Camden Property Trust (NYSE:CPT) today announced operating results for the three and six months ended June 30, 2016. Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”), and Net Income Attributable to Common Shareholders (“EPS”) for the three and six months ended June 30, 2016 are detailed below. A reconciliation of EPS to FFO is included in the financial tables accompanying this press release.

               
    Three Months Ended       Six Months Ended
June 30 June 30
Per Diluted Share     2016     2015       2016     2015
FFO $ 1.15     $ 1.12 $ 2.35     $ 2.20
AFFO $ 0.99 $ 0.92 $ 2.09 $ 1.88
EPS     $ 4.92     $ 0.40       $ 5.38     $ 1.68
                   
    Quarterly Growth     Sequential Growth     Year to Date Growth
Same Property Results     2Q16 vs. 2Q15     2Q16 vs. 1Q16     2016 vs. 2015
Revenues 4.3 % 1.6 % 4.6 %
Expenses 5.3 % 3.1 % 3.8 %
Net Operating Income ("NOI")     3.7 %     0.8 %     5.1 %
                   
Same Property Results     2Q16     2Q15     1Q16
Occupancy     95.5 %     96.0 %     95.4 %
           

“We are pleased to report another quarter of strong performance, with earnings and operating results in line with our expectations,” said Richard Campo, Camden’s Chairman and CEO. “Same property growth remains above long-term trend and consistent with our projections, and we are proceeding well with our planned dispositions of over $1 billion of assets this year. As a result, we are maintaining the midpoint of our prior guidance ranges for both same property growth and FFO per share.”

The Company defines same property communities as communities owned and stabilized as of January 1, 2015, excluding 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

Lease-up was completed during the quarter at Camden Paces in Atlanta, GA.

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

                             
            Total     Total     % Leased
Community Name         Location     Units     Cost     as of 7/24/2016
Camden Glendale Glendale, CA 303 $ 113.5 92 %
Camden Chandler         Chandler, AZ     380       67.7     77 %
TOTAL               683     $ 181.2      
 

Development Communities - Construction Ongoing ($ in millions)

                             
            Total     Total     % Leased
Community Name         Location     Units     Budget     as of 7/24/2016
Camden Gallery Charlotte, NC 323 $ 58.0 55 %
Camden Victory Park Dallas, TX 423 82.0 45 %
The Camden Los Angeles, CA 287 145.0 41 %
Camden Lincoln Station Denver, CO 267 56.0
Camden NoMa II Washington, DC 405 115.0
Camden Shady Grove Rockville, MD 457 116.0
Camden McGowen Station         Houston, TX     315       90.0      
TOTAL               2,477     $ 662.0      
 

Acquisition/Disposition Activity

During the quarter Camden sold its Las Vegas portfolio, comprised of 15 operating communities with 4,918 apartment homes, a retail center, and approximately 19.6 acres of undeveloped land for $630 million. The Company also sold Camden Westshore in Tampa, FL for $39 million. Subsequent to quarter-end, the Company sold Camden Summerfield I and II in Landover, MD for $110 million, and Camden Clearbrook in Frederick, MD for $61 million.

The Company is also marketing several additional communities for sale and expects these future sales to total approximately $310 million.

Earnings Guidance

Camden updated its earnings guidance for 2016 based on its current and expected views of the apartment market and general economic conditions, and provided guidance for third quarter 2016 as detailed below.

             
Per Diluted Share     3Q16     2016
FFO     $1.07 - $1.11     $4.50 - $4.60
EPS     $1.02 - $1.06     $6.73 - $6.83
             
Same Property Growth     2016 Range     2016 Midpoint
Revenues     3.85% - 4.35%     4.10%
Expenses 3.50% - 4.00% 3.75%
NOI     4.00% - 4.50%     4.25%
 

Camden intends to update its earnings guidance to the market on a quarterly basis. Additional information on the Company’s 2016 financial outlook and a reconciliation of expected EPS to expected FFO are included in the financial tables accompanying this press release.

Special Dividend

Camden anticipates declaring a special dividend in 2016. Provided all planned dispositions are completed as forecasted, the special dividend is anticipated to total $4.00 - $4.50 per share. The company expects to pay the dividend in the third quarter of 2016. All future dividends remain subject to the discretion of the Company's Board of Trust Managers and no assurances are made regarding the amount, form of payment, or timing of any dividends.

Conference Call
Friday, July 29, 2016 at 11:00 AM CT
Domestic Dial-In Number: (888) 317-6003
International Dial-In Number: (412) 317-6061
Passcode: 1942439
Webcast: http://services.choruscall.com/links/cpt160729

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 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, 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 154 properties containing 54,214 apartment homes across the United States. Upon completion of 7 properties under development, the Company’s portfolio will increase to 56,691 apartment homes in 161 properties. Camden was recently named by FORTUNE® Magazine for the ninth consecutive year as one of the “100 Best Companies to Work For” in America, ranking #9.

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 June 30, Six Months Ended June 30,
2016     2015 2016     2015

OPERATING DATA

    
Property revenues
Rental revenues $ 189,246 $ 178,313 $ 376,365 $ 353,533
Other property revenues   32,232       28,119     62,708       54,507  
Total property revenues   221,478       206,432     439,073       408,040  
 
Property expenses
Property operating and maintenance 52,856 49,169 103,125 98,020
Real estate taxes   27,300       24,581     54,180       49,258  
Total property expenses   80,156       73,750     157,305       147,278  
 
Non-property income
Fee and asset management 1,791 1,618 3,556 3,181
Interest and other income 215 141 439 201
Income/(loss) on deferred compensation plans   1,224       (297 )   1,287       1,567  
Total non-property income   3,230       1,462     5,282       4,949  
 
Other expenses
Property management 6,417 5,931 13,557 11,723
Fee and asset management 998 1,121 1,950 2,197
General and administrative 11,803 11,582 24,026 21,330
Interest (a) 23,070 24,846 46,860 49,898
Depreciation and amortization 62,456 59,940 124,547 117,924
Expense/(benefit) on deferred compensation plans   1,224       (297 )   1,287       1,567  
Total other expenses   105,968       103,123     212,227       204,639  
 
Gain on sale of operating properties, including land 32,235

-

32,678 85,192
Equity in income of joint ventures   1,689       1,531     3,186       2,913  
Income from continuing operations before income taxes 72,508 32,552 110,687 149,177
Income tax expense   (489 )     (407 )   (804 )     (836 )
Income from continuing operations 72,019 32,145 109,883 148,341
Income from discontinued operations 2,529 5,056 7,605 9,925
Gain on sale of discontinued operations, net of tax   375,237      

-

    375,237      

-

 
Net income 449,785 37,201 492,725 158,266
Less income allocated to non-controlling interests from continuing operations   (3,483 )     (1,122 )   (4,693 )     (6,588 )
Net income attributable to common shareholders $ 446,302     $ 36,079   $ 488,032     $ 151,678  
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income $449,785 $37,201 $492,725 $158,266
Other comprehensive income
Reclassification of net loss on cash flow hedging activities, prior service cost and net loss on post retirement obligation   33       37     65       74  
Comprehensive income 449,818 37,238 492,790 158,340
Less income allocated to non-controlling interests from continuing operations   (3,483 )     (1,122 )   (4,693 )     (6,588 )
Comprehensive income attributable to common shareholders $ 446,335     $ 36,116   $ 488,097     $ 151,752  
 

PER SHARE DATA

 
Total earnings per common share - basic $ 4.94 $ 0.40 $ 5.40 $ 1.69
Total earnings per common share - diluted 4.92 0.40 5.38 1.68
Earnings per share from continuing operations - basic 0.72 0.34 1.12 1.58
Earnings per share from continuing operations - diluted 0.72 0.34 1.12 1.57
 
Weighted average number of common shares outstanding:
Basic 89,559 89,153 89,451 89,071
Diluted 89,862 90,252 89,780 90,496
 

(a) Prior period has been changed to reflect the adoption of ASU 2015-03 (as supplemented by ASU 2015-15) at December 31, 2015, which required retrospective application.

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 June 30, Six Months Ended June 30,
2016   2015 2016   2015

FUNDS FROM OPERATIONS

    
 
Net income attributable to common shareholders $ 446,302 $ 36,079 $ 488,032 $ 151,678
Real estate depreciation and amortization 60,945 58,630 121,430 115,089
Real estate depreciation from discontinued operations

-

3,973 4,327 7,877
Adjustments for unconsolidated joint ventures 2,320 2,237 4,678 4,482
Income allocated to non-controlling interests 3,483 1,122 4,693 6,588
Gain on sale of operating properties, net of tax (32,235 )

-

(32,235 ) (85,145 )
Gain on sale of discontinued operations, net of tax   (375,237 )    

-

    (375,237 )    

-

 
Funds from operations $ 105,578     $ 102,041   $ 215,688     $ 200,569  
 
Less: recurring capitalized expenditures (a) (15,069 ) (17,894 ) (24,363 ) (28,538 )
           
Adjusted funds from operations - diluted $ 90,509     $ 84,147   $ 191,325     $ 172,031  
 

PER SHARE DATA

Funds from operations - diluted $ 1.15 $ 1.12 $ 2.35 $ 2.20
Adjusted funds from operations - diluted 0.99 0.92 2.09 1.88
Distributions declared per common share 0.75 0.70 1.50 1.40
 
Weighted average number of common shares outstanding:
FFO/AFFO - diluted 91,753 91,338 91,673 91,307
 

PROPERTY DATA

Total operating properties (end of period) (b) 157 169 157 169
Total operating apartment homes in operating properties (end of period) (b) 54,984 58,680 54,984 58,680
Total operating apartment homes (weighted average) 49,309 51,762 50,931 51,660
Total operating apartment homes - excluding discontinued operations (weighted average) 47,943 46,844 47,789 46,742
 

(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.

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

   

CAMDEN

BALANCE SHEET

(In thousands)

                       

(Unaudited)

        
 

Jun 30,
2016

  

Mar 31,
2016

  

Dec 31,
2015

  

Sep 30,
2015

  

Jun 30,
2015

ASSETS
Real estate assets, at cost
Land $ 989,097 $ 998,519 $ 989,247 $ 990,035 $ 975,211
Buildings and improvements   5,956,361       5,978,843       5,911,432       5,890,751       5,769,476  
6,945,458 6,977,362 6,900,679 6,880,786 6,744,687
Accumulated depreciation   (1,855,678 )     (1,841,107 )     (1,780,694 )     (1,730,929 )     (1,671,189 )
Net operating real estate assets 5,089,780 5,136,255 5,119,985 5,149,857 5,073,498
Properties under development, including land 446,740 489,730 486,918 439,777 484,663
Investments in joint ventures 31,142 32,568 33,698 34,705 35,731
Properties held for sale, including land
Operating properties held for sale (a) 105,254

-

-

-

-

Discontinued operations held for sale (b)  

-

      238,417       239,063       237,635       238,640  
Total real estate assets 5,672,916 5,896,970 5,879,664 5,861,974 5,832,532
Accounts receivable – affiliates 24,008 24,011 25,100 25,053 25,855
Other assets, net (c) 139,263 107,161 116,260 118,985 108,220
Cash and cash equivalents 341,726 6,935 10,617 10,375 16,508
Restricted cash   21,561       5,378       5,971       6,126       5,791  
Total assets $ 6,199,474     $ 6,040,455     $ 6,037,612     $ 6,022,513     $ 5,988,906  
 
 
 
LIABILITIES AND EQUITY
Liabilities
Notes payable
Unsecured $ 1,582,077 $ 1,866,502 $ 1,824,930 $ 1,803,360 $ 1,761,793
Secured 898,723 899,315 899,757 900,472 901,032
Accounts payable and accrued expenses 140,864 140,991 133,353 131,532 128,532
Accrued real estate taxes 46,801 25,499 45,223 57,642 43,905
Distributions payable 69,116 69,020 64,275 64,276 64,253
Other liabilities (d)   117,023       86,423       97,814       96,679       100,515  
Total liabilities 2,854,604 3,087,750 3,065,352 3,053,961 3,000,030
 
Commitments and contingencies
Non-qualified deferred compensation share awards 72,480 88,550 79,364 72,316 69,791
 
Equity
Common shares of beneficial interest 978 975 976 976 976
Additional paid-in capital 3,673,237 3,658,372 3,662,864 3,660,482 3,657,537
Distributions in excess of net income attributable to common shareholders (104,004 ) (491,275 ) (458,577 ) (452,257 ) (426,614 )
Treasury shares, at cost (373,914 ) (378,032 ) (386,793 ) (387,114 ) (387,172 )
Accumulated other comprehensive loss (e)   (1,848 )     (1,881 )     (1,913 )     (2,307 )     (2,345 )
Total common equity 3,194,449 2,788,159 2,816,557 2,819,780 2,842,382
Non-controlling interests   77,941       75,996       76,339       76,456       76,703  
Total equity   3,272,390       2,864,155       2,892,896       2,896,236       2,919,085  
Total liabilities and equity $ 6,199,474     $ 6,040,455     $ 6,037,612     $ 6,022,513     $ 5,988,906  
 
(a) Operating properties held for sale includes one dual-phase property and one operating property as of June 30, 2016 which were each subsequently sold in July.
               
(b) All prior periods presented have been changed to present the 15 operating properties, 19.6 acres of land, and retail center located in Las Vegas, Nevada, which were classified as held for sale at March 31, 2016 and subsequently sold on April 26, 2016. (See page 19 for additional information relating to this sale).
 
(c) Includes net deferred charges of: $ 2,353 $ 2,600 $ 2,851 $ 3,077 $ 59
 
(d) Includes deferred revenues of: $ 831 $ 1,797 $ 1,768 $ 1,918 $ 843
 
(e) Represents the unrealized net loss and unamortized prior service costs on post retirement obligation, and unrealized loss 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 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 June 30,     Six Months Ended June 30,
2016   2015

2016

  

2015

Net income attributable to common shareholders $ 446,302   $ 36,079 $ 488,032   $ 151,678
Real estate depreciation and amortization 60,945 58,630 121,430 115,089
Real estate depreciation from discontinued operations

-

3,973 4,327 7,877
Adjustments for unconsolidated joint ventures 2,320 2,237 4,678 4,482
Income allocated to non-controlling interests 3,483 1,122 4,693 6,588
Gain on sale of operating properties, net of tax (32,235 )

-

(32,235

)

(85,145

)

Gain on sale of discontinued operations, net of tax   (375,237 )    

-

 

(375,237

)

   

-

 
Funds from operations $ 105,578     $ 102,041 $ 215,688     $ 200,569  
 
Less: recurring capitalized expenditures (15,069 ) (17,894 )

(24,363

)

(28,538

)

           
Adjusted funds from operations $ 90,509     $ 84,147 $ 191,325     $ 172,031  
 
Weighted average number of common shares outstanding:
EPS diluted 89,862 90,252 89,780 90,496
FFO/AFFO diluted 91,753 91,338 91,673 91,307
 
Total earnings per common share - diluted $ 4.92 $ 0.40 $ 5.38 $ 1.68
FFO per common share - diluted $ 1.15 $ 1.12 $ 2.35 $ 2.20
AFFO per common share - diluted $ 0.99 $ 0.92 $ 2.09 $ 1.88
 

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:

 

3Q16 Range

2016 Range
Low   High Low   High
Expected earnings per common share - diluted $ 1.02 $ 1.06 $ 6.73 $ 6.83
Expected real estate depreciation and amortization 0.73 0.73 2.85 2.85
Expected adjustments for unconsolidated joint ventures 0.03 0.03 0.10 0.10
Expected income allocated to non-controlling interests 0.01 0.01 0.08 0.08
Reported (gain) on sale of operating properties

-

-

(0.36 ) (0.36 )
Reported (gain) on sale of discontinued operations

-

-

(4.18 ) (4.18 )
Estimated (gain) on properties held for sale   (0.72

)

   

(0.72

)

  (0.72 )     (0.72 )
Expected FFO per share - diluted $ 1.07 $ 1.11 $ 4.50 $ 4.60
 

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. 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 June 30, Six months ended June 30,
2016   2015 2016   2015
Net income $ 449,785 $ 37,201 $ 492,725 $ 158,266
Less: Fee and asset management income (1,791 ) (1,618 ) (3,556 ) (3,181 )
Less: Interest and other income (215 ) (141 ) (439 ) (201 )
Less: Income/(loss) on deferred compensation plans (1,224 ) 297 (1,287 ) (1,567 )
Plus: Property management expense 6,417 5,931 13,557 11,723
Plus: Fee and asset management expense 998 1,121 1,950 2,197
Plus: General and administrative expense 11,803 11,582 24,026 21,330
Plus: Interest expense 23,070 24,846 46,860 49,898
Plus: Depreciation and amortization expense 62,456 59,940 124,547 117,924
Plus: Expense/(benefit) on deferred compensation plans 1,224 (297 ) 1,287 1,567
Less: Gain on sale of operating properties, including land (32,235 )

-

(32,678 ) (85,192 )
Less: Equity in income of joint ventures (1,689 ) (1,531 ) (3,186 ) (2,913 )
Plus: Income tax expense 489 407 804 836
Less: Income from discontinued operations (2,529 ) (5,056 ) (7,605 ) (9,925 )
Less: Gain on sale of discontinued operations, net of tax   (375,237 )    

-

    (375,237 )    

-

 
Net Operating Income (NOI) $ 141,322 $ 132,682 $ 281,768 $ 260,762
 
"Same Property" Communities $ 122,611 $ 118,208 $ 244,254 $ 232,506
Non-"Same Property" Communities 12,092 9,708 25,066 18,497
Development and Lease-Up Communities 2,392 224 4,052 249
Dispositions/Other   4,227       4,542     8,396       9,510  
Net Operating Income (NOI) $ 141,322 $ 132,682 $ 281,768 $ 260,762
 

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, 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 June 30, Six months ended June 30,
2016   2015 2016   2015
Net income attributable to common shareholders $ 446,302 $ 36,079 $ 488,032 $ 151,678
Plus: Interest expense 23,070 24,846 46,860 49,898
Plus: Depreciation and amortization expense 62,456 59,940 124,547 117,924
Plus: Income allocated to non-controlling interests from continuing operations 3,483 1,122 4,693 6,588
Plus: Income tax expense 489 407 804 836
Plus: Real estate depreciation from discontinued operations

-

3,973 4,327 7,877
Less: Gain on sale of operating properties, including land (32,235 )

-

(32,678 ) (85,192 )
Less: Equity in income of joint ventures (1,689 ) (1,531 ) (3,186 ) (2,913 )
Less: Gain on sale of discontinued operations, net of tax   (375,237 )    

-

    (375,237 )    

-

 
Adjusted EBITDA $ 126,639 $ 124,836 $ 258,162 $ 246,696