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

               
    Three Months Ended       Nine Months Ended
September 30 September 30
Per Diluted Share     2016     2015       2016     2015
EPS $ 3.21     $ 0.41 $ 8.60     $ 2.09
FFO $ 1.13 $ 1.14 $ 3.49 $ 3.34
AFFO     $ 0.92     $ 0.94       $ 3.01     $ 2.83
                   
    Quarterly Growth     Sequential Growth     Year to Date Growth
Same Property Results     3Q16 vs. 3Q15     3Q16 vs. 2Q16     2016 vs. 2015
Revenues 3.7 % 1.6 % 4.2 %
Expenses 2.2 % 1.4 % 3.2 %
Net Operating Income ("NOI")     4.5 %     1.7 %     4.7 %
                   
Same Property Results     3Q16     3Q15     2Q16
Occupancy     95.8 %     96.2 %     95.5 %
           

“We are pleased to announce another solid quarter of performance,” said Richard Campo, Camden’s Chairman and CEO. “Our earnings were better than expected primarily due to lower operating expenses and the timing of certain dispositions, and we have raised our full-year guidance for both FFO and same property NOI as a result. In addition, we have now successfully completed all dispositions planned for 2016, for a total of nearly $1.2 billion in asset sales year-to-date, and we paid a special dividend of $4.25 per share to our common shareholders.”

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 Glendale in Glendale, CA, and construction was completed at Camden Victory Park in Dallas, TX. The Company also commenced construction at Camden Washingtonian in Gaithersburg, MD.

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

                         
        Total     Total     % Leased
Community Name     Location     Units     Cost     as of 10/26/2016
Camden Chandler Chandler, AZ 380 $ 67.8 87 %
Camden Victory Park     Dallas, TX     423       84.8     67 %
TOTAL           803     $ 152.6      
 

Development Communities - Construction Ongoing ($ in millions)

                         
        Total     Total     % Leased
Community Name     Location     Units     Budget     as of 10/26/2016
Camden Gallery Charlotte, NC 323 $ 58.0 69 %
The Camden Los Angeles, CA 287 145.0 70 %
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
Camden Washingtonian     Gaithersburg, MD     365       90.0      
TOTAL           2,419     $ 670.0      
 

Acquisition/Disposition Activity

During the quarter Camden acquired approximately 2.4 acres of land in Denver, CO for $15.0 million for the future development of approximately 230 apartment homes. The Company also sold one dual-phased community and five operating communities comprised of 2,906 apartment homes for approximately $484.4 million. Year-to-date, dispositions totaled nearly $1.2 billion.

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 fourth quarter 2016 as detailed below.

             
Per Diluted Share     4Q16     2016
EPS     $0.40 - $0.44     $9.00 - $9.04
FFO     $1.12 - $1.16     $4.61 - $4.65
             
Same Property Growth     2016 Range     2016 Midpoint
Revenues     3.9% - 4.1%     4.0%
Expenses 2.3% - 2.5% 2.4%
NOI     4.8% - 5.0%     4.9%
 

The Company's revised 2016 same store expense guidance is the result of lower projected operating expenses, including lower than anticipated property taxes due to both lower rates and valuations combined with better than expected resolutions to several prior year property tax appeals. The majority of the tax refunds from these prior year appeals will be recognized in the fourth quarter of 2016.

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

In addition to the regular quarterly dividend, Camden declared a special dividend of $4.25 per share to its common shareholders of record as of September 23, 2016. The special dividend, consisting primarily of gains on dispositions completed in 2016, was paid on September 30, 2016.

Conference Call

Friday, October 28, 2016 at 11:00 AM CT
Domestic Dial-In Number: (888) 317-6003; International Dial-In Number: (412) 317-6061
Passcode: 6983019
Webcast: http://services.choruscall.com/links/cpt161028.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 151 properties containing 52,506 apartment homes across the United States. Upon completion of 7 properties under development, the Company’s portfolio will increase to 54,925 apartment homes in 158 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 September 30, Nine Months Ended September 30,
2016   2015 2016   2015

OPERATING DATA

Property revenues
Rental revenues $ 187,771 $ 182,650 $ 564,136 $ 536,183
Other property revenues   32,464       29,943     95,172       84,450  
Total property revenues   220,235       212,593     659,308       620,633  
 
Property expenses
Property operating and maintenance 53,679 53,380 156,804 151,400
Real estate taxes   26,695       25,284     80,875       74,542  
Total property expenses   80,374       78,664     237,679       225,942  
 
Non-property income
Fee and asset management 1,667 1,902 5,223 5,083
Interest and other income 927 107 1,366 308
Income/(loss) on deferred compensation plans   3,494       (3,438 )   4,781       (1,871 )
Total non-property income   6,088       (1,429 )   11,370       3,520  
 
Other expenses
Property management 5,590 5,700 19,147 17,423
Fee and asset management 911 1,227 2,861 3,424
General and administrative 10,810 11,790 34,836 33,120
Interest (a) 23,076 23,674 69,936 73,572
Depreciation and amortization 62,832 61,336 187,379 179,260
Expense/(benefit) on deferred compensation plans   3,494       (3,438 )   4,781       (1,871 )
Total other expenses   106,713       100,289     318,940       304,928  
 
Gain on sale of operating properties, including land 262,719

-

295,397 85,192
Equity in income of joint ventures   1,866       1,574     5,052       4,487  
Income from continuing operations before income taxes 303,821 33,785 414,508 182,962
Income tax expense   (400 )     (498 )   (1,204 )     (1,334 )
Income from continuing operations 303,421 33,287 413,304 181,628
Income from discontinued operations

-

4,907 7,605 14,832
Gain on sale of discontinued operations, net of tax  

-

     

-

    375,237      

-

 
Net income 303,421 38,194 796,146 196,460
Less income allocated to non-controlling interests from continuing operations   (12,523 )     (1,150 )   (17,216 )     (7,738 )
Net income attributable to common shareholders $ 290,898     $ 37,044   $ 778,930     $ 188,722  
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income $303,421 $38,194 $796,146 $196,460
Other comprehensive income
Reclassification of net loss on cash flow hedging activities, prior service cost and net loss on post retirement obligation   32       38     97       112  
Comprehensive income 303,453 38,232 796,243 196,572
Less income allocated to non-controlling interests from continuing operations   (12,523 )     (1,150 )   (17,216 )     (7,738 )
Comprehensive income attributable to common shareholders $ 290,930     $ 37,082   $ 779,027     $ 188,834  
 

PER SHARE DATA

 
Total earnings per common share - basic $ 3.23 $ 0.41 $ 8.63 $ 2.10
Total earnings per common share - diluted 3.21 0.41 8.60 2.09
Earnings per share from continuing operations - basic 3.23 0.36 4.35 1.93
Earnings per share from continuing operations - diluted 3.21 0.36 4.34 1.93
 
Weighted average number of common shares outstanding:
Basic 89,669 89,164 89,524 89,102
Diluted 90,012 89,530 89,858 89,450
 

(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 September 30,     Nine Months Ended September 30,
2016   2015 2016   2015

FUNDS FROM OPERATIONS

    
 
Net income attributable to common shareholders $ 290,898 $ 37,044 $ 778,930 $ 188,722
Real estate depreciation and amortization 61,264 59,793 182,694 174,882
Real estate depreciation from discontinued operations

-

4,059 4,327 11,936
Adjustments for unconsolidated joint ventures 2,266 2,300 6,944 6,782
Income allocated to non-controlling interests 12,523 1,150 17,216 7,738
Gain on sale of operating properties, net of tax (262,719 )

-

(294,954 ) (85,145

)

Gain on sale of discontinued operations, net of tax  

-

     

-

    (375,237 )    

-

 
Funds from operations $ 104,232     $ 104,346   $ 319,920     $ 304,915  
 
Less: recurring capitalized expenditures (a)   (19,246 )     (18,202 )   (43,609 )     (46,740

)

 
Adjusted funds from operations - diluted $ 84,986     $ 86,144   $ 276,311     $ 258,175  
 

PER SHARE DATA

Funds from operations - diluted $ 1.13 $ 1.14 $ 3.49 $ 3.34
Adjusted funds from operations - diluted 0.92 0.94 3.01 2.83
Distributions declared per common share 0.75 0.70 2.25 2.10
Special Distributions declared per common share 4.25

-

4.25

-

 
Weighted average number of common shares outstanding:
FFO/AFFO - diluted 91,901 91,426 91,749 91,347
 

PROPERTY DATA

Total operating properties (end of period) (b) 151 171 151 171
Total operating apartment homes in operating properties (end of period) (b) 52,506 59,407 52,506 59,407
Total operating apartment homes (weighted average) 46,702 52,323 49,521 51,881
Total operating apartment homes - excluding discontinued operations (weighted average) 46,702 47,405 47,426 46,963
 

(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)

 

 

Sep 30,
2016		   Jun 30,
2016		   Mar 31,
2016		   Dec 31,
2015		   Sep 30,
2015
ASSETS        
Real estate assets, at cost
Land $ 962,507 $ 989,097 $ 998,519 $ 989,247 $ 990,035
Buildings and improvements   5,910,347       5,956,361       5,978,843       5,911,432       5,890,751  
6,872,854 6,945,458 6,977,362 6,900,679 6,880,786
Accumulated depreciation   (1,829,563 )     (1,855,678 )     (1,841,107 )     (1,780,694 )     (1,730,929 )
Net operating real estate assets 5,043,291 5,089,780 5,136,255 5,119,985 5,149,857
Properties under development, including land 425,452 446,740 489,730 486,918 439,777
Investments in joint ventures 30,046 31,142 32,568 33,698 34,705
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  
Total real estate assets 5,498,789 5,672,916 5,896,970 5,879,664 5,861,974
Short-term investments (c) 100,000

-

-

-

-

Accounts receivable – affiliates 23,998 24,008 24,011 25,100 25,053
Other assets, net (d) 143,059 139,263 107,161 116,260 118,985
Cash and cash equivalents 313,742 341,726 6,935 10,617 10,375
Restricted cash   8,691       21,561       5,378       5,971       6,126  
Total assets $ 6,088,279     $ 6,199,474     $ 6,040,455     $ 6,037,612     $ 6,022,513  
 
 
 
LIABILITIES AND EQUITY
Liabilities
Notes payable
Unsecured $ 1,582,655 $ 1,582,077 $ 1,866,502 $ 1,824,930 $ 1,803,360
Secured 897,971 898,723 899,315 899,757 900,472
Accounts payable and accrued expenses 143,193 140,864 140,991 133,353 131,532
Accrued real estate taxes 66,079 46,801 25,499 45,223 57,642
Distributions payable 82,861 69,116 69,020 64,275 64,276
Other liabilities (e)   122,270       117,023       86,423       97,814       96,679  
Total liabilities 2,895,029 2,854,604 3,087,750 3,065,352 3,053,961
 
Commitments and contingencies
Non-qualified deferred compensation share awards 72,222 72,480 88,550 79,364 72,316
 
Equity
Common shares of beneficial interest 978 978 975 976 976
Additional paid-in capital 3,675,806 3,673,237 3,658,372 3,662,864 3,660,482
Distributions in excess of net income attributable to common shareholders (261,324 ) (104,004 ) (491,275 ) (458,577 ) (452,257 )
Treasury shares, at cost (373,597 ) (373,914 ) (378,032 ) (386,793 ) (387,114 )
Accumulated other comprehensive loss (f)   (1,816 )     (1,848 )     (1,881 )     (1,913 )     (2,307 )
Total common equity 3,040,047 3,194,449 2,788,159 2,816,557 2,819,780
Non-controlling interests   80,981       77,941       75,996       76,339       76,456  
Total equity   3,121,028       3,272,390       2,864,155       2,892,896       2,896,236  
Total liabilities and equity $ 6,088,279     $ 6,199,474     $ 6,040,455     $ 6,037,612     $ 6,022,513  
 
(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) At September 30, 2016, our short-term investments consist wholly of a certificate of deposit that has a maturity date of January 4, 2017.
 
(d) Includes net deferred charges of: $ 2,140 $ 2,353 $ 2,600 $ 2,851 $ 3,077
 
(e) Includes deferred revenues of: $ 1,598 $ 831 $ 1,797 $ 1,768 $ 1,918
 
(f) 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
September 30,

Nine Months Ended
September 30,

2016     2015 2016     2015
Net income attributable to common shareholders $ 290,898 $ 37,044 $ 778,930 $ 188,722
Real estate depreciation and amortization 61,264 59,793 182,694 174,882
Real estate depreciation from discontinued operations

-

4,059 4,327 11,936
Adjustments for unconsolidated joint ventures 2,266 2,300 6,944 6,782
Income allocated to non-controlling interests 12,523 1,150 17,216 7,738
Gain on sale of operating properties, net of tax (262,719 )

-

(294,954 ) (85,145 )
Gain on sale of discontinued operations, net of tax  

-

   

-

    (375,237 )  

-

 
Funds from operations $ 104,232   $ 104,346   $ 319,920   $ 304,915  
 
Less: recurring capitalized expenditures (19,246 ) (18,202 ) (43,609 ) (46,740 )
       
Adjusted funds from operations $ 84,986   $ 86,144   $ 276,311   $ 258,175  
 
Weighted average number of common shares outstanding:
EPS diluted 90,012 89,530 89,858 89,450
FFO/AFFO diluted 91,901 91,426 91,749 91,347
 
Total earnings per common share - diluted $ 3.21 $ 0.41 $ 8.60 $ 2.09
FFO per common share - diluted $ 1.13 $ 1.14 $ 3.49 $ 3.34
AFFO per common share - diluted $ 0.92 $ 0.94 $ 3.01 $ 2.83
 

 

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:

 
4Q16 Range 2016 Range
Low     High Low     High
Expected earnings per common share - diluted $ 0.40 $ 0.44 $ 9.00 $ 9.04
Expected real estate depreciation and amortization 0.68 0.68 2.75 2.75
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

0.21

0.21
Reported (gain) on sale of operating properties

-

-

(3.28

)

(3.28

)

Reported (gain) on sale of discontinued operations  

-

       

-

   

(4.17

)

     

(4.17

)

Expected FFO per share - diluted $ 1.12 $ 1.16 $ 4.61 $ 4.65
 

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
September 30,

Nine months ended
September 30,

2016     2015 2016     2015
Net income $ 303,421     $ 38,194 $ 796,146     $ 196,460
Less: Fee and asset management income (1,667 ) (1,902 ) (5,223 ) (5,083 )
Less: Interest and other income (927 ) (107 ) (1,366 ) (308 )
Less: Income/(loss) on deferred compensation plans (3,494 ) 3,438 (4,781 ) 1,871
Plus: Property management expense 5,590 5,700 19,147 17,423
Plus: Fee and asset management expense 911 1,227 2,861 3,424
Plus: General and administrative expense 10,810 11,790 34,836 33,120
Plus: Interest expense 23,076 23,674 69,936 73,572
Plus: Depreciation and amortization expense 62,832 61,336 187,379 179,260
Plus: Expense/(benefit) on deferred compensation plans 3,494 (3,438 ) 4,781 (1,871 )
Less: Gain on sale of operating properties, including land (262,719 )

-

(295,397 ) (85,192 )
Less: Equity in income of joint ventures (1,866 ) (1,574 ) (5,052 ) (4,487 )
Plus: Income tax expense 400 498 1,204 1,334
Less: Income from discontinued operations

-

(4,907 ) (7,605 ) (14,832 )
Less: Gain on sale of discontinued operations, net of tax  

-

       

-

    (375,237 )      

-

 
Net Operating Income (NOI) $ 139,861 $ 133,929 $ 421,629 $ 394,691
 
"Same Property" Communities $ 120,966 $ 115,739 $ 357,919 $ 341,910
Non-"Same Property" Communities 11,801 8,545 35,898 24,160
Development and Lease-Up Communities 2,525 359 4,745 576
Dispositions/Other   4,569         9,286     23,067         28,045  
Net Operating Income (NOI) $ 139,861 $ 133,929 $ 421,629 $ 394,691
 

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
September 30,

Nine months ended
September 30,

2016     2015 2016     2015
Net income attributable to common shareholders $ 290,898 $ 37,044 $ 778,930 $ 188,722
Plus: Interest expense 23,076 23,674 69,936 73,572
Plus: Depreciation and amortization expense 62,832 61,336 187,379 179,260
Plus: Income allocated to non-controlling interests from continuing operations 12,523 1,150 17,216 7,738
Plus: Income tax expense 400 498 1,204 1,334
Plus: Real estate depreciation from discontinued operations

-

4,059 4,327 11,936
Less: Gain on sale of operating properties, including land (262,719 )

-

(295,397 ) (85,192 )
Less: Equity in income of joint ventures (1,866 ) (1,574 ) (5,052 ) (4,487 )
Less: Gain on sale of discontinued operations, net of tax  

-

       

-

    (375,237 )      

-

 
Adjusted EBITDA $ 125,144 $ 126,187 $ 383,306 $ 372,883