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Camden Property Trust Announces Third Quarter 2020 Operating Results

·14-min read

Camden Property Trust (NYSE:CPT) (the "Company") announced today operating results for the three and nine months ended September 30, 2020. 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, 2020 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

2020

2019

2020

2019

EPS

$0.35

$0.44

$0.95

$1.26

FFO

$1.25

$1.29

$3.69

$3.79

AFFO

$1.03

$1.09

$3.14

$3.28

The Company incurred approximately $0.4 million and $14.8 million of COVID-19 Related Impact for the three and nine months ended September 30, 2020, respectively.

Quarterly Growth

Sequential Growth

Year-To-Date Growth

Same Property Results*

3Q20 vs. 3Q19

3Q20 vs. 2Q20

2020 vs. 2019

Revenues

0.8%

2.2%

1.5%

Expenses

4.7%

4.9%

2.4%

Net Operating Income ("NOI")

(1.3)%

0.6%

1.0%

*Same property results exclude any COVID-19 Related Impact.

Same Property Results

3Q20

3Q19

2Q20

Occupancy

95.6%

96.3%

95.2%

For 2020, the Company defines same property communities as communities owned and stabilized since January 1, 2019, 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.

October Collections

Same Property Scheduled Rents*

October 2020

October 2019

3Q20

3Q19

Collected

98.1%

98.2%

99.4%

98.3%

Deferred/Payment Plan Arranged

—%

—%

—%

—%

Delinquent

1.9%

1.8%

0.6%

1.7%

*Rent is recognized as earned. The Company evaluates collectability on an ongoing basis and any accounts considered uncollectable are recorded against property revenues.

Retail revenues are not included above and comprise approximately 0.6% of total property revenues. The Company collected 58% and 54% of its retail billings for the third quarter of 2020 and October 29, 2020, respectively.

Operating Statistics - Same Property Portfolio

New Lease and Renewal Data - Date Signed (1) (2)

October 2020*

October 2019

3Q20(2)

3Q19(2)

New Lease Rates

(3.1)%

(0.4)%

(3.0)%

2.5%

Renewal Rates

3.0%

5.0%

1.7%

5.1%

Blended Rates

(0.8)%

1.8%

(0.9)%

3.7%

New Leases

1,248

1,415

1,760

1,686

Renewals

838

995

1,467

1,418

Total Leases

2,086

2,410

3,227

3,104

New Lease and Renewal Data - Date Effective (3) (4)

October 2020*

October 2019

3Q20(4)

3Q19(4)

New Lease Rates

(3.5)%

0.4%

(2.4)%

3.4%

Renewal Rates

2.1%

4.7%

0.6%

5.4%

Blended Rates

(1.0)%

2.5%

(0.9)%

4.4%

New Leases

1,698

1,487

1,943

2,003

Renewals

1,338

1,379

2,087

2,106

Total Leases

3,036

2,866

4,030

4,109

*Data as of October 27, 2020
(1) Average change in same property new lease and renewal rates vs. expiring lease rates when signed.
(2) Data represents average monthly leases signed during the period.
(3) Average change in same property new lease and renewal rates vs. expiring lease rates when effective.
(4) Data represents average monthly leases effective during the period.

Occupancy and Turnover Data

October 2020*

October 2019

3Q20

3Q19

Occupancy

95.4%

96.1%

95.6%

96.3%

Annualized Gross Turnover

50%

48%

60%

62%

Annualized Net Turnover

39%

39%

49%

52%

*Data as of October 27, 2020

Development Activity

During the quarter, construction was completed at Camden Downtown I in Houston, TX, lease-up was completed at Camden North End I in Phoenix, AZ and leasing began at Camden RiNo in Denver, CO. The Company also commenced construction at three communities: Camden Atlantic in Plantation, FL, Camden Tempe II in Tempe, AZ and Camden NoDa in Charlotte, NC. Subsequent to quarter-end, leasing began at Camden North End II in Phoenix, AZ.

Development Community - Construction Completed and Project in Lease-Up ($ in millions)

Total

Total

% Leased

Community Name

Location

Homes

Cost

as of 10/27/2020

Camden Downtown I

Houston, TX

271

$131.2

39%

Development Communities - Construction Ongoing ($ in millions)

Total

Total

% Leased

Community Name

Location

Homes

Estimated Cost

as of 10/27/2020

Camden RiNo

Denver, CO

233

$79.0

40%

Camden North End II

Phoenix, AZ

343

90.0

1%

Camden Lake Eola

Orlando, FL

360

125.0

Camden Buckhead

Atlanta, GA

366

160.0

Camden Hillcrest

San Diego, CA

132

95.0

Camden Atlantic

Plantation, FL

269

100.0

Camden Tempe II

Tempe, AZ

397

115.0

Camden NoDa

Charlotte, NC

387

105.0

Camden Cypress Creek II (JV)

Cypress, TX

234

38.0

33%

Total

2,721

$907.0

Liquidity Analysis

As of September 30, 2020, Camden had approximately $1.5 billion of liquidity comprised of approximately $590 million in cash and cash equivalents and no amounts outstanding on its $900 million unsecured credit facility. The Company has no scheduled debt maturities until 2022, and at quarter-end had $384 million left to fund under its existing wholly-owned development pipeline. As of September 30, 2020, Camden had outstanding letters of credit totaling approximately $10 million, which reduced the availability under its unsecured credit facility to $890 million.

In October 2020, the Company entered into a $40 million two-year unsecured floating rate term loan with an unrelated third party and used the net proceeds, together with cash on hand, to repay its $100 million unsecured term loan which was scheduled to mature in 2022.

Earnings Guidance

Camden updated its earnings guidance for 2020 based on its current and expected views of the apartment market and general economic conditions, and provided guidance for fourth quarter 2020 as detailed below.

Per Diluted Share

4Q20 Range

2020 Range

EPS

$0.30 - $0.36

$1.25 - $1.31

FFO

$1.21 - $1.27

$4.90 - $4.96

Same Property Growth

2020 Range

Revenues

0.75% - 1.25%

Expenses

3.20% - 3.60%

NOI

(0.75)% - 0.15%

Conference Call
Friday, October 30, 2020 at 10:00 AM CT
Domestic Dial-In Number: (888) 317-6003; International Dial-In Number: (412) 317-6061
Passcode: 6005789
Webcast: https://services.choruscall.com/links/cpt201030.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 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 56,383 apartment homes across the United States. Upon completion of 9 properties currently under development, the Company’s portfolio will increase to 59,104 apartment homes in 174 properties. Camden has been recognized as one of the 100 Best Companies to Work For® by FORTUNE magazine for 13 consecutive years, most recently ranking #18. The Company also received a Glassdoor Employees' Choice Award in 2020, ranking #25 for large U.S. companies.

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,

2020

2019

2020

2019

OPERATING DATA

Property revenues (a)

$

265,721

$

260,672

$

782,283

$

765,000

Property expenses

Property operating and maintenance

65,191

62,277

189,788

177,372

Real estate taxes

35,861

31,596

105,081

98,566

Total property expenses

101,052

93,873

294,869

275,938

Non-property income

Fee and asset management

2,542

2,139

7,449

5,849

Interest and other income

1,948

1,485

2,602

2,114

Income on deferred compensation plans

5,071

780

1,646

14,992

Total non-property income

9,561

4,404

11,697

22,955

Other expenses

Property management

5,894

6,154

18,360

18,904

Fee and asset management

1,018

1,316

2,681

4,022

General and administrative

12,726

13,458

40,350

40,027

Interest

24,265

20,719

67,454

60,538

Depreciation and amortization

90,575

85,814

275,237

250,734

Expense on deferred compensation plans

5,071

780

1,646

14,992

Total other expenses

139,549

128,241

405,728

389,217

Gain on sale of land

382

Equity in income of joint ventures

2,154

2,133

5,909

5,954

Income from continuing operations before income taxes

36,835

45,095

99,674

128,754

Income tax expense

(615

)

(313

)

(1,476

)

(709

)

Net income

36,220

44,782

98,198

128,045

Less income allocated to non-controlling interests

(1,263

)

(1,185

)

(3,480

)

(3,436

)

Net income attributable to common shareholders (b)

$

34,957

$

43,597

$

94,718

$

124,609

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income

$

36,220

$

44,782

$

98,198

$

128,045

Other comprehensive income

Unrealized (loss) on cash flow hedging activities

(12,998

)

Reclassification of net loss (gain) on cash flow hedging activities, prior service cost and net loss on post retirement obligation

366

357

1,098

(369

)

Comprehensive income

36,586

45,139

99,296

114,678

Less income allocated to non-controlling interests

(1,263

)

(1,185

)

(3,480

)

(3,436

)

Comprehensive income attributable to common shareholders

$

35,323

$

43,954

$

95,816

$

111,242

PER SHARE DATA

Total earnings per common share - basic

$

0.35

$

0.44

$

0.95

$

1.27

Total earnings per common share - diluted

0.35

0.44

0.95

1.26

Weighted average number of common shares outstanding:

Basic

99,419

98,959

99,372

98,259

Diluted

99,455

99,066

99,414

98,375

(a)

We elected to combine 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 September 30, 2020, we recognized $265.7 million of property revenue which consisted of approximately $234.3 million of rental revenue and approximately $31.4 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 $260.7 million recognized for the three months ended September 30, 2019, made up of approximately $230.7 million of rental revenue and approximately $30.0 million of amounts received under contractual terms for other services considered to be non-lease components within our lease contracts. For the nine months ended September 30, 2020, we recognized $782.3 million of property revenue which consisted of approximately $692.2 million of rental revenue and approximately $90.1 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 $765.0 million recognized for the nine months ended September 30, 2019, made up of approximately $677.0 million of rental revenue and approximately $88.0 million of amounts received under contractual terms for other services considered to be non-lease components within our lease contracts. Revenue related to utility rebilling to residents was $7.4 million and $6.6 million for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 we recognized $21.4 million of revenue related to utility rebilling to residents. This compares to revenue related to utility rebilling to residents of $19.5 million for the nine months ended September 30, 2019.

(b)

Net income attributable to common shareholders includes an approximate $0.4 million and $14.8 million COVID-19 Related Impact for the three and nine months ended September 30, 2020, respectively. Please refer to page 28 of the supplement, footnote (a), for additional detail on the breakdown of the COVID-19 Related Impact.

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,

2020

2019

2020

2019

FUNDS FROM OPERATIONS

Net income attributable to common shareholders (a)

$

34,957

$

43,597

$

94,718

$

124,609

Real estate depreciation and amortization

87,974

83,437

267,985

244,908

Adjustments for unconsolidated joint ventures

2,404

2,245

6,933

6,736

Income allocated to non-controlling interests

1,276

1,225

3,661

3,549

Funds from operations

$

126,611

$

130,504

$

373,297

$

379,802

Less: recurring capitalized expenditures (b)

(22,299

)

(20,242

)

(55,906

)

(51,063

)

Adjusted funds from operations

$

104,312

$

110,262

$

317,391

$

328,739

PER SHARE DATA

Funds from operations - diluted

$

1.25

$

1.29

$

3.69

$

3.79

Adjusted funds from operations - diluted

1.03

1.09

3.14

3.28

Distributions declared per common share

0.83

0.80

2.49

2.40

Weighted average number of common shares outstanding:

FFO/AFFO - diluted

101,203

100,819

101,162

100,129

PROPERTY DATA

Total operating properties (end of period) (c)

165

165

165

165

Total operating apartment homes in operating properties (end of period) (c)

56,383

56,271

56,383

56,271

Total operating apartment homes (weighted average)

49,158

48,801

49,081

48,441

(a)

Net income attributable to common shareholders includes the approximate $0.4 million and $14.8 million COVID-19 Related Impact for the three and nine months ended September 30, 2020, respectively. Please refer to page 28 of the supplement, footnote (a), for additional detail on the breakdown of the COVID-19 Related Impact.

(b)

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

(c)

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)

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

ASSETS

Real estate assets, at cost

Land

$

1,216,942

$

1,206,656

$

1,206,130

$

1,199,384

$

1,158,342

Buildings and improvements

7,677,676

7,597,165

7,547,150

7,404,090

7,242,256

8,894,618

8,803,821

8,753,280

8,603,474

8,400,598

Accumulated depreciation

(2,944,769

)

(2,857,124

)

(2,770,848

)

(2,686,025

)

(2,638,693

)

Net operating real estate assets

5,949,849

5,946,697

5,982,432

5,917,449

5,761,905

Properties under development, including land

522,664

514,336

467,288

512,319

440,917

Investments in joint ventures

20,992

21,735

22,318

20,688

21,715

Total real estate assets

6,493,505

6,482,768

6,472,038

6,450,456

6,224,537

Accounts receivable – affiliates

20,152

21,432

20,344

21,833

23,170

Other assets, net (a)

217,534

211,823

196,544

248,716

238,014

Cash and cash equivalents

589,614

601,584

22,277

23,184

157,239

Restricted cash

3,918

4,093

4,367

4,315

5,686

Total assets

$

7,324,723

$

7,321,700

$

6,715,570

$

6,748,504

$

6,648,646

LIABILITIES AND EQUITY

Liabilities

Notes payable

Unsecured

$

3,225,799

$

3,224,871

$

2,606,876

$

2,524,099

$

2,432,137

Secured

45,250

Accounts payable and accrued expenses

183,654

167,453

156,841

171,719

170,689

Accrued real estate taxes

87,159

62,499

32,365

54,408

74,658

Distributions payable

84,137

84,138

84,112

80,973

80,764

Other liabilities (b)

177,967

172,172

164,052

215,581

187,367

Total liabilities

3,758,716

3,711,133

3,044,246

3,046,780

2,990,865

Equity

Common shares of beneficial interest

1,068

1,068

1,069

1,069

1,065

Additional paid-in capital

4,577,813

4,574,387

4,569,995

4,566,731

4,538,422

Distributions in excess of net income attributable to common shareholders

(737,556

)

(689,809

)

(623,570

)

(584,167

)

(599,615

)

Treasury shares, at cost

(341,831

)

(341,637

)

(342,778

)

(348,419

)

(348,556

)

Accumulated other comprehensive income (loss) (c)

(5,431

)

(5,797

)

(6,163

)

(6,529

)

(6,438

)

Total common equity

3,494,063

3,538,212

3,598,553

3,628,685

3,584,878

Non-controlling interests

71,944

72,355

72,771

73,039

72,903

Total equity

3,566,007

3,610,567

3,671,324

3,701,724

3,657,781

Total liabilities and equity

$

7,324,723

$

7,321,700

$

6,715,570

$

6,748,504

$

6,648,646

(a) Includes net deferred charges of:

$

2,686

$

3,031

$

3,399

$

3,658

$

4,358

(b) Includes deferred revenues of:

$

314

$

344

$

375

$

408

$

497

(c) Represents the unrealized net loss and unamortized prior service costs on post retirement obligations, and unrealized net gain (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 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. 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,

2020

2019

2020

2019

Net income attributable to common shareholders (a)

$

34,957

$

43,597

$

94,718

$

124,609

Real estate depreciation and amortization

87,974

83,437

267,985

244,908

Adjustments for unconsolidated joint ventures

2,404

2,245

6,933

6,736

Income allocated to non-controlling interests

1,276

1,225

3,661

3,549

Funds from operations

$

126,611

$

130,504

$

373,297

$

379,802

Less: recurring capitalized expenditures

(22,299

)

(20,242

)

(55,906

)

(51,063

)

Adjusted funds from operations

$

104,312

$

110,262

$

317,391

$

328,739

Weighted average number of common shares outstanding:

EPS diluted

99,455

99,066

99,414

98,375

FFO/AFFO diluted

101,203

100,819

101,162

100,129

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Total Earnings Per Common Share - Diluted

$

0.35

$

0.44

$

0.95

$

1.26

Real estate depreciation and amortization

0.87

0.83

2.65

2.45

Adjustments for unconsolidated joint ventures

0.02

0.01

0.06

0.05

Income allocated to non-controlling interests

0.01

0.01

0.03

0.03

FFO per common share - Diluted

$

1.25

$

1.29

$

3.69

$

3.79

Less: recurring capitalized expenditures

(0.22

)

(0.20

)

(0.55

)

(0.51

)

AFFO per common share - Diluted

$

1.03

$

1.09

$

3.14

$

3.28

(a)

Net income attributable to common shareholders includes an approximate $0.4 million and $14.8 million COVID-19 Related Impact for the three and nine months ended September 30, 2020, respectively. The total COVID-19 Related Impact for the nine months ended September 30, 2020 was comprised of $9.5 million related to the Resident Relief Funds which were established in April 2020. Of this amount, approximately $9.1 million was paid to residents at our wholly-owned communities and approximately $1.3 million of Resident Relief Funds paid to residents of the operating communities owned by our unconsolidated joint ventures, of which, we recognized our ownership interest of $0.4 million in equity in income of joint ventures. Additionally, we incurred approximately $4.5 million of COVID-19 expenses at our operating communities, which included $2.8 million of bonuses paid to on-site employees who provided essential services during the pandemic and $1.7 million in other directly-related COVID-19 expenses for the nine months ended September 30, 2020. We also incurred approximately $0.8 million related to the Employee Relief Fund we established to help our employees impacted by COVID-19 for the nine months ended September 30, 2020.

CAMDEN

NON-GAAP FINANCIAL MEASURES

DEFINITIONS & RECONCILIATIONS

(In thousands, except per share amounts)

(Unaudited)

4Q20 Range

2020 Range

Low

High

Low

High

Expected earnings per common share - diluted

$

0.30

$

0.36

$

1.25

$

1.31

Expected real estate depreciation and amortization

0.88

0.88

3.53

3.53

Expected adjustments for unconsolidated joint ventures

0.02

0.02

0.08

0.08

Expected income allocated to non-controlling interests

0.01

0.01

0.04

0.04

Expected FFO per share - diluted

$

1.21

$

1.27

$

4.90

$

4.96

Note: This table contains forward-looking statements. Please see 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 12 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 September 30,

Nine months ended September 30,

2020

2019

2020

2019

Net income (a)

$

36,220

$

44,782

$

98,198

$

128,045

Less: Fee and asset management income

(2,542

)

(2,139

)

(7,449

)

(5,849

)

Less: Interest and other income

(1,948

)

(1,485

)

(2,602

)

(2,114

)

Less: (Income)/Loss on deferred compensation plans

(5,071

)

(780

)

(1,646

)

(14,992

)

Plus: Property management expense

5,894

6,154

18,360

18,904

Plus: Fee and asset management expense

1,018

1,316

2,681

4,022

Plus: General and administrative expense

12,726

13,458

40,350

40,027

Plus: Interest expense

24,265

20,719

67,454

60,538

Plus: Depreciation and amortization expense

90,575

85,814

275,237

250,734

Plus: Expense on deferred compensation plans

5,071

780

1,646

14,992

Less: Gain on sale of land

(382

)

Less: Equity in income of joint ventures

(2,154

)

(2,133

)

(5,909

)

(5,954

)

Plus: Income tax expense

615

313

1,476

709

NOI (b) (c)

$

164,669

$

166,799

$

487,414

$

489,062

"Same Property" Communities

$

144,737

$

146,686

$

437,678

$

433,237

Non-"Same Property" Communities

20,072

17,413

61,279

47,588

Development and Lease-Up Communities

(354

)

(11

)

(739

)

(13

)

COVID-19 Related Impact (b) (c)

(444

)

(13,614

)

Dispositions/Other

658

2,711

2,810

8,250

NOI (b) (c)

$

164,669

$

166,799

$

487,414

$

489,062

(a)

Net income attributable to common shareholders includes the approximate $0.4 million and $14.8 million COVID-19 Related Impact for the three and nine months ended September 30, 2020, respectively. Please refer to page 28 of the supplement, footnote (a), for additional detail on the breakdown of the COVID-19 Related Impact.

(b)

Two Resident Relief Funds were established for residents experiencing financial losses caused by the COVID-19 pandemic, and paid out approximately $9.1 million to approximately 7,100 Camden residents of our wholly-owned communities. All charges related to these funds were recognized in 2Q20 as a reduction of revenue.

(c)

We incurred approximately $0.4 million of COVID-19 expenses at our operating communities for the three months ended September 30, 2020 and $4.5 million for the nine months ending September 30, 2020, which included $2.8 million of bonuses paid to on-site employees who provided essential services during the pandemic and $1.7 million in other directly-related COVID-19 expenses.

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, loss on early retirement of debt, income (loss) allocated to non-controlling interests, as well as direct COVID-19 Related Impact. 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 or 1.33 for 9 month results. 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,

2020

2019

2020

2019

Net income attributable to common shareholders (a)

$

34,957

$

43,597

$

94,718

$

124,609

Plus: Interest expense

24,265

20,719

67,454

60,538

Plus: Depreciation and amortization expense

90,575

85,814

275,237

250,734

Plus: Income allocated to non-controlling interests

1,263

1,185

3,480

3,436

Plus: Income tax expense

615

313

1,476

709

Plus: COVID-19 Related Impact (b)

444

14,364

Less: Gain on sale of land

(382

)

Less: Equity in income of joint ventures

(2,154

)

(2,133

)

(5,909

)

(5,954

)

Adjusted EBITDA

$

149,965

$

149,495

$

450,438

$

434,072

Annualized Adjusted EBITDA

$

599,860

$

597,980

$

600,584

$

578,763

(a)

Net income attributable to common shareholders includes the approximate $0.4 million and $14.8 million COVID-19 Related Impact for the three and nine months ended September 30, 2020, respectively. Please refer to page 28 of the supplement, footnote (a), for additional detail on the breakdown of the COVID-19 Related Impact.

(b)

Approximately $0.4 million and $14.4 million of the stated COVID-19 Related Impact, which consists of the Resident Relief Funds, Employee Relief Fund, direct COVID-19 expenses, and bonus paid to on-site employees, has been added back to the Adjusted EBITDA calculation for the three and nine months ended September 30, 2020, respectively.

Net Debt to Annualized Adjusted EBITDA

The Company believes Net Debt to Annualized Adjusted EBITDA to be an appropriate supplemental measure of evaluating balance sheet leverage. 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. The following tables reconcile average Total debt to Net debt and computes the ratio to Adjusted EBITDA for the following periods:

Net Debt:

Average monthly balance for

Average monthly balance for

the three months ended September 30,

the nine months ended September 30,

2020

2019

2020

2019

Unsecured notes payable

$

3,225,490

$

2,431,858

$

3,028,011

$

2,278,843

Secured notes payable

45,322

120,933

Total debt

3,225,490

2,477,180

3,028,011

2,399,776

Less: Cash and cash equivalents

(536,520

)

(124,936

)

(367,113

)

(117,855

)

Net debt

$

2,688,970

$

2,352,244

$

2,660,898

$

2,281,921

Net Debt to Annualized Adjusted EBITDA:

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019

Net debt

$

2,688,970

$

2,352,244

$

2,660,898

$

2,281,921

Annualized Adjusted EBITDA

599,860

597,980

600,584

578,763

Net Debt to Annualized Adjusted EBITDA

4.5

x

3.9

x

4.4

x

3.9

x

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029006218/en/

Contacts

Kim Callahan, 713-354-2549