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Camden Property Trust Announces First Quarter 2019 Operating Results

HOUSTON--(BUSINESS WIRE)--

Camden Property Trust (CPT) announced today operating results for the three months ended March 31, 2019. Net Income Attributable to Common Shareholders (“EPS”), Funds from Operations (“FFO”), and Adjusted Funds from Operations (“AFFO”) for the three months ended March 31, 2019 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     2019     2018
EPS $0.40     $0.41
FFO $1.22 $1.15
AFFO     $1.12     $1.04
             
    Quarterly Growth     Sequential Growth
Same Property Results     1Q19 vs. 1Q18     1Q19 vs. 4Q18
Revenues 3.7% 0.8%
Expenses 3.8% 3.5%
Net Operating Income ("NOI")     3.6%     (0.6)%
                   
Same Property Results     1Q19     1Q18     4Q18
Occupancy     95.8 %     95.4 %     95.8 %
           

“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. “As a result, we are raising the midpoints of our 2019 guidance for both same property revenue and same property NOI growth to 3.4% each, an improvement of 10 basis points for each category. We are maintaining the midpoint of our 2019 FFO guidance at $5.07 per share, as we expect the impact of our recent equity offering to be offset by our improved same property growth outlook as well as the adjusted timing of real estate and capital market transactions.”

For 2019, the Company defines same property communities as communities owned and stabilized since January 1, 2018, 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

Construction was completed during the quarter at Camden North End I in Phoenix, AZ and Camden Grandview II in Charlotte, NC, and lease-up was completed at Camden Shady Grove in Rockville, MD. The Company also commenced construction at Camden North End II in Phoenix, AZ.

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

                         
        Total     Total     % Leased
Community Name     Location     Units     Cost     as of 4/30/2019
Camden Washingtonian Gaithersburg, MD 365 $ 87.8 86%
Camden McGowen Station Houston, TX 315 90.7 76%
Camden North End I Phoenix, AZ 441 97.2 63%
Camden Grandview II     Charlotte, NC     28       22.0     36%
Total           1,149     $ 297.7      

Development Communities - Construction Ongoing ($ in millions)

                   
        Total     Total
Community Name     Location     Units     Budget
Camden RiNo Denver, CO 233 $75.0
Camden Downtown I Houston, TX 271 132.0
Camden Lake Eola Orlando, FL 360 120.0
Camden Buckhead Atlanta, GA 365 160.0
Camden North End II     Phoenix, AZ     343     90.0
Total           1,572     $577.0

Acquisition/Disposition Activity

During the quarter, the Company acquired Camden Old Town Scottsdale, a 316-home apartment community located in Scottsdale, AZ for approximately $97.1 million.

Subsequent to quarter-end, Camden acquired approximately 4.3 acres of land in Charlotte, NC for approximately $10.9 million for the future development of approximately 400 apartment homes, and acquired Camden Rainey Street, a 326-home apartment community located in Austin, TX for approximately $120.4 million.

Capital Markets Transactions

During the quarter, Camden completed a public offering of 3,375,000 common shares for net proceeds of approximately $328.4 million. The Company also retired approximately $439.3 million of secured mortgage debt with a weighted average interest rate of 5.2%.

In addition, Camden amended and restated its unsecured credit facility, extending the maturity date to March 2023 with two 6-month extension options and increasing the size of its facility to $900 million.

Earnings Guidance

Camden updated its earnings guidance for 2019 based on its current and expected views of the apartment market and general economic conditions, and provided guidance for second quarter 2019 as detailed below.

                   
    2Q19     2019     2019 Midpoint
Per Diluted Share     Range     Range     Current     Prior     Change
EPS $0.39 - $0.43 $1.56 - $1.72 $1.64     $1.61     $0.03
FFO     $1.24 - $1.28     $4.99 - $5.15     $5.07     $5.07     $0.00
             
    2019     2019 Midpoint
Same Property Growth     Range     Current     Prior     Change
Revenues 3.00% - 3.80% 3.40%     3.30%     0.10%
Expenses 2.95% - 3.75% 3.35% 3.25% 0.10%
NOI     2.60% - 4.20%     3.40%     3.30%     0.10%

Camden intends to update its earnings guidance to the market on a quarterly basis. Additional information on the Company’s 2019 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 3, 2019 at 10:00 AM CT
Domestic Dial-In Number: (888) 317-6003; International Dial-In Number: (412) 317-6061
Passcode: 4687275
Webcast: https://services.choruscall.com/links/cpt190503.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 primarily engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. Camden owns interests in and operates 165 properties containing 56,271 apartment homes across the United States. Upon completion of 5 properties currently under development, the Company’s portfolio will increase to 57,843 apartment homes in 170 properties. Camden was recently named by FORTUNE Magazine for the 12th consecutive year as one of the 100 Best Companies to Work For® in America, ranking #19.

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,
2019       2018

OPERATING DATA

 
Property revenues (a) $ 248,567 $ 230,683
 
Property expenses
Property operating and maintenance 56,948 53,916
Real estate taxes   33,890           30,049

 

Total property expenses   90,838           83,965  
 
Non-property income
Fee and asset management 1,843 1,998
Interest and other income 298 793
Income/(Loss) on deferred compensation plans   10,356           (205 )
Total non-property income   12,497           2,586  
 
Other expenses
Property management 6,657 6,639
Fee and asset management 1,184 965
General and administrative 13,308 12,223
Interest 20,470 20,374
Depreciation and amortization 80,274 70,224
Expense/(Benefit) on deferred compensation plans   10,356           (205 )
Total other expenses   132,249           110,220  
 
Equity in income of joint ventures   1,912           1,829  
Income from continuing operations before income taxes 39,889 40,913
Income tax expense   (168 )         (388 )
Net income 39,721 40,525
Less income allocated to non-controlling interests from continuing operations   (1,108 )         (1,130 )
Net income attributable to common shareholders $ 38,613         $ 39,395  
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income $ 39,721 $ 40,525
Other comprehensive income
Unrealized gain (loss) on cash flow hedging activities (5,938 ) 3,601
Reclassification of net (gain) loss on cash flow hedging activities, prior service cost and net loss on post retirement obligation   (375 )         35  
Comprehensive income 33,408 44,161
Less income allocated to non-controlling interests from continuing operations   (1,108 )         (1,130 )
Comprehensive income attributable to common shareholders $ 32,300         $ 43,031  
 

PER SHARE DATA

 
Total earnings per common share - basic $ 0.40 $ 0.41
Total earnings per common share - diluted 0.40 0.41
 
Weighted average number of common shares outstanding:
Basic 96,892 95,067
Diluted 97,041 96,046
 
(a) Upon our adoption of Accounting Standard Codification 842 - “Leases” effective January 1, 2019, we elected the practical expedient to not separate lease and non-lease components and thus present rental revenue in a single line item in our consolidated statements of income and comprehensive income. For the three months ended March 31, 2019, we recognized $248.6 million of property revenue which consisted of approximately $220.1 million of rental revenue and approximately $28.5 million of amounts received under contractual terms for other services considered to be non-lease components within our lease contracts. This compares to property revenue of $230.7 million recognized for the three months ended March 31, 2018, made up of approximately $203.5 million of rental revenue and approximately $27.2 million of amounts received under contractual terms for other services considered to be non-lease components within our lease contracts.
 
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,
2019       2018

FUNDS FROM OPERATIONS

 
Net income attributable to common shareholders $ 38,613 $ 39,395
Real estate depreciation and amortization 78,675 68,595
Adjustments for unconsolidated joint ventures 2,231 2,247
Income allocated to non-controlling interests   1,144           1,130  
Funds from operations $ 120,663         $ 111,367  
 
Less: recurring capitalized expenditures (a) (9,655 ) (9,999 )
         
Adjusted funds from operations $ 111,008         $ 101,368  
 

PER SHARE DATA

Funds from operations - diluted $ 1.22 $ 1.15
Adjusted funds from operations - diluted 1.12 1.04
Distributions declared per common share 0.80 0.77
 
Weighted average number of common shares outstanding:
FFO/AFFO - diluted 98,797 97,124
 

PROPERTY DATA

Total operating properties (end of period) (b) 164 158
Total operating apartment homes in operating properties (end of period) (b) 55,945 54,181
Total operating apartment homes (weighted average) 47,957 46,353
 

(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,
2019
    Dec 31,
2018
    Sep 30,
2018
    Jun 30,
2018
    Mar 31,
2018
ASSETS
Real estate assets, at cost
Land $ 1,127,485 $ 1,098,526 $ 1,088,293 $ 1,066,077 $ 1,053,578
Buildings and improvements   7,057,101         6,935,971         6,828,068         6,620,169         6,494,229  
8,184,586 8,034,497 7,916,361 7,686,246 7,547,807
Accumulated depreciation   (2,479,875 )       (2,403,149 )       (2,328,092 )       (2,255,737 )       (2,185,452 )
Net operating real estate assets 5,704,711 5,631,348 5,588,269 5,430,509 5,362,355
Properties under development, including land 307,981 293,978 315,904 373,350 399,903
Investments in joint ventures   21,955         22,283         24,664         26,205         26,863  
Total real estate assets 6,034,647 5,947,609 5,928,837 5,830,064 5,789,121
Accounts receivable – affiliates 21,337 22,920 22,605 23,473 23,397
Other assets, net (a)(b) 217,663 205,454 228,468 204,717 199,420
Cash and cash equivalents 6,092 34,378 8,529 64,071 101,401
Restricted cash   5,655         9,225         10,061         9,581         15,036  
Total assets $ 6,285,394       $ 6,219,586       $ 6,198,500       $ 6,131,906       $ 6,128,375  
 
 
 
LIABILITIES AND EQUITY
Liabilities
Notes payable
Unsecured $ 2,079,136 $ 1,836,427 $ 1,394,178 $ 1,339,659 $ 1,339,142
Secured 45,683 485,176 865,431 865,629 865,798
Accounts payable and accrued expenses (b) 126,964 146,866 140,046 127,777 123,706
Accrued real estate taxes 30,891 54,358 70,174 52,461 29,061
Distributions payable 80,771 74,982 74,976 75,071 75,083
Other liabilities (b)(c)   195,629         183,999         178,898         156,767         157,002  
Total liabilities 2,559,074 2,781,808 2,723,703 2,617,364 2,589,792
 
Commitments and contingencies
Non-qualified deferred compensation share awards 52,674 60,874 85,938 76,174
 
Equity
Common shares of beneficial interest 1,064 1,031 1,030 1,027 1,026
Additional paid-in capital 4,527,659 4,154,763 4,147,278 4,132,404 4,132,056
Distributions in excess of net income attributable to common shareholders (526,856 ) (495,496 ) (466,512 ) (436,575 ) (396,596 )
Treasury shares, at cost (349,655 ) (355,804 ) (355,825 ) (355,752 ) (356,687 )
Accumulated other comprehensive income (d)   616         6,929         14,031         8,794         3,579  
Total common equity 3,652,828 3,311,423 3,340,002 3,349,898 3,383,378
Non-controlling interests   73,492         73,681         73,921         78,706         79,031  
Total equity   3,726,320         3,385,104         3,413,923         3,428,604         3,462,409  
Total liabilities and equity $ 6,285,394       $ 6,219,586       $ 6,198,500       $ 6,131,906       $ 6,128,375  
 
 
(a) Includes net deferred charges of: $ 5,081 $ 242 $ 538 $ 724 $ 929
 
(b) Includes net asset/(liability) and interest receivable/(payable) fair value of derivative instruments: ($13,370 ) ($7,433 ) $ 15,674 $ 10,472 $ 5,291
 
(c) Includes deferred revenues of: $ 659 $ 552 $ 603 $ 659 $ 536
 
(d) 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 depreciation and amortization related to real estate, gains (or losses) from the sale of certain real estate assets (depreciable real estate), impairments of certain real estate assets (depreciable real estate), gains or losses from change in control, and adjustments for unconsolidated joint ventures to reflect FFO on the same basis. 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 depreciable real estate, 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. The FFO definition as restated in 2018 allows companies an option to also exclude gains and losses on sales or impairment charges on real estate assets incidental to a company's business. We did not elect this option, and as a result, the definition of FFO as restated did not have an impact on our calculation upon adoption on January 1, 2019. 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,
2019       2018
Net income attributable to common shareholders $38,613 $39,395
Real estate depreciation and amortization 78,675 68,595
Adjustments for unconsolidated joint ventures 2,231 2,247
Income allocated to non-controlling interests 1,144         1,130  
Funds from operations $120,663         $111,367  
 
Less: recurring capitalized expenditures (9,655 ) (9,999 )
         
Adjusted funds from operations $111,008         $101,368  
 
Weighted average number of common shares outstanding:
EPS diluted 97,041 96,046
FFO/AFFO diluted 98,797 97,124
 
Three Months Ended March 31,
2019       2018
Total Earnings Per Common Share - Diluted $0.40 $0.41
Real estate depreciation and amortization 0.80 0.71
Adjustments for unconsolidated joint ventures 0.02 0.02
Income allocated to non-controlling interests         0.01  
FFO per common share - Diluted $1.22         $1.15  
 
Less: recurring capitalized expenditures (0.10 ) (0.11 )
         
AFFO per common share - Diluted $1.12         $1.04  
               

CAMDEN

   

NON-GAAP FINANCIAL MEASURES

DEFINITIONS & RECONCILIATIONS

(In thousands, except per share amounts)

(Unaudited)

 

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:

 
2Q19 Range 2019 Range
Low High Low High
Expected earnings per common share - diluted $0.39 $0.43 $1.56 $1.72
Expected real estate depreciation and amortization 0.82 0.82 3.30 3.30
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 $1.24 $1.28 $4.99 $5.15
 

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

 

 

Net Operating Income (NOI)

 

NOI is defined by the Company as property revenue 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 supplement. 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,
2019     2018
Net income $39,721 $40,525
Less: Fee and asset management income (1,843 ) (1,998 )
Less: Interest and other income (298 ) (793 )
Less: (Income)/Loss on deferred compensation plans (10,356 ) 205
Plus: Property management expense 6,657 6,639
Plus: Fee and asset management expense 1,184 965
Plus: General and administrative expense 13,308 12,223
Plus: Interest expense 20,470 20,374
Plus: Depreciation and amortization expense 80,274 70,224
Plus: Expense/(Benefit) on deferred compensation plans 10,356 (205 )
Less: Equity in income of joint ventures (1,912 ) (1,829 )
Plus: Income tax expense 168       388  
NOI $157,729 $146,718
 
"Same Property" Communities $134,682 $129,979
Non-"Same Property" Communities 19,723 15,338
Development and Lease-Up Communities 1,820 (2 )
Dispositions/Other 1,504       1,403  
NOI $157,729 $146,718

 

       

CAMDEN

   

NON-GAAP FINANCIAL MEASURES

DEFINITIONS & RECONCILIATIONS

(In thousands, except per share amounts)

(Unaudited)

 

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. Annualized Adjusted EBITDA is Adjusted EBITDA as reported for the period multiplied by 4 for quarter results. A reconciliation of net income attributable to common shareholders to Adjusted EBITDA is provided below:

 
Three months ended March 31,
2019     2018
Net income attributable to common shareholders $38,613 $39,395
Plus: Interest expense 20,470 20,374
Plus: Depreciation and amortization expense 80,274 70,224
Plus: Income allocated to non-controlling interests from continuing operations 1,108 1,130
Plus: Income tax expense 168 388
Less: Equity in income of joint ventures (1,912)     (1,829)
Adjusted EBITDA $138,721     $129,682
Annualized Adjusted EBITDA $554,884     $518,728
 

Net Debt

 

Net Debt is defined by the Company as the average monthly balance of Total Debt during the period, less the average monthly balance of Cash and Cash Equivalents during the period.

 
Average monthly balance for
the three months ended March 31,
2019     2018
Unsecured notes payable $2,081,233 $1,338,971
Secured notes payable 271,936     865,859
Total debt 2,353,169 2,204,830
Less: Cash and cash equivalents

(138,748)

   

(111,621)

Net debt $2,214,421     $2,093,209

Net Debt to Annualized Adjusted EBITDA

Three months ended March 31,
2019     2018
Net debt $2,214,421 $2,093,209
Annualized Adjusted EBITDA 554,884     518,728
Net Debt to Annualized Adjusted EBITDA 4.0x 4.0x

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