied to acquire common shares on the open market at 85% of the market
value, as defined, on the first or last day of the offering period, whichever
price is lower. A participant may not purchase more than $25,000 in value of
shares during any Plan Year, as defined. On January 6, 1998, 17,143 shares
were purchased under the ESPP for the 1997 Plan Year.

6. RELATED PARTY TRANSACTIONS

Camden Connection, Inc. ("CCI") (formerly Apartment Connection, Inc.) is a
nonqualified-REIT subsidiary. CCI was established to act as a leasing agent
providing tenants for apartment owners in Houston, including properties owned
by the Company. Locator fees paid by the Company to CCI were $79,000,
$136,000, and $195,000 for the years ended 1997, 1996, and 1995, respectively.
The Company made an unsecured working capital revolving line of credit
available to CCI, which was renewable annually. The loan had a maximum
commitment of $1.2 million and earned interest at a fixed rate of 7.5% per
annum. During 1997, the operations of CCI were sold and the loan was paid off.
The loan's outstanding balance was $1.2 million at December 31, 1996.

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40
Two of the executive officers ("Executives") have loans totaling $1.8
million with one of the Company's nonqualified-REIT subsidiaries. The
Executives utilized amounts received from these loans to purchase common shares
of the Company. The loans mature in 1999 and bear interest at the fixed rate
of 7.0%. These loans are non-recourse, but are secured by a pledge of such
common shares, and do not require any prepayments of principal until maturity.

During 1995, the Company formed TeleServe, Inc. (formerly Camden
Communications One, Inc.) doing business as CamTel ("CamTel"). CamTel is a
nonqualified-REIT subsidiary that was established to provide fiber optic,
central office switched telecommunications service to residents in the
Company's properties and third parties. CamTel entered into operating
agreements with third parties during the fourth quarter of 1997 to provide
continuing services to CamTel's customers. The Company had made a 7.0%
unsecured revolving line of credit available to CamTel, which had an
outstanding balance of $0 and $585,000 at December 31, 1997 and 1996,
respectively.

In connection with the April 15, 1997 merger with Paragon, the Company
through one of the Company's affiliates, Camden Residential Services, Inc.,
began performing residential services for owners of 15 affiliated properties.
Management fees earned on the properties amounted to $279,000 for the year
ended December 31, 1997. Although the management agreements were not the result
of arm's length negotiations, the Company believes that they were no more
favorable to the owners than the fees that would have been paid to unaffiliated
third parties under similar circumstances.

Prior to 1997, the Company had management agreements in which the
Executives had 1% economic interests with respect to four properties. Fees
earned amounted to $428,000 and $441,000 for the years ended 1996 and 1995,
respectively. Although the management agreements were not the result of arm's
length negotiations, the Company believes that they were no more favorable to
the owners than the fees that would have been paid to unaffiliated third
parties under similar circumstances.

7. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value for all financial instruments, whether or not recognized, for
financial statement purposes. Disclosure about fair value of financial
instruments is based on pertinent information available to management as of
December 31, 1997 and December 31, 1996. Considerable judgment is necessary to
interpret market data and develop estimated fair values. Accordingly, the
estimates presented herein are not necessarily indicative of the amounts the
Company could obtain on disposition of the financial instruments. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.

As of December 31, 1997 and 1996, management estimates that the fair value
of (i) cash and cash equivalents, receivables, accounts payable, accrued
expenses and other liabilities and distributions payable are carried at amounts
which reasonably approximate their fair value; and (ii) based upon the
Company's effective borrowing rate for issuance of debt with similar terms and
remaining maturities, the carrying amounts of debt and related interest rate
swap agreements approximate fair value.

The Company is exposed to credit risk in the event of nonperformance by
counterparties to its interest rate swap agreements, but has no off-balance
sheet risk of loss. The Company anticipates that its counterparties will fully
perform their obligations under the agreements.

8. NET CHANGE IN OPERATING ACCOUNTS

The effect of changes in the operating accounts on cash flows from
operating activities is as follows:

(In thousands) Year Ended December 31,
-----------------------------------
1997 1996 1995
--------- -------- --------

Decrease (increase) in assets:
Restricted cash - escrow deposits . . . . . . . . . . . . . . . . . $ 853 $ 210 $ (68)
Accounts receivable - affiliates . . . . . . . . . . . . . . . . . . 2,046 221 65
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,733) 929 (335)
Increase (decrease) in liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 434 (788) 3,143
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . 842 1,381 1,552
Accrued expenses and other liabilities . . . . . . . . . . . . . . . (12,695) 1,399 643
--------- -------- -------
Net change in operating accounts . . . . . . . . . . . . . . . . . . $ (10,253) $ 3,352 $ 5,000
========= ======== =======

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41
9. COMMITMENTS AND CONTINGENCIES

Construction Contracts. As of December 31, 1997, the Company was obligated
for approximately $19.8 million of additional expenditures (a substantial
amount of which is to be provided by debt).

Lease Commitments. At December 31, 1997, Camden had long-term leases
covering certain land, office facilities and equipment. Rental expense totaled
$783,000 in 1997, $475,000 in 1996 and $476,000 in 1995. Minimum annual rental
commitments for the years ending December 31, 1998 through 2002 are $414,000,
$176,000, $173,000, $162,000 and $160,000, respectively, and $6 million in the
aggregate thereafter.

Employment Agreements. The Company has employment agreements with six of
its senior officers, the terms of which expire at various times through August
20, 1999. Such agreements provide for minimum salary levels as well as various
incentive compensation arrangements, which are payable based on the attainment
of specific goals. The agreements also provide for severance payments in the
event certain situations occur such as termination without cause or a change of
control. The severance payments vary based on the officer's position and
amount to one times the current salary base for four of the officers and 2.99
times the average annual compensation over the previous three fiscal years for
the two remaining officers.

Contingencies. 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.

10. SUBSEQUENT EVENTS

In the ordinary course of its business, the Company issues letters of
intent indicating a willingness to negotiate for the purchase or sale of
multifamily properties or development land. In accordance with local real
estate market practice, such letters of intent are non-binding, and neither
party to the letter of intent is obligated to pursue negotiations unless and
until a definitive contract is entered into by the parties. Even if definitive
contracts are entered into, the letters of intent and resulting contracts
contemplate that such contracts will provide the purchaser with periods varying
from 25 to 180 days during which it will evaluate the properties and conduct
its due diligence and during which periods the purchaser will have the ability
to terminate the contracts without penalty or forfeiture of any deposit or
earnest money. There can be no assurance that definitive contracts will be
entered into with respect to any properties covered by letters of intent or
that the Company will acquire or sell any property as to which the Company may
have entered into a definitive contract. Further, due diligence periods are
frequently extended as needed. An acquisition or sale becomes probable at the
time that the due diligence period expires and the definitive contract has not
been terminated. The Company is then at risk under an acquisition contract, but
only to the extent of any earnest money deposits associated with the contract,
and is obligated to sell under a sales contract.

The Company is currently in the due diligence period for the purchase of
land for development and the acquisition of properties. No assurance can be
made that the Company will be able to complete the negotiations or become
satisfied with the outcome of the due diligence.

The Company seeks to selectively dispose of assets that are not in core
markets, have a lower projected net operating income growth rate than the
overall portfolio, or no longer conform to the Company's operating and
investment strategies. The proceeds from these sales may be reinvested in
acquisitions or developments or used to retire debt.

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11. QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data for the years ended December 31, 1997
and 1996 are as follows:

(In thousands, except per share amounts)

First Second Third Fourth Total
-------- ------- -------- -------- -----------

1997:
Revenues . . . . . . . . . . . . . . . . . . . . . $ 29,472 $54,072 $ 56,939 $ 59,306 $ 199,789
Net income to common shareholders . . . . . . . . 4,064 6,429 8,260 19,685* 38,438
Basic earnings per share . . . . . . . . . . . . . 0.25 0.24 0.27 0.62* 1.46
Diluted earnings per share . . . . . . . . . . . . 0.24 0.24 0.27 0.59* 1.41

1996:
Revenues . . . . . . . . . . . . . . . . . . . . . $ 26,590 $27,231 $ 28,768 $ 29,017 $ 111,606
Net income (loss) to common shareholders . . . . . (1,750)** 3,498 2,801 4,160 8,709
Basic earnings per share . . . . . . . . . . . . . (0.12)** 0.24 0.19 0.26 0.59
Diluted earnings per share. . . . . . . . . . . . . (0.12)** 0.24 0.19 0.26 0.58

* Includes a $10,170 or $0.32 basic earnings and $0.29 diluted earnings per
share impact related to gain on sales of properties.
** Includes a $(5,351) or $(0.37) basic and diluted earnings per share impact
from losses related to early retirement of debt.

43
SCHEDULE III

CAMDEN PROPERTY TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(In thousands)

COST
CAPITALIZED
SUBSEQUENT
TO
ACQUISITION
INITIAL COST TO OR GROSS AMOUNT AT WHICH
DESCRIPTION ENCUMBRANCES CAMDEN PROPERTY TRUST DEVELOPMENT CARRIED AT DECEMBER 31, 1997 (a)
----------------------------- ------------ -------------------------- ----------- ---------------------------------------
BUILDING AND
PROPERTY NAME LOCATION LAND IMPROVEMENTS LAND BUILDING TOTAL
-------------- -------- --------- ------------- --------- ----------- -----------

Apartments TX $ 34,100 $ 98,814 $ 540,738 $ 33,366 $ 98,814 $ 574,104 $ 672,918
Apartments AZ 11,300 84,833 2,054 11,300 86,887 98,187
Apartments FL 33,793 28,907 206,877 1,574 28,907 208,451 237,358
Apartments KY 22,500 6,034 48,597 257 6,034 48,854 54,885
Apartments MO 49,960 24,017 146,624 3,295 24,017 149,919 173,939
Apartments NC 23,460 13,837 85,387 1,733 13,837 87,120 100,957
Projects under Development TX 29,139 4,275 29,139 4,275 33,414
Projects under Development AZ 3,378 955 3,378 955 4,333
Projects under Development FL 2,067 583 2,067 583 2,650
Projects under Development KY 325 325 325
Projects under Development CO 2,047 1,036 2,047 1,036 3,083
--------- --------- ----------- -------- --------- ----------- -----------
Total $ 163,813 $ 219,540 $ 1,120,230 $ 42,279 $ 219,540 $ 1,162,509 $ 1,382,049
========= ========= =========== ======== ========= =========== ===========

DATE DEPRECIABLE
ACCUMULATED CONSTRUCTED LIFE
DESCRIPTION DEPRECIATION OR ACQUIRED (YEARS)
----------------------------- ------------ ----------- -----------

PROPERTY NAME LOCATION
-------------- --------

Apartments TX $ 70,932 1993-1997 3-35
Apartments AZ 7,813 1994-1997 3-35
Apartments FL 4,568 1997 3-35
Apartments KY 1,357 1997 3-35
Apartments MO 5,831 1997 3-35
Apartments NC 4,164 1997 3-35
Projects under Development TX 1995-1997
Projects under Development AZ 1997
Projects under Development FL 1996
Projects under Development KY 1997
Projects under Development CO 1994
--------
Total $ 94,665
========

(a) The aggregate cost for federal income tax purposes at December 31,1997 was
$1,368 million.

The changes in total real estate assets for the years ended December 31, 1997,
1996 and 1995 are as follows:

1997 1996 1995
------------ ---------- ----------

Balance, beginning of the period $ 646,545 $ 607,598 $ 510,324
Additions during period:
Acquisition - Paragon 618,292
Acquisitions - Other 45,830 6,294
Development 91,203 56,132 91,237
Improvements 13,308 9,578 8,409
Deductions during period:
Cost of real estate sold (33,129) (33,057) (2,372)
------------ ---------- ----------
Balance, end of period $ 1,382,049 $ 646,545 $ 607,598
============ ========== ==========

The changes in accumulated depreciation for the years ended December 31, 1997,
1996 and 1995 are as follows:

1997 1996 1995
--------- --------- ---------

Balance, beginning of the period $ 56,369 $ 36,800 $ 17,731
Depreciation 43,769 22,946 19,299
Real estate sold (5,473) (3,377) (230)
--------- --------- ---------
Balance, end of period $ 94,665 $ 56,369 $ 36,800
========= ========= =========

S-1
44
INDEX TO EXHIBITS