Camden Property Trust (NYSE:CPT) announced today operating results for the three months ended March 31, 2018. Net Income Attributable to Common Shareholders (“EPS”), Funds from Operations (“FFO”), and Adjusted Funds from Operations (“AFFO”) for the three months ended March 31, 2018 are detailed below. A reconciliation of EPS to FFO is included in the financial tables accompanying this press release.

         
      Three Months Ended
March 31
Per Diluted Share       2018       2017
EPS $0.41       $0.39
FFO $1.15 $1.09
AFFO       $1.04       $0.99
             
    Quarterly Growth     Sequential Growth
Same Property Results     1Q18 vs. 1Q17     1Q18 vs. 4Q17
Revenues 3.3% 0.3%
Expenses 2.1% 3.7%
Net Operating Income ("NOI")     4.0%     (1.5)%
                     
Same Property Results       1Q18     1Q17     4Q17
Occupancy       95.4%    

94.7%

    95.7%
             

“We are pleased to report another quarter of strong performance, with same property growth and FFO per share slightly better than anticipated,” said Richard J. Campo, Camden’s Chairman and CEO. “We now expect 2018 same property NOI growth to be 2.7% at the midpoint of our guidance range, compared to our original outlook of 2.5%, primarily as a result of lower than expected operating expenses during the first quarter. Camden’s 2018 guidance for FFO per share is unchanged, as the slight improvement in our outlook for same property NOI is offset by revised assumptions regarding the timing of additional 2018 acquisitions and initial occupancy at one of our new development communities.”

The Company defines same property communities as communities owned and stabilized since January 1, 2017, excluding communities under redevelopment and properties held for sale. A reconciliation of net income to NOI and same property NOI is included in the financial tables accompanying this press release.

Development Activity

During the quarter, construction was completed at Camden Shady Grove in Rockville, MD. Subsequent to quarter-end, leasing began at Camden McGowen Station in Houston, TX and Camden North End I in Phoenix, AZ.

Development Communities - Construction Completed and Projects in Lease-Up ($ in millions)

                         
        Total     Total     % Leased
Community Name     Location     Units     Cost    

as of 5/1/2018

Camden NoMa II Washington, DC 405 $107.6 78%
Camden Shady Grove     Rockville, MD     457     113.0     70%
Total           862     $220.6      
 

Development Communities - Construction Ongoing ($ in millions)

                         
        Total     Total     % Leased
Community Name     Location     Units     Budget    

as of 5/1/2018

Camden McGowen Station Houston, TX 315 $90.0 6%
Camden North End I Phoenix, AZ 441 105.0 9%
Camden Washingtonian Gaithersburg, MD 365 90.0
Camden Grandview II Charlotte, NC 28 21.0
Camden RiNo Denver, CO 233 75.0
Camden Downtown I     Houston, TX     271     132.0      
Total           1,653     $513.0      
 

Acquisition/Disposition Activity

During the quarter, the Company acquired Camden Pier District, a 358-home apartment community located in St. Petersburg, FL, for $126.9 million and Camden North Quarter, a 333-home apartment community located in Orlando, FL, for $81.4 million.

Subsequent to quarter-end, Camden acquired a 1.78-acre land parcel in Orlando, FL, for $11.4 million for the future development of approximately 360 wholly-owned apartment homes.

Share Repurchase

During the quarter, Camden repurchased 3,222 shares at an average price of $78.72 per share for $0.3 million. The Company currently has approximately $269.5 million remaining under its stock repurchase program.

Earnings Guidance

Camden updated its earnings guidance for 2018 based on its current and expected views of the apartment market and general economic conditions, and provided guidance for second quarter 2018 as detailed below.

                         
    2Q18     2018     2018 Midpoint      
Per Diluted Share     Range     Range     Current     Prior     Change
EPS $0.45 - $0.49     $1.68 - $1.88     $1.78     $1.78     $0.00
FFO     $1.16 - $1.20     $4.62 - $4.82     $4.72     $4.72     $0.00
                   
      2018     2018 Midpoint      
Same Property Growth     Range     Current     Prior     Change
Revenues     2.5% - 3.5%     3.0%     3.0%     0.0%
Expenses 3.0% - 4.0% 3.5% 4.0% (0.5)%
NOI     1.7% - 3.7%     2.7%     2.5%     0.2%
 

Camden intends to update its earnings guidance to the market on a quarterly basis. Additional information on the Company’s 2018 financial outlook and a reconciliation of expected EPS to expected FFO are included in the financial tables accompanying this press release.

Conference Call

Friday, May 4, 2018 at 10:00 AM CT
Domestic Dial-In Number: (888) 317-6003; International Dial-In Number: (412) 317-6061
Passcode: 7582072
Webcast: http://services.choruscall.com/links/cpt180504.html
Supplemental financial information is available in the Investors section of the Company’s website under Earnings Releases or by calling Camden’s Investor Relations Department at (713) 354-2787.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates, and projections about the industry and markets in which Camden (the “Company”) operates, management's beliefs, and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Factors which may cause the Company’s actual results or performance to differ materially from those contemplated by forward-looking statements are described under the heading “Risk Factors” in Camden’s Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission (SEC). Forward-looking statements made in today’s press release represent management’s current opinions at the time of this publication, and the Company assumes no obligation to update or supplement these statements because of subsequent events.

About Camden

Camden Property Trust, an S&P 400 Company, is a real estate company engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. Camden owns interests in and operates 158 properties containing 54,181 apartment homes across the United States. Upon completion of 6 properties currently under development, the Company’s portfolio will increase to 55,834 apartment homes in 164 properties. Camden was recently named by FORTUNE® Magazine for the eleventh consecutive year as one of the “100 Best Companies to Work For” in America, ranking #22.

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

   

CAMDEN

OPERATING RESULTS

 

(In thousands, except per share amounts)

       
(Unaudited)
Three Months Ended March 31,
2018       2017

OPERATING DATA

      
Property revenues
Rental revenues (a) $ 203,505 $ 188,102
Other property revenues (a)   27,178           31,419  
Total property revenues   230,683           219,521  
 
Property expenses
Property operating and maintenance 53,916 51,548
Real estate taxes   30,049           27,920  
Total property expenses   83,965           79,468  
 
Non-property income
Fee and asset management 1,998 1,748
Interest and other income 793 634
Income/(loss) on deferred compensation plans   (205 )         4,617  
Total non-property income   2,586           6,999  
 
Other expenses
Property management 6,639 7,027
Fee and asset management 965 884
General and administrative 12,223 12,868
Interest 20,374 22,956
Depreciation and amortization 70,224 63,734
Expense/(benefit) on deferred compensation plans   (205 )         4,617  
Total other expenses   110,220           112,086  
 
Loss on early retirement of debt — (323 )
Equity in income of joint ventures   1,829           1,817  
Income from continuing operations before income taxes 40,913 36,460
Income tax expense   (388 )         (471 )
Net income 40,525 35,989

Less income allocated to non-controlling interests from continuing operations

  (1,130 )         (1,128 )
Net income attributable to common shareholders $ 39,395         $ 34,861  
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income $40,525 $35,989
Other comprehensive income
Unrealized gain on cash flow hedging activities 3,601 —
Reclassification of net loss on cash flow hedging activities, prior service cost and net loss on post retirement obligation   35           34  
Comprehensive income 44,161 36,023
Less income allocated to non-controlling interests from continuing operations   (1,130 )         (1,128 )
Comprehensive income attributable to common shareholders $ 43,031         $ 34,895  
 

PER SHARE DATA

 
Total earnings per common share - basic $ 0.41 $ 0.39
Total earnings per common share - diluted 0.41 0.39
 
Weighted average number of common shares outstanding:
Basic 95,067 89,925
Diluted 96,046 90,949
 

(a)

Upon our adoption of the new revenue standard ASU 2014-09 effective January 1, 2018, we are now presenting certain revenue items historically included as a component of other property revenues as rental revenues due to the nature and timing of revenue recognition for these items being more closely aligned to a lease. This new presentation has been applied prospectively as this reclassification will not have an impact upon total property revenues. Approximately $5.6 million of rental revenue is related to this presentation for the three months ended March 31, 2018. Had ASU 2014-09 been effective as of January 1, 2017, we would have reclassified approximately $5.3 million from other property revenues to rental revenue for the three months ended March 31, 2017.

 

Note: Please refer to the following pages for definitions and reconciliations of all non-GAAP financial measures presented in this document.

         

CAMDEN

FUNDS FROM OPERATIONS

(In thousands, except per share and property data amounts)

               

(Unaudited)

 

Three Months Ended March 31,
2018     2017

FUNDS FROM OPERATIONS

 
Net income attributable to common shareholders $ 39,395 $ 34,861
Real estate depreciation and amortization 68,595 62,153
Adjustments for unconsolidated joint ventures 2,247 2,213
Income allocated to non-controlling interests   1,130         1,128  
Funds from operations $ 111,367       $ 100,355  
 
Less: recurring capitalized expenditures (a) (9,999 ) (9,694 )
       
Adjusted funds from operations - diluted $ 101,368       $ 90,661  
 

PER SHARE DATA

Funds from operations - diluted $ 1.15 $ 1.09
Adjusted funds from operations - diluted 1.04 0.99
Distributions declared per common share 0.77 0.75
 
Weighted average number of common shares outstanding:
FFO/AFFO - diluted 97,124 92,029
 

PROPERTY DATA

Total operating properties (end of period) (b) 158 153
Total operating apartment homes in operating properties (end of period) (b) 54,181 53,116
Total operating apartment homes (weighted average) 46,353 45,710
 

(a) Capital expenditures necessary to help preserve the value of and maintain the functionality at our communities.

 

(b) Includes joint ventures and properties held for sale, if any.

 

Note: Please refer to the following pages for definitions and reconciliations of all non-GAAP financial measures presented in this document.

                   

CAMDEN

BALANCE SHEETS

(In thousands)

                               

(Unaudited)

Mar 31,
2018		     Dec 31,
2017		     Sep 30,
2017		     Jun 30,
2017		     Mar 31,
2017
ASSETS
Real estate assets, at cost
Land $ 1,053,578 $ 1,021,031 $ 1,016,097 $ 1,008,459 $ 984,523
Buildings and improvements   6,494,229         6,269,481         6,269,561         6,199,435         6,071,203  
7,547,807 7,290,512 7,285,658 7,207,894 7,055,726
Accumulated depreciation   (2,185,452 )       (2,118,839 )       (2,080,989 )       (2,016,259 )       (1,952,809 )
Net operating real estate assets 5,362,355 5,171,673 5,204,669 5,191,635 5,102,917
Properties under development, including land 399,903 377,231 363,481 373,294 377,107
Investments in joint ventures   26,863         27,237         28,420         29,665         30,062  
Total real estate assets 5,789,121 5,576,141 5,596,570 5,594,594 5,510,086
Accounts receivable – affiliates 23,397 24,038 23,620 23,592 23,634
Other assets, net (a) 199,420 195,764 189,253 155,784 147,922
Cash and cash equivalents 101,401 368,492 350,274 16,318 245,529
Restricted cash   15,036         9,313         9,178         8,312         8,175  
Total assets $ 6,128,375       $ 6,173,748       $ 6,168,895       $ 5,798,600       $ 5,935,346  
 
LIABILITIES AND EQUITY
Liabilities
Notes payable
Unsecured $ 1,339,142 $ 1,338,628 $ 1,338,117 $ 1,437,608 $ 1,583,819
Secured 865,798 865,970 866,134 866,292 866,476
Accounts payable and accrued expenses 123,706 128,313 127,557 116,754 120,086
Accrued real estate taxes 29,061 51,383 70,027 48,559 24,682
Distributions payable 75,083 72,943 72,962 69,347 69,326
Other liabilities (b)   157,002         154,567         154,506         134,851         123,654  
Total liabilities 2,589,792 2,611,804 2,629,303 2,673,411 2,788,043
 
Commitments and contingencies
Non-qualified deferred compensation share awards 76,174 77,230 73,015 84,050 75,704
 
Equity
Common shares of beneficial interest 1,026 1,028 1,028 978 978
Additional paid-in capital 4,132,056 4,137,161 4,134,206 3,678,660 3,675,737
Distributions in excess of net income attributable to common shareholders (396,596 ) (368,703 ) (383,584 ) (351,910 ) (317,642 )
Treasury shares, at cost (356,687 ) (364,066 ) (364,736 ) (364,785 ) (365,923 )
Accumulated other comprehensive loss (c)   3,579         (57 )       (7 )       (1,795 )       (1,829 )
Total common equity 3,383,378 3,405,363 3,386,907 2,961,148 2,991,321
Non-controlling interests   79,031         79,351         79,670         79,991         80,278  
Total equity   3,462,409         3,484,714         3,466,577         3,041,139         3,071,599  
Total liabilities and equity $ 6,128,375       $ 6,173,748       $ 6,168,895       $ 5,798,600       $ 5,935,346  
 
 
(a) Includes:
net deferred charges of: $ 929 $ 1,125 $ 1,312 $ 1,487 $ 1,683
net fair value adjustment of derivative instruments: $ 5,291 $ 1,690 $ 1,754 $ — $ —
 
(b) Includes deferred revenues of: $ 536 $ 426 $ 1,463 $ 513 $ 1,455
 
(c) Represents the unrealized net loss and unamortized prior service costs on post retirement obligations, and unrealized net gain on cash flow hedging activities.
 
CAMDEN NON-GAAP FINANCIAL MEASURES
DEFINITIONS & RECONCILIATIONS
(In thousands, except per share amounts)
     

(Unaudited)

 

This document contains certain non-GAAP financial measures management believes are useful in evaluating an equity REIT's performance. Camden's definitions and calculations of non-GAAP financial measures may differ from those used by other REITs, and thus may not be comparable. The non-GAAP financial measures should not be considered as an alternative to net income as an indication of our operating performance, or to net cash provided by operating activities as a measure of our liquidity.

 

FFO

The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States of America ("GAAP")), excluding gains (or losses) associated with the sale of previously depreciated operating properties, real estate depreciation and amortization, impairments of depreciable assets, and adjustments for unconsolidated joint ventures. Our calculation of diluted FFO also assumes conversion of all potentially dilutive securities, including certain non-controlling interests, which are convertible into common shares. We consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions of operating properties, and depreciation, FFO can assist in the comparison of the operating performance of a company’s real estate investments between periods or to different companies. A reconciliation of net income attributable to common shareholders to FFO is provided below:

 

Adjusted FFO

In addition to FFO, we compute Adjusted FFO ("AFFO") as a supplemental measure of operating performance. AFFO is calculated utilizing FFO less recurring capital expenditures which are necessary to help preserve the value of and maintain the functionality at our communities. Our definition of recurring capital expenditures may differ from other REITs, and there can be no assurance our basis for computing this measure is comparable to other REITs. A reconciliation of FFO to AFFO is provided below:

   
Three Months Ended March 31,
2018       2017
Net income attributable to common shareholders $ 39,395 $ 34,861
Real estate depreciation and amortization 68,595 62,153
Adjustments for unconsolidated joint ventures 2,247 2,213
Income allocated to non-controlling interests   1,130     1,128  
Funds from operations $ 111,367   $ 100,355  
 
Less: recurring capitalized expenditures (9,999 ) (9,694 )
   
Adjusted funds from operations $ 101,368   $ 90,661  
 
Weighted average number of common shares outstanding:
EPS diluted 96,046 90,949
FFO/AFFO diluted 97,124 92,029
 
Total earnings per common share - diluted $ 0.41 $ 0.39
FFO per common share - diluted $ 1.15 $ 1.09

AFFO per common share - diluted

$ 1.04 $ 0.99
 

Expected FFO

Expected FFO is calculated in a method consistent with historical FFO, and is considered an appropriate supplemental measure of expected operating performance when compared to expected earnings per common share (EPS). Guidance excludes gains, if any, on properties not currently held for sale due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales. A reconciliation of the ranges provided for diluted EPS to expected FFO per diluted share is provided below:

         
2Q18 Range 2018 Range
Low     High Low     High
Expected earnings per common share - diluted $ 0.45 $ 0.49 $ 1.68 $ 1.88
Expected real estate depreciation and amortization 0.68 0.68 2.81 2.81
Expected adjustments for unconsolidated joint ventures 0.02 0.02 0.09 0.09
Expected income allocated to non-controlling interests   0.01   0.01   0.04   0.04
Expected FFO per share - diluted $ 1.16 $ 1.20 $ 4.62 $ 4.82
 

Note:  This table contains forward-looking statements.  Please see the paragraph regarding forward-looking statements earlier in this document.

 
CAMDEN NON-GAAP FINANCIAL MEASURES
DEFINITIONS & RECONCILIATIONS
(In thousands, except per share amounts)
     

(Unaudited)

 

Net Operating Income (NOI)

 

NOI is defined by the Company as total property income less property operating and maintenance expenses less real estate taxes. NOI is further detailed in the Components of Property NOI schedules on page 11 of the supplemental. The Company considers NOI to be an appropriate supplemental measure of operating performance to net income attributable to common shareholders because it reflects the operating performance of our communities without allocation of corporate level property management overhead or general and administrative costs. A reconciliation of net income attributable to common shareholders to net operating income is provided below:

           
Three months ended March 31,
2018       2017
Net income $ 40,525 $ 35,989
Less: Fee and asset management income (1,998 ) (1,748 )
Less: Interest and other income (793 ) (634 )
Less: Income/(loss) on deferred compensation plans 205 (4,617 )
Plus: Property management expense 6,639 7,027
Plus: Fee and asset management expense 965 884
Plus: General and administrative expense 12,223 12,868
Plus: Interest expense 20,374 22,956
Plus: Depreciation and amortization expense 70,224 63,734
Plus: Expense/(benefit) on deferred compensation plans (205 ) 4,617
Plus: Loss on Early Retirement of Debt

—

323
Less: Equity in income of joint ventures (1,829 ) (1,817 )
Plus: Income tax expense   388           471  
Net Operating Income (NOI) $ 146,718 $ 140,053
 
"Same Property" Communities $ 128,604 $ 123,681
Non-"Same Property" Communities 14,665 11,424
Development and Lease-Up Communities 2,048 42
Dispositions/Other   1,401           4,906  
Net Operating Income (NOI) $ 146,718 $ 140,053
 

Adjusted EBITDA

 

Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, including net operating income from discontinued operations, excluding equity in (income) loss of joint ventures, (gain) loss on sale of unconsolidated joint venture interests, gain on acquisition of controlling interest in joint ventures, gain on sale of operating properties including land, net of tax, loss on early retirement of debt and income (loss) allocated to non-controlling interests. The Company considers Adjusted EBITDA to be an appropriate supplemental measure of operating performance to net income attributable to common shareholders because it represents income before non-cash depreciation and the cost of debt, and excludes gains or losses from property dispositions. A reconciliation of net income attributable to common shareholders to Adjusted EBITDA is provided below:

 
Three months ended March 31,
2018       2017
Net income attributable to common shareholders $ 39,395 $ 34,861
Plus: Interest expense 20,374 22,956
Plus: Depreciation and amortization expense 70,224 63,734
Plus: Income allocated to non-controlling interests from continuing operations 1,130 1,128
Plus: Income tax expense 388 471

Plus: Loss on early retirement of debt

—

323

Less: Equity in income of joint ventures   (1,829 )         (1,817 )
Adjusted EBITDA $ 129,682 $ 121,656